1998 Annual Report / Gradall Industries, Inc.

                                      -1-
<PAGE>
attitude

For  over  50  years,  Gradall's  continual  growth  can  be  traced to a unique
attitude.  A  quest  to  be  different  and better, leading to the first Gradall
machine,  created in 1946 to build roads during the post-war labor shortage. The
attitude is apparent in the dedication and work ethic of our 700-plus employees,
committed to a new high standard in machine design, manufacture and support. Our
allied  businesses  -  independent  distributors  and suppliers - also share our
progressive  attitude,  aligning  themselves  and  their own businesses' futures
with Gradall's goal orientation. Plus, it's an attitude shared by our  customers
-  contractors  and  government  officials  -  people  who recognize the Gradall
difference  and actually invest in our unique blend of designed-in productivity,
versatility  and  reliability.

Throughout  this annual report, you will see evidence of the Gradall attitude, a
unique  posture  which  sets  an  appropriate stage for our impressive corporate
performance.

                                      -2-
<PAGE>
                                  Consolidated
                                    Financial
                                   Highlights

                 (dollars in  millions,  except share  amounts)

                            Gradall  Industries, Inc.

<TABLE>
<CAPTION>
                                                 For the Years Ended
                                               ----------------------
                                                1998    1997    1996
                                               ------  ------  ------
<S>                                            <C>     <C>     <C>
Net sales . . . . . . . . . . . . . . . . . .  $182.6  $158.7  $140.9
Operating income. . . . . . . . . . . . . . .    24.0    20.6    17.9
Income before extraordinary item. . . . . . .    14.4    12.0     8.3
Extraordinary loss on
  extinguishment of debt, net of tax benefit.       -       -     1.0
Net income. . . . . . . . . . . . . . . . . .    14.4    12.0     7.3

Earnings per share(1) . . . . . . . . . . . .  $ 1.54  $ 1.33  $ 1.07
Working capital . . . . . . . . . . . . . . .    27.8    26.5    14.9
Funded debt . . . . . . . . . . . . . . . . .     7.6   10.37      .9
Shareholders' equity. . . . . . . . . . . . .    42.4   21.29      .1
<FN>
(1)  Earnings  per  share data is presented on a diluted basis for 1998 and 1997
and  on  a  pro forma basis for 1996.  See Note 12 to the Consolidated Financial
Statements  included  herein.
</TABLE>

   [Net Sales, Operating Income and Income before extraordinary item graphs]

<TABLE>
<CAPTION>
Table  of  Contents
--------------------------------------------------------------------------------
<S>                                              <C>
Consolidated Financial Highlights . . . . . . .   3
Letter to Stockholders. . . . . . . . . . . . .   4
Gradall Material Handlers . . . . . . . . . . .   8
Gradall Excavators. . . . . . . . . . . . . . .  10
Parts and Distribution. . . . . . . . . . . . .  12
Suppliers . . . . . . . . . . . . . . . . . . .  14
Selected Consolidated Financial Data. . . . . .  16
Consolidated Balance Sheets . . . . . . . . . .  18
Consolidated Statements of Income . . . . . . .  19
Consolidated Statements of Changes
  in Stockholders' Equity . . . . . . . . . . .  20
Consolidated Statements of Cash Flows . . . . .  21
Notes to Consolidated Financial Statements. . .  22
Report of Independent Accountants . . . . . . .  35
Report of Management. . . . . . . . . . . . . .  35
Management's Discussion and Analysis of
  Financial Condition and Results of Operations  36
Accounting Pronouncements . . . . . . . . . . .  43
Cautionary Statement. . . . . . . . . . . . . .  44
The Company's Stock . . . . . . . . . . . . . .  45
General Information . . . . . . . . . . . . . .  46
Gradall Replicas. . . . . . . . . . . . . . . .  47
</TABLE>

                                      -3-
<PAGE>

                                      -4-
<PAGE>
to  our  stockholders

Gradall  Industries, Inc. continued its strong growth trend in 1998, achieving a
fifth  consecutive  record  year  in  sales  and  profitability.

Punctuating  our sales and  profitability achievements, I am pleased to announce
that  Gradall has received ISO 9001 certification. We see this as recognition of
the long-time reputation of our company and our employees for excellent quality,
and  a  signal  to  both our government and  private contractor markets that our
reputation  will  continue.

Additional  recognition  has come in the form of 1998 Ernst & Young Entrepreneur
of  the  Year  awards,  presented  to  Gradall  and  myself  in  recognition  of
industrial  leadership,  citizenship  and  overall  growth  performance.

I  am  proud  to  say  these achievements reflect an attitude that permeates our
company  and  positions us for success. We are prepared to take advantage of the
market  demand  for versatile,  productive, high-value construction machines. We
are  focused  on  profiting from our ongoing commitment to continually introduce
new,  more  productive  products.  We  are clearly motivated to continue to make
strategic  capital  investments  to  build  volume  and  efficiency  into  our
manufacturing  capacity.

As  a  direct  result, it is my pleasure to report that Gradall Industries, Inc.
posted a record $182.6 million in net sales in 1998, an increase of 15.1 percent
over  1997.  Net  income  for  1998  was $14.4 million, up 19.7 percent. Diluted
earnings  per  share  reached  $1.54,  up  15.8  percent.

Benefitting  from  favorable  interest  rates,  supportive  construction  market
conditions  in the U.S. and an excellent share of the booming rental market, our
material  handler  sales hit a record $110.2 million, up 31.2 percent over 1997.

                                                     to  our  stockholders
                                                     continued on pages 6-7

                                      -5-
<PAGE>
to  our  stockholders  continued

Fueling  material handler sales was the introduction of our new D Series models,
replacing  all  of  our  C Series machines. Featuring a new, protective operator
cab, the D Series machines enhance the market preference for Gradall's trademark
advantages  such  as  unique  maneuverability,  ease  of  operation  and  their
reputation  for  superior  strength  and  reliability.

Hydraulic excavator sales reached $54.6 million, continuing to  benefit from the
overall  market demand for smaller versatile machines that can do many different
kinds  of  work.  In  this  market,  acceptance  of  our  two  new models in the
27,000-pound  class  effectively paved the way for our newest model, the XL 2300
non-highway  speed  wheeled  excavator,  which  topped the best new product list
published  by  Construction  Equipment,  the  leading  industry  trade magazine.

Unit  and  net sales of larger XL Series excavators continue to benefit from the
Transportation  Equity Act (TEA-21), funding highway and bridge work starting in
late  1998.  Distinguished  by  their  telescoping  boom  design  and powered by
high-pressure  hydraulics,  Gradall  excavators  are  gaining acceptance in high
productivity  work  formerly  dominated  by conventional excavators. At the same
time,  our  excavators  enjoy a clear preference in the market for machines that
can  perform  delicate  finishing  and  grading  functions.

Sales  of service parts reached $17.9 million in 1998, up 3.5 percent from 1997.
This  growth  can  be  attributed  to  our  strong  distribution network and the
promotion  of  new  product  support  programs,  including  Gradall Plus  CD-ROM
reference  materials  and  the  Gradall  On-Line  Distributor (GOLD) order entry
systems.

                                      -6-
<PAGE>
Overall sales were also sparked by an ongoing commitment to worldwide sales. The
addition  of  a  sales  office  and  greater  distribution  in Central and South
America  accompanied  an  expanded  global  marketing  initiative  reaching into
Europe,  the  Middle  East,  Russia  and  the  Pacific  Rim.

Prompted  by  continuing increases in unit sales, Gradall executed a $13 million
capital  investment  plan  in  1998  which  included  the  purchase  of a second
manufacturing  facility.  Without  any  long-term  debt,  and  assisted  by  the
proceeds  from  an  additional public offering in June 1998, Gradall purchased a
modern  330,000-square-foot  manufacturing  facility  in  Orrville,  Ohio.

$7  million  of  the  $13  million  total  was invested in new equipment for the
450,000-square-foot  New  Philadelphia  plant,  which  continues  to  serve  as
corporate  headquarters.  New  equipment  in  the plant includes lasers, robots,
machining centers, seam welders and paint systems, designed to control costs and
improve  production  efficiency.

At  the  end  of  1998,  both  product lines continued to be produced at the New
Philadelphia plant. However, local tax abatements and overwhelming encouragement
from  the  Orrville  community  support  Gradall's  initial efforts to equip and
operate  the  Orrville  facility  as  an  entity  dedicated  primarily  to  the
manufacture  of  Gradall  material  handlers.

Such a move greatly expands our overall capacity, supporting  our active program
to  explore  options  in  product  acquisition  and  contract  manufacturing.

                          Barry L. Phillips, President

                                      -7-
<PAGE>

In  his  22  years  as  a  masonry  contractor, Dennis Knowlton says the Gradall
material handler's unique steering system, allowing the big machine to literally
turn  on  a dime, has actually increased his  profitability. "With our Gradalls,
we  save a ton of time moving scaffolding or squaring up to unload tubs of mud,"
said  Knowlton,  owner  of Knowlton Construction Equipment in Clifford, Pa. "The
steering capabilities are tremendous." Knowlton and other contractors who own or
rent  Gradall  material handlers also know the wide variety of jobs they have to
do  can  match  up  nicely with the designed-in versatility of Gradall machines.
Equipped  with a range of attachments, Gradalls can be found moving brick, block
and mortar; placing trusses and bundles of lumber; even backfilling and cleaning
up  at the end of the project. The unique design of the machines also makes them
"operator  friendly,"  said  Knowlton.  A  hydrostatic  drivetrain  provides
convenient, no-shift operation, and the new operator cabs are protective without
obstructing  the  view  of  the jobsite. "We own four Gradalls right now, and we
often  rent  more," said Knowlton. "We rely heavily on these machines, and we've
always  gotten  excellent  support  from  the  company  and  our  distributor."

                                      -8-
<PAGE>
material handlers

Material handlers have always been popular rental machines. Tremendous growth in
the rental industry, combined with highly favorable market conditions, increases
sales  potential  for  the  material  handler  line.

Gradall Material Handlers are  typically used to move a  variety of construction
materials  around  jobsites  and  industrial  facilities.  Masonry,  framing and
general  contractors  prefer Gradalls for their collection of unique advantages,
including 90  rear-pivot steering. This allows operators to place lumber, brick,
block and other materials  faster, easier and with greater  precision. Gradall's
telescopic booms are among the strongest in the industry, providing greater lift
capacity  and longer  reach. 1998 sales benefitted   dramatically from favorable
market  conditions,  including  low  interest  rates  and a strong  economy. The
highly  successful introduction of a new D Series family of machines also helped
to  increase  1998  material  handler  sales.  Gradall's  primary  focus for its
material handler sales continues to be in the North American market. In addition
to  its  traditional  distributor  network,  Gradall  is  a preferred product of
national  rental  companies, which are a growing source of new machines for many
of  the  nation's  contractors.

                                      -9-
<PAGE>

"My  new XL 2200 excavator has definitely made a major contribution to my bottom
line," says Howard Beezer, owner of Delta Equipment Rentals, Inc. in Washington,
D.C.  "Its  low operating  profile makes it perfect for interior demolition jobs
and  work  on other tight jobsites."  The XL 2000 series machines mark Gradall's
entrance  into  the  27,000-pound  excavator  class,  offering  Gradall  users
traditional Gradall versatility and productivity in a machine suited for smaller
jobs.  "Delta  owns  ten  Gradall  excavators. We use them for cleaning sediment
ponds,  demolition work, trenching,  ditching, finishing and just about anything
else  you can think of.  It's their productivity, versatility and the ability to
handle  finesse  work  that's  always  been  a  strong  point  for Gradall." His
operators  also  like  the fact that the new XL series hydraulics offer twice as
much  power and use half as much  fuel as the old Gradalls used to. "We've owned
Gradalls forever, and I don't  see that changing anytime soon.  In fact, I can't
wait  to  see  their  next  class  of  machines  hit  the  street."

                                      -10-
<PAGE>
excavators
Gradall  excavator  sales  began  to  benefit from the release of new government
money -TEA-21- earmarked for road and bridge repair and construction. Along with
a series of new product innovations, this transportation bill sets the stage for
steadily  increasing  excavator  sales.

Gradall  hydraulic  excavators  are distinguished by their telescoping, rotating
booms.  The  boom's  arm-like  motion  increases  the  machine's  versatility,
maximizing  the  potential of the machine to use a wide range of attachments. As
it  has  for  many  years,  Gradall  continues  to dominate the niche market for
highway-speed,  wheeled  excavators.  More  recently, the introduction of the XL
Series  high-pressure hydraulics, combined with a durable crawler undercarriage,
has allowed Gradall to successfully compete in the conventional excavator market
segment.  The  most  recent  addition to the XL excavator line, the XL 2300, was
introduced  in  Munich, Germany, at the 1998 Bauma  exhibit, the world's largest
construction  trade  show.  Gradall's  XL 2300, the first excavator of its kind,
combines  the  versatility  of  the  famous  Gradall  boom  with  a  wheeled
undercarriage  for  greater  maneuverability around jobsites, opening new market
opportunities.  The XL 2300 is the third model in Gradall's line of 27,000-pound
excavators,  designed  to  satisfy  industry  demand  to  buy  or  rent mid-size
machines.  Current  product  development  includes  a  line  of  34,000-pound
excavators  for municipalities and contractors. Increased demand is expected for
specialized  machines  used in mining and metal mill work. Growth is anticipated
in international markets, including Russia, Latin America, Turkey, China and the
Pacific  Rim.

                                      -11-
<PAGE>

"Some  of  our  Gradalls  are  more than 10 years old," says Brent Kearns, fleet
manager  for  Vegas  General  Construction,  "and  they're  still going strong."
Product support, which is provided by Bat Rentals in Las Vegas, helps keep Vegas
General's  material  handlers  running by minimizing  downtime and extending the
life  of  each  machine.  Vegas General has owned more than 20 Gradall machines.
"The  Gradall  is the only machine that can maneuver in the tight spaces we work
in.  Authorized  Gradall  Parts  are the only parts we trust to keep our Gradall
material  handlers performing at their best" says Kearns. "Over the years, we've
built  almost  8,000 homes, and thanks to the  reliability of Gradall Parts, our
Gradalls  have  never  let  us  down."

                                      -12-
<PAGE>
parts  &  distribution
Gradall  excavators  and  material  handlers  have a strong, reputable name. Our
highly  respected  global  distribution  network  for  sales,  parts and service
demonstrates  the  dedication  we  have  to  serving  our  customers.

Gradall  maintains  a  strong  distribution  network that provides effective and
efficient  parts  and  service  support.  This  network  is  made  up of leading
equipment distributors located throughout North America and worldwide. Gradall's
distributors  are  chosen  for their  financial strength and their commitment to
promoting  and  selling  Gradall  products,  as well as their ability to provide
critical after-sale service and parts. They are supported by Gradall's qualified
staff  of  sales  and  product  support  regional  managers. These managers work
hand-in-hand  with distributors, ensuring fast, efficient support and helping to
maintain  a  high level of customer satisfaction. Now, as a result of continuing
development  of  new markets, Gradall has distributors in Russia, South America,
China, the Middle East and the Pacific Rim. Gradall's On-Line Distributor (GOLD)
System  allows  distributors  to access parts availability information and order
parts  with  their  computers.  In  1998, the GOLD System was expanded to  offer
broader  availability  of  aftermarket products. In 1999, Gradall will introduce
the new Gradall Plus  system, an electronic database containing over 50 years of
Gradall  equipment  product  support  detail  by  model.  This  includes  parts,
service,  operation  and  safety  information. The database will be available on
CD-ROM  and  will  make valuable Gradall product support information easier than
ever  to  access.

                                      -13-
<PAGE>

"Gradall  is  the  kind  of  company  I  want  to  be  aligned with," says Chuck
Stockwell,  account  manager for Parker Hannifin, Fluid Connectors Group. "Their
strong  emphasis  on  continuous  improvement and product development is part of
what  makes  them  successful. They have the attitude we look for in a strategic
partner. They see and appreciate the added value we can bring to the table." The
four-year-old  strategic  partnership between Gradall and Parker Hannifin allows
Parker  representatives  to  work  closely with Gradall during various stages of
product  design  and  manufacturing. This helps ensure that Gradall utilizes the
potential  of Parker's hoses and fittings in the most effective manner, enabling
Gradall  to promise their customers that there will be no leaks in the hydraulic
system.  It's all part of the Parker Hannifin Certified Leak-Free program. "It's
a mutually beneficial situation," says Stockwell. "By eliminating what sometimes
becomes  an adversarial relationship between customer and supplier, both Gradall
and  Parker  Hannifin  contribute  to  each  other's  growth."

                                      -14-
<PAGE>
suppliers
Gradall  has  formed  strategic partnerships with many suppliers. Companies like
Rexroth  Mobile  Hydraulics, Bethlehem Steel and Meritor Axles work closely with
Gradall  to  ensure  that the components going into our machines are the highest
possible  quality.

Gradall's  suppliers  often  do  more  than  simply  provide products for use by
Gradall.  They  get  involved  in  the  design  stage,  helping  to  optimize
manufacturing processes, and they provide post-sale  support for their products.
They  offer the highest quality components available for use in our products and
enable  us  to  reduce  total  costs  through  techniques  such  as just-in-time
shipping.  Part of the Gradall attitude is the concept that working hand-in-hand
with  business  partners  creates  an  environment  where  both  companies  will
benefit.  Gradall's  strategic  relationships  with  companies like Parker Fluid
Connectors,  Meritor  Axles,  Bethlehem Steel and Rexroth Mobile Hydraulics help
ensure  that  Gradall  products  are  continually  improving  and  that the best
manufacturing  processes  are in use. That's why we've made a commitment to work
closely  with  our  core suppliers, growing and improving with them and ensuring
the  future  success  of  Gradall  as  well  as  our  suppliers.

                                      -15-
<PAGE>
                             Selected  Consolidated
                                 Financial Data

                 (dollars in  thousands,  except share  amounts)

                            Gradall  Industries, Inc.

The  following  table  sets  forth  selected consolidated financial data for the
Company  for  the  five  years  ended  December 31, 1998 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,
                                        ---------------------------------------------------------
                                          1994       1995         1996        1997        1998
                                        --------  -----------  ----------  ----------  ----------
<S>                                     <C>       <C>          <C>         <C>         <C>
 Income Statement Data:
-------------------------------------------------------------------------------------------------
 Net sales . . . . . . . . . . . . . .  $88,820   $  118,438   $  140,909  $  158,659  $  182,607
 Cost of sales . . . . . . . . . . . .   71,280       92,637      108,098     120,663     140,456
                                        --------  -----------  ----------  ----------  ----------
 Gross profit. . . . . . . . . . . . .   17,540       25,801       32,811      37,996      42,151
 Research and development and
      product engineering costs. . . .    2,123        2,504        3,081       3,644       4,039
Selling, general and administrative
      expenses . . . . . . . . . . . .    9,346       10,503       11,815      13,712      14,149
                                        --------  -----------  ----------  ----------  ----------
 Operating income. . . . . . . . . . .    6,071       12,794       17,915      20,640      23,963
Amortization of FAS 106 (1). . . . . .   (3,626)
Interest expense . . . . . . . . . . .    1,146        1,642        3,108         696         380
 Other, net. . . . . . . . . . . . . .      234          865        1,018         257          31
                                        --------  -----------  ----------  ----------  ----------
Income before provision for taxes and
      extraordinary item . . . . . . .    8,317       10,287       13,789      19,687      23,552
Income tax provision . . . . . . . . .    3,152        3,680        5,503       7,696       9,198
                                        --------  -----------  ----------  ----------  ----------
Income before extraordinary item . . .    5,165        6,607        8,286      11,991      14,354
Extraordinary item (2) . . . . . . . .                                973
                                        --------  -----------  ----------  ----------  ----------

 Net income (3). . . . . . . . . . . .  $ 5,165   $    6,607   $    7,313  $   11,991  $   14,354
                                        ========  ===========  ==========  ==========  ==========
 Earnings per share (4)
      Basic:
      Before extraordinary item. . . .            $     1.17   $     1.19  $     1.34  $     1.56
      After extraordinary item . . . .                  1.17         1.05        1.34        1.56
Weighted average shares outstanding. .             5,637,244    6,956,507   8,939,605   9,230,768
      Diluted:
      Before extraordinary item. . . .            $     1.17   $     1.18  $     1.33  $     1.54
      After extraordinary item . . . .                  1.17         1.04        1.33        1.54
Weighted average shares
      outstanding. . . . . . . . . . .             5,637,244    7,003,200   9,013,760   9,316,466
Pro forma (5)
      Net income per share . . . . . .            $     0.77   $     1.07
 Weighted average shares
      outstanding. . . . . . . . . . .             8,939,294    8,939,294

 Balance Sheet Data:
-------------------------------------------------------------------------------------------------
Working capital. . . . . . . . . . . .  $ 2,472   $   10,735   $   14,907  $   26,509  $   27,842
Total assets . . . . . . . . . . . . .   41,099       52,024       58,226      76,735      98,987
Total debt . . . . . . . . . . . . . .   11,234       37,922        7,910      10,312       7,631
Stockholders' (deficit) equity . . . .   (2,158)     (23,119)       9,076      21,219      42,375

                                      -16-
<PAGE>
                             Selected  Consolidated
                                 Financial Data

                                   (continued)

                            Gradall  Industries, Inc.
<FN>
(1)     -The  FAS  106  gain  resulted  from the reduction in the postretirement
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)     -Net  income  (loss)  per  share data have been omitted for year 1994 as
such  amount  is  not  comparable  due  to  a recapitalization which occurred in
October,  1995  (the  "1995  Recapitalization").

(4)     -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.

(5)     -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.

(6)     -Excludes  former  wholly  owned  subsidiaries of the Company which were
spun  off to certain  shareholders in connection with the 1995 Recapitalization.
</TABLE>

                                      -17-
<PAGE>
                                  Consolidated
                                     Balance
                                     Sheets

                 (dollars in  thousands,  except share  amounts)

                            Gradall  Industries, Inc.
   
<TABLE>
<CAPTION>
                                                         December 31,
Assets                                                  1998      1997
-------------------------------------------------------------------------
<S>                                                   <C>       <C>
Current assets:
  Cash . . . . . . . . . . . . . . . . . . . . . . .  $ 2,457   $  1,605 
  Accounts receivable trade, net of allowance for
    doubtful accounts of $69 and $56 . . . . . . . .   26,983     25,290 
  Inventories. . . . . . . . . . . . . . . . . . . .   32,872     25,564 
  Prepaid expenses and deferred charges. . . . . . .    2,510      1,645 
  Deferred income taxes. . . . . . . . . . . . . . .      985        742 
                                                      --------  ---------
       Total current assets. . . . . . . . . . . . .   65,807     54,846 
Deferred income taxes. . . . . . . . . . . . . . . .    5,985      5,402 
Property, plant and equipment, net . . . . . . . . .   25,838     15,108 
Other assets:
  Deferred financing costs, net of
    accumulated amortization of $698 and $404. . . .      152        446 
  Other. . . . . . . . . . . . . . . . . . . . . . .    1,205        933 
                                                      --------  ---------
       Total other assets. . . . . . . . . . . . . .    1,357      1,379 
                                                      --------  ---------
       Total assets. . . . . . . . . . . . . . . . .  $98,987   $ 76,735 
                                                      ========  =========

Liabilities and Stockholders' Equity
Current liabilities:
  Current portion of capital lease obligation. . . .  $   307   $    297 
  Current portion of long-term debt. . . . . . . . .    6,919 
  Accounts payable - trade . . . . . . . . . . . . .   16,288     17,113 
  Accrued other expenses:
    Profit sharing . . . . . . . . . . . . . . . . .    1,404      1,327 
    Floor plan interest. . . . . . . . . . . . . . .    1,341      1,444 
    Warranty . . . . . . . . . . . . . . . . . . . .    1,853      1,075 
    Deferred revenue . . . . . . . . . . . . . . . .    2,286 
    Income taxes . . . . . . . . . . . . . . . . . .    2,208      1,115 
    Other. . . . . . . . . . . . . . . . . . . . . .    5,359      5,966 
                                                      --------  ---------
       Total current liabilities . . . . . . . . . .   37,965     28,337 
                                                      --------  ---------
Long-term obligations:
  Capital lease obligation . . . . . . . . . . . . .      405        412 
  Long-term debt . . . . . . . . . . . . . . . . . .               9,603 
  Accrued post-retirement benefit cost . . . . . . .   16,554     15,719 
  Other long-term liabilities. . . . . . . . . . . .    1,688      1,445 
                                                      --------  ---------
       Total long-term obligations . . . . . . . . .   18,647     27,179 
                                                      --------  ---------
       Total liabilities . . . . . . . . . . . . . .   56,612     55,516 
                                                      --------  ---------
Stockholders' equity:
  Serial preferred shares, par value $.001 per share
    2,000,000 shares authorized,
    none issued and outstanding
  Common stock, $.001 par value; 18,000,000 shares
    authorized; 9,508,231 and 8,940,194 issued and
    outstanding in 1998 and 1997, respectively . . .       10          9 
  Additional paid-in capital . . . . . . . . . . . .   45,805     38,894 
  Accumulated deficit. . . . . . . . . . . . . . . .   (2,733)   (17,087)
  Accumulated other comprehensive loss . . . . . . .     (707)      (597)
                                                      --------  ---------
       Total stockholders' equity. . . . . . . . . .   42,375     21,219 
                                                      --------  ---------
       Total liabilities and stockholders' equity. .  $98,987   $ 76,735 
                                                      ========  =========
</TABLE>
    
    The accompanying notes are an integral part of these consolidated financial
                                   statements.

                                      -18-
<PAGE>
                                  Consolidated
                                   Statements
                                    of Income

                 (dollars in  thousands,  except share  amounts)

                            Gradall  Industries, Inc.

<TABLE>
<CAPTION>
                                                      For the Years Ended December 31,
                                                    ----------------------------------
                                                       1998        1997        1996
                                                    ----------  ----------  ----------
<S>                                                 <C>         <C>         <C>
Net sales. . . . . . . . . . . . . . . . . . . . .  $  182,607  $  158,659  $  140,909
Cost of sales. . . . . . . . . . . . . . . . . . .     140,456     120,663     108,098
                                                    ----------  ----------  ----------
                 Gross profit. . . . . . . . . . .      42,151      37,996      32,811
Research and development and product
     engineering costs . . . . . . . . . . . . . .       4,039       3,644       3,081
Selling general and administrative expenses. . . .      14,149      13,712      11,815
                                                    ----------  ----------  ----------
                 Operating income. . . . . . . . .      23,963      20,640      17,915
Other expense:
       Interest expense. . . . . . . . . . . . . .         380         696       3,108
      Other. . . . . . . . . . . . . . . . . . . .          31         257       1,018
                                                    ----------  ----------  ----------
                 Net other expense . . . . . . . .         411         953       4,126
                                                    ----------  ----------  ----------
                 Income before income taxes
                       and extraordinary item. . .      23,552      19,687      13,789
Income tax provision . . . . . . . . . . . . . . .       9,198       7,696       5,503
                                                    ----------  ----------  ----------
Income before extraordinary item . . . . . . . . .      14,354      11,991       8,286
                                                    ----------  ----------  ----------
Extraordinary item, loss from early extinguishment
      of debt, net of tax benefit of $622. . . . .                                 973
                                                    ----------  ----------  ----------
Net income . . . . . . . . . . . . . . . . . . . .  $   14,354  $   11,991  $    7,313
                                                    ==========  ==========  ==========
Basic:
Weighted average shares outstanding. . . . . . . .   9,230,768   8,939,605   6,956,507
Earnings per share:
     Before extraordinary item . . . . . . . . . .  $     1.56  $     1.34  $     1.19
     After extraordinary item. . . . . . . . . . .  $     1.56  $     1.34  $     1.05
Diluted:
Weighted average shares outstanding. . . . . . . .   9,316,466   9,013,760   7,003,200
Earnings per share:
     Before extraordinary item . . . . . . . . . .  $     1.54  $     1.33  $     1.18
     After extraordinary item. . . . . . . . . . .  $     1.54  $     1.33  $     1.04
</TABLE>

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

                                      -19-
<PAGE>
                                  Consolidated
                            Statements of Changes in
                                  Stockholders'
                                     Equity

                             (dollars in thousands)

                            Gradall  Industries, Inc.

<TABLE>
<CAPTION>
                                                                                                  Accumulated
                                                                     Additional                   Other Com-
                                                       Additional     Paid-In                     prehensive
                                 Preferred   Common     Paid-In       Capital-     Accumulated      Income
                                   Stock      Stock     Capital       Warrants       Deficit       (Loss)(1)      Total
                                -----------  -------  ------------  ------------  -------------  -------------  ---------
<S>                             <C>          <C>      <C>           <C>           <C>            <C>            <C>
Balance December 31, 1995. . .  $    2,000   $     6  $    11,994   $     1,000   $   (37 ,391)  $       (728)  $(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 
  Minimum pension liability
    adjustment . . . . . . . .                                                                            (34)       (34)
                                                                                                                ---------
  Total comprehensive income                                                                                       7,279 
                                -----------  -------  ------------  ------------  -------------  -------------  ---------
Balance December 31, 1996                          9       38,907                      (29,078)          (762)     9,076 

  Additional expense
    resulting from the initial
    public offering                                           (19)                                                   (19)
  Stock options exercised                                       6                                                      6 
  Net income                                                                           11, 991                    11,991 
  Minimum pension liability
    adjustment                                                                                            165        165 
                                                                                                                ---------
  Total comprehensive income                                                                                      12,156 
                                -----------  -------  ------------  ------------  -------------  -------------  ---------

Balance December 31, 1997                          9       38,894                      (17,087)          (597)   21, 219 

  Issuance of  562,500 shares
    of common stock                                1        6,876                                                  6,877 

  Stock options exercised                                      35                                                     35 

  Net income                                                                            14,354                    14,354 

  Minimum pension liability
    adjustment                                                                                           (110)      (110)
                                                                                                                ---------
  Total comprehensive income                                                                                      14,244 
                                -----------  -------  ------------  ------------  -------------  -------------  ---------
Balance December 31, 1998. . .  $        -   $    10  $    45,805   $         -   $     (2,733)  $       (707)  $ 42,375 
                                -----------  -------  ------------  ------------  -------------  -------------  ---------
<FN>
(1) All items included in accumulated other comprehensive income (loss) are shown net of income taxes. The tax effect for
the  minimum  pension  liability  adjustment  was  $70,  $(93)  and  $17  for  1998,  1997,  and  1996  respectively.
</TABLE>

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

                                      -20-
<PAGE>
                                  Consolidated
                                   Statements
                                       of
                                   Cash Flows

                             (dollars in thousands)

                            Gradall  Industries, Inc.

<TABLE>
<CAPTION>
                                                                        For the Years Ended December 31,
                                                                        -------------------------------
                                                                          1998       1997       1996
                                                                        ---------  --------  ---------
<S>                                                                     <C>        <C>       <C>
Cash flows from operating activities:
  Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 14,354   $11,991   $  7,313 
  Adjustments to reconcile net income
        to net cash provided by operating activities:
            Extraordinary item, before tax benefit . . . . . . . . . .                          1,595 
            Change in pension liability adjustment . . . . . . . . . .      (110)      165        (34)
            Post-retirement benefit transition obligation. . . . . . .       835    1, 115        780 
            Depreciation . . . . . . . . . . . . . . . . . . . . . . .     2,420     1,721      1,391 
            Amortization . . . . . . . . . . . . . . . . . . . . . . .       294       157        344 
            Deferred income taxes. . . . . . . . . . . . . . . . . . .      (826)      264        106 
            Equity loss on investment. . . . . . . . . . . . . . . . .                             44 
            Gain on sale of property, plant and equipment. . . . . . .       (98)       (1)      (111)
            Increase in accounts receivable. . . . . . . . . . . . . .    (1,693)   (8,444)    (4,710)
            Increase in inventories. . . . . . . . . . . . . . . . . .    (7,308)   (4,238)    (2,816)
            Increase in prepaid expenses . . . . . . . . . . . . . . .      (865)   (1,150)       (51)
            Increase in other assets . . . . . . . . . . . . . . . . .      (272)     (135)      (152)
            Increase in accounts payable and accrued expenses. . . . .     4,147     2,204      3,941 
            Increase (decrease) in accrued other long-term liabilities       243      (239)        28 
                                                                        ---------  --------  ---------
               Net cash provided by operating activities . . . . . . .    11,121     3,410      7,668 
                                                                        ---------  --------  ---------
Cash flows from investing activities:
  Proceeds from sale of property, plant and equipment. . . . . . . . .       223        12        104 
  Purchase of property, plant and equipment. . . . . . . . . . . . . .   (13,275)   (5,305)    (2,300)
                                                                        ---------  --------  ---------
               Net cash used in investing activities . . . . . . . . .   (13,052)   (5,293)    (2,196)
                                                                        ---------  --------  ---------
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 5,540 common shares. . . . . . . . . . . . . . . . . . .        35 
  Redemption of preferred stock. . . . . . . . . . . . . . . . . . . .                         (2,000)
  Net proceeds from follow on public offering. . . . . . . . . . . . .     6,877 
  Proceeds (repayments) on capital leases. . . . . . . . . . . . . . .         3        90       (172)
  Net advances (repayments) on revolving line of credit. . . . . . . .    (2,684)    2,312    (10,808)
  Proceeds from (payments of) bank overdraft . . . . . . . . . . . . .    (1,448)      884       (730)
  Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 (19)
                                                                        ---------  --------  ---------
               Net cash provided by (used in) financing activities . .     2,783     3,273     (6,794)
                                                                        ---------  --------  ---------
               Net increase (decrease) in cash . . . . . . . . . . . .       852     1,390     (1,322)
Cash, beginning of year. . . . . . . . . . . . . . . . . . . . . . . .     1,605       215      1,537 
                                                                        ---------  --------  ---------
Cash, end of year. . . . . . . . . . . . . . . . . . . . . . . . . . .  $  2,457   $ 1,605   $    215 
                                                                        =========  ========  =========
Supplemental disclosure:
  Cash paid for:
            Income taxes . . . . . . . . . . . . . . . . . . . . . . .  $  8,931   $ 7,650   $  2,875 
                                                                        =========  ========  =========
            Interest . . . . . . . . . . . . . . . . . . . . . . . . .  $    409   $   604   $  3,572
                                                                        =========  ========  =========
  Other:
            Amounts financed through capital leases. . . . . . . . . .  $    290   $   287 
                                                                        =========  ========
</TABLE>

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

                                      -21-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                             (dollars in thousands)

                            Gradall  Industries, Inc.

1.  Nature  of  Business  and  Basis  of  Presentation:
Gradall Industries, Inc. (the "Company"), Incorporated in Delaware, formerly ICM
Industries  Inc.  (ICM),  is  a  holding  company.  The  consolidated  financial
statements  include  the  Company and its wholly owned subsidiaries, The Gradall
Company,  The  Gradall  Orrville  Company  and  Gradall  Investment Company. The
Gradall  Investment  Company  was  dissolved  in  1996.

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

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.

On  June  29,  1998,  the  Company  completed a public offering in which 562,500
shares  of  common  stock  were  issued  by  the Company for a total sum of $7.3
million.  Expenses  incurred  in  connection  with  the  issue approximated $0.5
million including $0.1 million related to selling shareholders. The net proceeds
of  the  offering  were  used  to  repay  the  revolving  credit  facility.

On  October 13, 1998, a new company, The Gradall Orrville Company, was formed as
a  wholly  owned  subsidiary  of  Gradall  Industries,  Inc.,  to purchase a new
production  plant  at Orrville, Ohio. The new facility, formerly the Volvo Truck
Assembly  plant,  contains  330,000  square  feet  and  will  provide additional
production  space  for  the  material  handler  product.

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.

                                      -22-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

2.  Summary  of  Significant  Accounting  Policies,  Continued:
Revenue  Recognition:  The  Company's revenue recognition policy is to recognize
revenue  when  products  are  shipped.  In  1998,  the  Company  entered  into a
twelve-month  lease agreement for certain inventories which includes a guarantee
by  the  Company at the end of the lease agreement. Revenues equal to the amount
of  the  guarantee  are  deferred.

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:

Description                     Useful Life                   Method
--------------------------------------------------------------------------------
Machinery  and  equipment        3-10 years                Straight-line

Buildings  and  improvements    10-24 years                Straight-line

Furniture  and  fixtures         3-10 years                Straight-line

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.

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.

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.

                                      -23-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

2.  Summary  of  Significant  Accounting  Policies,  Continued:
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 $2,552, $1,722
and  $1,641  in  1998,  1997  and  1996,  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  $1,487,  $1,922  and  $1,440  in  1998,  1997  and  1996,  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.  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.

Earnings  Per  Common  Share: In the fourth quarter of 1997, the Company adopted
the  provisions  of  Statement  of Financial Accounting Standards No. 128 ("SFAS
128"),  "Earnings per Share," which specifies the computation, presentation, and
disclosure  requirements  of earnings per common share. Basic earnings per share
are based on the weighted average number of common shares outstanding during the
period.  Diluted  earnings  per  common  share are based on the weighted average
number  of  common  shares  outstanding during the period plus, if dilutive, the
incremental  number  of  common  shares  issuable  on a pro forma basis upon the
exercise of employee stock options, assuming the proceeds are used to repurchase
outstanding  shares  at  the  average  market  price  during the year. All prior
periods  have  been  restated  to conform to the provisions of this statement. A
reconciliation  of  the  Basic  and  Diluted per share computations are provided
below:

<TABLE>
<CAPTION>
                                              1998       1997       1996
                                            ---------  ---------  ---------
<S>                                         <C>        <C>        <C>
Common Shares
Weighted average common shares outstanding
 Basic . . . . . . . . . . . . . . . . . .  9,230,768  8,939,605  6,956,507
Additional common shares
     issuable for stock options. . . . . .     85,698     74,155     46,693
                                            ---------  ---------  ---------
Common shares - Diluted. . . . . . . . . .  9,316,466  9,013,760  7,003,200
                                            =========  =========  =========
</TABLE>

Comprehensive  Income:  Statement  of  Financial  Accounting  Standards No. 130,
"Reporting Comprehensive Income."  was adopted during the first quarter of 1998.
The  standard  established  guidelines  for  the  reporting  and  display  of
comprehensive  income  (loss)  and  its  components  in  financial  statements.
Comprehensive  income includes net income and adjustments to the minimum pension
liability.  The  Company has changed the format of its Consolidated Statement of
Changes  in  Stockholders'  Equity  to  present  comprehensive  income  and  its
components.

Segment  Information:  Statement  of  Financial  Accounting  Standards  No. 131,
"Disclosures  about  Segments  of  an  Enterprise  and Related Information," was
adopted  in  the  fourth  quarter  of 1998 and supersedes Statement of Financial
Accounting  Standards  No.  14,  "Financial Reporting for Segments of a Business
Enterprise."  The  new standard established guidelines for reporting information
on  operating  segments in interim and annual financial statements. The adoption
of  the  standard  did  not  affect the Company's financial position, results of
operations  or  cash  flows  (see  Note  14).

                                      -24-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

2.  Summary  of  Significant  Accounting  Policies,  Continued:

Future Accounting Requirements: In June 1998, the Financial Accounting Standards
Board  issued  Statement  of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities." This Statement requires that
all derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives will be recorded each period in current
earnings  or  other  comprehensive  income.  The new rules will be effective the
first  quarter  of 2000. The Company is in the process of determining the impact
of  this  new standard and, based on current market conditions, anticipates that
it  will  not  have a material impact on the Company's financial statements when
effective.

Reclassifications:  Certain  prior  years'  balances  have  been reclassified to
conform  to  the  current  year's  presentation.

3.  Inventories:

<TABLE>
<CAPTION>
Inventories are comprised of:
                                 1998     1997
                               --------  -------
<S>                            <C>       <C>
Raw materials . . . . . . . .  $  1,401  $   921
Work in process . . . . . . .    24,501   24,739
Finished goods. . . . . . . .    13,058    5,474
                               --------  -------
                                 38,960   31,134
Less LIFO reserve . . . . . .     6,088    5,570
                               --------  -------
Total inventory . . . . . . .  $ 32,872  $25,564
                               ========  =======
</TABLE>

4.  Property,  Plant  and  Equipment:

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

<TABLE>
<CAPTION>
                                     1998     1997
                                   -------  -------
<S>                                <C>      <C>
Land. . . . . . . . . . . . . . .  $   963  $   513
Machinery and equipment . . . . .   23,998   16,910
Buildings and improvements. . . .   11,087    5,587
Furniture and fixtures. . . . . .    3,212    2,277
Construction in progress. . . . .    2,584    4,109
                                   -------  -------
                                    41,844   29,396
Less accumulated depreciation . .   16,006   14,288
                                   -------  -------
Net property, plant and equipment  $25,838  $15,108
                                   =======  =======
</TABLE>

5.  Financing:

<TABLE>
<CAPTION>
Long-term debt includes:   1998    1997
                         -------  ------
<S>                       <C>     <C>
Revolving credit . . . .  $6,919  $9,603
Less current maturities.   6,919       0
                         -------  ------
                          $    0  $9,603
</TABLE>

At  December 31, 1998, the Company maintained a loan and security agreement with
Heller  Financial,  Inc.  which provided for up to $25 million in revolving loan
commitments.  Amounts  borrowed  under  the borrowing base, as defined, could be
repaid  and  reborrowed  at  any  time prior to August 31, 1999, the termination
date.  Amounts  outstanding  under  this  agreement were reclassified to current
portion  of  long-term  debt  at  December  31,  1998.

                                      -25-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

5.  Financing,  Continued:
The  revolving  line  of  credit bears interest at either LIBOR plus 1% or prime
minus  .50%.  At  December  31,  1998,  the  prime rate was 7.75%. There were no
borrowings  under the LIBOR option at year end. The average annual interest rate
in  effect for the revolving line of credit was 7.25%. 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%. The Company also pays an
unused  line  fee  of  0.25  percent  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.

On  January  27,  1999  the  Company's  Loan  and Security Agreement with Heller
Financial,  Inc. was paid in full and terminated. A new revolving line of credit
for $17 million was established with KeyBank National Association (the "Lender")
with  an  unsecured  demand  promissory  note. The note bears interest at either
LIBOR plus .80% or prime minus 1.40%. The note renews annually and terminates at
the  earlier  of  the  Lender's demand or the Company's decision to terminate by
written  or  oral  communication  to  the  Lender.

6.  Lease  Obligations
The Company leases certain machinery and equipment under capital leases expiring
between  1999  and  2001.  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.  A
number  of  these  leases  have  renewal  options.

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

<TABLE>
<CAPTION>
                                1998    1997
                               ------  ------
<S>                            <C>     <C>
Machinery and equipment . . .  $1,020  $1,020

Information systems . . . . .     571     287
                               ------  ------
Total capital leases. . . . .   1,591   1,307
Less accumulated depreciation     572     364
                               ------  ------

                               $1,019  $  943
                               ======  ======
</TABLE>

                                      -26-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

6.  Lease  Obligations,  Continued:

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,  1998:



<TABLE>
<CAPTION>
Operating                               Capital   Operating
Year ending December 31,                 Leases     Leases
                                        --------  ----------
<S>                                     <C>       <C>
1999 . . . . . . . . . . . . . . . . .  $    356  $      160
2000 . . . . . . . . . . . . . . . . .       370          86
2001 . . . . . . . . . . . . . . . . .        60          32
                                        --------  ----------
Total minimum lease payments . . . . .       786  $      278
                                                  ==========
Interest . . . . . . . . . . . . . . .        74
                                        --------
Liability under capital lease payments       712
Current portion. . . . . . . . . . . .       307
                                        --------
Long-term capitalized lease obligation  $    405
                                        ========
</TABLE>

Rental  expense  for  operating  leases  amounted to $394, $409 and $397 for the
years  ended  December  31,  1998,  1997,  and  1996  respectively.

7.  Employee  Benefit  Plans:
Pension  and  Postretirement  Benefit  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 for years ending December 31,
1998  and  1997  was  $371  and  $254  respectively.

Postretirement  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.

Statement  of  Financial Accounting Standards No. 87, "Employers' Accounting for
Pension,"  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
$1,160  and  $980 at December 31, 1998 and 1997, respectively, has been included
in  other  long-term  liabilities and has been reported net of income tax effect
within  stockholders'  equity.

                                      -27-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

7.  Employee  Benefit  Plans,  Continued:
The  following  table  sets  forth  the  both  plan's  funded status and amounts
recognized  in  the  Company's  consolidated  financial  statements.

<TABLE>
<CAPTION>
                                     Pension Benefits   Postretirement Benefits
                                   --------------------  --------------------
                                     1998       1997       1998       1997
                                   ---------  ---------  ---------  ---------
<S>                                <C>        <C>        <C>        <C>
Change in Benefit Obligation
Projected benefit obligation
(PBO)/Accumulated
postretirement benefit obligation
(APBO), beginning of year . . . .  $ 12,637   $ 10,990   $ 18,874   $ 16,515 
  Service cost. . . . . . . . . .       487        505        678        583 
  Interest cost . . . . . . . . .       889        819      1,166      1,232 
  Plan amendments . . . . . . . .                            (509)
  Plan curtailments . . . . . . .                   17 
  Actuarial (gain) loss . . . . .       375        946     (1,355)     1,279 
  Benefits paid . . . . . . . . .      (649)      (640)    (1,056)      (735)
                                   ---------  ---------  ---------  ---------
PBO/APBO, end of year . . . . . .  $ 13,739   $ 12,637   $ 17,798   $ 18,874 
                                   =========  =========  =========  =========

Change in plan assets
Fair value of plan assets,
  beginning of year . . . . . . .  $ 11,197   $  9,081 
  Actuarial return on plan assets       837      1,838 
  Employer contributions. . . . .       930        918   $  1,056   $    735 
  Benefits paid . . . . . . . . .      (649)      (640)    (1,056)      (735)
                                   ---------  ---------  ---------  ---------
Fair value of plan assets,
  end of year . . . . . . . . . .    12,315     11,197 
                                   =========  =========  =========  =========

Funded status . . . . . . . . . .    (1,424)    (1,440)   (17,798)   (18,874)
Prior service costs . . . . . . .        98        108       (509)
Cumulative net (gain) or loss . .     1,691      1,227      1,753      3,155 
                                   ---------  ---------  ---------  ---------
(Accrued) prepaid pension/
  postretirement cost . . . . . .  $    365   $   (105)  $(16,554)  $(15,719)
                                   =========  =========  =========  =========

Amounts recognized in the
statement of financial position
consist of:
  Prepaid benefit cost. . . . . .  $    365   $   (105)
  Accrued benefit liability . . .                        $(16,554)  $(15,719)
  Intangible asset
  Accumulated other
    comprehensive income. . . . .    (1,160)      (980)
                                   ---------  ---------  ---------  ---------
Net amount recognized . . . . . .  $   (795)  $ (1,085)  $(16,554)  $(15,719)
                                   =========  =========  =========  =========
</TABLE>

<TABLE>
<CAPTION>
                                           Pension Benefits             Postretirement Benefits
                                   -------------------------------  -------------------------------
                                     1998       1997       1996       1998       1997       1996
                                   ---------  ---------  ---------  ---------  ---------  ---------
<S>                                <C>        <C>        <C>        <C>        <C>        <C>
Weighted average assumptions
as of December 31
Discount rate . . . . . . . . . .       7.0%       7.0%       7.5%       7.0%       7.0%       7.5%
Long-term rate of
  return on assets. . . . . . . .       8.5%       8.5%       8.5%       N/A        N/A        N/A
Rate of compensation increase . .       4.5%       4.5%       4.5%
Medical trend rates . . . . . . .                                    5% to 8%   5% to 8%   5% to 8%
</TABLE>

                                      -28-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

7.  Employee  Benefit  Plans,  Continued:
For  measurement  purposes,  an 8 percent annual rate increase in the per capita
cost  of covered health care benefits was assumed for 1998. The rate was assumed
to  decrease  gradually to 5 percent by 2011 and remain at that level hereafter.
Assumed  health  care  cost trend rates have a significant effect on the amounts
reported  for the health care plan. A one-percent point change in assumed health
care  cost  trend  rates  would  have  the  following  effects:

<TABLE>
<CAPTION>
<S>                                                        <C>     <C>
  Effect on total of service and interest cost components  $  346  $  (270)
  Effect on postretirement benefit obligation . . . . . .  $2,876  $(2,060)
</TABLE>

<TABLE>
<CAPTION>
                                  Pension Benefits     Postretirement Benefits
                               ----------------------  -----------------------
                                1998    1997    1996    1998     1997    1996
                               ------  ------  ------  -------  ------  ------
<S>                            <C>     <C>     <C>     <C>      <C>     <C>
Components of net periodic
  pension/postretirement cost
Service cost. . . . . . . . .  $ 487   $ 505   $ 693   $  679   $  584  $  539
Interest cost . . . . . . . .    889     819     739    1,166    1,232   1,143
Expected return on assets . .   (954)   (775)   (658)
Amortization of unrecognized
  Prior service costs . . . .     10      10      13      (18)      34      17
  (Gain) / Loss . . . . . . .     28      44      59 
Cumulative net (gain) loss. .             17 
                               ------  ------  ------  -------  ------  ------
Net periodic
  pension/postretirement cost  $ 460   $ 620   $ 846   $1,827   $1,850  $1,699
                               ======  ======  ======  =======  ======  ======
</TABLE>

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. No
Company  contributions  were  made  to  the  plan  in  1998,  1997  or  1996.

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. Company contributions for 1998, 1997 and 1996 were $1,404, $1,327 and
$794  respectively.

                                      -29-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

8.  Income  Taxes:

The  provision  for income taxes for the years ended December 31, 1998, 1997 and
1996  consisted  of  the  following:

<TABLE>
<CAPTION>
                               1998     1997    1996
                              -------  ------  ------
<S>                           <C>      <C>     <C>
Federal. . . . . . . . . . .  $8,576   $6,327  $3,433
State. . . . . . . . . . . .   1,448    1,105     642
Deferred . . . . . . . . . .    (826)     264     806
                              -------  ------  ------
                               9,198    7,696   4,881
                              -------  ------  ------
Tax effect of extraordinary
  item (shown separately). .                     622 
                              -------  ------  ------
                              $9,198   $7,696  $5,503
                              =======  ======  ======
</TABLE>

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

<TABLE>
<CAPTION>
                                 1998   1997   1996
                                 -----  -----  -----
<S>                              <C>    <C>    <C>
Federal statutory rate. . . . .  35.0%  35.0%  35.0%
Effect of state and local taxes   4.0%   3.7%   3.6%
Change in tax liability . . . .     -      -      - 
Other . . . . . . . . . . . . .   0.1%   0.4%   1.4%
                                 -----  -----  -----
                                 39.1%  39.1%  40.0%
                                 =====  =====  =====
</TABLE>

The components of the net deferred tax benefits (liabilities) as of December 31,
1998  and  1997  were  as  follows:
   
<TABLE>
<CAPTION>
                                        1998      1997
                                      --------  --------
<S>                                   <C>       <C>
Current:
   Inventories . . . . . . . . . . .  $  (659)  $  (705)
   Accrued expenses. . . . . . . . .    1,644     1,628 
   Other . . . . . . . . . . . . . .               (181)
                                      $   985   $   742 
Long-term:
   Basis of property and equipment .  $(1,862)  $(1,618)
   Postretirement benefits liability    6,761     6,420 
   Accrued expenses. . . . . . . . .    1,086       600 
                                      --------  --------
                                      $ 5,985   $ 5,402 
                                      ========  ========
</TABLE>
    
The  sources  of timing differences and the related deferred tax effects were as
follows:
   
<TABLE>
<CAPTION>
                                     1998     1997    1996
                                   --------  ------  ------
<S>                                <C>       <C>     <C>
Accrued expenses. . . . . . . . .  $  (647)  $ 340   $ 970 
Postretirement benefits liability     (341)   (456)   (318)
Depreciation. . . . . . . . . . .      244     225     212 
Inventories . . . . . . . . . . .      (46)    (57)    (52)
Other . . . . . . . . . . . . . .      (26)    212      (6)
                                   --------  ------  ------
                                   $  (816)  $ 264   $ 806 
                                   ========  ======  ======
</TABLE>
    
Valuation  allowances  are  established  when  necessary  to reduce deferred tax
assets  to  the  amounts  expected  to  be  realized.

                                      -30-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

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, 1998 and
1997  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 exercisable 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.

On  May  20,  1998, the stockholders approved a qualified incentive stock option
plan  under  which 300,000 shares of the Company's common stock are reserved for
grants  to  key  employees. The plan includes provisions for pricing and vesting
which are the same as the above plan. The stockholders also approved an employee
stock purchase plan under which 300,000 shares of the Company's common stock may
be sold at a 15% market price reduction. Common shares sold through the plan are
being  purchased  in  the  open  market.

The  following  summarizes  the  changes  in  the  number of Common Shares under
option:
   
<TABLE>
<CAPTION>
(Options in thousands)                         1998           1997           1996
                                           -------------  -------------  ------------
<S>                                        <C>            <C>            <C>
Options outstanding at beginning of year.           514            278           132
Options granted during the year . . . . .                          237           151
Options exercised during the year . . . .            (5)            (1)
Options canceled during the year. . . . .                                         (5)
Options outstanding at end of year. . . .           509            514           278
                                           -------------  -------------  ------------
Option price range per share. . . . . . .  $2.71-$13.75   $2.71-$13.75   $2.71-$6.32
                                           =============  =============  ============
</TABLE>
    
The  Company's current option plans, which provide for a total of 815 options (6
of  which  have been exercised), have 300 options remaining for future grants at
December  31,  1998.

                                      -31-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

10.  Stock  Options,  Continued:
The  ranges  of exercise prices and the remaining contractual life of options as
of  December  31,  1998  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, 1998. . . . . . . . . . . . . . . . . .    132    140        237
  Weighted-average remaining contractual life (in years)   6.78   7.30       8.45
  Weighted-average exercise price. . . . . . . . . . . .  $2.71  $6.32  $   13.47
Options exerciseable in thousands:
  Outstanding as of December 31, 1998. . . . . . . . . .    132     53         79
  Weighted-average remaining
    contractual life  (in years) . . . . . . . . . . . .   6.78   7.30       8.45
  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 1998,
1997  and  1996  along with significant assumptions used in determining the fair
value  of  the  compensation  amounts.

<TABLE>
<CAPTION>
                                 1998         1997        1996
                              -----------  -----------  ---------
<S>                           <C>          <C>          <C>
Pro forma amounts:
Net income . . . . . . . . .  $   14,019   $   11,777   $  7,242 
Earnings per share (basic) .  $     1.52   $     1.32   $   1.04 
Earnings per share (diluted)  $     1.51   $     1.31   $   1.03 

Assumptions:
Dividend yield . . . . . . .           0            0          0 
Expected volatility. . . . .       36.75%       36.75%     34.46%
Risk free interest rate. . .   6.20-6.73%   6.20-6.73%      6.30%
Expected lives . . . . . . .     4 years      4 years    4 years 
</TABLE>

During  fiscal years 1997 and 1996 the weighted average grant-date fair value of
options  granted  was  $5.08  and $2.31 per share, respectively. No options were
granted  in  1998.

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, results of operations
or  cash  flows  of  the  Company.

                                      -32-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

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
                                                                                    -----------
<S>                                                                                 <C>
Net income as reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $    7,313 
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 
Increase in income taxes related to the pro forma adjustments. . . . . . . . . . .        (763)
                                                                                    -----------
Pro forma net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       9,536 
                                                                                    ===========
Average shares outstanding as if the initial public
  offering had occurred on January 1, 1995 . . . . . . . . . . . . . . . . . . . .   8,939,294 
Pro forma net income per share . . . . . . . . . . . . . . . . . . . . . . . . . .  $     1.07 
</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.

14.  Segment  Reporting:
During  the  fourth  quarter of 1998, the Company adopted Statement of Financial
Accounting  Standard  No.  131,  "Disclosure about Segments of an Enterprise and
Related  Information."  Management has determined that the Company operates in a
single  industry  segment,  construction  equipment.  The  Company's  operations
involve  manufacturing  specialized  construction equipment and parts. While the
Company's  chief  operating  decision  maker monitors the revenue streams of the
different products, operations are managed and financial performance is measured
in  the  construction  equipment  segment.

Products  and  Services:  The  Company groups its products and services into the
following  categories:

1.  Material  Handlers-Machines typically used to move a variety of construction
materials  around  jobsites  and  industrial facilities.  2. Excavators-Machines
used  for  ditching,  sloping,  finish  grading,  general  maintenance  and
infrastructure  projects.  3. Parts & Distribution-Parts and service support for
Gradall  machines.

                                      -33-
<PAGE>
                                    Notes to
                                  Consolidated
                                    Financial
                                   Statements

                                  (continued)

                             (dollars in thousands)

                            Gradall  Industries, Inc.

14.  Segment  Reporting,  Continued:
The  revenues  generated  by  these  products  and services at December 31 were:

<TABLE>
<CAPTION>
($in thousands)          1998      1997      1996
                       --------  --------  --------
<S>                    <C>       <C>       <C>
Material Handlers . .  $110,161  $ 84,004  $ 70,409
Excavators. . . . . .    54,580    57,361    55,096
Parts & Distribution.    17,866    17,294    15,404
                       --------  --------  --------
                       $182,607  $158,659  $140,909
                       ========  ========  ========
</TABLE>

Foreign  and  Domestic Sales: The Company sells equipment and parts to countries
outside of the United States. There were no foreign countries with sales greater
than  10%  of  total  revenue.  The  domestic  and foreign revenues generated at
December  31  by  domestic  and  foreign  were:

<TABLE>
<CAPTION>
($in thousands)         1998      1997      1996
                      --------  --------  --------
<S>                   <C>       <C>       <C>
United States. . . .  $176,796  $153,444  $138,330
All other countries.     5,811     5,215     2,579
                      --------  --------  --------
                      $182,607  $158,659  $140,909
                      ========  ========  ========
</TABLE>

Major  Customers:  For  the years ended December 31, 1998 and 1996, one customer
accounted  for  10%  or  more  of the Company's total revenue. No customers have
accounted  for  10%  or  more  of the Company's total revenue for the year ended
December  31, 1997. At December 31, 1998, the customer accounted for 13%, and at
December  31,  1996,  the  customer  accounted  for  11%  of the Company's total
revenue.

15.  Selected  Summary  Quarterly  Data  (Unaudited):

<TABLE>
<CAPTION>
                                                           QUARTERS ENDED(2)
                                           1997                                        1998
                        ------------------------------------------  ------------------------------------------
                        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. . . . . . .  $  35,910  $  38,356  $  40,310  $  44,083  $  41,541  $  49,789  $  44,138  $  47,139

Gross Profit . . . . .      8,618      9,267      9,814     10,297      9,551     11,143      9,980     11,477

Operating Income . . .      4,674      4,735      5,310      5,921      5,234      6,018      5,779      6,932

Income Before
  Income Taxes . . . .      4,363      4,231      5,250      5,843      5,011      5,878      5,926      6,737

Net Income . . . . . .      2,657      2,577      3,199      3,558      3,054      3,582      3,612      4,106


Earnings Per Share (1)
Basic. . . . . . . . .  $     .30  $     .29  $     .36  $     .40  $     .34  $     .40  $     .38        .43
Dilutive . . . . . . .  $     .30  $     .29  $     .35  $     .39  $     .34  $     .40  $     .38        .43
<FN>
(1)  Based  on  average  shares  outstanding  during  the  quarter.
(2)  The  sum  of  each  year's  quarterly  data  may  not  equal  the  total  year  results  due to rounding.
</TABLE>

                                      -34-
<PAGE>
                                    Report of
                                   Independent
                                   Accountants



                                    Report of
                                   Management


                            Gradall  Industries, Inc.

To  the  Board  of  Directors  and  Stockholders  of  Gradall  Industries,  Inc.
In  our  opinion,  the  accompanying  consolidated  balance  sheets  and related
consolidated  statements  of  income,  changes  in stockholders' equity and cash
flows  present  fairly,  in  all  material  respects,  the financial position of
Gradall  Industries,  Inc.  and its subsidiaries (the "Company") at December 31,
1998 and 1997, and the results of their operations and their cash flows for each
of  the  three  years  in the period ended December 31, 1998, in conformity with
generally  accepted  accounting  principles.  These financial statements are the
responsibility  of the Company's management; our responsibility is to express an
opinion  on  these  financial  statements  based on our audits. We conducted our
audits  of  these  statements  in  accordance  with  generally accepted auditing
standards  which require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  financial  statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,  assessing  the
accounting  principles  used  and  significant estimates made by management, and
evaluating  the  overall  financial  statement presentation. We believe that our
audits  provide  a  reasonable  basis  for  the  opinion  expressed  above.


                                           /s/ PricewaterhouseCoopers

Cleveland,  Ohio
February  23,  1999


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 Chief                         Vice  President, Chief Financial
Executive Officer                           Officer and Treasurer

                                      -35-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                            Gradall  Industries, Inc.

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 Consolidated Financial Data
and  other  financial  data  appearing  elsewhere  herein.

General
Gradall  Industries  operates  in  two  markets  of  the  construction equipment
segment.  The  majority  of  the  Company's  revenues,  63.4%,  are generated by
material  handler  machines and related parts that are sold in the rough-terrain
variable-reach material handler market which has grown in excess of 30% per year
for  the  last  five  years.  New  applications,  increased  rental  demands and
displacement  of  straight-mast  forklifts  and small rough-terrain cranes along
with  strong construction and a supportive economy are the major contributors to
the  rapid market growth. The Company has in excess of 16% market share in North
America  for  the  three  size  classes  that  it competes in. Ninety percent of
Gradall  material  handlers are first used in rental fleets. The product is sold
to  national  rental companies and independent distributors for rent and sale to
end-users.  Sales  for  material handler machines were $110.2 million in 1998, a
31.2%  increase over 1997 sales and a four-year compound annual growth of 39.9%.
A  new  D  series  family  of  machines  was introduced in early 1998 to provide
improved  ergonomics,  safety  and  serviceability.

The remaining 36.6% of the Company's sales are generated from excavator machines
and  related  parts.  Excavators  are  produced  with  wheeled  and  crawler
undercarriages  which  compete in separate markets. Gradall is the market leader
in  North  America  in  the wheeled excavator market with a market share of over
40%.  In  the  highway-speed  niche  market, Gradall has a market share in North
America  of  over  90%.  Since  1994  the  wheeled excavator market has a modest
compound  annual  growth  of  4.3%  and  the crawler market has grown at a 13.1%
compound  annual  growth.  The  passage  of the Federal highway bill (TEA-21) is
expected  to  increase construction equipment demand and contribute to increased
market  growth  over  the  next three or four years. International sales and the
rental  market  are  areas  of focus for sales growth in 1999. Excavator machine
sales  were  $54.6  million  in  1998, down 4.8% from 1997 volume. The four-year
compound  annual  growth  for  excavator  sales  is  4.8%.

The  significant sales growth of material handlers in recent years has created a
need  to  increase  production  capacity.  The board of directors has approved a
capacity  expansion  program, which will require a $30 to $50 million investment
over  the  next  three  to  five  years.  An important step in this plan was the
purchase of an additional 330,000-sq. ft. facility in October 1998. Formerly the
Volvo  Truck Assembly plant, the facility is located in Orrville, Ohio, and will
be  used  to  produce  material  handler  products.  Start-up  of  this plant is
scheduled  for  the  second  quarter  1999  upon  the receipt of newly purchased
machinery  and  equipment.

                                      -36-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

                            Gradall  Industries, Inc.

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,
                                       ----------------------
                                        1996    1997    1998
                                       ------  ------  ------
<S>                                    <C>     <C>     <C>
Net Sales:

  Excavators. . . . . . . . . . . . .   39.1%   36.2%   29.9%

  Material handlers . . . . . . . . .   50.0    52.9    60.3 

  Service parts . . . . . . . . . . .   10.9    10.9     9.8 
                                       ------  ------  ------

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

Cost of sales . . . . . . . . . . . .   76.7    76.1    76.9 
                                       ------  ------  ------

  Gross profit. . . . . . . . . . . .   23.3    23.9    23.1 

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

Selling general and
   administrative expenses. . . . . .    8.4     8.6     7.7 
                                       ------  ------  ------

Operating income. . . . . . . . . . .   12.7    13.0    13.1 

Other expense:

  Interest expense. . . . . . . . . .    2.2     0.4     0.2 

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

Income before
  income taxes and extraordinary item    9.8    12.4    12.9 

Income tax provision. . . . . . . . .    3.9     4.9     5.0 
                                       ------  ------  ------

Income before
  extraordinary item. . . . . . . . .    5.9%    7.6%    7.9%
                                       ======  ======  ======
<FN>
(1)  The  sum  in  any column may not equal the indicated total due to rounding.
</TABLE>

Results  of  Operations  Fiscal  1998  Compared  to  Fiscal  1997
Net  Sales.  Net sales were $182.6 million for fiscal 1998, an increase of $23.9
million or 15.1% compared to $158.7 million for fiscal 1997. The increase in net
sales  was  attributable  to  a material increase in the unit volume of material
handlers.  Excavator  unit  sales were slightly lower and service parts showed a
small  increase  in  fiscal 1998 over fiscal 1997. The introduction of the new D
series  family  of  material  handlers  plus  strong  market demand were the key
factors  for  higher  material handler sales. The abundance of low price crawler
excavators  entering the U.S. from Asia contributed to reduced crawler excavator
sales.  Service  parts sales increased for material handler parts as a result of
the  increased  population  of  field units. Net sales of material handlers were
$110.2  million  for fiscal 1998, an increase of $26.2 million or 31.2% compared
to  $84.0 million in 1997. Net sales of excavators were $54.6 million for fiscal
1998,  a  decrease  of $2.8 million or 4.9% compared to $57.4 million for fiscal
1997. Net sales of service parts were $17.9 million for fiscal 1998, an increase
of  $0.6  million or 3.5% compared to $17.3 million in fiscal 1997. 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  1998.

                                      -37-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

                            Gradall  Industries, Inc.

Gross  Profit.  Gross  profit  was $42.2 million for fiscal 1998, an increase of
$4.2 million or 10.9% compared to $38.0 million for fiscal 1997. Gross profit as
a  percentage  of  net  sales  decreases to 23.1% for fiscal 1998 from 24.0% for
fiscal 1997, primarily due to increased volume production inefficiencies related
to  schedule  changes, parts shortages, high overtime and outsourcing. The newly
acquired  Orrville  facility should reduce overtime and outsourcing requirements
following  start  up  in  mid-1999.

Research and Development and Product Engineering Costs. Research and development
and  product  engineering  cost was $4.0 million for fiscal 1998, an increase of
$0.4  million or 10.8% compared to $3.6 million for fiscal 1997. The increase is
due to the addition of engineering personnel to support new product development.

Selling, General and Administrative. Selling, general and administrative expense
was  $14.1 million for fiscal 1998, an increase of $0.4 million or 3.2% compared
to  $13.7  million  for  1997.  This increase is attributable to the addition of
marketing field sales and service representatives, greater overseas and domestic
travel  and increased advertising spending for international trade publications.

Interest  Expense. Interest expense was $0.4 million for fiscal 1998, a decrease
of  $0.3  million  or  45.4%
compared  to  $0.7  million for fiscal 1997. This reduction is the result of the
application of the net proceeds of the Company's public offering of common stock
on  June  29,  1998,  to  reduce  indebtedness.

Income  Tax  Provisions. Income tax expense was $9.2 million for fiscal 1998, an
increase  of $1.5 million or 19.5% compared to $7.7 million for fiscal 1997, and
representing  an  effective  tax  rate  of  39.1%  in  1998  and  1997.

Net  Income.  Net  income was $14.4 million for fiscal 1998, an increase of $2.4
million  or  19.7%  compared  to  $12.0  million  for fiscal 1997. This increase
results  from  the  higher  level  of  sales in fiscal 1998 generating increased
operating  margins  and  reduced  debt  from  the  1998 public offering lowering
interest  expense.

Diluted  Earnings  Per  Share After Extraordinary Item. Earnings per share after
extraordinary  item  were  $1.54  for fiscal 1998, an increase of $0.21 or 15.8%
from  $1.33  for fiscal 1997, resulting from increased net sales and net income.

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 were $17.3 million for fiscal 1997, an increase of
$1.9  million  or  12.3%  compared  to  $15.4  million  for  fiscal  1996.

                                      -38-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

                            Gradall  Industries, Inc.

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 1997from
23.3% for fiscal 1996, primarily due to improved production efficiencies and the
economics  of  higherproduction  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.

Liquidity  and  Capital  Resources
In  June  1998,  the Company completed a public offering of 562,500 newly issued
shares  of  common  stock at $13.00 per share. As part of the offering, existing
shareholders  sold  1,250,000  shares  of  common stock. The $6.9 million of net
proceeds  to  the  Company  was  used  to  repay  the revolving credit facility.

                                      -39-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

                            Gradall  Industries, Inc.

The  Company  has  funded  its  operations  primarily  with  cash generated from
operations.  The  Company  generated net cash from operating activities of $11.1
million  in  1998  compared  to  $3.4 million for 1997.  Net cash from operating
activities  for  1998 resulted from $14.4 million of net income and $2.5 million
of non-cash charges to income, primarily depreciation and postretirement benefit
transition  obligation,  which  were reduced by $5.7 million of net cash used by
changes  in  operating assets and liabilities, primarily a $7.3 million increase
in  inventory  due  to more finished machines in stock.  Net cash from operating
activities  for  1997 resulted from $12.0 million of net income, $3.4 million of
non-cash  charges  to  income, primarily depreciation and postretirement benefit
transition  obligation  and  reduced  by $12.0 million from changes in operating
assets  and  liabilities,  primarily  an  $8.4  million  increase  in  accounts
receivable.

Net  cash  used by investing activities, consisting of purchases of property and
equipment,  was  $13.3  million  in  1998  and  $5.3  million  in 1997.  Capital
expenditures  for  1998  include  $5.6  million  for  the  purchase  of  a
330,000-square-foot facility in Orrville, Ohio to be used for the manufacture of
material  handlers.  The  Company  continues  the multi-year program to increase
production  efficiencies,  labor  productivity  and  the output of the Company's
manufacturing facility through investments in new capital equipment.  Management
expects  to invest approximately $10.5 million of additional capital in 1999 for
start-up  machinery  at  the Orrville facility and production improvements under
the multi-year program which will be funded from internally generated cash flow.

At  December  31,  1998,  borrowings  under  Gradall's revolving credit facility
totaled  $6.9  million  and  $18.1  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,
1998,  the  average  annual  interest  rate  under  the facility was 7.25%.  The
Company  was  not  required  to  make  any  principal  repayments  of the amount
outstanding  under  the  facility  until  August  31,  1999.

In January 1999 the Company's Loan and Security Agreement with Heller Financial,
Inc.  was  paid  in  full and terminated. A new revolving line of credit for $17
million was established with KeyBank National Association (the "Lender") with an
unsecured  demand promissory note. At February 28, 1999, borrowing under the new
revolving  credit  facility totaled $9.3 million, and $5.7 million was available
under  the  facility. The note bears interest at either LIBOR plus .80% or prime
minus  1.40%.  The  note  renews  annually  and terminates at the earlier of the
Lender's  demand  or  the  Company's  decision  to  terminate by written or oral
communication  to  the  Lender.

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.

                                      -40-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

                            Gradall  Industries, Inc.

The  Board of Directors has approved in principle the Capacity Expansion Program
which is intended to raise capacity in excess of 50% over the next three to five
years.  The  Capacity  Expansion  Program  will  require  a  $30  to $50 million
investment  over  this  time frame. The acquisition of the Orrville facility and
the  purchase  of  robot  welders,  machining  centers  and  lasers  which total
approximately  $8.3 million are the investments in this program through December
31,  1998.  The Company may alter or revise the Capacity Expansion Program based
upon  changes  in  market  demand  and/or  economic  conditions.

The  Company  believes  that  cash  flow  from  operations  together  with funds
available  under  its  new  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 programs having been written using
two  digits rather than four to define the applicable year. Any of the Company's
computers,  computer  programs,  manufacturing  and  administration equipment or
products  that  have  date-sensitive software may recognize a date using "00" as
the  year  1900  rather  than  the year 2000. If any of the Company's systems or
equipment that have date-sensitive software use only two digits, system failures
or miscalculations may result causing disruptions of operations, including among
other  things,  a  temporary  inability  to  process normal business activities.
Significant  uncertainty  exists  concerning the scope and magnitude of problems
associated  with  the  year  2000  change.

The  Company  recognizes the need to ensure its operations will not be adversely
impacted  by  year  2000 software failures and has established a project team to
address  year 2000 risks. The project team has coordinated the identification of
and  will  coordinate  the  implementation  of  changes to computer hardware and
software  applications that will attempt to ensure availability and integrity of
the Company's information systems and the reliability of its operational systems
and  manufacturing  process.

The  Company  believes  that  it  has  identified substantially all of the major
computer,  software  applications  and related equipment used in connection with
its  internal operations that must be modified, upgraded or replaced to minimize
the  possibility  of  a  material  disruption  to  its business. The Company has
commenced  the  process of modifying, upgrading and replacing major systems that
have  been identified as adversely affected and expects to complete this process
by  the end of September 1999. In addition to computers, photocopiers, telephone
switches,  security  systems, elevators and other common devices may be affected
by  the  year  2000  problem.  The  Company is currently assessing the potential
effect  of  and  costs  of  remediating  the year 2000 problem on its office and
facilities  equipment.

The  Company  also faces risk to the extent that suppliers of products, services
and  systems purchased by the Company and others with whom the Company transacts
business  on  a  worldwide  basis do not comply with year 2000 requirements. The
Company  has  initiated  formal  communications  with  significant suppliers and
customers  to  determine  the  extent  to which the Company is vulnerable to the
failure  of  such  third parties to remediate their own year 2000 issues. In the
event  any such third parties cannot provide the Company with products, services
or  systems  that  meet  the  year 2000 requirements on a timely basis or in the
event  year  2000  issues  prevent  such  third  parties from timely delivery of
products  or  services  required  by  the  Company,  the  Company's  results  of
operations  could  be  materially  adversely  affected.  To the extent year 2000
issues  cause  significant  delays  in  supplier  shipments,  the  sourcing  of
alternative  suppliers  or  increasing inventory levels, the Company's business,
results  of  operations  and  financial  position  could be materially adversely
affected.

                                      -41-
<PAGE>
                             Management's Discussion
                                  and Analysis
                                  of Financial
                                    Condition
                                   and Results
                                  of Operations

                                   (continued)

                            Gradall  Industries, Inc.

The  Company's research and supplier response indicate that all of the Company's
products  manufactured  to  date and all future designs are year 2000 compliant.

External  and internal costs specifically associated with modifying internal use
software  for year 2000 compliance are expensed as incurred. To date the Company
has spent $0.22 million on this project. Cost to be incurred in 1999 to fix year
2000  problems  are  estimated  at approximately $0.5 million. Such costs do not
include normal system upgrades and replacements. The Company does not expect the
costs relating to year 2000 remediation to have a material adverse effect on its
results  of  operations,  cash  flows  or  financial  condition.

As  part  of  Gradall's contingency planning, the Company is developing business
continuity  plans for those areas that are critical to Gradall's business. These
business  continuity  plans  will be designed to mitigate serious disruptions to
the  business  flow  beyond  the  end  of  1999. The major drive for contingency
planning  will  be  in  the  first  half  of  1999 with the expectation that the
Company  will  have  plans  in  place  by the end of the second quarter of 1999.

The  failure  to  correct  a  material  year  2000  problem  could  result in an
interruption  in  or  a  failure  of  certain  normal  business  activities  or
operations.  Such  failures  could materially and adversely affect the Company's
results  of  operations,  liquidity  and financial condition. Due to the general
uncertainty  inherent  in  the  year  2000  readiness  of critical suppliers and
customers,  the  Company  is  unable  to  determine  at  this  time  whether the
consequences  of year 2000 failures will have a material impact on the Company's
results  of  operations, liquidity or financial condition. The year 2000 project
is expected to significantly reduce the Company's level of uncertainty about the
year 2000 problem and in particular about the year 2000 compliance and readiness
of  its  critical  suppliers  and customers. The Company believes that, with the
implementation of new business systems and completion of the projects scheduled,
the  possibility  of  significant  interruptions  of normal operations should be
reduced.

The  estimates and conclusions herein contain forward-looking statements and are
based  on  management's best estimates of future events. Risks to completing the
plan  include the ability to retain human resources, our ability to discover and
correct  the  potential  year 2000 sensitive problems which could have a serious
impact  on operations, and the ability of suppliers and customers to bring their
systems  into  year  2000  compliance.

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

                                      -42-
<PAGE>
                            Accounting Pronouncements

                            Gradall  Industries, Inc.

Accounting  Pronouncements
In  June  1997,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting  Comprehensive
Income,"  effective  for  fiscal  years  ending  after  December  31,  1997.
Thedifference between net income and comprehensive income for the Company is due
to  change  in its minimum pension liability adjustment. Comprehensive income is
being  shown  in  the  statement  of  changes  in  stockholders'  equity.

In  June 1997, the Financial Accounting Standards Board also issued Statement of
Financial  Accounting  Standards ("SFAS") No. 131, "Disclosure about Segments of
an  Enterprise and Related Information," effective for fiscal years ending after
December  15,  1997.  The  Company adopted SFAS No. 131 in the fourth quarter of
1998.  SFAS  No. 131 requires disclosure only and had no impact on the Company's
consolidated  financial  statements.  The  Company's one segment of construction
equipment  is  discussed  in  Note  14 to the consolidated financial statements.

In  February  1998, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards ("SFAS") No. 132, "Employers' Disclosures about
Pensions  and  Other  Postretirement  Benefits,"  effective  for  fiscal  years
beginning  after  December  15,  1997.  The  Company adopted SFAS No. 132 in the
fourth quarter of 1998. SFAS No. 132 revises employers disclosures about pension
and  other  postretirement benefits plans. It does not change the measurement or
recognition  of  those  plans  and  therefore,  had  no  impact on the Company's
consolidated  financial  statements.  The  Company's  Pension and Postretirement
Benefit  Plans are discussed in Note 7 to the consolidated financial statements.

In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." This Statement requires that all derivative instruments
be  recorded on the balance sheet at their fair value. Changes in the fair value
of  derivatives  will  be  recorded  each  period  in  current earnings or other
comprehensive income. The new rules will be effective the first quarter of 2000.
The  Company  is  in  the process of determining the impact of this new standard
and,  based  on  current  market conditions, anticipates that it will not have a
material  impact  on  the  Company's  financial  statements  when  effective.

In  March  1998,  the  Accounting Standards Executive Committee ("AcSEC") of the
American  Institute of Certified Public Accountants issued Statement of Position
98-1,  "Accounting  for the Costs of Computer Software Developed or Obtained for
Internal  Use"  ("SOP  98-1").  SOP  98-1  requires expenses incurred during the
application  development  stage  of  a  software  implementation  project  to be
capitalized  and  amortized  over  the  useful  life of the project. The Company
adopted  SOP 98-1 in the first quarter of 1999. SOP 98-1 is not expected to have
a  material  impact on the Company's consolidated financial position, results of
operations  or  cash  flows.

In  April  1998,  the AcSEC issued Statement of Position 98-5, "Reporting on the
Costs  of  Start-Up  Activities" ("SOP 98-5"). SOP 98-5 provides guidance on the
financial  reporting of start-up and organization costs; requiring such costs be
expensed  as  incurred.  SOP  98-5 is effective for fiscal years beginning after
December  15,  1998.  The  Company's  current policy is to expense such costs as
incurred  consistent  with  SOP  98-5.

                                      -43-
<PAGE>
                              Cautionary Statements

                            Gradall  Industries, Inc.

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 Securities 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.

                                      -44-
<PAGE>
                               The Company's Stock

                            Gradall  Industries, Inc.

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
                December 31, 1998  December 31, 1997
                -----------------  -----------------
                 High      Low      High      Low
<S>             <C>      <C>       <C>      <C>
First Quarter.  $18 3/8  $ 15 3/8  $16 1/4  $    12
Second Quarter   17 7/8   13 1/16   16 1/4       12
Third Quarter.   16 7/8   12  5/8   17 3/8   14 3/4
Fourth Quarter       16   13 3/32   16 7/8       15
</TABLE>

As  of  February  26,  1999,  there were 135 record holders of the Common Stock.

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.

                                      -45-
<PAGE>
                               General Information

                            Gradall  Industries, Inc.

<TABLE>
<CAPTION>
Stockholder  Information
-----------------------------------------------------------------------------------------------------
<S>                                                    <C>
Annual meeting                                         Stock exchange
Sheraton Airport Hotel, 5300 Riverside Drive           Gradall Industries, Inc. common
Cleveland, Ohio                                        stock is traded under the symbol GRDL and is
May 19, 1999 at 10:00 am EDT                           listed on the NASDAQ National Market.

Transfer agent and registrar                           Form 10-K or investor information
Chase Mellon Shareholders Services                     Bruce A. Jonker
85 Challenger Road, Overpeck Centre                    Vice President, Chief Financial Officer
Ridgefield Park, NJ 07660                              Gradall Industries, Inc.
Phone Toll-Free 1-800-756-3353                         406 Mill Ave. SW, New Philadelphia, Ohio 44663
                                                       Phone 330-339-8374,  Fax 330-339-8317

Directors
-----------------------------------------------------------------------------------------------------
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,                 Jack D. Rutherford
Gradall Industries, Inc.                               Chairman of the Board, and Chief Executive
David S. Williams                                      Officer Emeritus, The Gradall Company
Vice President, Marketing and Sales,                   Ernest Green
Gradall Industries, Inc.                               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

Officers and Senior Managers
-----------------------------------------------------------------------------------------------------
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
</TABLE>

Equal  Opportunity  Employer
--------------------------------------------------------------------------------
Gradall  is  an  equal  opportunity employer and seeks to attract and retain the
best-qualified people regardless of race, sex, age, religion, national origin or
veteran  status.

                                      -46-
<PAGE>
www.gradall.com/store

Authorized  Gradall  apparel  and  replicas  are  available  to  investors  and
contractors  alike  via our easy-to-navigate website. Just point your browser to
www.gradall.com/store  for  product  and  pricing  information.

Gradall  has  authorized  the  production of a collection of scale model machine
replicas.  These  collector-quality replicas are manufactured in exacting detail
using  actual  Gradall engineering drawings. The 534C-9 Material Handler and the
XL  5100 Wheeled Hydraulic Excavator replicas have been available for two years,
while  the  XL  5200 Crawler Excavator was just released last year. Each replica
includes  such  authentic  details as the telescoping boom, steering mechanisms,
paint  and decals. Gradall also offers a full line of apparel, including shirts,
hats,  jackets  and  other items. Gradall merchandise can be purchased online at
www.gradall.com/store.

                                      -47-
<PAGE>