Gradall Industries, Inc. 1997 Annual Report

                                                                         GRADALL
                                                      a different kind of animal

<PAGE>

Since  1946,  Gradall machines have been widely distinguished from all others by
their  unique  versatility and productivity.  Currently marketed worldwide using
the  theme  "a  different  kind  of  animal"    graphics created for the current
advertising  campaign  are  featured  in  this  annual  report.

<PAGE>

                               Table of Contents

<TABLE>
<CAPTION>

<S>                                               <C>
Consolidated Financial Highlights. . . . . . . .   4
Letter to Stockholders . . . . . . . . . . . . .   5
Gradall Excavators . . . . . . . . . . . . . . .   6
Gradall Material Handlers. . . . . . . . . . . .   8
Parts and Distribution . . . . . . . . . . . . .  10
Selected Consolidated Financial Data . . . . . .  12
Consolidated Balance Sheets. . . . . . . . . . .  14
Consolidated Statements of Income. . . . . . . .  15
Consolidated Statements of
Changes in Stockholders' Equity. . . . . . . . .  16
Consolidated Statements of Cash Flows. . . . . .  17
Notes to Consolidated Financial Statements . . .  18
Report of Independent Accountants. . . . . . . .  32
Report of Management . . . . . . . . . . . . . .  32
Management's Discussion and Analysis
of Financial Condition and Results of Operations  33
General Information. . . . . . . . . . . . . . .  41
Gradall Replicas . . . . . . . . . . . . . . . .  43
</TABLE>

                            Gradall Industries, Inc.

<PAGE>

                                  Consolidated
                              Financial Highlights

                              (dollars in millions,
                              except share amounts)

<TABLE>
<CAPTION>
                                                For the Years Ended
                                               1997    1996    1995
                                              ------  ------  -------
<S>                                           <C>     <C>     <C>
Net sales. . . . . . . . . . . . . . . . . .  $158.7  $140.9  $118.4 
Operating income . . . . . . . . . . . . . .    20.6    17.9    12.8 
Income before extraordinary item . . . . . .    12.0     8.3     6.6 
Extraordinary loss on
 extinguishment of debt, net of tax benefit.       -     1.0       - 
Net income . . . . . . . . . . . . . . . . .    12.0     7.3     6.6 

Earnings per share(1). . . . . . . . . . . .  $ 1.33  $ 1.07  $ 0.77 
Working capital. . . . . . . . . . . . . . .    26.5    14.9    10.7 
Funded debt. . . . . . . . . . . . . . . . .    10.3     7.9    37.9 
Shareholders' equity (deficit) . . . . . . .    21.2     9.1   (23.1)
<FN>
(1)  Earnings  per  share data is presented on a diluted basis for 1997 and on a
pro  forma  basis  for 1996 and 1995.  See Note 12 to the Consolidated Financial
Statements  included  herein.
</TABLE>

                            Gradall Industries, Inc.

                                       4
<PAGE>

                              TO OUR STOCKHOLDERS

In  this,  our second annual report to stockholders, Gradall (The "Company") is
extremely  pleased  to  report  continued  record  sales  and  earnings.

     This  outstanding  performance  is  the  direct  result of a strategic plan
emphasizing the continuing introduction of new and uniquely productive machines;
each  benefitting  by  being  a  "different  kind of animal" in their respective
construction  equipment  markets;  each setting new, high standards for quality.

     While  new  product  development  is  pivotal  in  the  strategic plan, our
management  blueprint  further  mandates  a  strong  focus  on  strengthening
distribution, maximizing production efficiency and continually enhancing product
support  programs.

     The  initial  public  offering of Gradall Industries, Inc., stock in August
1996,  has allowed the Company to substantially reduce debt and interest expense
while  negotiating  a  more  favorable  bank  agreement.

                   [Picture of Barry L. Phillips, President]

     The  cumulative effect of all of these actions, combined with the hard work
of  Gradall employees, has resulted in record net sales for 1997 totaling $158.7
million,  up  12.6 percent over 1996. Record net income was $12 million, up 44.7
percent before an extraordinary item. Basic earnings per share reached $1.34, up
25.2  percent  from $1.07, the unaudited pro forma net income per share computed
as  though  the  initial  stock  offering  was  effective  Jan.  1,  1996.

     Impacting  both  domestic  and international sales during 1997 was the wide
acceptance  of  our  new,  XL  2200  excavator  and  the  introduction  of  our
remote-controlled  XL 2210 steel mill machine. In 1998 more new excavator models
will  be  introduced, including a rough terrain wheeled undercarriage telescopic
excavator  being  unveiled  at  a  major  world  trade  show  in  Germany.

      Our  material  handler  group experienced record sales fueled by growth in
housing  and  non-residential  construction  as  well  as  an  expansion  of the
equipment  rental  market.

     In  mid-1997,  we  introduced  the  544D,  the  first  of our new family of
advanced  D Series material handlers. Seven more models, completing the D Series
family,  were  introduced  in January 1998, replacing the popular C Series line.
The  sale  of service parts increased during the year as a result of our program
to aggressively strengthen our distributor support activities.     An investment
of  $5.3  million  in  capital  equipment during 1997, plus plans to exceed that
level  in  1998, are effectively improving operating margins through quality and
manufacturing  efficiencies.

 All  of  this puts Gradall in an excellent position for 1998. Now 52 years old,
Gradall  continues  to  benefit  from  its  historic  leadership  position as an
innovative  producer  of  high  quality,  uniquely  productive  machines.

     Gradall  Industries,  Inc.  is  dedicated  to  continued  growth  and  the
commitment  to  increase  stockholder  value.



                                                /s/ Barry L. Phillips, President
                                                --------------------------------
                                                    Barry L. Phillips, President

                                       5
<PAGE>

     The Gradall Excavator. Capitalizing of the advantages of being different. A
different kind of animal.

                         [PICTURE OF XL 2210 EXCAVATOR]

Gradall's  new  XL  2210  excavator,  introduced  during
the  second  half  of  1997,    is  operated  with  a  remote  control  device.

                                       6
<PAGE>

                       ESTABLISHING A NEW WORLD STANDARD
                    FOR EXCAVATOR PERFORMANCE AND VERSATILITY

Gradall  continues  to  dominate  the  traditional  niche market for versatile,
wheeled  excavators,  while creating new, higher productivity models to increase
sales  into  non-traditional  markets  and  applications.

                    [Picture of XL 5100 wheeled excavator.]

     Unique  in  their  design,  starting  with  the very first machine in 1946,
Gradall  excavators  have always distinguished themselves from other machines by
their  rotating,  telescoping  booms.

                        [Picture of XL 2200 excavator.]

     Today,  thanks  to  new innovative high pressure hydraulics and designed-in
strength,  XL  excavators  are  now known for their exclusive ability to deliver
traditional  Gradall  versatility  along  with  a high level of power and speed,
increasing their market potential. The XL Series are able to perform the precise
grading  and sloping which launched the Gradall legend, and production work such
as mass excavation and pavement removal, cutting contractor costs by eliminating
the  need  for  multiple  machines.

                        [Picture of XL 2300 excavator.]

     The  true  pioneer  among  truck  mounted  excavators,  Gradall  has always
dominated  that  niche  market  in  North  America.  Now, innovations in Gradall
hydraulic  power  and an increased emphasis on models with rough terrain crawler
undercarriages  have allowed the company to show impressive increases in machine
sales while competing with conventional excavator industry giants in the popular
19  to  21  ton  and  24  to  28  ton  classes.

     Identifying  the  growing  demand  for  specialized excavators, Gradall has
launched  a  new  family  of  models  which is further expanding sales potential
beyond  the  core market of contractors involved in road construction and repair
or  other  high  productivity  work.

  The new XL 2200 is popular among contractors who buy or rent the excavator for
jobs  requiring  smaller,  highly  versatile  machines.

Another new model, the XL 2210, is operated with a remote control device, making
it  popular  for  steel  and  aluminum  metal  mill  maintenance work as well as
hazardous  waste  cleanup  and  other  potentially  dangerous  jobs.

In  1998,  the  new XL 2300 is being introduced in the U.S. and at a major world
trade  show  in  Europe.  Able  to  efficiently  perform specialized digging and
finishing  work,  the XL 2300 has a rough terrain wheeled undercarriage allowing
it  to be driven quickly around jobsites-a unique advantage for both contractors
and  governmental  agencies.

Additional  excavator  models  will  be  introduced later this year and in 1999,
aimed  at  capitalizing on the growing domestic sales potential in core markets;
the  need  for  specialized  machines  for  mining  and  metal  mill  work;  and
opportunities  unfolding  as  a  result  of  major Gradall initiatives in China,
Russia,  South  America  and  elsewhere.

                                       7
<PAGE>

The Gradall D-Series Material Handlers. The Gradall D-Series Material Handlers.
Rugged  agility  has  always  set  them  apart.  A  different  kind  of  animal.

                         [PICTURE OF 544D MATERIAL HANDLER]

       The 544D, introduced in mid-1997, was the first of Gradall's new D-Series
                                                    family of material handlers.

                                       8
<PAGE>

                   EXTENDING GRADALL'S MARKET SHARE ADVANTAGE
                      WITH AN ALL-NEW COLLECTION OF MODELS

Gradall  has  reinforced  its  strong position in the competitive rough terrain
material  handler  market  by  introducing  an  entirely  new family of D Series
handlers.  Replacing  the  highly successful C Series, the new D Series machines
have unique advantages that will provide additional customer benefits in growing
domestic  and  foreign  markets.

                    [Picture of New D Series operator cab.]

     Typically,  Gradall material handlers are used to lift, transport and place
brick,  lumber, structural steel and other materials on construction, industrial
storage  and  other  work  sites.  Gradall  material  handlers  can utilize many
attachments,  enabling  general  and masonry contractors to directly profit from
Gradall  versatility.  Gradall  machines  can effectively perform many different
jobs  and thereby eliminate the cost of buying or renting additional specialized
machines.

                     [Picture of 534D-9 material handler.]

     One  of  the  traditional,  key  advantages  Gradall holds over competitive
models  is  a  unique 90  rear wheel steering design, making them the industry's
most  maneuverable machines. Pivoting into position for precise machine movement
and  load  placement,  even  on  very  tight jobsites, our material handlers can
measurably  increase  productivity  through  this  designed-in  maneuverability
advantage.  Strength  and  reliability  also  are  legendary,  making  Gradall a
preferred  brand  among  national  rental  companies.

                 [Picture of Uniquely mobile steering design.]

     The  eight  new D Series models also provide state-of-the-industry operator
protection,  new  instrumentation, wider seating and excellent visibility in all
directions.  The  machines  are  designed  for  easy  operation,  shortening the
operator  training  process  and  encouraging  faster,  more efficient work with
advantages  like  a  hydrostatic  transmission.

The  first  of the new D Series models was well received by the industry when it
was introduced in mid-1997. The 544D, literally a giant among material handlers,
has  a  tremendous  10,000-pound  capacity and a maximum lift height of 55 feet.

In  January 1998, the introduction of seven more models completed the impressive
new  D  Series family. Designed for a variety of jobs, they have lift capacities
from  6,000  to  10,000  pounds  and  maximum  lift  heights from 24 to 55 feet.

The  524D  LoPro  is under 7 feet tall and capitalizes on the need for a machine
that  can  work in limited clearance jobs or move through low doorways. In 1997,
the  leading  construction  equipment  publication selected this machine for its
list  of  the  industry's  greatest  innovations.

 Traditionally,  Gradall  material  handlers  have  been sold primarily in North
America, where a favorable construction market has been forecast. The Company is
accelerating  its  entry  into international markets with recent sales in Korea,
China,  Brazil  and  Russia.  Key  to  this initiative is the establishment of a
global  distribution  network.

                                       9
<PAGE>

Gradall parts and distribution. A different kind of animal. The extra advantage
from  Gradall.

                               [Picture of World]

                                       10
<PAGE>

                        THE EXTRA ADVANTAGE FROM GRADALL

Vital  to  Gradall's  continuing  growth  initiative  is our commitment to high
quality  distribution  and  product  support  programs.

                               [Picture of Parts]
                           Dedicated to product support.

     To  meet  that  commitment  in  the core North American market, Gradall has
established  a  separate network of independent distributors to sell and support
Gradall  excavators  or  material  handlers.

                               [Picture of Plant]
                        Gradall's 430,000 sq. ft. plant.

     Distributor  selection  is  based  on  various criteria including financial
strength;  commitment  to  promoting  and  selling  Gradall products; after-sale
service,  location  of  branches;  and  reputation  among  key  sales  or rental
prospects  in  the  distributor's  territory.

                               [Picture of Parts]
                       Many parts available in kit form.

     To  work closely with those distributors, Gradall has expanded its staff of
regional  product  support  managers.  Through these managers as well as through
direct communications with the Gradall factory, distributors are able to receive
fast,  efficient  technical  support  for  sales and service, maintaining a high
level  of  customer  satisfaction.

     Gradall  also  maintains  a  dedicated  training  center  adjacent  to  the
manufacturing  plant,  providing  distributor personnel and owner-operators with
up-to-date  training  on  preventive  maintenance  and  service  as well as safe
efficient,  operation  techniques.

     Typically, excavator distributors selected for each state or region are the
leading  suppliers  of  equipment  to state and local governments or contractors
involved in road construction and maintenance, excavation and other earth moving
projects.

  Likewise, an important factor to consider in the selection of Gradall material
handler  distributors  is  their  regional  importance  in  the  sale, rental or
rent-to-sell  of  equipment  to  building  contractors.

  In  accordance with Gradall's global growth initiative, we have also increased
our commitment to worldwide distribution. Comprehensive sales channels have been
established  to  facilitate marketing activities into Russia, South America, the
Middle  East,  the  Pacific  Rim  and other promising world markets. At the same
time,  cooperative  selling  relationships  have  been  established  with  major
equipment  agents  in  key  regions  throughout  the  world.

                                       11
<PAGE>

                             Selected Consolidated
                                 Financial Data

                             (dollars in thousands,
                              except share amounts)

        The following table sets forth selected consolidated financial data for
the  Company  for the five years ended December 31, 1997 that have been taken or
derived  from  the  historical  financial  statements  of  the  Company  and are
qualified  in their entirety by reference to such financial statements and notes
included  therein.  See  "Consolidated  Financial  Statements."

<TABLE>
<CAPTION>
                                                 For the Years Ended December 31,
                                                 --------------------------------
                                       1993(7)      1994(7)       1995         1996      1997
<S>                                  <C>          <C>          <C>          <C>        <C>
Income Statement Data:
-------------------------------------------------------------------------------------------------
Net sales . . . . . . . . . . . . .  $   72,208   $   88,820   $  118,438   $ 140,909  $  158,659
Cost of sales . . . . . . . . . . .      59,274       71,280       92,637     108,098     120,663
Gross profit. . . . . . . . . . . .      12,934       17,540       25,801      32,811      37,996
                                     -----------  -----------  -----------  ---------  ----------
Research and development and
    product engineering costs . . .       1,848        2,123        2,504       3,081       3,644
Selling, general and
  administrative expenses . . . . .       9,307        9,346       10,503      11,815      13,712
                                     -----------  -----------  -----------  ---------  ----------
Operating income. . . . . . . . . .       1,779        6,071       12,794      17,915      20,640
Amortization of FAS 106(1). . . . .      (3,626)
Interest expense. . . . . . . . . .       1,055        1,146        1,642       3,108         696
Other, net. . . . . . . . . . . . .        (549)         234          865       1,018         257
                                     -----------  -----------  -----------  ---------  ----------
Income before provision for taxes,
  extraordinary item and change
  in accounting . . . . . . . . . .       1,273        8,317       10,287      13,789      19,687
Income tax provision. . . . . . . .         550        3,152        3,680       5,503       7,696
                                     -----------  -----------  -----------  ---------  ----------
Income before extraordinary item
  and change in accounting. . . . .         723        5,165        6,607       8,286      11,991
Extraordinary item(2) . . . . . . .                                               973
Change in accounting
  loss(3) . . . . . . . . . . . . .       9,014 
                                     -----------  -----------  -----------  ---------  ----------
Net income (loss)(4). . . . . . . .  $   (8,291)  $    5,165   $    6,607   $   7,313  $   11,991
                                     -----------  -----------  -----------  ---------  ----------
Earnings per share(5)
  Basic:
  Before extraordinary item . . . .                            $     1.17   $    1.19  $     1.34
  After extraordinary item. . . . .                                  1.17        1.05        1.34
Weighted average shares
    outstanding . . . . . . . . . .                             5,637,244   6,956,507   8,939,605

  Diluted:
  Before extraordinary item . . . .                            $     1.17  $     1.18  $     1.33
  After extraordinary item. . . . .                                  1.17        1.04        1.33
Weighted average shares
     outstanding. . . . . . . . . .                             5,637,244   7,003,200   9,013,760

Pro forma(6)
  Net income per share. . . . . . .                            $     0.77  $     1.07
Weighted average shares
    outstanding . . . . . . . . . .                             8,939,294   8,939,294
Balance Sheet Data:
-------------------------------------------------------------------------------------------------
Working capital . . . . . . . . . .  $      150   $    2,472   $   10,735  $   14,907  $   26,509
Total assets. . . . . . . . . . . .      38,210       41,099       52,024      58,226      76,735
Total debt. . . . . . . . . . . . .      15,151       11,234       37,922       7,910      10,312
Stockholders' (deficit) equity. . .      (7,572)      (2,158)     (23,119)      9,076      21,219
<FN>

                            Gradall Industries, Inc.

                                       12
<PAGE>

                             Selected Consolidated
                                 Financial Data

                                   (continued)

(1)     The  FAS  106  gain  resulted  from the reduction in the post-retirement
health  care  benefits  liability  reflecting  a change in actuarial assumptions
related  to  the  projected  growth  in  medical  costs.

(2)     An  extraordinary  item  of $1.0 million, net of taxes, related to early
extinguishment  of  senior and subordinated debt which was incurred in September
1996  to  write  off  unamortized  deferred  financing costs and the discount on
subordinated  debt  which was paid off with the proceeds from the initial public
offering  on  September  3,  1996.

(3)     Reflects  a $9.0 million after-tax decrease in net income resulting from
the  adoption of the accrual basis of accounting for post-retirement health care
benefits  (FAS  106).

(4)     Net  income  (loss)  per share data have been omitted for years prior to
1995  as  such  amounts  are  not  comparable  due to the 1995 Recapitalization.

(5)     Presented based on actual earnings and average shares outstanding in the
periods  indicated  after  giving  effect to the 5,540-for-1 stock split and the
conversion  of  outstanding  Warrants.

(6)     Presented  as  if  the  1995 Recapitalization, the issuance of shares of
Common  Stock pursuant to the initial public offering and the application of the
net proceeds thereof to reduction in debt, all had occurred effective January 1,
1995.  Pro  forma  net  income per share data does not include the extraordinary
item.

(7)     Excludes  former wholly owned subsidaries of the Company which were spun
off  to certain shareholders in connection with a Recapitalization which occured
in  October  1995.  See Note 1 to the Consolidated Financial Statements included
herein.
</TABLE>

                            Gradall Industries, Inc.

                                       13
<PAGE>

                                  Consolidated
                                     Balance
                                     Sheets

                             (dollars in thousands
                             except share amounts)

<TABLE>
<CAPTION>
                                                       December 31,
                                                   --------------------
ASSETS                                               1997       1996
-------------------------------------------------  ---------  ---------
<S>                                                <C>        <C>
Current assets:
  Cash. . . . . . . . . . . . . . . . . . . . . .  $  1,605   $    215 
  Accounts receivable - trade,
    net of allowance for doubtful
    accounts of $56 and $76 . . . . . . . . . . .    25,290     16,846 
  Inventories . . . . . . . . . . . . . . . . . .    25,564     21,326 
  Prepaid expenses and deferred charges . . . . .     1,645        495 
  Deferred income taxes . . . . . . . . . . . . .       742      1,151 
                                                   ---------  ---------

       Total current assets . . . . . . . . . . .    54,846     40,033 

Deferred income taxes . . . . . . . . . . . . . .     5,402      5,257 

Property, plant and equipment, net. . . . . . . .    15,108     11,535 

Other assets:
  Deferred financing costs, net of
    accumulated amortization of $404 and $242 . .       446        608 
  Other . . . . . . . . . . . . . . . . . . . . .       933        793 
                                                   ---------  ---------

       Total other assets . . . . . . . . . . . .     1,379      1,401 
                                                   ---------  ---------

       Total assets . . . . . . . . . . . . . . .  $ 76,735   $ 58,226 
                                                   =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Capital lease obligation, current portion . . .  $    297   $    174 
  Accounts payable - trade. . . . . . . . . . . .    17,113     13,405 
  Accrued other expenses:
    Legal . . . . . . . . . . . . . . . . . . . .       452      1,800 
    Floor plan interest . . . . . . . . . . . . .     1,444        851 
    Warranty. . . . . . . . . . . . . . . . . . .     1,075      1,225 
    Income taxes. . . . . . . . . . . . . . . . .     1,115      1,333 
    Other . . . . . . . . . . . . . . . . . . . .     6,841      6,338 
                                                   ---------  ---------
       Total current liabilities. . . . . . . . .    28,337     25,126 
                                                   ---------  ---------

Long term obligations:
  Capital lease obligation,
    net of current portion. . . . . . . . . . . .       412        445 
  Long-term debt. . . . . . . . . . . . . . . . .     9,603      7,291 
  Accrued post-retirement benefit cost. . . . . .    15,719     14,604 
  Other long term liabilities . . . . . . . . . .     1,445      1,684 
                                                   ---------  ---------

       Total long term obligations. . . . . . . .    27,179     24,024 
                                                   ---------  ---------

       Total liabilities. . . . . . . . . . . . .    55,516     49,150 
                                                   ---------  ---------

Stockholders' equity:
  Common stock, $.001 par value;
    18,000,000 shares authorized; 8,940,194
    and 8,939,294 issued and outstanding in
    1997 and 1996, respectively . . . . . . . . .         9          9 
  Serial preferred shares, par value $.001
    per share 2,000,000 shares authorized,
    none issued and outstanding
  Additional paid-in capital. . . . . . . . . . .    38,894     38,907 
  Accumulated deficit . . . . . . . . . . . . . .   (17,684)   (29,840)
                                                   ---------  ---------

       Total stockholders' equity . . . . . . . .    21,219      9,076 
                                                   ---------  ---------

       Total liabilities and stockholders' equity  $ 76,735   $ 58,226 
                                                   =========  =========
<FN>

The  accompanying  notes  are  an  integral part of these consolidated financial
                                   statements.
</TABLE>

                            Gradall Industries, Inc.

                                       14
<PAGE>

                                  Consolidated
                                   Statements
                                       of
                                     Income

                              (dollars in thousands
                              except share amounts)

<TABLE>
<CAPTION>
                                       For the Years Ended December 31,
                                      ----------------------------------
                                         1997        1996        1995
------------------------------------------------  ----------  ----------
<S>                                   <C>         <C>         <C>
Net sales. . . . . . . . . . . . . .  $  158,659  $  140,909  $  118,438
Cost of sales. . . . . . . . . . . .     120,663     108,098      92,637
                                      ----------  ----------  ----------
        Gross profit . . . . . . . .      37,996      32,811      25,801
Research and development and product
  engineering costs. . . . . . . . .       3,644       3,081       2,504
Selling general and
  administrative expenses. . . . . .      13,712      11,815      10,503
                                      ----------  ----------  ----------

    Operating income . . . . . . . .      20,640      17,915      12,794

Other expense:
  Interest expense . . . . . . . . .         696       3,108       1,642
  Other. . . . . . . . . . . . . . .         257       1,018         865
                                      ----------  ----------  ----------

    Net other expense. . . . . . . .         953       4,126       2,507
                                      ----------  ----------  ----------

    Income before income taxes
      and extraordinary item . . . .      19,687      13,789      10,287

Income tax provision . . . . . . . .       7,696       5,503       3,680
                                      ----------  ----------  ----------

Income before extraordinary item . .      11,991       8,286       6,607
                                      ----------  ----------  ----------

Extraordinary item, loss from early
  extinguishment of debt, net of
  income tax benefit of $622 . . . .                     973
                                      ----------  ----------  ----------

Net income . . . . . . . . . . . . .  $   11,991  $    7,313  $    6,607
                                      ==========  ==========  ==========

Basic:
Weighted average shares outstanding.   8,939,605   6,956,507   5,637,244
  Earnings per share:
  Before extraordinary item. . . . .  $     1.34  $     1.19  $     1.17
  After extraordinary item . . . . .  $     1.34  $     1.05  $     1.17

Diluted:
Weighted average shares outstanding.   9,013,760   7,003,200   5,637,244
Earnings per share:
  Before extraordinary item. . . . .  $     1.33  $     1.18  $     1.17
  After extraordinary item . . . . .  $     1.33  $     1.04  $     1.17
<FN>
    The accompanying notes are an integral part of these consolidated financial
                                   statements.
</TABLE>

                           Distribution of 1997 Sales

Excavators. . . .  36%
Material Handlers  53%
Service Parts . .  11%


                            Gradall Industries, Inc.

                                       15
<PAGE>

                                  Consolidated
                                   Statements
                                       of
                                     Changes
                                       in
                                  Stockholders'
                                     Equity

                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                     Additional
                                                         Additional   Paid-In
                                   Common     Preferred    Paid-In    Capital-    Accumulated
                                   Stock        Stock      Capital    Warrants      Deficit       Total
---------------------------------------------------------------------------------------------------------
<S>                             <C>           <C>         <C>        <C>         <C>            <C>
Balance December 31, 1994. . .                                                   $     (3,134)  $ (3,134)

  Net income . . . . . . . . .                                                          6,607      6,607 

  Stock dividend . . . . . . .  $         5               $     (4)                        (1)

  Issuance of
    4,570,500 shares . . . . .            5                 10,495                                10,500 

  Issuance of 554,000
    shares to employees. . . .            1                  1,499                                 1,500 

  Redemption of
    4,570,500 shares . . . . .           (5)                     4                    (39,591)   (39,592)

  Issuance of 449,294
    common stock warrants. . .                                       $   1,000                     1,000 

  Issuance of
    140 preferred shares . . .                $    2,000                               (2,000)
                                ------------  ----------  ---------  ----------  -------------  ---------

Balance December 31, 1995. . .            6        2,000    11,994       1,000        (38,119)   (23,119)

  Issuance of 2,950,000
    shares of common stock . .            3                 24,913                                24,916 

  Redemption of
    140 preferred shares . . .       (2,000)       2,000

  Redemption of 449,294
    common stock warrants. . .                                          (1,000)         1,000 

  Net income . . . . . . . . .                                                          7,313      7,313 

  Change in unfunded
    pension obligation . . . .                                                            (34)       (34)
                                ------------  ----------  ---------  ----------  -------------  ---------

Balance December 31, 1996. . .            9                 38,907                    (29,840)     9,076 

  Additional expense
    resulting from the initial
    public offering. . . . . .                                 (19)                                  (19)

  Stock options
    exercised. . . . . . . . .                                   6                                     6 

  Net income . . . . . . . . .                                                         11,991     11,991 

  Change in unfunded
    pension obligation . . . .                                                            165        165 
                                ------------  ----------  ---------  ----------  -------------  ---------

Balance December 31, 1997. . .  $         9   $           $ 38,894   $           $    (17,684)  $ 21,219 
                                ============  ==========  =========  ==========  =============  =========
<FN>
         The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                            Gradall Industries, Inc.

                                       16
<PAGE>

                                  Consolidated
                                   Statements
                                       of
                                   Cash Flows

                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                For the Years Ended December 31,
                                                                   1997      1996       1995
                                                                 --------  ---------  ---------
<S>                                                              <C>       <C>        <C>
Cash flows from operating activities:
  Net income. . . . . . . . . . . . . . . . . . . . . . . . . .  $11,991   $  7,313   $  6,607 
  Adjustments to reconcile net income
    to net cash provided by operating activities:
    Extraordinary item, before tax benefit. . . . . . . . . . .               1,595 
    Change in unfunded pension obligation . . . . . . . . . . .      165        (34)
    Post-retirement benefit transition obligation . . . . . . .    1,115        780        779 
    Depreciation. . . . . . . . . . . . . . . . . . . . . . . .    1,721      1,391      1,081 
    Amortization. . . . . . . . . . . . . . . . . . . . . . . .      157        344        125 
    Deferred income taxes . . . . . . . . . . . . . . . . . . .      264        106     (1,161)
    Equity loss on investment . . . . . . . . . . . . . . . . .                  44         43 
    (Gain) loss on sale of property, plant and equipment. . . .       (1)      (111)        41 
    Increase in accounts receivable . . . . . . . . . . . . . .   (8,444)    (4,710)      (492)
    Increase in inventory . . . . . . . . . . . . . . . . . . .   (4,238)    (2,816)    (3,618)
    Increase in prepaid expenses. . . . . . . . . . . . . . . .   (1,150)       (51)      (157)
    (Increase) decrease in other assets . . . . . . . . . . . .     (135)      (152)        13 
    Increase in accounts payable and accrued expenses . . . . .    2,204      3,941      3,417 
    Increase (decrease) in accrued other long-term liabilities.     (239)        28        203 
                                                                 --------  ---------  ---------
            Net cash provided by operating activities . . . . .    3,410      7,668      6,881 
                                                                 --------  ---------  ---------
Cash flows from investing activities:
  Proceeds from sale of property, plant and equipment . . . . .       12        104         30 
  Purchase of property, plant and equipment . . . . . . . . . .   (5,305)    (2,300)    (4,189)
                                                                 --------  ---------  ---------
          Net cash used in investing activities . . . . . . . .   (5,293)    (2,196)    (4,159)
                                                                 --------  ---------  ---------
Cash flows from financing activities:
  Net proceeds from initial public offering . . . . . . . . . .              26,916 
  Payment of term debt. . . . . . . . . . . . . . . . . . . . .             (10,000)
      Payment of subordinated debt. . . . . . . . . . . . . . .             (10,000)
  Issuance of 900 common shares . . . . . . . . . . . . . . . .        6 
  Issuance of 4,570,500 common shares . . . . . . . . . . . . .                         10,500 
  Redemption of preferred stock . . . . . . . . . . . . . . . .              (2,000)
  Issuance of 554,000 common shares to employees. . . . . . . .                          1,500 
  Redemption of 4,570,500 common shares . . . . . . . . . . . .                        (39,592)
    New debt incurred in connection with the recapitalization,
    including $1 million of common stock warrants . . . . . . .                         38,941 
  Debt repaid in the recapitalization transaction . . . . . . .                        (10,802)
  Recapitalization expenses . . . . . . . . . . . . . . . . . .                         (1,654)
    Proceeds (repayments) on capital leases . . . . . . . . . .       90       (172)      (102)
  Net advances (repayments) on revolving line of credit . . . .    2,312    (10,808)      (825)
  Proceeds from (payments of) bank overdraft. . . . . . . . . .      884       (730)       689 
  Other . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (19)
                                                                 --------  ---------  ---------
            Net cash provided by (used in) financing activities    3,273     (6,794)    (1,345)
                                                                 --------  ---------  ---------

            Net increase (decrease) in cash . . . . . . . . . .    1,390     (1,322)     1,377 
                                                                 --------  ---------  ---------

Cash, beginning of year . . . . . . . . . . . . . . . . . . . .      215      1,537        160 
                                                                 --------  ---------  ---------

Cash, end of year . . . . . . . . . . . . . . . . . . . . . . .  $ 1,605   $    215   $  1,537 
                                                                 ========  =========  =========

Supplemental disclosure:
  Cash paid for:
            Income taxes. . . . . . . . . . . . . . . . . . . .  $ 7,650   $  2,875   $  4,460 
                                                                 ========  =========  =========
            Interest. . . . . . . . . . . . . . . . . . . . . .  $   604   $  3,572   $  1,029 
                                                                 ========  =========  =========
  Other:
            Amounts financed through capital leases . . . . . .  $   287              $    476 
                                                                 ========  =========  =========
<FN>
    The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                            Gradall Industries, Inc.

                                       17
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements

                             (dollars in thousands)

1.  NATURE  OF  BUSINESS  AND  BASIS  OF  PRESENTATION:

Gradall  Industries, Inc. (the "Company"), Incorporated in Deleware formerly ICM
Industries  Inc.  (ICM),  is  a  holding  company.  The  consolidated  financial
statements  include  the  Company and its wholly-owned subsidiaries, The Gradall
Company  and  Gradall  Investment  Company.  The  Gradall Investment Company was
dissolved  in  1996.

The  Gradall  Company  manufacturers  and sells excavating and material handling
equipment  to  public  and private sector customers throughout the world through
independent  distribution  organization.

On  September  15,  1995,  ICM  entered  into  a Recapitalization Agreement (the
"Recapitalization"  or  the  "Agreement"), which was effective October 13, 1995,
under  which  ICM  (a)  issued  common  shares comprising an 82.5% common equity
interest  to  MLGA  Fund II, L.P. and partners for a price of $10.5 million; (b)
redeemed a portion of the common shares owned by Jack D. Rutherford and David T.
Shelby  at  a  purchase  price  of $44.5 million, less costs and expenses of the
transaction,  certain  payments  to  officers and employees, amounts required to
retire  existing  indebtedness  of  The Gradall Company, and further adjusted as
required  in  the Agreement for working capital, income taxes,property additions
and  cash  balances  as of the effective date of the transaction; (c) issued 140
shares of Preferred Stock with a liquidation preference of $2 million to Messrs.
Rutherford  and  Shelby;  (d)  issued  common  shares  representing  10%  of its
outstanding  common stock to certain officers and employees, and (e) distributed
certain  non-Gradall  investments to Messrs. Rutherford and Shelby pursuant to a
plan  of  partial  liquidation.

The  Recapitalization  was  financed  under  a  Loan and Security Agreement with
Heller  Financial,  Inc.  for  a $10 million term loan repayable in installments
through  September  30, 2000 and up to $22 million in revolving loan commitments
for  a period of five years, along with a Securities Purchase Agreement with The
Marlborough  Capital  Investment  Fund,  L.P.  and Mellon Ventures, Inc. for $10
million of 12.5% Senior Subordinated Notes due October 31, 2003 and warrants for
449,294  shares  of  common  stock.  These  transactions were accounted for as a
leveraged  recapitalization  under  which  the  existing basis of accounting was
continued,  and  assets  and liabilities of the continuing business were carried
forward.  Under the Agreement the name of ICM was changed to Gradall Industries,
Inc.

Sources  and  uses of cash in connection with these transactions are summarized
below:

<TABLE>
<CAPTION>
<S>                                                            <C>
Sources of cash:
----------------------------------------------------------------------
Purchase of 4,570,500 shares by MLGA Fund II, LP. . . . . . .  $10,500

Purchase of 554,000 shares by employees . . . . . . . . . . .    1,500

Borrowing from Heller Financial, Inc. - Term Loan . . . . . .   10,000

Borrowing from Heller Financial, Inc. - Revolvers . . . . . .   17,941

12.5% Senior Subordinated Notes . . . . . . . . . . . . . . .   10,000

Company funds . . . . . . . . . . . . . . . . . . . . . . . .    2,809
                                                               $52,750
Uses of cash:
----------------------------------------------------------------------
Repayment of State of Ohio debt . . . . . . . . . . . . . . .  $ 1,320

Repayment of Bank One Debt, including accrued interest of $43    9,482

Acquisition of 4,570,500 shares from Rutherford and Shelby. .   39,592

Financing and other transaction costs . . . . . . . . . . . .    2,356

                                                               $52,750
</TABLE>

                            Gradall Industries, Inc.

                                       18
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

1.  NATURE  OF  BUSINESS  AND  BASIS  OF  PRESENTATION,  CONTINUED:

The  purchase  price was further adjusted based on the actual tax liabilities as
of  the  closing  date  including  consideration of any taxes resulting from the
distribution  of  the  non-Gradall investments to Messrs. Rutherford and Shelby.
Subsequent  adjustments  to  date  have  not  had  a  material  impact  on  the
accompanying  financial  statements.

Former  wholly-owned  subsidiaries  of  ICM,  Magna  Power  and  International
Consulting  Management  were  transferred  to  Messrs.  Rutherford and Shelby in
connection  with  the  Recapitalization  described  above. For purposes of these
consolidated financial statements, this spin-off transaction has been treated as
a  change in the reporting entity and these entities have been excluded from the
accompanying  financial  statements  for all periods presented on the basis that
these  companies  operated in different industries, were autonomous and had only
incidental  transactions  with  the  Company.  Management  fees  to these former
subsidiaries  of  $288  for the year ended December 31, 1995 are included in the
accompanying  consolidated  statements  of  income.

The  following  table  summarizes  the  October  12,  1995  book  values of the
companies  transferred  and  excluded  from  these  financial  statements:

<TABLE>
<CAPTION>
<S>                     <C>
Cash . . . . . . . . .  $   944

Accounts receivable. .    5,976

Inventory. . . . . . .    6,948

Property and equipment    3,350

Other. . . . . . . . .      579
                        -------
                        $17,797
                        =======

Accounts payable . . .  $ 3,229

Accrued liabilities. .    3,044

Debt . . . . . . . . .   10,789

Net assets . . . . . .      735
                        -------
                        $17,797
                        =======
</TABLE>

On September 3, 1996, the Company completed an initial public offering in which
2,950,000  shares  of common stock were issued for a total sum of $29.5 million.
Expenses  incurred  in connection with the issue approximated $2.6 million.  The
net  proceeds  of  the  offering  were  used  as  follows:

<TABLE>
<CAPTION>
<S>                                <C>
Repay outstanding term debt . . .  $ 9,550

Repay subordinate debt. . . . . .   10,000

Redeem preferred stock. . . . . .    2,000

Reduce revolving credit liability    5,379
</TABLE>

In  connection  with  the  offering,  the  Company  increased  the number of its
authorized  shares of common stock from 2,200 to 18,000,000 and effected a 5,540
to  1  stock  split.  All  applicable  share  and  per  share  data  have  been
retroactively  adjusted  for  the  stock  split.

                            Gradall Industries, Inc.

                                       19
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

2.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

PRINCIPLES  OF CONSOLIDATION: The accompanying consolidated financial statements
include  the  accounts  of  the  Company  and its wholly-owned subsidiaries. All
significant  intercompany  accounts  and  transactions  have  been  eliminated.

USE  OF  ESTIMATES:  The  preparation of financial statements in conformity with
generally  accepted  accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
related  notes.  Actual  results  may  differ  from  those  estimates.

SOURCE  OF  SUPPLY OF LABOR: Virtually all of the Company's hourly employees are
represented by the International Association of Machinists and Aerospace Workers
under  a  three-year  contract  which  expires  April  16,  2000.

REVENUE  RECOGNITION:  The  Company's revenue recognition policy is to recognize
revenue  when  products  are  shipped.

PRODUCT  FINANCING: The Company provides its distributors with product financing
through agreements with third party financing companies. Such financings include
a Wholesale Floor Plan for distributors and a Retail Finance Plan for end-users,
each  with  reduced  interest rates subsidized by the Company, and a Rental Plan
for  distributors.

PRODUCT  WARRANTY  COSTS: In general, the Company provides warranty on equipment
for  a period of up to twelve months or for a specified period of use after sale
or  rental  by  the  distributor.  Reserves  for  estimated  warranty  costs are
established  at  the  time  of  sale.

INVENTORIES:  Inventories are stated at cost not in excess of market value using
the  last-in,  first-out  (LIFO)  method  of  inventory  costing. Inventory cost
includes  materials,  direct  labor, manufacturing overhead, and outside service
costs.  Market  value  is  determined  by  comparison  with  recent purchases or
realizable  value.

PROPERTY,  PLANT  AND  EQUIPMENT: Expenditures for property, plant and equipment
and  for renewals and betterments which extend the originally estimated economic
lives  of  assets  are  capitalized  at  cost.  Expenditures for maintenance and
repairs  are  charged  to  expense.  Items which are sold, retired, or otherwise
disposed of are removed from the asset and accumulated depreciation accounts and
any  gains  or  losses  are  reflected in income. The Company's depreciation and
amortization  methods  are  as  follows:

<TABLE>
<CAPTION>

Description                 Useful Life     Method
--------------------------  -----------  -------------
<S>                         <C>          <C>
Machinery and equipment. .   3-10 years  Straight-line

Buildings and improvements  10-24 years  Straight-line

Furniture and fixtures . .   3-10 years  Straight-line
</TABLE>

PATENTS:  The  cost  of patents is being amortized on a straight-line basis over
the  remaining  legal  life  of  the  patents.

DEFERRED  FINANCING  COSTS:  Costs  incurred  to  obtain  financing  have  been
capitalized  and  are  being amortized over the life of the respective financing
arrangements.

                            Gradall Industries, Inc.

                                       20
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

2.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES,  CONTINUED:
INCOME  TAXES:  The  Company  follows  the  provisions of Statement of Financial
Accounting  Standards  No.  109,  "Accounting for Income Taxes". Deferred income
taxes  arise from reporting certain items of income and expense for tax purposes
in  a  different  period  than  for  financial reporting purposes. The principle
difference  relates  to  accounting  for  post-retirement  health  benefits.

FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company's financial instruments consist
principally  of  cash,  accounts  receivable,  accounts  payable  and  accrued
liabilities  in which the fair value of these financial instruments approximates
the carrying value. The Company's revolving line of credit provides for periodic
changes  in  interest  rates  which approximate current rates and therefore, the
fair  value  of  the  debt  approximates  carrying  value.

RESEARCH  AND DEVELOPMENT COSTS: Expenditures relating to the development of new
products and processes, including significant improvements to existing products,
are  expensed as incurred. Research and development expenses were $1,722, $1,641
and  $1,209  in  1997,  1996  and  1995,  respectively. In addition, the Company
incurred other engineering expenses relating to new product development (that do
not  meet the accounting definition of "Research and Development") in the amount
of  $1,922,  $1,440  and  $1,295  in  1997,  1996  and  1995,  respectively.

STOCK  BASED  COMPENSATION:  The  Company  accounts for stock based compensation
awards  pursuant  to Accounting Principles Board Opinion No. 25, "Accounting for
Stock  Issued to Employees," and its related interpretations which prescribe the
use  of  the intrinsic value based method. Accordingly, no compensation cost has
been  recognized  for  its  fixed  stock  option plans. However, the Company has
adopted  the  disclosure  requirements  of  Statement  of  Financial  Accounting
Standards  No.  123,  "Accounting for Stock Based Compensation," See Note 10 for
additional  information.

PER SHARE DATA:  The Company adopted Statement of Accounting Standards ("SFAS")
No.  128,  "Earnings  Per  Share",  in the fourth quarter of 1997. The impact of
implementing  SFAS No. 128 is discussed in Note 14 to the Consolidated Financial
Statements.

RECLASSIFICATIONS:    Certain  1996  and 1995 balances have been reclassified to
conform  to  the  current  year's  presentation.

3.  INVENTORIES:

Inventories  are  comprised  of:

<TABLE>
<CAPTION>

                    1997     1996
-----------------------------------
<S>                <C>      <C>
Raw materials . .  $   921  $ 1,167

Work in process .   24,739   18,402

Finished goods. .    5,474    7,187
                   -------  -------
                    31,134   26,756

Less LIFO reserve    5,570    5,430
                   -------  -------
Total inventory .  $25,564  $21,326
                   =======  =======
</TABLE>

                            Gradall Industries, Inc.

                                       21
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

4.  PROPERTY,  PLANT  AND  EQUIPMENT:

The  major  classes  of property, plant and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                    1997     1996
---------------------------------------------------
<S>                                <C>      <C>
Land. . . . . . . . . . . . . . .  $   513  $   513

Machinery and equipment . . . . .   16,910   14,836

Buildings and improvements. . . .    5,587    5,587

Furniture and fixtures. . . . . .    2,277    1,652

Construction in progress. . . . .    4,109    1,380
                                   -------  -------

                                    29,396   23,968

Less accumulated depreciation . .   14,288   12,433
                                   -------  -------

Net property, plant and equipment  $15,108  $11,535
                                   =======  =======
</TABLE>

5.LONG-TERM  DEBT:
Long  term  debt  includes:

<TABLE>
<CAPTION>
                   1997    1996
--------------------------------
<S>               <C>     <C>
Revolving credit  $9,603  $7,291
</TABLE>

In  1996,  the Company's Loan and Security Agreement with Heller Financial, Inc.
was amended and restated as of December 20, 1996. This agreement provides for up
to  $25 million in revolving loan commitments. There are no aggregate maturities
on  the revolving loan commitment. Amounts borrowed based on the borrowing base,
as  defined,  may be repaid and reborrowed at any time prior to the earlier of a
default  or  August  31,  1999,  the  termination  date.

The  revolving  line  of  credit bears interest at either LIBOR plus 1% or prime
minus .50%.  At December 31, 1997, the prime rate was 8.5%, LIBOR was 5.97%, and
the  average annual interest rate in effect for the revolving line of credit was
7.86%.  At December 31, 1996, the prime rate was 8.25%, LIBOR was 5.66%, and the
average  annual  interest  rate  in  effect for the revolving line of credit was
9.94%.  The  Company  also  pays  an  unused  line fee of 0.25percent per annum.

The  terms  of  the  financing  agreement  contain,  among  other  provisions,
restrictions  on the level of capital expenditures and various financial ratios,
as defined. The financing agreements are collateralized by substantially all the
assets  of  the  Company.

6.  LEASE  OBLIGATIONS:

The Company leases certain machinery and equipment under capital leases expiring
beginning  in the year 1998. The assets and liabilities under capital leases are
recorded  at  the  original purchase cost. The assets are depreciated over their
estimated  productive  lives.  Depreciation  of  assets  under capital leases is
included  in  depreciation  expense.

In  addition, the Company leases certain equipment under operating leases having
terms  up  to  5  years  which  are for equipment. A number of these leases have
renewal  options.

                            Gradall Industries, Inc.

                                       22
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

6.  LEASE  OBLIGATIONS, CONTINUED:

The  following  is  a  summary  of  property  held  under  capital  leases:

<TABLE>
<CAPTION>
                                1997    1996
---------------------------------------------
<S>                            <C>     <C>
Machinery and equipment . . .  $1,020  $1,020

Information systems . . . . .     287
                               ------  ------
Total capital leases. . . . .   1,307
Less accumulated depreciation     364     230
                               ------  ------

                               $  943  $  790
                               ======  ======
</TABLE>

The  following  is  a  summary  of future minimum payments under capitalized and
operating  leases that have remaining noncancelable lease terms in excess of one
year  at  December  31,  1997:

<TABLE>
<CAPTION>
                                        Capital   Operating
                                         Leases     Leases
                                        --------  ----------
<S>                                     <C>       <C>
Year ending December 31,

1998 . . . . . . . . . . . . . . . . .  $    341  $      117

1999 . . . . . . . . . . . . . . . . .       201          67

2000 . . . . . . . . . . . . . . . . .       247          31

2001 . . . . . . . . . . . . . . . . .                    18

2002 . . . . . . . . . . . . . . . . .                    14
                                        --------  ----------


Total minimum lease payments . . . . .       789  $      247
                                        --------  ==========

Interest . . . . . . . . . . . . . . .        80
                                        --------

Liability under capital lease payments       709

Current portion. . . . . . . . . . . .       297
                                        --------

Long-term capitalized lease obligation  $    412
                                        ========
<FN>
Rental  expense  for  operating  leases amounted to $409, $397, and $319 for the
years  ended  December  31,  1997,  1996  and  1995,  respectively.
</TABLE>

7.  EMPLOYEE  BENEFIT  PLANS:

PENSION  PLANS:  Substantially  all employees are covered by pension plans which
provide  for  monthly  pension  payments  to  eligible former employees who have
retired.  Prior  to  March  24,  1997  the  Company sponsored two plans, one for
members  of  the  collective  bargaining  unit  and  one  for salaried and other
eligible  employees.

Benefits  paid  under the collective bargaining unit plan are based on a benefit
multiplier  times  years  of credited service, reduced by benefits under a prior
plan.  Such  prior plan benefits are guaranteed under the terms of group annuity
contracts.  Benefits  paid  under  the salary plan are based on the greater of a
benefit  multiplier  times  years  of  credited  service  or  a  percentage  of
pre-retirement  earnings. Pension costs are funded as actuarially determined and
to the extent cash contributions are deductible for federal income tax purposes.
The  collective  bargaining  unit  plan uses the entry age normal actuarial cost
method  to  determine annual contributions to the plan. The salary plan uses the
unit  credit  actuarial  cost  method  to  determine  contributions.

Effective  March  24,  1997 the Company adopted the IAM National Pension Plan to
replace  the  existing  collective  bargaining  unit  plan  for  future  service
benefits.  The  collective  bargaining  unit  plan  benefits were frozen and the
Company  continues  to  fund  the  plan  for  past service benefits. The expense
related to funding the IAM National Pension Plan from March 24, 1997 to December
31,  1997  was  $254.

                            Gradall Industries, Inc.

                                       23
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

7.  EMPLOYEE  BENEFIT  PLANS,  CONTINUED:

The  components  of  net periodic pension cost for the years ended December 31,
1997,  1996  and  1995  are  as  follows:

<TABLE>
<CAPTION>
                                 1997      1996      1995
------------------------------------------------------------
<S>                            <C>       <C>       <C>
Service cost. . . . . . . . .  $   505   $   693   $   566 

Interest cost . . . . . . . .      819       738       644 

Actual return of plan assets.   (1,838)   (1,118)   (1,399)

Net amortization and deferral    1,117       532       943 

Curtailment under FAS 88. . .       17 
                               --------  --------  --------
Total pension cost. . . . . .  $   620   $   845   $   754 
                               ========  ========  ========
</TABLE>

The  funded status of the plans as of December 31, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
                                                         1997                    1996
--------------------------------------------------------------------------------------------
<S>                                            <C>           <C>          <C>         <C>
                                                Collective               Collective
                                                Bargaining    Salaried    Bargaining  Salaried
                                                Unit Plan       Plan      Unit Plan     Plan
Accumulated benefit obligation:

   Vested . . . . . . . . . . . . . . . . . .  $     6,193   $     3,808  $   5,612   $  3,129

   Nonvested. . . . . . . . . . . . . . . . .          733           372        699        276
                                               ------------  -----------  ----------  --------

                                                     6,926         4,180      6,311      3,405
                                               ============  ===========  ==========  ========

Projected benefit obligation. . . . . . . . .        6,926         5,711      6,311      4,679

Plan assets at fair value, primarily
  stock and bond funds. . . . . . . . . . . .        6,360         4,837      5,213      3,867
                                               ------------  -----------  ----------  --------

Projected benefit obligation in
  excess of plan assets . . . . . . . . . . .          566           874      1,098        812

Unrecognized net asset. . . . . . . . . . . .                                                1

Unrecognized net loss . . . . . . . . . . . .          980           247      1,154        218

Unrecognized prior service cost . . . . . . .                        108         17        118
                                               ------------  -----------  ----------  --------

(Prepaid asset) pension liability
  recognized in other current assets
  and other current liabilities, respectively  $      (414)  $       519  $     (73)  $    475
                                               ============  ===========  ==========  ========
</TABLE>

The  actuarial  assumptions  used  were  as  follows:

<TABLE>
<CAPTION>
                                             1997   1996   1995
----------------------------------------------------------------
<S>                                          <C>    <C>    <C>
Discount rate . . . . . . . . . . . . . . .   7.0%   7.5%   7.5%
Rate of increase in compensation levels . .   4.5%   4.5%   4.5%
Expected long-term rate of return on assets   8.5%   8.5%   8.5%
</TABLE>

Statement  of  Financial Accounting Standards No. 87 contains a provision which
requires  the  recognition  of  a  liability (including unfunded accrued pension
costs)  that  is  at  least equal to the unfunded accumulated benefit obligation
(the  excess  of  the accumulated benefit obligation over the fair value of plan
assets).  Recognition  of  an  additional  minimum  liability  is required if an
unfunded  accumulated  benefit  exists  and  the liability already recognized as
unfunded  accrued  pension  cost  is  less than the unfunded accumulated benefit
obligation.  The additional minimum liability of $980 and $1,171 at December 31,
1997  and  1996,  respectively, has been included in other long-term liabilities
and  an  intangible  pension  asset  of  $17 at December 31, 1996 has been in an
amount  not  exceeding  the  amount  of  unrecognized  prior  service  cost. The
difference  between  the long-term liabilities and the intangible asset has been
reported  net  of  income  tax  effect  within  equity.

                            Gradall Industries, Inc.

                                       24
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

7.  EMPLOYEE  BENEFIT  PLANS,  CONTINUED:

SAVINGS  AND  INVESTMENT  PLAN:  Substantially  all  employees  are  eligible to
participate  in  a  savings and investment plan. The Company sponsors two plans,
one for members of the collective bargaining unit and one for salaried and other
eligible  employees.  The  plans provide for contributions by employees, through
salary  reductions,  and  for  a matching contribution by the Company based on a
rate determined for each plan year by the Board of Directors of the Company. The
plans  also  provide  for  a  discretionary  contribution  by  the  Company.

DEFERRED  COMPENSATION  PROGRAM: The Company has a deferred compensation program
under  which  certain  employees  may  elect to postpone receipt of a portion of
their  earnings.  The  amounts so deferred are deposited in a trust account, but
remain assets of the Company. The trustees of the program are officers and a key
employee  of  the  Company.

PROFIT  SHARING PLAN: The Company maintains a profit sharing plan covering union
and  salaried employees. The amount of the profit sharing bonus is determined by
the Company's return on sales and is calculated based upon the wages of eligible
employees.

POST-RETIREMENT  BENEFITS:  The Company provides eligible retired employees with
health  care  and  life  insurance  benefits.  These  benefits are provided on a
non-contributory  basis  for  life  insurance and contributory basis for medical
coverage.  Currently,  the  Company  does  not  pre-fund  these  benefits.

The components of periodic net post-retirement benefit cost for the years ended
December  31,  1997,  1996  and  1995  are  as  follows:

<TABLE>
<CAPTION>
                                            1997    1996    1995
-----------------------------------------------------------------
<S>                                        <C>     <C>     <C>
Service cost. . . . . . . . . . . . . . .  $  584  $  539  $  393
Interest cost . . . . . . . . . . . . . .   1,232   1,143   1,098
Amortization of loss. . . . . . . . . . .      34      17
                                           ------  ------  ------
Net periodic post retirement benefit cost  $1,850  $1,699  $1,491
                                           ======  ======  ======
</TABLE>

The  following table displays the plans' funded status at December 31, 1997 and
1996  based on the most recent actuarial analysis at December 31, 1997 and 1996:

<TABLE>
<CAPTION>
                                                      1997      1996
----------------------------------------------------------------------
<S>                                                 <C>       <C>
  Accumulated post-retirement benefit obligations:

  Retirees . . . . . . . . . . . . . . . . . . . .  $ 8,586   $ 7,155 

  Fully-eligible active plan participants. . . . .    4,371     4,401 

  Other active plan participants . . . . . . . . .    5,917     4,959 
                                                    --------  --------

Total. . . . . . . . . . . . . . . . . . . . . . .  $18,874   $16,515 
                                                    ========  ========

Plan assets at fair value. . . . . . . . . . . . .  $     -   $     - 

Accumulated post-retirement benefit obligation
  in excess of assets. . . . . . . . . . . . . . .   18,874    16,515 

Unrecognized net actuarial loss. . . . . . . . . .   (3,155)   (1,911)
                                                    --------  --------

Accrued post-retirement benefit cost . . . . . . .  $15,719   $14,604 
                                                    ========  ========
</TABLE>

                            Gradall Industries, Inc.

                                       25
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

7.  EMPLOYEE  BENEFIT  PLANS,  CONTINUED:

For  measuring  the  expected  Post-Retirement Benefit Obligation, an 8% annual
rate increase in the per capita cost of covered health care benefits was assumed
for  1997. This rate was assumed to decrease to 5.0% by 2011 and remain constant
thereafter.  The  weighted  average  discount  rate  used  in  determining  the
Accumulated Post-retirement Benefit Obligation was 7.0% and 7.5% respectively at
December  31,  1997  and  1996.

If  the  health  care  cost  trend  rate  were  increased  1%,  the  Accumulated
Post-Retirement  Obligation  as  of  December  31,  1997 would have increased by
$2,627  and  the  effect of this change on the aggregate of service and interest
costs  for  1997  would  be  an  increase  of  $157  and  $155,  respectively.

8.  INCOME  TAXES:

The  provision for income taxes for the years ended December 31, 1997, 1996 and
1995  consisted  of  the  following:

<TABLE>
<CAPTION>
                               1997    1996     1995
------------------------------------------------------
<S>                           <C>     <C>     <C>
Federal. . . . . . . . . . .  $6,327  $3,433  $ 3,888 

State. . . . . . . . . . . .   1,105     642      849 

Deferred . . . . . . . . . .     264     806   (1,057)
                              ------  ------  --------

                               7,696   4,881    3,680 

Tax effect of extraordinary
  item (shown separately). .             622
                              ------  ------  --------

                              $7,696  $5,503  $ 3,680 
                              ======  ======  ========
</TABLE>

The  Company's  effective  tax  rate differed from the federal statutory rate as
follows:

<TABLE>
<CAPTION>
                                 1997   1996    1995
-----------------------------------------------------
<S>                              <C>    <C>    <C>
Federal statutory rate. . . . .  35.0%  35.0%   34.0%
Effect of state and local taxes   3.7%   3.6%    4.8%
Change in tax liability . . . .     -      -   (3.0)%
Other . . . . . . . . . . . . .   0.4%   1.4%      - 
                                 -----  -----  ------
                                 39.1%  40.0%   35.8%
                                 =====  =====  ======
</TABLE>

The components of the net deferred tax benefits (liabilities) as of December 31,
1997  and  1996  were  as  follows:

<TABLE>
<CAPTION>
                                         1997      1996
---------------------------------------------------------
<S>                                    <C>       <C>
Current:

   Inventories. . . . . . . . . . . .  $  (705)  $  (762)

   Accrued expenses . . . . . . . . .    1,628     1,882 

   Other. . . . . . . . . . . . . . .     (181)       31 
                                       --------  --------

                                       $   742   $ 1,151 
                                       ========  ========
Long-term:

   Basis of property and equipment. .  $(1,618)  $(1,393)

   Post-retirement benefits liability    6,420     5,964 

   Accrued expenses . . . . . . . . .      600       686 
                                       --------  --------

                                       $ 5,402   $ 5,257 
                                       ========  ========
</TABLE>

                            Gradall Industries, Inc.

                                       26
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

8.  INCOME  TAXES,  CONTINUED:

The  sources of timing differences and the related deferred tax effects were as
follows:

<TABLE>
<CAPTION>
                                     1997    1996     1995
------------------------------------------------------------
<S>                                 <C>     <C>     <C>
Accrued expenses . . . . . . . . .  $ 340   $ 970   $  (577)
Post-retirement benefits liability   (456)   (318)     (308)
Depreciation . . . . . . . . . . .    225     212        84 
Inventory. . . . . . . . . . . . .    (57)    (52)       20 
Other. . . . . . . . . . . . . . .    212      (6)     (276)
                                    ------  ------  --------
                                    $ 264   $ 806   $(1,057)
                                    ======  ======  ========
<FN>
Valuation  allowances  are  established  when  necessary  to reduce deferred tax
assets  to  the  amounts  expected  to  be  realized.
</TABLE>

9.  PREFERRED  STOCK:

The  Company  is authorized to issue shares of Series A preferred stock in which
each  share  has  one  vote with a fixed aggregate of 12% of the total vote. The
holders  of  this  preferred  stock  will  vote together with the holders of the
Company's  common  stock on all matters submitted to the Company's stockholders.
Holders  may  require  the Company to redeem preferred shares proportionately to
any reduction in shares held by MLGA Fund II, L.P. At December 31, 1997 and 1996
no  Series  A  preferred  stock  was  outstanding.

The  Board  of Directors is authorized, subject to any limitations prescribed by
law,  to  issue  preferred stock in one or more classes or series and to fix the
designations, voting powers, preferences, rights, qualifications, limitations or
restrictions  of  any  such class or series, including dividend rights, dividend
rates,  redemption  prices  and  terms,  conversion  rights  and  liquidation
preferences of each class or series of Preferred Stock, without any further vote
or  action  by  the  stockholders  of  the  Company.

10.  STOCK  OPTIONS:

On  October  13,  1995,  the  stockholders  approved a qualified incentive stock
option  program  under  which  315,226  shares of the Company's common stock are
reserved  for grants to key employees (The "1995 Stock Option Plan"). The option
price  is  to  be  determined by the Board, but may not be less than 100% of the
fair  market  value  of  the Company's common stock at the time of the grant and
options  must  be exercised within ten years from the date of grant. The options
vest  and  become  excercisable  in  three annual installments commencing on the
first  anniversary  of  the date of the grant. On June 3, 1997, the stockholders
approved  an  amendment  to  the 1995 Stock Option Plan increasing the number of
shares  of  the  Company's common stock reserved for grants under the program to
515,226.

                            Gradall Industries, Inc.

                                       27
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

10.  STOCK  OPTIONS,  CONTINUED:

The  following  summarizes  the  changes  in  the number of Common Shares under
option:

<TABLE>
<CAPTION>
(Options in thousands)                         1997           1996      1995
-----------------------------------------------------------------------------
<S>                                        <C>            <C>           <C>
Options outstanding at beginning of year.           278           132       -
Options granted during the year . . . . .           237           151     132
Options exercised during the year . . . .            (1)            -       -
Options canceled during the year. . . . .             -            (5)      -
                                           -------------  ------------  -----
Options outstanding at end of year. . . .           514           278     132
                                           =============  ============  =====
Option price range per share. . . . . . .  $2.71-$13.75   $2.71-$6.32   $2.71
<FN>
The  Company's  current  option plans, which provide for a total of 514 options,
have  no  options  remaining  for  future  grants  at  December  31,  1997.
</TABLE>

The  ranges of exercise prices and the remaining contractual life of options as
of  December  31,  1997  were:

<TABLE>
<CAPTION>
<S>                                        <C>    <C>    <C>
-----------------------------------------  -----  -----  ---------
Range of exercise prices: . . . . . . . .  $2.71  $6.32  $12-13.75
-----------------------------------------  -----  -----  ---------
Options outstanding in thousands:
  Outstanding as of
    December 31, 1997 . . . . . . . . . .    132   14.5        237
  Weighted-average remaining contractual
    life (in years) . . . . . . . . . . .   7.78   8.30       9.45
  Weighted-average exercise price . . . .  $2.71  $6.32  $   13.47
Options exerciseable in thousands:
  Outstanding as of December 31, 1997 . .     88     10          -
  Weighted-average remaining
    contractual life (in years) . . . . .   7.78   8.30       9.45
  Weighted-average exercise price . . . .  $2.71  $6.32  $   13.47
</TABLE>

On  August  15,  1996,  an unqualified stock option for 10,000 shares of common
stock  was  granted  to  a  director  at  the  exercise  price  of  $2.71.

In  October  1995,  the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS")  No. 123, "Accounting for Stock-Based
Compensation."  This  statement  defines a fair value based method of accounting
for  an  employee stock option or similar equity instrument. The statement does,
however,  allow  an  entity  to  continue to measure compensation cost for those
plans  using  the  intrinsic  value  based  method  of  accounting prescribed by
Accounting  Principles  Board  Opinion  No.  25, "Accounting for Stock Issued To
Employees."

In 1996, the Company adopted provisions of SFAS No. 123 by providing disclosures
of  the  pro forma effect on net income and earnings per share that would result
if  the  fair  value  compensation element were to be recognized as expense. The
following  table  shows  the pro forma earnings and earnings per share for 1997,
1996  and  1995  along with significant assumptions used in determining the fair
value  of  the  compensation  amounts.

                            Gradall Industries, Inc.

                                       28
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

10.  STOCK  OPTIONS,  CONTINUED:

<TABLE>
<CAPTION>
                                 1997        1996       1995
---------------------------------------------------------------
<S>                           <C>          <C>        <C>
Pro forma amounts:

Net income . . . . . . . . .  $   11,777   $  7,242   $   6,603

Earnings per share (basic) .  $     1.32   $   1.04   $    1.17
Earnings per share (diluted)  $     1.31   $   1.03   $    1.17


Assumptions:

Dividend yield . . . . . . .           0          0           0

Expected volatility. . . . .       36.75%     34.46%    35.01 %

Risk free interest rate. . .   6.20-6.73%      6.30%    5.70  %

Expected lives . . . . . . .     4 years    4 years     4 years
</TABLE>

During  fiscal  years  1997,  1996 and 1995 the weighted average grant-date fair
value  of  options  granted  was $5.08, $2.31 and $0.98 per share, respectively.

11.  CONTINGENCIES:

The  Company  is  involved  in  certain  claims  and  litigation  related to its
operations.  Based  upon  the  facts  known  at  this time, management is of the
opinion  that  the  ultimate  outcome of all such claims and litigation will not
have  a  material  adverse  effect  on  the  financial  condition  or results of
operations  of  the  Company.

12.  PRO  FORMA  INFORMATION:

Net  income  and  net  income  per  share  are  presented  below  as if the 1995
Recapitalization, the issuance of shares of common stock pursuant to the initial
public offering and the application of the net proceeds thereof to the reduction
in  debt,  all  had  occurred  as  of  January  1,  1995.

<TABLE>
<CAPTION>
                                                        1996         1995
-----------------------------------------------------------------------------
<S>                                                  <C>          <C>
Net income as reported. . . . . . . . . . . . . . .  $    7,313   $    6,607 

Extraordinary charge. . . . . . . . . . . . . . . .         973 

Reduction in interest expense using an average
  interest rate of 8.2% including the elimination
  of amortization of deferred financing costs . . .       2,013          434 

Increase in income taxes related to the pro
  forma adjustments . . . . . . . . . . . . . . . .        (763)        (180)
                                                     -----------  -----------

Pro forma net income. . . . . . . . . . . . . . . .  $    9,536   $    6,861 
                                                     ===========  ===========

Average shares outstanding as if the initial public
  offering had occurred on January 1, 1995. . . . .   8,939,294    8,939,294 

Pro forma net income per share. . . . . . . . . . .  $     1.07   $      .77 
</TABLE>

13.  EXTRAORDINARY  ITEM:

The  early repayment of the term debt and subordinated debt with the proceeds of
the  initial  public  offering  resulted  in  the  write-off of $723 of deferred
financing  costs and unamortized discount on the subordinated debt of $872 which
have  been  accounted  for  as  an  extraordinary  charge  resulting  from early
extinguishment  of  debt  net  of  applicable income taxes of $622. Total income
before  taxes  after  consideration  of these extraordinary expenses amounted to
$12,194  for  the  year  ended  December  31,  1996.

                            Gradall Industries, Inc.

                                       29
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

14.  EARNINGS  PER  SHARE:

In  the  fourth  quarter  of  1997,  the  Company adopted Statement of Financial
Accounting  Standards  No.  128,  "Earnings  per  Share",  which  modifies  the
calculation  of  earnings  per  share.  The  Standard  replaces  the  previous
presentation  of  primary  and  fully  diluted  earnings  per share to basic and
diluted  earnings  per  share.

Basic earnings per share excludes dilution and is computed by dividing income by
the weighted average number of common shares outstanding for the period. Diluted
earnings  per  share  includes  the dilution of common stock equivalents, and is
computed  similary  to  fully  diluted earnings per share pursuant to Accounting
Principals  Board  Opinion 15. All prior periods presented have been restated to
reflect  this  adoption.

<TABLE>
<CAPTION>
                                                   1997        1996        1995
----------------------------------------------------------------------------------
<S>                                             <C>         <C>         <C>
Basic earnings per share
  Income before extraordinary item . . . . . .  $   11,991  $    8,286  $    6,607

  Net income . . . . . . . . . . . . . . . . .  $   11,991  $    7,313  $    6,607

Weighted average shares outstanding and used
  in calculation of basic earnings per share .   8,939,605   6,956,507   5,637,244

Earnings per share
  Income before extraordinary item . . . . . .  $     1.34  $     1.19  $     1.17
                                                ==========  ==========  ==========
  Earnings applicable to common shares . . . .  $     1.34  $     1.05  $     1.17
                                                ==========  ==========  ==========

Diluted earnings per share
  Income before extraordinary item . . . . . .  $   11,991  $    8,286  $    6,607

  Net income . . . . . . . . . . . . . . . . .  $   11,991  $    7,313  $    6,607

Weighted average shares outstanding and used
  in calculation of diluted earnings per share   9,013,760   7,003,200   5,637,244

Earnings per share
  Income before extraordinary item . . . . . .  $     1.33  $     1.18  $     1.17
                                                ==========  ==========  ==========
  Earnings applicable to common shares . . . .  $     1.33  $     1.04  $     1.17
                                                ==========  ==========  ==========

Commom shares
  Weighted average number of shares used
    in calculating basic earnings per share. .   8,939,605   6,956,507   5,637,244

Shares issuable upon exercise of stock options
  based on average market prices . . . . . . .      74,155      46,693           -
                                                ----------  ----------  ----------

Weighted average number of shares used in
  calculation of diluted earnings per share. .   9,013,760   7,003,200   5,637,244
                                                ==========  ==========  ==========
</TABLE>

                            Gradall Industries, Inc.

                                       30
<PAGE>

                                     Notes
                                       to
                                  Consolidated
                                    Financial
                                   Statements
                                   (continued)
                             (dollars in thousands)

15.  SELECTED  SUMMARY  QUARTERLY  DATA  (UNAUDITED):

<TABLE>
<CAPTION>
                                                          QUARTERS ENDED(2)
                                            1996                                       1997
                         -----------------------------------------  -----------------------------------------
                          MAR. 31,  JUN. 30,   SEP. 30,   DEC.31,   MAR. 31,   JUN. 30,   SEP. 30,   DEC. 31,
                         ---------  ---------  --------  ---------  ---------  ---------  ---------  --------
<S>                      <C>        <C>        <C>       <C>        <C>        <C>        <C>        <C>
Net Sales . . . . . . .  $  34,137  $  35,499  $ 35,205  $  36,068  $  35,910  $  38,356  $  40,310  $ 44,083

Gross Profit. . . . . .      7,670      8,313     8,264      8,564      8,618      9,267      9,814    10,297

Operating Income. . . .      4,155      4,368     4,574      4,818      4,674      4,735      5,310     5,921

Income Before . . . . .      1,834      1,692     2,095      2,665      4,363      4,231      5,250     5,843
  Extraordinary Item

Net Income. . . . . . .      1,834      1,692     1,122      2,665      2,657      2,577      3,199     3,558


Earnings Per
  Share Before
  Extraordinary Item(1)
Basic . . . . . . . . .  $     .31  $     .28  $    .30  $     .30  $     .30  $     .29  $     .36  $    .40
Dilutive. . . . . . . .  $     .31  $     .28  $    .30  $     .30  $     .30  $     .29  $     .35  $    .39

Earnings Per
  Share After
  Extraordinary Item(1)
Basic . . . . . . . . .  $     .31  $     .28  $    .16  $     .30  $     .30  $     .29  $     .36  $    .40
Dilutive. . . . . . . .  $     .31  $     .28  $    .16  $     .30  $     .30  $     .29  $     .35  $    .39
<FN>
(1):  Based  on  average  shares  outstanding  during  the  quarter.
(2):  The  sum  of  each  years  quarterly  data  may  not  equal  the  total  year results due to rounding.
</TABLE>

                            Gradall Industries, Inc.

                                       31
<PAGE>

                                   Report of
                                   Independent
                                   Accountants

To  the  Board  of  Directors  and  Stockholders  of  Gradall  Industries, Inc.

     We  have  audited  the  accompanying consolidated balance sheets of Gradall
Industries,  Inc.  and  Subsidiaries  as  of December 31, 1997 and 1996, and the
related  consolidated  statements of income, stockholders' equity and cash flows
for  each  of  the  three  years  in  the  period ended December 31, 1997. These
consolidated  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is to express an opinion on these consolidated
financial  statements  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
Gradall  Industries, Inc. and Subsidiaries as of December 31, 1997 and 1996, and
the  consolidated  results  of their operations and their cash flows for each of
the  three  years  in  the  period  ended  December 31, 1997, in conformity with
generally  accepted  accounting  principles.

                                                  /S/ Coopers & Lybrand L.L.P.
                                                  ----------------------------
                                                  Coopers  &  Lybrand  L.L.P.

Cleveland,  Ohio
February  23,  1998

                                   Report of
                                   Management

To  the  Board  of  Directors  and  Stockholders  of  Gradall  Industries, Inc.

     The Company maintains accounting and related internal control systems which
are  intended  to  provide reasonable assurance that assets are safeguarded from
loss or unauthorized use and to produce records necessary for the preparation of
financial  information.  There  are  limits  inherent in all systems of internal
control,  and  the  cost of the systems should not exceed the expected benefits.
Through  recommendations  from  its  independent  accountants  the  Company
periodically  reviews  these  systems  and  controls  and  compliance therewith.

     The  Audit  Committee  of  the  Board  of  Directors, comprised entirely of
nonemployee directors, meets with management, and the independent accountants to
review  the  results  of  their  work  and  to  satisfy  itself  that  their
responsibilities are being properly discharged. The independent accountants have
full  and  free access to the Audit Committee and may have discussions regarding
appropriate  matters,  with  and  without  the  presence  of  management.

     The  primary  responsibility  for  integrity of financial information rests
with  management. Certain valuations contained herein result, of necessity, from
estimates  and  judgments  of management, actual results could differ from these
estimates. The accompanying consolidated financial statements, notes thereto and
other  related  information  were prepared in conformity with generally accepted
accounting  principles  applied  on  a  consistent  basis.

      /S/Barry  L.  Phillips          /S/  Bruce  A.  Jonker
      ----------------------          ----------------------
      Barry  L.  Phillips             Bruce  A.  Jonker
      President  and                  Vice  President,
      Chief  Executive  Officer       Chief Financial Officer and Treasurer

                            Gradall Industries, Inc.

                                       32
<PAGE>

                            Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

The  following  discussion  of results of operations and financial condition is
based  upon  and  should  be read in conjunction with the Company's Consolidated
Financial  Statements  and  Notes thereto, the Selected Financial Data and other
financial  data  appearing  elsewhere  herein.

GENERAL

Gradall  Industries  operates  in  two  segments  of  the construction equipment
market.  Historically, the majority of the Company's revenues has been generated
by  the  sale  of  telescopic  boom excavators and related parts, while sales of
rough-terrain  variable  reach material handlers and related parts accounted for
the balance of the revenues.  Beginning in 1995, and continuing through 1996 and
1997,  the Company's product mix shifted and sales of material handlers exceeded
sales of excavators.  The growth of Gradall's material handler business reflects
the  strong growth of the material handler market and Gradall's continued market
share  of  approximately  16%.   Gradall's excavator business has grown with the
increased sales of the Company's XL Series of excavators and the introduction of
new  products  in  new  markets.

The  Company's consolidated net sales grew from $118.4 million in 1995 to $158.7
million in 1997, an increase of $40.3 million or 15.8% per annum.  This increase
is  largely  due  to  significant  growth  in  the  rough-terrain variable reach
material  handler  market  and  to  the  increasing penetration of the excavator
market  by  the  Company's  XL  Series of excavators. Of the $40.3 million total
increase  of  net sales, $31.7 million or 78.7% reflects growth in the Company's
material  handlers  business (including related service parts), and $8.6 million
or  21.3%  relates  to  the  growth of its excavator business (including related
service  parts).

From  1995  to 1997, sales of material handlers grew from $52.9 million to $84.0
million  representing  an increase of 26.0% per annum. This growth is due to the
overall  growth in the market for material handlers and to an increase in demand
for  the  Company's  material handlers.  Over the same period, the rough-terrain
variable  reach  material handler market has grown at an overall rate of 32% per
annum. This dynamic industry growth is due to new applications, increased rental
demand  and  displacement  of  straight-mast  forklifts  and small rough-terrain
cranes.

From 1995 to 1997, sales of excavators grew from $49.2 million to $57.4 million,
representing an increase of 8.0% per annum. This growth is due to the success of
the  Company's  XL  Series  excavators  which strengthened Gradall's competitive
position  in  the market for conventional crawler excavators.  Approximately 75%
of  excavator  units  sold by the Company in 1997 were XL Series models.  In May
1997, Gradall shipped its first production units of the new XL 2200 excavator in
the  12-14  ton  size  class.  The  Company  believes  that  this  new model  is
well-positioned  to  take  advantage  of growth in the niche market for smaller,
more  versatile  high-pressure  excavators.

The  Company  manufactures  and  markets  service  parts  for its excavators and
material  handlers.    Sales of service parts grew from $14.8 million in 1995 to
$17.3 million in 1997, representing an increase of 8.1% per annum. Approximately
72%  of  service  parts  sales  are  related  to  the  excavator  product  line.

                            Gradall Industries, Inc.

                                       33
<PAGE>

                            Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

Net  income  was  reduced  by  an  extraordinary  charge of $1.0 million, net of
taxes,  in 1996 due to the write off of unamortized deferred financing costs and
the  discount  on subordinated debt resulting from the repayment of indebtedness
from  the  proceeds  of  the  Company's initial public offering of common stock.

RESULTS  OF  OPERATIONS

The  following  table  sets  forth,  for  the  periods  indicated, items in the
Company's  income  statements  as  a  percentage  of  net  sales for the periods
indicated(1):

<TABLE>
<CAPTION>
                                   FOR THE YEARS ENDED DECEMBER 31,
                                        1995    1996    1997
-------------------------------------------------------------
<S>                                    <C>     <C>     <C>
Net Sales:

  Excavators. . . . . . . . . . . . .   41.5%   39.1%   36.2%

  Material handlers . . . . . . . . .   45.3    50.0    52.9 

  Service parts . . . . . . . . . . .   13.2    10.9    10.9 
                                       ------  ------  ------

Total net sales . . . . . . . . . . .  100.0%  100.0%  100.0%

Cost of sales . . . . . . . . . . . .   78.2    76.7    76.1 
                                       ------  ------  ------

  Gross profit. . . . . . . . . . . .   21.8    23.3    23.9 

Research and development and product
  engineering costs . . . . . . . . .    2.1     2.2     2.3 

Selling general and
   administrative expenses. . . . . .    8.9     8.4     8.6 
                                       ------  ------  ------

Operating income. . . . . . . . . . .   10.8    12.7    13.0 

Other expense:

  Interest expense. . . . . . . . . .    1.4     2.2     0.4 

  Other, net. . . . . . . . . . . . .    0.7     0.7     0.2 
                                       ------  ------  ------

Income before
  income taxes and extraordinary item    8.7     9.8    12.4 

Income tax provision. . . . . . . . .    3.1     3.9     4.9 
                                       ------  ------  ------

Income before
  extraordinary item. . . . . . . . .    5.6%    5.9%    7.6%
                                       ======  ======  ======
<FN>
(1)  The  sum  in  any column may not equal the indicated total due to rounding.
</TABLE>

RESULTS  OF  OPERATIONS  FISCAL  1997  COMPARED  TO  FISCAL  1996

Net  sales.  Net sales were $158.7 million for fiscal 1997, an increase of $17.8
million or 12.6% compared to $140.9 million for fiscal 1996. The increase in net
sales  was attributed to a material increase in unit volume of material handlers
and  excavators  and  a  moderate increase in sales volume of service parts. The
introduction of the new excavator models XL 2200 and XL 2210 in 1997 assisted in
the  excavator  unit increase. Price increases affecting all three product lines
had  a  modest  favorable impact. Net sales of excavators were $57.4 million for
fiscal  1997,  an increase of $2.3 million or 4.1% compared to $55.1 million for
fiscal  1996. Net sales of material handlers were $84.0 million for fiscal 1997,
an increase of $13.6 million or 19.3% compared to $70.4 million for fiscal 1996,
Net  sales  of  service  parts was $17.3 million for fiscal 1997, an increase of
$1.9  million  or  12.3% compared to $15.4 million for fiscal 1996. Although the
Company  expects  net  sales  to increase in the future, it anticipates that the
rate  of growth, especially with respect to sales of material handlers, will not
continue  at  the  rate  of  growth  experienced  in  1997.

                            Gradall Industries, Inc.

                                       34
<PAGE>

                            Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

Gross  Profit.  Gross  profit  amounted  to  $38.0  million for fiscal 1997, an
increase  of  $5.2  million  or 15.8% compared to $32.8 million for fiscal 1996.
Gross  profit  as  a  percentage of net sales increased to 24.0% for fiscal 1997
from  23.3%  for  fiscal 1996, primarily due to improved production efficiencies
and  the  economics  of  higher  production  volume.

Research and Development and Product Engineering Costs. Research and development
and  product  engineering  cost was $3.6 million for fiscal 1997, an increase of
$0.6  million or 18.3% compared to $3.1 million for fiscal 1996. The increase is
due to the addition of engineering personnel to support new product development.

Selling, General and Administrative. SG & A expense was $13.7 million for fiscal
1997,  an increase of $1.9 million or 16.1% compared to $11.8 million for fiscal
1996.  This  increase is attributed to the addition of marketing field sales and
service  representatives  to improve service to the distributor organization. In
addition  the  higher  unit  volume  of  shipments  in fiscal 1997 increased the
interest expense for dealer floor plan and retail subsidy above the 1996 expense
level.

Interest  Expense. Interest expense was $0.7 million for fiscal 1997, a decrease
of  $2.4  million  or  77.6%  compared  to  $3.1  million  for fiscal 1996. This
reduction  is the result of the application of the net proceeds of the Company's
initial public offering to reduce outstanding indebtedness on September 3, 1996.

Other.  Other  expense  was  $0.3  million  for  fiscal 1997, a decrease of $0.8
million  or 74.8% compared to $1.0 million in fiscal 1996. In 1996 other expense
included  a  charge  of $0.8 million for settlement of a distributor litigation.

Income  Tax  Provision.  Income tax expense was $7.7 million for fiscal 1997, an
increase  of $2.2 million or 39.9% compared to $5.5 million for fiscal 1996, and
representing  an  effective  tax  rate  of  39.1%  in  1997  and  39.9% in 1996.

Extraordinary  Item.  An  extraordinary  charge  of  $1.0 million, net of taxes,
related  to early extinguishment of senior and subordinated debt was incurred in
September  1996  to  write  off  unamortized  deferred  financing  costs and the
discount  on  subordinated  debt  which  was  paid  off  with  proceeds from the
Company's  initial  public  offering  on  September  3,  1996.

Net  Income.  Net  income was $12.0 million for fiscal 1997, an increase of $4.7
million or 64.0% compared to $7.3 million for fiscal 1996. This increase results
from  the  higher  level  of sales in fiscal 1997 generating increased operating
margins and reduced debt from the 1996 initial public offering lowering interest
expense.

Diluted  Earnings  Per  Share After Extraordinary Item. Earnings per share after
extraordinary item were $1.33 for fiscal 1997, a increase of $0.29 or 27.9% from
$1.04  for  fiscal year 1996, reflecting the $4.7 million increase in net income
described  above.

                            Gradall Industries, Inc.

                                       35
<PAGE>

                            Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

RESULTS  OF  OPERATIONS  FISCAL  1996  COMPARED  TO  FISCAL  1995

Net  Sales.  Net sales were $140.9 million for fiscal 1996, an increase of $22.5
million  or  19.0%  compared to $118.4 million for fiscal 1995.  The increase in
net  sales  was  substantially  attributable  to  a significant increase in unit
volume  of  material  handlers  and  a  moderate  increase  in  unit  volume  of
excavators.  Price increases affecting both product lines had a modest favorable
impact.  Net sales of excavators were $55.1 million for fiscal 1996, an increase
of  $5.9  million or 12.0% compared to $49.2 million for fiscal 1995.  Net sales
of  material  handlers  were $70.4 million for fiscal 1996, an increase of $16.8
million  or  31.3%  compared  to  $53.6  million  for fiscal 1995.  Net sales of
service  parts were $15.4 million for fiscal 1996, a decrease of $0.2 million or
1.2%  compared  to  $15.6  million for fiscal 1995.  In 1995 $0.6 million of the
$15.6  million in service parts net sales was revenue associated with a one-time
military  subcontract.

Gross  Profit.    Gross  profit  amounted  to  $32.8 million for fiscal 1996, an
increase  of  $7.0  million  or 27.2% compared to $25.8 million for fiscal 1995.
Gross  profit  as  a  percentage of net sales increased to 23.3% for fiscal 1996
from  21.8%  for  fiscal 1995, primarily due to improved production efficiencies
and  the  economies  of  higher  production  volume.

Research and Development and Product Engineering Costs. Research and development
and  product  engineering  cost was $3.1 million for fiscal 1996, an increase of
$0.6  million or 23.0% compared to $2.5 million for fiscal 1995. The increase is
due to the addition of engineering personnel to support new product development.

Selling, General and Administrative. SG & A expense was $11.8 million for fiscal
1996,  an increase of $1.3 million or 12.5% compared to $10.5 million for fiscal
1995.  The  increase  is  due  to expenses related to the 1996 Con Expo, a major
trade  show  held  every  three  years, increased dealer floor plan interest and
retail  subsidy tied to the increased sales volume, and higher legal expenses in
connection  with  the  settlement  of  litigation.

Interest  Expense.    Interest  expense  was  $3.1  million  for fiscal 1996, an
increase of $1.5 million or 89.3% compared to $1.6 million for fiscal 1995. This
increase  in interest expense was due to increased borrowings in connection with
the  recapitalization  which  occurred on October 13, 1995.  Fourth quarter 1996
interest  was  reduced as a result of the application of the net proceeds of the
Company's  initial  public  offering  to  reduce  outstanding  indebtedness.

Income  Tax  Provision.  Income tax expense was $5.5 million for fiscal 1996, an
increase  of $1.8 million or 49.5% compared to $3.7 million for fiscal 1995, and
represented  an  effective  tax  rate  of  39.9%  in  1997  and  35.8%  in 1996.

Extraordinary  Item.  An  extraordinary  charge  of  $1.0 million, net of taxes,
related  to early extinguishment of senior and subordinated debt was incurred in
September  1996  to  write  off  unamortized  deferred  financing  costs and the
discount  on  subordinated  debt  which  was paid off with the proceeds from the
Company's  initial  public  offering  on  September  3,  1996.

                            Gradall Industries, Inc.

                                       36
<PAGE>

                            Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

Net  Income.   Net Income was $7.3 million for fiscal 1996, an increase of $0.7
million  or 10.7% compared to $6.6 million for fiscal 1995.  The higher level of
sales  in  fiscal  1996  generated higher operating margins which were partially
offset  by  the  additional  interest cost related to the debt incurred with the
1995  Recapitalization  and  the  extraordinary  charge.

Diluted  Earnings  Per  Share After Extraordinary Item. Earnings per share after
extraordinary item were $1.04 for fiscal 1996, a decrease of $0.13 or 11.1% from
$1.17  for fiscal year 1995, principally as a result of the extraordinary charge
described  above  and  a  higher  number of shares outstanding after the initial
public  offering.

LIQUIDITY  AND  CAPITAL  RESOURCES

In  September,  1996  Gradall completed the initial public offering of 2,950,000
newly  issued  shares  of  common  stock  at  $10.00  per share.  As part of the
offering,  existing shareholders sold 1,075,000 shares of common stock including
the  shares received upon exercise of all the warrants issued in connection with
the 1995 Recapitalization. The $26.9 million of net proceeds to the Company were
used  to redeem $2 million in preferred stock, to repay in full $10.0 million in
subordinated  debt  and  $9.6  million  in  senior  term debt, and to reduce the
Company's  revolving  credit  borrowings  by  $5.4  million.  As a result of the
application  of  the proceeds from the initial public offering, Gradall incurred
an  after tax extraordinary charge in the fourth quarter of 1996 of $973,000 net
of  $622,000  of  income  tax  benefits,  to  write off unamortized discount and
deferred  financing  charges  related  to  the  warrants  and  the  repayment of
indebtedness.

The  Company  has  funded  its  operations  primarily  with  cash generated from
operations.  The  Company  generated  net cash from operating activities of $3.4
million  in  1997  compared  to  $7.7 million for 1996.  Net cash from operating
activities  for  1997 resulted from $12.0 million of net income and $3.4 million
of  non-cash  charges  to  income,  primarily  depreciation  and post retirement
benefit  transition  obligation, which were reduced by $12.0 million of net cash
used  by  changes  in operating assets and liabilities, primarily a $8.4 million
increase  in  accounts receivable due to strong shipments in the fourth quarter.
Net  cash  from  operating activities for 1996 resulted from $7.3 million of net
income,  $4.2  million  of non-cash charges to income primarily depreciation and
the  write  off  of  $1.6 million deferred financing and reduced by $3.8 million
from  changes  in  operating  assets  and  liabilities, primarily a $4.7 million
increase  in  accounts  receivable.

Net  cash  used by investing activities, consisting of purchases of property and
equipment,  was  $5.3  million  in 1997 and $2.2 million in 1996.  These capital
expenditures were incurred primarily in connection with the Company's multi-year
program  to  increase production efficiencies, labor productivity and the output
of  the  Company's  manufacturing  facility  through  investments in new capital
equipment.  The Company's capital investments in 1997 under this program totaled
$5.3  million  which  were  funded  by  cash from operations and borrowings from
available  credit  facilities.   Management expects to invest approximately $6.5
million  of  additional  capital  in  1998 for improvements under the multi-year
program  which  will  also  be  funded  from  internally  generated  cash  flow.

                            Gradall Industries, Inc.

                                       37
<PAGE>

                            Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

On  December 20, 1996, the Company's revolving credit facility was amended.  The
facility  was  increased  to  $25  million and the maturity date was extended to
August  31, 1999.  Borrowings under the revolving credit facility are limited by
a  borrowing  base,  which  is based on the value of the Company's inventory and
receivables  from  time  to  time.  At  December 31,  1997, borrowings under the
revolver  totaled  $9.6  million  and  $15.4  million  was  available  under the
facility.    Outstanding  balances  under  the  amended  facility generally bear
interest  at  the  Company's choice of either LIBOR plus 1% or prime minus 0.5%.
On  December  31,  1997, the average annual interest rate under the facility was
7.86%.    The  Company  is  not required to make any principal repayments of the
amount  outstanding  under  the  facility  until  August  31,  1999.

Borrowings  under  the amended credit facility are collateralized principally by
the  Company's  inventory  and  receivables.  The  amended facility continues to
require  the  Company to maintain various financial ratios and defined levels of
tangible  net  worth  and  to  restrict  asset  acquisitions  and  dispositions,
additional  indebtedness  and  certain  payments,  including  cash  dividends.

A  substantial  amount  of the Company's working capital is invested in accounts
receivable  and  inventories.    The  Company  periodically  reviews  accounts
receivable  for  noncollectability  and  inventories  for  obsolescence  and
establishes  allowances  that  it  believes  are  appropriate.  In addition, the
Company continuously monitors the level of its purchase orders for raw materials
and  correlates  these  orders,  and  its  inventory  balances  of  various  raw
materials,  to  its  current  production  schedule.  To  avoid  shortages of raw
materials  during periods of increased demand, the Company may from time to time
increase  its  level  of  purchases  to  meet  its  anticipated  future level of
production.

The  Company  believes  that  cash  flow  from  operations  together  with funds
available under its amended credit facility will be adequate to fund its working
capital  and  capital  expenditure  requirements  for  the  foreseeable  future.

IMPACT  OF  THE  "YEAR  2000  ISSUE"

The  "Year 2000 Issue" is the result of computer systems that were programmed in
prior  years using a two-digit representation for the year. Consequently, in the
year  2000, date-sensitive computer programs may interpret the date "00" as 1900
rather  than  2000.  The  Company's  operating  units  have completed an initial
assessment  of  the systems affected by the Year 2000 Issue, and are formulating
action  plans to correct or replace these programs by a target date of September
30,  1999.

The  Company  will be required to modify or replace several internally developed
software  packages  along  with purchased software packages used internally. The
Company  will  use internal resources to modify programs, and will upgrade where
necessary  packaged  .  Estimates  of  the total remaining cost of the year 2000
project  have  not  yet  been finalized, but are not expected to have a material
adverse  effect  on  future  operating  results  or  cash  flows.

INFLATION

The  overall  impact  of  the  low  rate of inflation in recent years has had no
significant  impact  on  the  Company.

                            Gradall Industries, Inc.

                                       38
<PAGE>

                                   Accounting
                                 Pronouncements

ACCOUNTING  PRONOUNCEMENTS
In March 1995, The Financial Accounting Standard Board ("FASB") issued Statement
of  Financial  Accounting  Standards  ("SFAS")  No.  121,  "Accounting  for  the
Impairment  of  Long-Lived  Assets and for Long-Lived Assets to Be Disposed Of,"
for the year ended December 31, 1996. The adoption of SFAS No. 121 had no impact
on  the  Company's  financial  position  or  results  of  operations.

In  October  1995,  the  FASB  issued  SFAS No. 123, "Accounting for Stock-Based
Compensation,"  effective  for  transactions  entered  into in fiscal years that
begin  after  December  15, 1995. The Company adopted this standard's disclosure
only  provisions  for  the  year  ended  December 31, 1996. The adoption of this
standard  had  no  impact  on  the  Company's  financial  position or results of
operation.

In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share," effective for
the  periods  ending  after  December 15, 1997. The Company adopted Statement of
Accounting  Standards  ("SFAS")  No.  128,  "Earnings  Per  Share" in the fourth
quarter of 1997. The impact of implementing SFAS No. 128 is discussed in Note 14
to  the  Consolidated  Financial  Statements.

In  March  1997,  the  FASB also issued SFAS No. 129, "Disclosure of Information
about  Capital  Structure," effective for fiscal years ending after December 15,
1997.  The  adoption of SFAS No. 129 had no impact on the Company's consolidated
financial  statements.

In  June  1997,  the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
and  SFAS  No.  131,  "Disclosures  about  Segments of an Enterprise and Related
Information," both effective for fiscal years beginning after December 15, 1997.
The  Company  is  currently  studying the provisions of these SFAS's and has not
adopted  such  provisions  in  its  December  31,  1997  consolidated  financial
statements.

CAUTIONARY  STATEMENT

This  report and the foregoing Management's Discussion and Analysis of Financial
Condition  and  Results  of  Operations  contains  various  "forward  looking
statements"  within the meaning of Section 27A of the Secutities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
Company's  Annual  Report to Shareholders, any Report on Form 10-K, 10-Q or Form
8-K  or any other written or oral statements made by or on behalf of the Company
may include forward looking statements. Forward looking statements represent the
Company's  expectations or beliefs concerning future events. Any forward looking
statements  made by or on behalf of the Company are subject to uncertainties and
other  factors  that  could  cause actual results to differ materially from such
statements.

Undo  reliance should not be placed on any forward looking statements made by or
on  behalf of the Company as such statements speak only as of the date made. The
Company  undertakes  no  obligation  to  publicly  update  or revise any forward
looking  statement,  whether  as  a result of new information, the occurrence of
future  events  or  otherwise.

                            Gradall Industries, Inc.

                                       39
<PAGE>

                                       The
                                    Company's
                                      Stock

MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS

The  Company's  Common  Stock  is traded on the Nasdaq National Market under the
symbol  "GRDL."  The  following table sets forth, for the periods indicated, the
high  and  low last trade price per share of the Common Stock as reported on the
Nasdaq  National  Market.

<TABLE>
<CAPTION>

                    Year Ended       Year Ended(1)
                December 31, 1997  December 31, 1996
                -----------------  -----------------
                  High     Low      High       Low
<S>             <C>      <C>       <C>      <C>
First Quarter.  $16 1/4  $     12        -         -
Second Quarter   16 1/4        12        -         -
Third Quarter.   17 3/8    14 3/4  $11 7/8  $     10
Fourth Quarter   16 7/8        15   13 5/8    10 3/4
<FN>
(1)  Trading  Commenced  on  August  28,  1996.
   As  of February 27, 1998, there were 129 record  holders of the Common Stock.
</TABLE>

The  Company has not paid any cash dividends to shareholders. The declaration of
any cash or stock dividends will be at the discretion of the Board of Directors,
and  will  depend upon earnings, capital requirements and the financial position
of the Company, general economic conditions and other pertinent factors. At this
time,  the  Company does not intend to pay any cash dividends in the foreseeable
future.  Management intends to reinvest earnings, if any, in the development and
expansion  of  the  Company's  business  for  an  indefinite period of time. The
Company's  credit  facility  restricts  the  payment  of  dividends.

                            Gradall Industries, Inc.

                                       40
<PAGE>

                                    General
                                   Information

<TABLE>
<CAPTION>

DIRECTORS
---------------------------------------------------------------------------------------------
<S>                                           <C>
SANGWOO AHN                                   PERRY J. LEWIS
Chairman of the Board                         Founding Partner, Morgan Lewis Githens & Ahn
Founding Partner, Morgan Lewis Githens & Ahn
                                              WILLIAM C. UGHETTA, JR.
BARRY L. PHILLIPS                             Managing Director, Long Point Capital
President and Chief Executive Officer,
Gradall Industries, Inc.                      JACK D. RUTHERFORD
                                              Chairman of the Board, and Chief Executive
DAVID S. WILLIAMS                             Officer Emeritus, The Gradall Company
Vice President, Marketing and Sales,
Gradall Industries, Inc.                      ERNEST GREEN
                                              FOUNDER, President and Chief Executive Officer,
JOHN A. MORGAN                                EGI, Inc.
Founding Partner, Morgan Lewis Githens & Ahn



COMMITTEES
---------------------------------------------------------------------------------------------
Compensation Committee                        Audit Committee
Sangwoo Ahn - Chairman                        William C. Ughetta, Jr. - Chairman
Jack D. Rutherford                            Ernest Green
Barry L. Phillips                             Jack D. Rutherford
</TABLE>

                            Gradall Industries, Inc.

                                       41
<PAGE>

                                    General
                                   Information

<TABLE>
<CAPTION>

OFFICERS  AND  SENIOR  MANAGERS
--------------------------------------------------------------------------------------
<S>                                          <C>
Barry L. Phillips                            Joseph H. Keller
President and Chief Executive Officer        Vice President, Engineering and Secretary

David S. Williams                            James C. Cahill
Vice President, Marketing and Sales          Vice President, Manufacturing

Bruce A. Jonker
Vice President, Chief Financial Officer and
Treasurer

STOCKHOLDER INFORMATION
--------------------------------------------------------------------------------------
Annual meeting                               Stock exchange
Sheraton Airport Hotel                       Gradall Industries, Inc. common stock
5300 Riverside Drive                         is traded under the symbol GRDL and
Cleveland, Ohio                              is listed on the NASDAQ National
                                             Market.
May 20, 1998 at 10:00 am EDT
                                             Form 10-K or Investor information
Transfer agent and registrar                 Bruce A. Jonker
Chase Mellon Shareholders Services           Vice President, Chief Financial Officer
85 Challenger Road                           Gradall Industries, Inc.
Overpeck Centre                              406 Mill Ave. SW
Ridgefield Park, NJ 07660                    New Philadelphia, Ohio 44663
                                             Phone 330-339-8374
Phone Toll-Free 1-800-756-3353               Fax 330-339-8317
</TABLE>

                            Gradall Industries, Inc.

                                       42
<PAGE>

                                    GRADALL
                                    REPLICAS

                       COLLECTOR-QUALITY,  SCALE  MODELS

Scale  model  replicas  of three famed Gradall construction machines, authorized
by  Gradall Industries, Inc., are available at special pricing for stockholders.
Suitable  for  desktop  or  bookshelf  display, these die cast masterpieces were
created  using  Gradall  engineering  drawings  with unusual attention to detail
including  authentic  boom  movements  and  steering

mechanisms.  First  introduced  to  collectors  a  year ago, the XL 5100 wheeled
excavator  and  534C-9 material handler replicas were widely acclaimed. Now, the
collection  has  been  expanded  to  include  a  replica  of the XL 5200 crawler
excavator. Replicas have been produced in limited quantities and are numbered to
assure  authenticity  and  to  enhance  their  value.

     [534C-9 Gradall Material Handler Scale 1:32 Length 8 inches Price $96]

 [XL 5100 Gradall Hydraulic Excavator Scale 1:50 Length 7 1/2 inches Price $128]

    [XL 5200 Gradall Excavator Crawler Scale 1:50 Length 7 inches Price $98]



To  order,  please  contact
Hiram  Construction  Co.
18413  Rt.  700
Hiram,  OH 44234
Phone  440-834-8817
Fax  440-834-0560
Toll-free  800-591-1171

                                       43
<PAGE>

                                                        Gradall Industries, Inc.
                                                              406 Mill Avenue SW
                                                    New Philadelphia, Ohio 44663
                                                            Phone (330) 339-2211
                                                              Fax (330) 339-8317
                                                                 www.gradall.com

                                       44
<PAGE>

    Gradall Industries, Inc. 1997 Annual Report  A different kind of animal.

                                       45
<PAGE>