SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 10-K

                   FOR ANNUAL AND TRANSITION REPORTS PURSUANT
             TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT



(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the year ended December 31, 1998

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from      to

                       Commissions file number: 333-18957

                         CLARK Material Handling Company

             (Exact name of registrant as specified in its charter)

                               Delaware 61-1312827
                  (State or other jurisdiction of (IRS Employer
               incorporation or organization) Identification No.)

                                172 Trade Street
                            Lexington, Kentucky 40511
                  (Address of registrant's principal (Zip Code)
                               executive offices)

Registrant's telephone number, including area code:  (606) 288-1200

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

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

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

As of January 1, 1998, there were 1,000 shares of the registrant's  common stock
outstanding, all of which were owned by an affiliate of the registrant.

                    Documents incorporated by reference: None









                         CLARK Material Handling Company
                       Index to Annual Report on Form 10-K




PART I.......................................................................  3
     Item 1 --  BUSINESS.....................................................  3
     Item 2 --  PROPERTIES...................................................  7
     Item 3 --  LEGAL PROCEEDINGS............................................  8
     Item 4 --  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........  8

PART II......................................................................  8
     Item 5 --  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                STOCKHOLDER MATTERS..........................................  8
     Item 6 --  SELECTED FINANCIAL DATA......................................  8
     Item 7 --  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                AND RESULTS OF OPERATIONS....................................  9
     Item 7A -- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.. 14
     Item 8 --  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................. 15
     Item 9 --  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                AND FINANCIAL DISCLOSURES.................................... 15

PART III..................................................................... 16
     Item 10 --  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.......... 16
     Item 11 --  EXECUTIVE COMPENSATION...................................... 17
     Item 12 --  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                 MANAGEMENT.................................................. 19
     Item 13 --  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 20

PART IV.......................................................................21
     Item 14 --  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
                 FORM 8-K.................................................... 21


                                       2
<PAGE>


Introduction
------------

          The  following  summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial statements
(including notes thereto)  included  elsewhere in this report.  Unless otherwise
indicated or the context  otherwise  requires,  references  to the  "Company" or
"CLARK" are to CLARK Material Handling Company  (including its predecessors) and
the other material  handling  operations  acquired from certain  subsidiaries of
Terex Corporation ("the  Predecessor's  Parent") pursuant to the Acquisition (as
defined) for periods prior to the  Acquisition  and to CLARK  Material  Handling
Company and its subsidiaries  for periods from and after the Acquisition,  after
giving effect thereto.

          The Private Securities  Litigation Reform Act of 1995 provides a "safe
harbor" for certain  forward-looking  statements.  Certain matters  discussed in
this  filing  could be  characterized  as forward  looking  statements,  such as
statements relating to plans for future expansion,  capital spending,  financing
sources  and  effects  of  regulation  and  competition.  Such  forward  looking
statements  involve  important risks and  uncertainties  that could cause actual
results  to differ  materially  from those  expressed  in such  forward  looking
statements.

                                     PART I

Item 1 -- BUSINESS

General

          CLARK is a leading international designer,  manufacturer, and marketer
of a complete line of forklift  trucks  including  internal  combustion  trucks,
electric  riders,  narrow aisle  stackers  and powered hand trucks.  The Company
invented the platform  truck in 1917,  the tow tractor in 1924, and the forklift
in 1928, and produced the first  electric  forklift in 1942. As a result of this
innovation  and the  production  of more than one million  forklifts in its more
than 80-year history, management believes CLARK(R) is one of the most recognized
brand  names  of  forklift  trucks  in  North  America  and  that it has a large
installed fleet of units in operation worldwide.

          This large installed  fleet has allowed CLARK to generate  significant
ongoing replacement parts sales, which typically generate  substantially  higher
gross  margins and provide a more stable  revenue base than new  forklift  truck
sales. CLARK's North American operations  historically account for approximately
70% of its net sales and its European  operations account for approximately 25%.
CLARK's recently  acquired Asian operations  account for approximately 5% of its
1998 net  sales.  It is  anticipated  that  CLARK  Asia will grow to be a higher
percentage in the future. CLARK and its subsidiaries distributes its products to
a diverse customer base through a global network of  approximately  700 dealers,
with more than 950 locations worldwide.

          For information  concerning the Company's  backlog  orders,  see "Item
7--Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations -- Backlog."  Information  about  segments is included in notes 1 and
13, respectively,  to the Company's  consolidated  financial statements included
under "Item 8 -- Financial Statements and Supplementary Data."

The Acquisition

          The  Company  and CMH  Holdings  Corporation,  a Delaware  corporation
("Holdings"),  were formed by Citicorp Venture Capital Ltd. ("CVC"), and certain
members  of  management  of CLARK  (the  "Management  Investors")  to affect the
acquisition  (the  "Acquisition")  of  substantially  all the assets and certain
liabilities of Clark Material Handling Company, a Kentucky corporation,  and all
of the  outstanding  capital stock of certain of its  affiliates,  including its
German,  Korean,   Brazilian  and  Canadian  affiliates.   The  Acquisition  was
consummated  on  November  27,  1996.  The  aggregate   consideration   for  the
Acquisition  was $139.5  million,  which was  subject  to  certain  post-closing
adjustments.  To finance the Acquisition,  the Company issued $130 million of 10
3/4% Senior Notes due 2006 (the  "Original  Notes").  In  addition,  the Company
issued all of its common  stock to Holdings in exchange for $25 million in cash.
Holdings was capitalized,  coincident with the closing of the Acquisition,  with
$25 million through the sale of capital stock and junior subordinated debentures
to CVC and certain individuals.

Subsequent Acquisitions

          In 1997 the Company acquired  substantially  all of the assets of Blue
Giant USA Corporation  and Blue Giant Limited  (collectively  "Blue Giant").  In
addition,  the Company acquired  substantially all of the assets of Hydrolectric
Lift  Trucks,  Inc.  ("HLT"),  a supplier  of  uprights  for  material  handling
equipment.

                                       3
<PAGE>

          On July 15, 1998, the Company acquired substantially all of the assets
and certain liabilities of the forklift division ("Samsung Forklift") of Samsung
Heavy  Industries  ("SHI").  The initial purchase price for Samsung Forklift was
$30.4 million, based upon the stated purchase price of 39.1 billion South Korean
Won and is subject to certain  adjustments.  To finance  this  acquisition,  the
Company  sold $20 million of 10 3/4% of Senior  Notes due 2006 (the "New Notes",
and along with the Original  Notes,  the  "Notes")  and 20,000  shares of Senior
Exchangable Preferred Stock with a liquidation preference of $1,000 a share.

See note 4 to the Company's consolidated financial statements.

Products

          CLARK  currently  offers  over 100 truck  designs  within  five  major
product lines: light internal combustion ("IC") trucks (with a capacity of 1.0 -
5.0  tons),  heavy IC trucks  (with a capacity  of 5.5 - 18 tons),  narrow-aisle
trucks  (with a capacity  of 1.5 - 2.5 tons),  electric  counterbalanced  riders
(with a capacity of 1.3 - 6.0 tons),  and manual and powered hand trucks (with a
capacity of 2.0 - 4.0 tons).

          Light IC trucks,  used for general  warehousing  needs,  are generally
powered by liquid  propane.  Such trucks are well suited for  manufacturing  and
distribution  applications that require a high degree of maneuverability.  Heavy
IC trucks are specialty  products designed for use in more demanding  situations
such as heavy  manufacturing or container  handling  applications.  Narrow-aisle
trucks  provide  solutions for high density  storage needs and operate in six to
eight  foot   aisles  and  reach   heights  of  more  than  30  feet.   Electric
counterbalanced riders,  designed for indoor use in warehousing,  manufacturing,
distribution  and other  applications,  are powered by a  rechargeable  electric
battery.  Powered  hand  trucks are  generally  used in the  transportation  and
order-selecting businesses.

          Rapid  development  and  introduction  of new and redesigned  products
incorporating  the latest  materials  handling  technology is a key component of
CLARK's strategy.

          In 1996, CLARK expanded its Genesis(R) family with the addition of a 4
- 5.5 ton  pneumatic  tire IC lift truck,  and a 2 - 3.2 ton electric four wheel
sit down  rider.  CLARK also made  significant  additions  to its  narrow  aisle
product line, which was expanded to include double reach and straddle models.

          During 1997, CLARK added three more trucks to its Genesis(R) family, a
4.0 - 5.0 ton cushion  tire IC lift truck,  a 6.0 - 7.0 ton cushion tire IC lift
truck,  and a 1.2 - 2.5 ton three  wheel  electric  sit down  rider.  CLARK also
expanded its Genesis(R) heart-of -the-line 2 - 3 ton IC trucks by increasing the
capacity  to 3.2 tons and  adding a 3.0  liter GM engine  option.  Additionally,
CLARK  purchased  Blue Giant and HLT.  Blue Giant  produces a full line of CLARK
branded  manual and powered  walkie  pallet trucks and stackers and continues to
produce and sell under the Blue Giant name.  HLT produces  forklift masts mainly
for CLARK's own use.

          In 1998 CLARK  introduced the "M-Series"  trucks in North America from
it's Korean  subsidiary  ("CLARK  Asia").  This product line adds a value priced
series of IC trucks in the 1 - 2 ton, 2-3 ton, 4 - 5 ton and 6 - 7 ton pneumatic
tire class.  The 10 -18 ton pneumatic tire IC product is  manufactured  by CLARK
under license from an Australian company.  Significant product improvements were
also made to powered hand trucks.  CLARK's European  subsidiary ("CLARK Europe")
introduced the Genesis  trucks  already common in the United States,  especially
the 4 - 5.5 ton and 6 - 7 ton models.  The Genesis  pneumatic  range was rounded
off by the new 1- 2 ton gas and diesel-powered trucks, and the 4 - 5 ton Genesis
pneumatic  truck received a new  "green-diesel  engine".  At the Hanover Fair in
1998, CLARK presented a forklift truck powered by liquified natural gas (LNG).

Aftermarket Parts

          Since the Company's  inception,  more than one million forklift trucks
have  been  manufactured  by  CLARK  and its  predecessors,  which  generates  a
substantial  aftermarket parts business for CLARK.  CLARK supplies both original
equipment parts to fit CLARK brand forklifts and Totalift (R) parts to fit other
brands.

          CLARK's  parts  distribution   operation  undertakes   purchasing  and
customer services for aftermarket parts. CLARK distributes its aftermarket parts
in North America through a distribution center in Southaven,  Mississippi,  (the
"Southaven  Facility"),  in Europe through a warehouse located in Saarn, Germany
and for the  international  operations of CLARK,  through sales and distribution
facilities.  CLARK shares the Southaven  Facility with the Predecessor's  Parent
and,  pursuant to the Acquisition,  CLARK and the  Predecessor's  Parent entered
into a Service

                                       4
<PAGE>

Agreement  providing  for the  continued  use by  CLARK  of such  facility.  For
information regarding the Service Agreement, see "Item 13--Certain Relationships
and Related Transactions--Service Agreement."

Manufacturing Operations

          CLARK's  Lexington,  Kentucky  facility  produces both IC and electric
forklifts with lift capacities  ranging from 1 - 18 tons. The Lexington facility
is primarily an assembly operation with welding and painting  capabilities.  ISO
9001 certification was awarded in August 1997.

          CLARK  Europe's  Mulheim  manufacturing   facility  produces  both  IC
forklifts  (diesel,  LP gas  and  natural  gas)  with  hydrodynamic  as  well as
electronically  controlled hydrostatic drive (MegaStat(TM)) and electric powered
forklifts  equipped  with  D/C  as  well  as  frequency-controlled   A/C  motors
(MegaAC(TM))  in the capacity  range of 1 - 5 tons.  The  manufacturing  process
includes  pre-production and welding production of frames and uprights. A powder
dry paint  system was  recently  installed  to ensure  high-quality  painting of
frames  and  uprights.  The  Mulheim  facility  has also been  awarded  ISO-9001
certification.

          CLARK Asia's Changwon,  Korea manufacturing  facility produces both IC
forklifts (1.5 - 7.5 ton diesel,  gas, and LPG), and electric  forklifts  (reach
and sit-down rider) of 1.5 - 3 ton capacity.  The factory also has an integrated
upright  manufacturing  facility and  assembly  line.  The factory  became fully
operational in November 1998, and includes manual frame and robotic carriage and
upright welding. CLARK Asia has also been awarded ISO 9001 certification.

          Blue Giant has two locations,  one in Pell City,  Alabama,  and one in
Brampton, Ontario, Canada. The Pell City, Alabama facility produces powered hand
trucks, tow tractors, pallet trucks, walkie stacker forklifts and scissor lifts.
The Brampton,  Ontario  facility  produces dock  equipment,  and walkie  stacker
forklifts. The Brampton facility is ISO-9001 certified.

Dealer Network

          CLARK  and its  subsidiaries  distributes  its  product  to a  diverse
customer base through a global  network of  approximately  700 dealers with more
than 950  locations.  The  Company  also owns  three  dealers  in Europe and two
dealers in North America.  CLARK's dealers and distributors generally market the
full CLARK product line and maintain comprehensive service capabilities. CLARK's
sales  organization  coordinates  sales  and  promotional  activities,  provides
ongoing dealer training, and facilitates dealer communications. CLARK sells to a
diversified  customer base, with no single customer  accounting for more than 5%
of total sales.

Suppliers

          The Company  strategically  relies upon outside  suppliers  for a vast
majority of the individual components of a lift truck.  Management believes that
such outsourcing allows CLARK greater  flexibility in varying its cost structure
in response to changing market conditions.

          Principal  materials  used  by  CLARK  in  its  various  manufacturing
processes include steel, castings, engines, tires, electric controls,  uprights,
transaxles and motors, and a variety of other fabricated or manufactured  items.
While  substantially  all such  materials are typically  available from multiple
suppliers, CLARK depends exclusively upon certain suppliers of key parts used in
its  lift  trucks.  From  time  to  time,  certain  of  CLARK's  suppliers  have
experienced difficulties in meeting CLARK's production schedules. The failure of
a key supplier to meet the Company's  requirements on a timely basis or the loss
of a key supplier could lead to delays in the Company's manufacturing operations
and have a material adverse effect on the Company.

Competition

          CLARK  competes  in  an  industry  with  over  30  competitors.  Major
competitors  include NACCO Industries,  Inc. in the U.S. and Linde AG in Europe.
In addition,  the Company also competes with Toyota Industrial  Equipment/U.S.A,
Inc.,  Mitsubishi  Caterpillar  Forklift  America,  Inc., Crown Equipment Corp.,
Raymond Corporation, Daewoo and Jungheinreich AG.

          The  forklift   market  in  which  the  Company   competes  is  highly
competitive.  The Company encounters significant  competition  particularly from
lower cost foreign competitors, including manufacturers located in Japan


                                       5
<PAGE>

and  Korea.  The  Company  competes  on the  basis of  quality,  price,  on-time
delivery, product line, ease of use, safety, comfort, and customer service. Many
of the Company's  competitors have greater financial resources than the Company.
Additionally,  certain  of  the  Company's  products  are  subject  to  changing
technology that could place the Company at a competitive  disadvantage  relative
to  product  innovations  by  competitors.  There can be no  assurance  that the
Company will be able to achieve the technological advances that may be necessary
to remain competitive.

Intellectual Property

          The Company  relies on a combination  of  trademarks,  service  marks,
trade  names,  patents,  licensing  arrangements,  trade  secrets,  know-how and
proprietary  technology to secure and protect its intellectual  property rights.
In particular, the Company's CLARK(R), Clarklift(R),  Powrworker(R), Genesis(R),
and Blue  Giant(R)  trademarks  are of  particular  importance  to the Company's
business. The Company is currently undertaking to obtain trademark registrations
for its MegaValve  (TM),  MegaStat (TM), and MegaAC (TM) marks.  The loss of the
Company's  rights  under one or more of the  Company's  trademarks  could have a
material adverse effect on the Company's business.

          There can be no  assurance  that the  Company  will be  successful  in
obtaining  approval of any present or future  patent or trademark  applications;
that any patents,  patent applications and patent licenses will adequately cover
the Company's  technologies or protect the Company from potential  infringements
by third parties;  that any  nondisclosure and  confidentiality  agreements will
provide  meaningful  protection  for the Company's  trade  secrets,  know-how or
proprietary  technology  in the event of any  unauthorized  use or disclosure of
such  information;  or that others will not obtain  access to, or  independently
develop technologies or know-how similar to that of the Company.  There also can
be no assurance  that future  litigation by the Company will not be necessary to
enforce its trademark,  patent and other  proprietary  rights,  or to defend the
Company  against  claimed   infringement  of  the  rights  of  others,   adverse
determinations in which could have a material adverse effect on the Company.

Employees

          As of  December  31,  1998,  CLARK's  total  work force  consisted  of
approximately  1,776  salaried,   hourly  and  temporary  employees.   Of  these
employees, 881 are in the Company's United States operations,  and 895 employees
are in the Europe, Asia, Germany, Canada and Brazil operations.

         In Europe,  the Mulheim  facility is  represented  by the German  Metal
Workers (Industrie  Gewerkschaft  Metall). The Mulheim facility has a total work
force of approximately 300, of which approximately 200 are members of the German
Metal  Workers.  There are no contracts  between CLARK and the union,  but CLARK
follows  standard  practices by complying with contracts  between the unions and
the employer's association.

         Management  believes  that its  relationships  with its  employees  and
unions are good.

Environmental Matters

         As with  other  industrial  companies,  the  Company's  facilities  and
operations  are  required  to comply  with and are  subject to  liability  under
federal,  state,  local and foreign  environmental  and worker health and safety
laws,  regulations  and  ordinances,  including those relating to air emissions,
wastewater  discharges  and the  management  and disposal of certain  materials,
substances and wastes  ("Environmental  Laws").  Certain of these  Environmental
Laws hold owners or operators of land or businesses liable for their own and for
previous  owners' or  operators'  releases  of  hazardous  or toxic  substances,
materials or wastes,  pollutants or contaminants,  including, in some instances,
petroleum and petroleum  products.  Compliance with  Environmental Laws also may
require  the  acquisition  of  permits  or  other   authorizations  for  certain
activities and  compliance  with various  standards or procedural  requirements.
Although the Company believes that its operations are in substantial  compliance
with current  regulatory  requirements under material  applicable  Environmental
Laws, the nature of the Company's  operations and the history of industrial uses
at some of its  facilities  expose  the  Company to the risk of  liabilities  or
claims with respect to environmental  and worker health and safety matters.  The
Company may also have contingent  responsibility for liabilities with respect to
environmental  matters  arising in connection  with the prior  operations of the
material  handling  business of Clark  Equipment  Company,  a predecessor of the
Company  ("CEC").  There can be no assurance  that material costs or liabilities
will not be incurred in connection with such liabilities or claims.



                                       6
<PAGE>

         In connection with the Acquisition, the Company agreed to indemnify the
Predecessor's  Parent and hold it harmless from and against all losses which are
incurred or suffered by the Predecessor's  Parent with respect to or arising out
of the Company's  business and assets except for such losses which arise from or
are in connection with any real property, business entities or assets which were
not acquired as part of the Acquisition  (which the Predecessor's  Parent agreed
to retain  responsibility for and indemnified the Company against).  No specific
environmental losses were identified by the parties in the Acquisition Agreement
nor are  there  any known  material  losses  which  have  been  asserted  by the
Predecessor's  Parent pursuant to the environmental  indemnity provisions of the
Acquisition Agreement or incurred by the Company. The environmental  indemnities
are subject to certain deductibles,  caps, and time limitations depending on the
nature of the environmental claim.

          Based upon the  Company's  experience to date and the  indemnities  it
obtained in  connection  with the  Acquisition,  the Company  believes  that the
future cost of  compliance  with existing  Environmental  Laws (or liability for
known  environmental  liabilities or claims) should not have a material  adverse
effect on the Company's business,  financial condition or results of operations.
Compliance with such laws has, and will, require  expenditures by the Company on
a  continuing  basis.  Future  events,  such as  changes  in  existing  laws and
regulations  or their  interpretation,  may give rise to  additional  compliance
costs or liabilities  that could have a material adverse effect on the Company's
business,  financial  condition or results of operations.  Compliance  with more
stringent laws or regulations,  as well as more vigorous enforcement policies of
regulatory  agencies or stricter or different  interpretations of existing laws,
may require additional expenditures by the Company that may be material.

Item 2 -- PROPERTIES

          The Company's  headquarters  are located in Lexington,  Kentucky.  The
Company currently owns or leases 14 facilities in North America,  Europe, Brazil
and Korea which are used for manufacturing, distribution, sales, warehousing and
service center activities. The following table outlines the principal facilities
owned or leased by CLARK or its subsidiaries:

     Facility Location                             Type of Facility
     -----------------                             ----------------
 Lexington, Kentucky                       Manufacturing, warehouse and office
 Lexington, Kentucky  *                    Sales, training and engineering
 Lexington, Kentucky                       Warehouse
 Saarn, Germany                            Warehouse
 Mulheim-Ruhr, Germany **                  Manufacturing, engineering, power 
                                           generation, maintenance and office
 Barcelona, Spain                          Sales branch
 Paris, France                             Sales branch
 Lyon, France                              Sales branch
 State of Sao Paulo, Brazil                Parts distribution
 Seoul, South Korea                        Office and Sales Branch
 Changwon, South Korea *                   Manufacturing, warehouse, office and 
                                           parts distribution
 Wilmington, Ohio                          Manufacturing, warehouse and office
 Pell City, Alabama                        Manufacturing, warehouse and office
 Brampton, Ontario, Canada *               Manufacturing, warehouse and office 

----------
*        Owned.
**       A portion of the facility is owned.

          CLARK also owned a manufacturing facility in Banwaal, Korea, which was
closed in the fourth quarter of 1994 and was sold in January 1999.  CLARK Europe
also presently leases unoccupied office space in Mulheim-Ruhr, Germany.

          Management believes that the Company's facilities are suitable for its
operations and provide  sufficient  capacity to meet the Company's  requirements
for the foreseeable future.


                                       7
<PAGE>

Item 3 -- LEGAL PROCEEDINGS

          From time to time product  liability  claims are asserted  against the
Company  for  various  injuries  alleged to have  resulted  from  defects in the
manufacture and/or design of its products.  As of December 31, 1998, the Company
had 66 pending lawsuits relating to claims arising from accidents  involving its
products.  Most of these lawsuits are in various stages of pretrial  completion,
and certain plaintiffs are seeking punitive as well as compensatory damages. The
Company is  self-insured,  up to certain  limits,  for these  product  liability
claims, as well as certain  exposures  related to general workers'  compensation
and automobile liability.  The Company has recorded and maintains on its balance
sheet reserves relating to the estimated liability, based in part upon actuarial
determinations, of the Company's aggregate exposure for such self-insured risks.
The Company is involved in various other legal proceedings, which have arisen in
the normal course of its  operations.  The Company has recorded  provisions  for
estimated  losses in  circumstances  where a loss is probable  and the amount or
range of  possible  amounts  of the  losses is  estimable.  Although  management
believes these reserves are sufficient there can be no assurance that any of the
foregoing reserves are adequate.


Item 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.


                                     PART II

Item 5 -- MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

          The Company's common stock is not publicly traded and, accordingly, an
established market does not exist for such common stock. The Company is a wholly
owned subsidiary of Holdings.  For certain information  concerning the ownership
of the capital stock of Holdings,  see "Item 12 -- Security Ownership of Certain
Beneficial Owners and Management."

          No dividends have been paid on the Company's  common stock.  There are
certain  limitations  on the payment of  dividends  in the  Company's  borrowing
arrangements.

Item 6 -- SELECTED FINANCIAL DATA

          Through  November  26,  1996,  the Company  operated  as wholly  owned
subsidiaries of the Predecessor's  Parent. On November 27, 1996, the Company was
acquired by Holdings.  Accordingly,  the selected  financial data shown below is
not  necessarily  comparable  as a result  of these  ownership  changes  and the
resulting   adjustments  required  for  purchase  business   combinations  under
generally accepted accounting principles.

          The information  contained in this table should be read in conjunction
with "Item 7 -- Management's  Discussion and Analysis of Financial Condition and
Results of  Operations"  and the  Company's  consolidated  financial  statements
included under "Item 8--Financial Statements and Supplementary Data."


                                       8
<PAGE>

<TABLE>
<CAPTION>
                                     Wholly Owned Subsidiaries of the
                                           Predecessor's Parent                        The Company
                                     ---------------------------------     ------------------------------------
                                                          Eleven Months    One Month
                                        Years Ended           Ended          Ended            Years Ended
                                        December 31,       November 26,   December 31,        December 31,
                                       1994     1995           1996           1996        1997(6)       1998(6)
(in Millions)                          ----     ----           ----           ----        -------       -------
Operating Data:
<S>                                  <C>       <C>           <C>            <C>         <C>             <C>    
Net Sales (1)                        $ 472.7   $ 528.8       $ 404.6        $ 46.8      $ 489.9         $ 538.9
Gross Profit (1)                        42.9      44.2          45.6           4.9         58.8            63.0
Engineering, selling and                                                  
    administration expenses (1)(2)      50.2      37.6          32.3           3.0         37.7            49.3
Income (loss) from operations (3)      (14.0)      3.1          13.3           1.9         21.0            13.7
Income (loss) before                                                     
    extraordinary items and                                              
    cumulative effect of change
    in accounting (2) (3)              (25.3)    (17.4)         (2.1)           .5          7.9            (6.2)
Balance sheet data (at end of period):
Working capital (4)                     41.4      46.4          51.4          45.0         55.8            95.9
Net property, plant and
    equipment                           60.7      58.2          51.2          51.0         47.8            69.9
Total assets                           194.7     192.7         192.7         301.3        313.3           398.1
Long-term obligations (5)              125.9     143.0         151.3         133.6        133.9           154.5
Redeemable preferred stock               --        --            --            --           --             21.2

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

(1 )  Certain reclassifications of prior years have been made to conform with 
the current year presentation.

(2) Includes  corporate charges  allocated by the  Predecessor's  Parent of; (a)
$8.5  million and $7.0  million in the years ended  December  31, 1994 and 1995,
respectively; and (b) $5.7 million in the eleven month period ended November 26,
1996.

(3) Includes  severance and exit charges of $6.7 million and $3.5 million in the
years ended December 31, 1994 and 1995, respectively.

(4) Calculated  as  net  trade  receivables  plus  net  inventories  less  trade
payables.

(5) The amounts of long-term  obligations  as of December 31, 1994 and 1995, and
November 26, 1996,  include Due to Parent of $68.5  million,  $87.6  million and
$96.4 million,  respectively;  such amounts also include the  long-term  portion
of capital lease  obligations.  At  December 31, 1996, 1997 and 19987 the amount 
of long-term obligations includes the Notes and the long-term portion of capital
lease obligations.

(6) Amounts  for the years ended  December  31, 1997 and 1998  include  entities
acquired  in  purchase  business  combinations.  See Note 4 to the  consolidated
financial statements.

</TABLE>


Item 7 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

General

          The Company  manufactures  products in the U.S,. Canada, Germany,  and
Korea and sells products worldwide. A portion of the Company's raw materials are
acquired  from  foreign   suppliers  and  denominated  in  foreign   currencies.
Consequently,  the Company's  operating  results are subject to  fluctuations in
foreign  currency  exchange  rates,  as well as, the  translation of its foreign
operations  into U.S.  dollars.  The risks  associated with operating in foreign
countries could adversely  affect the Company's  future  operating  results.  In
addition,  currency  fluctuations could improve the competitive  position of the
Company's foreign  competitors if the value of the U.S. dollar rises in relation
to the local  currencies of such  competitors.  The Company has not historically
hedged its foreign currency risk.

          Sales  of  products   manufactured   and  sold  by  the  Company  have
historically  been subject to cyclical  variation based,  among other things, on
general economic  conditions.  Management believes that the Company has improved
its ability to sustain profitability in changing market conditions. There can be
no assurance, however, as to the magnitude or timing of any decline or recovery,
or that any  future  decline  will not have a  material  adverse  effect  on the
Company's business.


                                       9
<PAGE>

          The  Company  started  implementation  of a  new  Enterprise  Resource
Planning (ERP) system in its North  American  operation in the fourth quarter of
1998. The transition from that operation's legacy systems has been difficult and
adversely  impacted the fourth quarter results.  In November,  1998, the Company
engaged a team of consultants  from the firm that developed the software used in
the ERP system.  The restart process is substantially  complete but some further
work is required to optimize the system performance and processes.

Results of Operations
<TABLE>
<CAPTION>
                    Wholly Owned Subsidiaries
                    of the Predecessor's Parent                          The Company                               
                    ---------------------------  ------------------------------------------------------------------
                           Eleven Months Ended      One Month Ended          Year Ended              Year Ended
                           -------------------      ---------------          -----------             ----------
                            November 26, 1996      December 31, 1996      December 31, 1997       December 31, 1998
                            -----------------      -----------------      -----------------       -----------------
                             ($)        (%)         ($)         (%)        ($)         (%)         ($)         (%)
                                                             (dollars in millions)
<S>                         <C>        <C>       <C>          <C>        <C>         <C>         <C>         <C>   
Net Sales (1)               $ 404.6    100.0%    $ 46.8       100.0%     $ 489.9     100.0%      $ 538.9     100.0%
Gross Profit (1)               45.6     11.3%       4.9        10.5%        58.8      12.0%         63.0      11.7%
Engineering, Selling and       32.3      8.0%       3.0         6.4%        37.7       7.7%         49.3       9.1%
Administrative Expenses (1)(2)
Income from Operations (2)     13.3      3.3%       1.9         4.0%        21.0       4.3%         13.7       2.5%
----------
(1)  Certain  reclassifications  of prior year amounts have been made to conform
     with the current year presentation.
(2)  Includes  corporate charges allocated by the  Predecessor's  Parent of $5.7
     million in the eleven month period ended November 26, 1996.
</TABLE>


Fiscal Year Ended December 31, 1998 compared to fiscal year ended 
-----------------------------------------------------------------
December 31, 1997
-----------------
Net Sales
--------- 
          Net sales were $538.9 million in 1998, an increase of $49.0 million or
10.0% from $489.9 million in 1997.  Truck sales increased $42.1 million or 10.6%
and part sales increased $6.9 million or 7.5%.

          Most of the  increased  truck  sales  were from newly  acquired  Asian
operations  ($18.7  million),  and the Blue Giant  ($18.5  million) and European
($9.5 million)  operations.  Parts sales  increased  mainly in the North America
(including Blue Giant) and Asian operations accounting for $4.8 million and $1.2
million of the increase, respectively.

          North  American   machine  sales  were  negatively   impacted  by  our
conversion to an Enterprise Resource Planning (ERP) system in the fourth quarter
of 1998. The impact of this was made more severe than it would have been because
of lower  than  anticipated  orders  attributed  to higher  than  normal  dealer
inventories.  Market  conditions  in Mexico and South America in 1998 also had a
negative impact on sales of approximately $6.8 million.

Gross Profit 
------------ 
          Gross profit  increased $4.2  million or 7.1% to $63.0 million in 1998
compared to $58.8 million in 1997.  As a percentage  of net sales,  gross profit
was 11.7% and 12.0% for 1998 and 1997, respectively. Increased sales account for
an additional $5.6 million of gross profit and the Company had favorable results
in the  area of  product  liability  in 1998  and this  expense  decreased  $5.1
million.  However,  offsetting  these favorable  items were lower  absorption of
overhead  costs in the  North  American  manufacturing  facility  in the  fourth
quarter,  primarily due to problems with the ERP implementation of approximately
$2.3 million,  a portion of the new ERP system costs  allocated to cost of sales
of $0.2 million and higher parts  distribution  expense,  inventory  and royalty
expense  for use of the Samsung  name on certain  trucks  manufactured  by CLARK
Asia.

Engineering, Selling and Administrative Expenses
------------------------------------------------
          Engineering,  selling and  administrative  expenses increased by $11.6
million to $49.3  million in 1998 from $37.7 million in 1997. As a percentage of
net sales,  engineering,  selling and administrative expenses were 9.1% and 7.7%
in 1998 and 1997,  respectively.  Acquisitions  completed  in 1998 and late 1997
accounted  for $8.0  million  of this  increase.  Implementation  of the new ERP
system added $0.7 million of expense and increased  North  American  selling and
engineering  expense  accounted for $3.1 million of the  increased  engineering,
selling and administrative expense.


                                       10
<PAGE>
Income from Operations
----------------------
          Income from operations decreased $7.3 million to $13.7 million in 1998
from $21.0  million in 1997.  In the start-up  operations  in Asia,  income from
operations was a negative ($1.3 million) primarily due to loss of production and
sales  resulting from the move from Samsung  Forklift's  factory to CLARK Asia's
current  manufacturing  location.  While CLARK Asia  generated a positive  gross
profit,  it was  not  sufficient  to  offset  its  operating  expenses.  For the
consolidated  Company,  income from  operations as a percentage of net sales was
2.5% and 4.3% for 1998 and 1997, respectively.


Fiscal Year Ended  December  31, 1997  compared to the month ended  December 31,
--------------------------------------------------------------------------------
1996, and the eleven months ended November 26, 1996
---------------------------------------------------
          The  acquisition  of the Company on November 26,  1996,  resulted in a
significant  change in the Company's  capital structure and a revaluation of the
Company's  assets and  liabilities in accordance with the provisions of purchase
accounting  required by generally accepted accounting  principles.  Accordingly,
the  results  of  operations  for the year  ended  December  31,  1997,  are not
comparable to the results of operations  for the month ended  December 31, 1996,
and the eleven-month  period ended November 26, 1996, or the year ended December
31, 1995.

Net Sales
---------
          Net sales were $489.9 million in 1997, an increase of $38.5 million or
8.5% from $451.4  million in the twelve month  period  ended  December 31, 1996.
Truck sales increased $39.0 million and parts sales were relatively  consistent.
The increase in truck sales was primarily due to improved  market  conditions in
1997 and the  acquisition  of Blue Giant USA  Corporation  and Blue Giant Canada
Limited  which  increased  sales by $4.8 million or 1.2%. A change in the German
Deutsche mark ("DM") annual average  currency  translation rate from 1.505 DM to
one U.S.  dollar for 1996 to 1.734 DM to one U.S. dollar for 1997 had a negative
impact on  reported  sales  (and  income)  in U.S.  dollars  from the  Company's
European operations.

Gross Profit
------------
          Gross profit  increased  $8.3 million,  or 16.4%,  to $58.8 million in
1997 from $50.5 million in 1996. As a percentage of net sales,  gross profit was
12.0% and 11.1% for 1997 and 1996  respectively.  Increased  sales accounted for
approximately  $4.6 million of the increased gross profit and lower costs due to
the  Company's  cost  reduction  efforts in the area of  materials,  labor,  and
overhead accounted for the balance of the improvement.

Engineering, Selling and Administrative Expenses
------------------------------------------------
          Engineering,  selling and  administrative  expenses  increased by $2.4
million to $37.7 million for the twelve months period ended December,  1997 from
$35.3  million for the twelve  month period  ended  December  31, 1996.  Certain
administrative  functions  performed by the Predecessor's  Parent were replaced,
but at a lower  cost  than  was  charged  by the  parent  in 1996.  The  Company
increased its engineering and selling  expenses $5.0 million.  This increase was
to support new product and sales  initiatives  in 1997 and beyond.  Engineering,
selling and administrative expenses expressed as a percentage of sales were 7.7%
and 7.8% respectively in 1997 and 1996.

Income from Operations
----------------------
          Income from operations increased $5.8 million to $21.0 million for the
twelve-month   period  ended  December  31,  1997  from  $15.2  million  in  the
twelve-month period in 1996. Income from operations expressed as a percentage of
net sales was 4.3% and 3.4% for the twelve  months  ended  December 31, 1997 and
December 31, 1996 respectively.

Backlog

         The  Company's  backlog of orders at December  31,  1998,  December 31,
1997,  and  December  31, 1996 were $77.5  million , $114.8  million,  and $80.4
million  respectively.  Substantially all of the Company's backlog of orders are
expected to be filled within one year,  although  there can be no assurance that
all such orders will be filled  within that time  period.  The  cancellation  or
delay of certain orders could have a material adverse effect on the Company.

                                       11
<PAGE>
Capital Resources, Liquidity and Financial Condition

          In 1998 the Company converted its U.S.  operations (except Blue Giant)
to a new information system. The transition from that operation's legacy systems
has been  difficult,  and in the fourth quarter of 1998, the U.S.  manufacturing
operations of the Company became aware of material problems associated with lost
visibility to many of the key elements of  information  needed to administer the
business. As a result, during the fourth quarter the Company was unable to react
on a timely  basis,  production  slowed,  sales  declined  and  inventories  and
receivables  grew  substantially.  In order to finance the  resultant  growth in
working  capital,  the  Company  increased  its  borrowing  on its  U.S.  credit
facilities, which began to approach its maximum borrowing capacity subsequent to
December 31, 1998.

          During the first quarter of 1999 the Company  substantially  corrected
its ERP system problems and working capital levels began to decline.  To further
enhance liquidity the Company received a short-term expansion of its U.S. credit
facility in the amount of $5 million.  Should the need arise,  management  could
also increase liquidity by further utilizing its foreign credit facilities,  and
appreciated  real estate and would consider other  necessary  measures to obtain
additional financing.

          The Company's  business is capital  intensive and requires funding for
purchases of production and replacement parts inventories,  capital expenditures
for  repair,  replacement  and  upgrading  of  existing  facilities  as  well as
financing of accounts  receivables from customers and dealers.  The Company will
continue to have  significant debt service  requirements.  On December 31, 1998,
the Company had $9.7 million of cash, cash equivalents and cash securing letters
of credit,  $150.0  million of long-term  debt and $7.8 million of capital lease
obligations.  At  December  31,  1998,  working  capital,  defined  as net trade
receivables  plus net inventories  less trade payables,  increased $40.1 million
compared to December 31, 1997 primarily as a result of the  acquisition of CLARK
Asia ($26.8 million) and higher  inventories  due, in most part, to the problems
described above related to the new ERP system.  In the first quarter of 1999 the
Company substantially corrected the information systems issues and began working
through the  scheduling  processes  necessary  to reduce  inventories  in future
periods.

          Cash provided by operating  activities  for 1998 was a negative  $10.4
million; however, the Company's cash balances were up $3.3 million from December
31, 1997.  The Company had $21.6 million of capital  expenditures  of which $7.7
million was for CLARK Asia for the twelve months ending December 31, 1998. These
expenditures  include  factory  equipment,  tooling,  new  products  and systems
modernization  expenditures.  Capital  expenditures for the twelve months ending
December 31, 1997 were $6.3 million. The Company made interest payments of $15.1
million on its Notes. The Company's ability to incur additional  indebtedness is
somewhat  restricted  by the  covenants  set  forth in the  Company's  borrowing
arrangements.

          In connection with the  Acquisition,  the Company entered into a $30.0
million  revolving credit facility (the "Revolving Credit  Facility"),  which is
secured by the  accounts  receivable  and  inventory of the  Company's  domestic
operations,  excluding HLT and Blue Giant.  CLARK Europe  entered into a working
capital credit line of $10.0 million with Deutsche Bank in October,  1998. After
consideration  of  certain  borrowing  conditions,  the  U.S.  revolving  credit
facility had a borrowing  availability of $11.9 million as of December 31, 1998.
In addition,  the Company had a combined borrowing  availability of $3.4 million
against its lines of credit with  Deutsche  Bank and the National Bank of Canada
for total borrowing availability of $15.3 million.

          To  accommodate  additional  short-term  financing  needs and  provide
further liquidity, the Company in March 1999 secured a temporary increase of its
U.S. Revolving Credit Facility to $35.0 million until June 30, 1999.  Management
believes that it has adequate  available  borrowing capacity under the Revolving
Credit Facility to cover its foreseeable working capital requirements for fiscal
1999 and that cash flow from operations and its borrowing  arrangements  will be
adequate to meet other liquidity and capital needs in 1999.

          As of the date of this filing, the Company was not in violation of any
covenants or  restrictions  in the  Revolving  Credit  Facility or the indenture
governing the Notes.

                                       12
<PAGE>
Contingencies, Commitments and Uncertainties

          From time to time product  liability  claims are asserted  against the
Company  for  various  injuries  alleged to have  resulted  from  defects in the
manufacture and/or design of its products. In addition,  the Company is involved
in various  other legal  proceedings,  which have arisen in the normal course of
its operations. See "Item 3-Legal Proceedings."

          The Company is  contingently  liable as a guarantor for certain of its
dealers' and customers' financing arrangements with financial institutions.  The
guarantees under these financing  arrangements  aggregated  approximately $126.0
million  at  December  31,  1998,   which  is   consistent   with  prior  years.
Historically,  the Company and the Predecessor have incurred only minimal losses
relating to these arrangements.

          CLARK is  contingently  liable for a portion of the  related  value of
machines  sold to and  leased  by a third  party to users  for  terms  generally
ranging from three to five years.  CLARK  repurchases  certain  machines  leased
under this  program and then sells or leases such  machines to other  users.  At
December  31,  1998,  the maximum  contingent  liability  under this program was
approximately $4.9 million.  CLARK has historically recorded profits on the sale
of repurchased machines.

          For additional  information on contingencies  and  uncertainties,  see
Note 11 to the Company's  consolidated financial statements included under "Item
8--Financial Statements and Supplementary Data."

Year 2000

          The  Company is aware of the issues  associated  with the  programming
code in existing computer systems as the millennium approaches.  The "year 2000"
problem is pervasive and complex as virtually  every computer  operation will be
affected  in some way by the  rollover  of the two digit  year  value to 00. The
issue  is  whether  computer  systems  will  properly  recognize  date-sensitive
information  when the year changes to 2000.  Systems that do not recognize  such
information could generate erroneous data or cause a system to fail.

          The Company is utilizing  both  internal and external  resources  with
respect  to its year 2000  issues.  With  regard to its  information  technology
("IT")  systems,  CLARK is in the process of installing  new software to provide
improved  operational  and  financial  functionality  at each  of its  worldwide
locations.  This new software is year 2000 compliant and "Euro"  compliant.  The
installation  was  substantially  completed in the North American  manufacturing
operation during the first quarter of 1999. The European manufacturing operation
is currently  running  parallel  with their legacy  system and is expected to be
substantially  completed  during the second quarter of 1999. The Company intends
to begin software  installation at the Blue Giant, HLT and CLARK Asia facilities
in the second  quarter of 1999 and should be completed in the fourth  quarter of
1999. The  installation  of the new software by CLARK is a result of a strategic
plan to upgrade its company-wide  computer systems which pre-dated the Company's
efforts to make its IT systems year 2000 compliant.  Therefore,  the Company has
not incurred and does not anticipate  incurring any material  costs,  (currently
estimated at less than $0.2  million)  specifically  related to year 2000 issues
that are in addition to the costs  associated  with its overall  computer system
upgrade.

          CLARK does not believe that it has any material  year 2000 issues with
regard  to  its  non-IT  systems.   The  Company's  products  employ  chips  and
microprocessors  which use interval  timers as opposed to  real-time  clocks and
therefore should not be affected by the year 2000 rollover.  In addition,  CLARK
does not utilize computer controlled machines in its factory production, thereby
eliminating  any  potential  year 2000  problem  relating  to its  manufacturing
equipment.

          The Company has ongoing  business  relationships  with many suppliers,
dealers,  and other parties,  each of which may have their own year 2000 issues.
CLARK is in the process of making contact with these third parties with which it
has a material  relationship  in order to assess whether the Company faces risks
relating  to third  party year 2000  problems.  The  Company  expects to be in a
position to make this  assessment  regarding third party risks during the second
quarter of 1999. There can be no assurance at this time that these third parties
are taking appropriate actions to safeguard their computer systems.

          Management  can not at this time  predict with any  certainty  CLARK's
most likely  worst case  scenario  relating to the year 2000  problem.  However,
during the fourth  quarter of 1998 the  Company  attempted  to convert  its U.S.
systems to a new, year 2000 compliant system, and experienced  difficulties with
the



                                       13
<PAGE>

conversion.  As discussed  under  "Capital  Resources,  Liquidity  and Financial
Condition",  the Company  encountered  significant growth in its inventories and
accounts  receivable along with reduced sales and slowdown in production  during
that time frame.  While these  conversion  problems have now been  substantially
corrected,  they serve as evidence that failure to operate with systems that are
not year 2000  compliant  could have a  material,  adverse  effect on  financial
conditions and results of operations.  The Company intends to perform  test-runs
at its facilities following  installation of its new 2000 compliant software. If
a year 2000 problem is identified during these test-runs, the Company intends to
immediately  seek  correction of the problem from its software vendor at no cost
to the Company and will develop other  contingency plans responsive to the facts
and circumstances that exist at that time.

Euro Conversion

          The Euro was  introduced  on January 1, 1999, at which time the eleven
participating   European  Monetary  Union  member  countries  established  fixed
conversion rates between their existing  currencies (legacy  currencies) and the
Euro.  During  the   three-and-a-half   year  transition  period  following  its
introduction,  countries will be allowed to transact business in the Euro and in
their  own  currencies.  On July 1,  2002,  the  Euro  will be the one and  only
official  currency in European  Union  countries that are  participating  in the
conversion.

          The Company's  European  operations have established  plans to address
the issues  raised by the Euro  currency  conversion  and are  cognizant  of the
potential  business  implications of the conversion.  CLARK is in the process of
installing new software in each of its worldwide  locations that will be able to
process Euro currency  transactions.  The Company does not expect the conversion
costs to be material.  However, due to numerous  uncertainties,  the Company can
not reasonably  estimate the effect one common currency will have on pricing and
the resulting impact, if any, on its results of operations,  financial condition
or cash flow.

New Accounting Pronouncements

          In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standard  ("SFAS") No. 133,  "Accounting for
Derivative Instruments and Hedging Activities," which establishes accounting and
reporting  standards  for these  items and will be  effective  for fiscal  years
beginning  after June 15, 1999.  Historically,  the Company has not entered into
derivative or hedging transactions;  therefore,  management does not expect that
the  adoption  of this  new  standard  will  have a  significant  impact  on the
Company's financial position or results of operations.

Item 7A - Quantitative and Qualitative Disclosures about Market Risks

          The primary  market risks facing the Company deal with  interest  rate
risk and foreign  currency  risk.  Other risks  dealing with  contingencies  are
described in Note 11 to the Company's consolidated financial statements included
under Item 8.

Interest Rate Risk

          The Company is exposed to  interest  rate risk  because the  Company's
borrowing  arrangements,  with  the  exception  of the  Notes,  generally  carry
variable rates of interest.  The Company has not, to date, engaged in derivative
transactions,  such as interest rate swaps, caps or collars,  in order to reduce
its  risk,  nor does it have any  plans in the  future  to do so. A  significant
increase in  interest  rates could have an adverse  effect on the  Company.  For
example,  based on the  level  of the  Company's  variable  rate  borrowings  at
December 31, 1998, a 1% increase in interest  rates would result in an increased
charge against earnings of approximately $0.3 million.


                                       14
<PAGE>
Foreign Currency Risk

          The Company  manufactures  products in the U.S.,  Canada,  Germany and
Korea and sells products worldwide. A portion of the Company's raw materials are
acquired  from  foreign   suppliers  and  denominated  in  foreign   currencies.
Consequently,  the Company's  operating  results are subject to  fluctuations in
foreign  currency  exchange  rates,  as well as, the  translation of its foreign
operations  into U.S.  dollars.  The risks  associated with operating in foreign
countries could adversely  affect the Company's  future  operating  results.  In
addition,  currency  fluctuations could improve the competitive  position of the
Company's foreign  competitors if the value of the U.S. dollar rises in relation
to the local  currencies of such  competitors.  The Company has not historically
hedged its foreign  currency  risk.  During 1998, the Company  incurred  foreign
exhange losses of $1.4 million.  The Company is unable to quantify the potential
impact of future foreign currency movements upon earnings.


Item 8 -- FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The Consolidated  Financial Statements of the Company,  along with the
Report of  Independents  Accountants,  is included on pages F-1 through  F-32 of
this Form 10-K.

          Supplementary data called for by this item is not presented,  as it is
not applicable to the registrant

Item 9 -- CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
FINANCIAL DISCLOSURE

         None.


                                       15
<PAGE>



                                    PART III

Item 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

          The following table sets forth certain information with respect to the
persons who are members of the Board of Directors  or executive  officers of the
Company.  Directors  serve for a term of one year or until their  successors are
elected  and  qualified;  officers  serve  at the  discretion  of the  Board  of
Directors.

    Name                  Age                Position
    ----                  ---                --------     
 Dr. Martin M.Dorio, Jr.  53   President, Chief Executive Officer and Director
 Dr. J. Frithjof Timm     56   Managing Director and President, CLARK Europe
 Joseph F. Lingg          53   Vice President, Finance and Treasurer
 Kevin M. Reardon         54   Managing Director and President, CLARK Asia
 Michael J. Grossman      48   Vice President, General Counsel and Secretary
 Robert J. O'Brien        49   Vice President, Manufacturing, North America
 Thomas J. Snyder         53   Director
 Diether Klingelnberg     54   Director
 Michael A. Delaney       44   Director
 James A. Urry            44   Director

          Dr.  Martin M. Dorio,  Jr.,  President,  Chief  Executive  Officer and
Director.  Dr.  Dorio  joined the  Company in June 1995 as  President  and Chief
Executive  Officer.  From 1990 until he joined the Company,  Dr. Dorio served in
various  positions  with  Case  Corporation,  a  manufacturer  of  tractors  and
construction  equipment,   including  Vice  President,  Corporate  Planning  and
Development.  Dr.  Dorio  has  over 20  years  of  experience  in  manufacturing
companies,  and has served in key management  positions of FMC Corp. and General
Electric Co.

          Dr. J. Frithjof Timm,  Managing Director and President,  CLARK Europe.
Dr. Timm joined the Company in May 1995 as Managing  Director  and  President of
CLARK Europe.  From 1992 to 1995, he was President of Komatsu  Europe and, prior
to  that,  he was  Managing  Director  of Sales of the  Hydraulic  Mobile  Crane
Division of Krupp A.G.

          Joseph F. Lingg,  Vice President,  Finance,  and Treasurer.  Mr. Lingg
joined the Company in January 1996 as Vice President,  Finance and Treasurer. In
1995,  Mr. Lingg served as Vice  President  and Chief  Financial  Officer of RBC
Company of America,  a  manufacturer  of bearings,  and for more than five years
prior thereto he served as Vice President and Chief Financial  Officer of Mosler
Inc., a manufacturer and servicer of security products.

          Kevin M. Reardon,  Managing  Director and  President,  CLARK Asia. Mr.
Reardon joined the Company in 1984 and has been Managing  Director and President
of CLARK Asia since 1998.  Previously,  Mr.  Reardon  served as Vice  President,
Sales and  Marketing,  and Director of Marketing and National  Sales Manager for
the Company.

          Michael J. Grossman,  Vice  President,  General Counsel and Secretary.
Mr.  Grossman  joined the Company in 1985 as Assistant  General  Counsel.  Since
1991, he has served as Vice President,  General Counsel and Assistant  Secretary
of the Company.

          Robert J. O'Brien, Vice President,  Manufacturing,  North America. Mr.
O'Brien joined the Company in March of 1995, as Director of Manufacturing.  From
1980 until he joined the Company, he served in various key operations  positions
with Allied  Signal  Aerospace.  Mr.  O'Brien has over 20 years of experience in
manufacturing operations in the Aerospace industry.

          Thomas J.  Snyder,  Director.  Mr.  Snyder has been  President,  Chief
Operating Officer and a director of Delco Remy  International,  Inc. since 1994.
From 1962 to 1994,  Mr. Snyder held several  executive  positions with the Delco
Remy Division of General Motors,  most recently as Product  Manager,  Heavy Duty
Systems. He is also a director of St. John's Health Systems.


                                       16
<PAGE>
          Diether  Klingelnberg,  Director.  Mr.  Klingelnberg  served  as Chief
Executive  Officer of  International  Knife & Saw,  Inc.  until March  1996.  In
addition,  he served as Chairman of the Board and Chief Executive Officer of IKS
Corporation  from 1979  until  November  1996.  Mr.  Klingelnberg  is  currently
Managing Director of Klingelnberg  Beteillgungs-GmbH and is a director of Honsel
AG,  IKS   Corporation,   the  Alfred  H.   Schuette   Company,   and   Eickhoff
Maschinenfabrik GmbH, Bochum, and Oerlikon Geartec AG, Zuerich.

          Michael A. Delaney, Director. Mr. Delaney has been a Managing Director
of CVC since 1989. Mr. Delaney is a director of Aetna  Industries,  Inc., Allied
Digital Technologies,  Inc., AmeriSource Health Corporation,  MSX International,
CORT Business Services Corporation,  Delco Remy International,  Inc., Enterprise
Media Inc., Great Lakes Dock and Dredge Corporation,  GVC Holdings,  Fabri-Steel
Products Incorporated, IKS Corporation, JAC Holdings, PalomarTechnologies, Inc.,
SC Processing, Inc., and Triumph Holdings, Inc.

          James A. Urry, Director.  Mr. Urry has been with Citibank,  N.A. since
1981,  serving as a Vice  President  since 1986. He has been a Vice President of
CVC since  1989.  He is a  director  of  AmeriSource  Health  Corporation,  CORT
Business  Services  Corporation,  Hancor Holding  Corporation,  IKS Corporation,
Airxcel,  Inc., Palomar Technologies,  Inc., York International  Corporation and
Brunngr Mond Company.

Director Compensation and Arrangements

          The  directors  of the Company do not receive  compensation  for their
services as directors. Members of the Board of Directors are elected pursuant to
certain voting agreements among Holdings and its  stockholders.  See "Item 12 --
Security   Ownership   of  Certain   Beneficial   Owners   and   Management--The
Stockholders' Agreement."

Item 11 -- EXECUTIVE COMPENSATION

          The  compensation  of  executive  officers  of  the  Company  will  be
determined  by the Board of  Directors  of the  Company.  The Company  adopted a
401(k) retirement plan in 1997. See "-- 401(k) Plan".

          The following  table sets forth  certain  information  concerning  the
compensation  received by the Chief  Executive  Officer and the four most highly
compensated officers of the Company for services rendered in 1998.

                                       17
<PAGE>

                               Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                      Long Term Compensation
                                                                                      ----------------------
                                                Annual Compensation                           Awards
                                                -------------------                           ------
                                                                                       Restricted    Stock        
                                                                        Other Annual      Stock     Options       All Other
                                                 Salary    Bonus (1)  Compensation (2)    Awards   (#Shares)  Compensation (3)
<S>                                          <C>         <C>         <C>                <C>        <C>         <C>          
Dr. Martin M. Dorio Jr. ...................  $ 300,000      -        $    -                -          -        $ 22,577
President and Chief Executive Officer

Dr. J. Frithjof Timm ......................    204,730      -             -                -          -          31,719
President and Managing Director CLARK Material  
Handling Europe (4)
Joseph F. Lingg ...........................    138,754      -             -                -          -           6,852
Vice President of Finance
Kevin M. Reardon ..........................    128,574      -         7,778                -          -           5,395
President and Managing Director CLARK Material 
Handling Asia
Michael J. Grossman .......................    139,193      -             -                -          -           5,597
Vice President, Secretary and General Counsel

(1) Earned bonus amounts were not calculatable as of March 31,1999.
(2) Represents foreign service premium for Mr. Reardon.
(3) Includes Company 401(k) contributions and group term life insurance premiums
    respectively  as  follows:  Dr. Dorio, $9,000 and $3,235:  Mr. Lingg, $3,813 
    and  $3,039;  Mr. Reardon, $2,418  and $2,977; and  Mr. Grossman, $3,825 and 
    $1,772.  Includes $10,342 imputed interest for Dr. Dorio and $31,719 pension
    and disability for Dr. Timm.
(4) Dr.Timm's salary, bonus, and other compensation are calculated from Deutsche
    Marks using a conversion rate of 1.734 DM/$.

</TABLE>



Employment Agreements

          In 1996,  Holdings entered a three-year  employment  contract with Dr.
Martin M. Dorio,  Jr.  pursuant to which Dr. Dorio is employed as the  President
and Chief Executive Officer of Holdings and the Company.  The agreement provides
for an annual  base  salary  of  $225,000,  which is  subject  to  annual  merit
increases,  and an annual performance bonus. The Company has agreed that, in the
event  that  Holdings  is unable to pay Dr.  Dorio any  amounts  due to him with
respect to annual  bonuses,  the Company will pay such amounts.  Since  November
1996, the Company has paid Dr. Dorio's compensation.  In addition, the agreement
provides  for the  receipt  by Dr.  Dorio  of  standard  company  benefits.  The
agreement is  terminable by Holdings with or without  cause.  In the event,  the
agreement is terminated  without cause or as a result of the total disability of
Dr. Dorio, Dr. Dorio will be entitled to continue to receive his base salary and
certain other benefits for specified  periods.  Following any termination of Dr.
Dorio's employment,  he will be subject to a non-competition  covenant for up to
two years.

401(k) Plan

          In 1997,  the  Company  adopted a  qualified  401(k)-retirement  plan.
Subject  to  certain  statutory  limitations,  eligible  employees  are  able to
contribute a percentage  of their  compensation  to the plan on a pre-tax  basis
("elective deferrals").  For 1998, the maximum amount of elective deferrals that
could be made by any  employee was $10,000.  Employees are fully vested in their
elective  deferrals  at all  times.  Generally,  employees  may  not  receive  a
distribution  of  their  account  balances  prior to  their  death,  disability,
termination of employment or retirement,  and their account  balances  cannot be
assigned or alienated.

Compensation Committee Interlocks and Insider Participation

          Although the Company has no  compensation  committee,  each of Messrs.
Snyder,  Klingelnberg,  Delaney and Urry  participated in  deliberations  of the
Board of Directors concerning executive compensation.

                                       18
<PAGE>
Item 12 -- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          All of the outstanding capital stock of the Company is currently owned
by Holdings.  The following table sets forth certain information with respect to
the  beneficial  ownership of the preferred  stock of Holdings (of the "Holdings
Preferred  Stock") and the Class A common stock (the  "Holdings  Class A Stock")
and the Class B common  stock of  Holdings  (the  "Holdings  Class B Stock"  and
together with the Holdings Class A Stock, the "Holdings  Common Stock"),  by (i)
each person or entity who owns five percent or more thereof,  (ii) each director
of the Company who is a stockholder,  (iii) the Chief  Executive  Officer of the
Company and the other  executive  officers  named in the  "Summary  Compensation
Table" above who are  stockholders,  and (iv) the  directors and officers of the
Company as a group. Unless otherwise specified, all shares are directly held.

<TABLE>
<CAPTION>

                                                                   Number and Percent of Shares
                                                                   ---------------------------- 
                                           Holdings                                
                                          Preferred          Holdings Class A      Holdings Class B
                                            Stock                Stock(1)              Stock(2)
                                            -----                -------               -------
 Name of Beneficial Owner            Number     Percent      Number    Percent     Number      Percent
 ------------------------            ------     -------      ------    -------     ------      -------
<S>                                <C>           <C>      <C>          <C>      <C>               <C>  
Citicorp Venture Capital Ltd.       12,207.4      71.89%   102,671.40   37.5%    550,220.04        75.7%
 399 Park Avenue
 New York, New York  10043
Dr. Martin M. Dorio, Jr.               404.8        2.4%    55,180.7    20.2%         --           --
 172 Trade Street
 Lexington, Kentucky  40511
Dr. J. Frithjof Timm                   130.1        0.8%    19,879.5     7.3%         --           --
 172 Trade Street
 Lexington, Kentucky  40511
Kevin M. Reardon                        37.1        0.2%     5,391.6     2.0%         --           --
Michael J. Grossman                     68.4        0.4%     6,566.3     2.4%         --           --
Joseph F. Lingg                         40.5        0.2%     5,518.1     2.0%         --           --
Thomas J. Snyder                         --         --       5,000.0     1.8%         --           --
Diether Klingelnberg                     --         --          42.0    0.02%      8,943.5          1.2%
Michael A. Delaney                     101.5        0.6%       855.0     0.3%      4,536.3          0.6%
James A. Urry                          101.5        0.6%       855.0     0.3%      4,536.3          0.6%
All directors and executive 
 officers as a group (10 persons)      966.8        5.7%   106,396.6    38.9%     18,016.1          2.4%

----------

(1) Does not include shares of Holdings Class A Stock  issueable upon conversion
    of Holdings  Class B Stock.  See  "--Holdings  Common  Stock."  Assuming the
    conversion  of all of a  holder's  shares  of  Holdings  Class B Stock  into
    Holdings  Class A Stock,  but no such  conversion  by any  other  holder  of
    Holdings  Class B Stock,  the number of shares and the  percentage  of total
    Holdings  Class A Stock held by the  converting  holder would be as follows:
    for CVC,  652,065.5 and 79.2%; for Diether  Klingelnberg,  8,985.5 and 3.2%;
    for Michael A.  Delaney,  5,391.3 and 1.9%;  for James A. Urry,  5,391.3 and
    1.9%; and for all directors and executive officers as a group, 124,412.7 and
    42.7%.

(2) Does not include shares of Holdings  Class B Stock issuable upon  conversion
    of Holdings  Class A Stock.  See  "--Holdings  Common  Stock."  Assuming the
    conversion  of all of a  holder's  shares  of  Holdings  Class A Stock  into
    Holdings  Class B Stock,  but no such  conversion  by any  other  holder  of
    Holdings  Class A Stock,  the number of shares and the  percentage  of total
    Holdings  Class B Stock held by the  converting  holder would be as follows:
    for CVC,  652,065.54 and 78.6%; for Dr. Martin M. Dorio, Jr..,  55,180.7 and
    7.1%;  for Dr. J. Frithjof  Timm,  19,879.5 and 2.7%;  for Kevin M. Reardon,
    5,391.6 and 0.7%; for Michael J.  Grossman,  6,566.3 and 0.9%; for Joseph F.
    Lingg,  5,518.1 and 0.7%; for Thomas J. Snyder,  5,000 and 0.7%; for Diether
    Klingelnberg,  8,985.5 and 1.2%;  for Michael A. Delaney,  5,391.3 and 0.7%;
    and for James A. Urry, 5,391.3 and 0.7%; and for all directors and executive
    officers as a group, 124,412.7 and 14.9%.

</TABLE>

Holdings Common Stock

          The Certificate of  Incorporation  of Holdings  provides that Holdings
may issue 2,500,000  shares of Holdings  Common Stock,  divided into two classes
consisting  of  1,250,000  shares of  Holdings  Class A Stock and  1,250,000  of
Holdings  Class B Stock.  The holders of Holdings  Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders.  Except as required by law, the holders of Holdings  Class B Stock
have no voting rights.  Under the Certificate of  Incorporation  of Holdings,  a
holder of either  class of Holdings  Common  Stock may convert any or all of his
shares  into an equal  number of shares of the other  class of  Holdings  Common
Stock;  provided that in the case of a conversion  from Holdings  Class B Stock,
which is nonvoting,  into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of  Holdings  Class A stock  which  would be held after  giving
effect to the conversion.

The Stockholders' Agreement

          Pursuant to the Securities Purchase and Holders Agreement entered into
among the stockholders of Holdings (the "Stockholders' Agreement"), the Board of
Directors  of Holdings  and the  Company  shall be composed at all times of five
directors as follows: the President of the Company, Dr. Martin M. Dorio, Jr. (so
long as he continues to serve as President);  two individuals designated by CVC;
and two additional directors who shall not be employees of CVC but who shall be


                                       19
<PAGE>
designated  by CVC,  subject  to the right of  holders  of the  majority  of the
outstanding  shares of Holdings  Class A Stock to veto the election of either of
such additional directors.

          The Stockholders'  Agreement  contains certain  provisions which, with
certain  exceptions,  restrict the ability of the stockholders from transferring
any Holdings  Common  Stock,  Holdings  Preferred  Stock or Holdings  Debentures
except pursuant to the terms of the Stockholders' Agreement. So long as Holdings
has not  consummated  a public  offering of Holdings  Common Stock  resulting in
aggregate  net proceeds of $30.0  million or more, if holders of at least 50% of
the Holdings Common Stock then outstanding approve the sale of the Company, each
stockholder  has agreed to consent to such sale and, if such sale  includes  the
sale of stock,  each  stockholder  has agreed to sell all of such  stockholder's
Holdings  Common  Stock on the terms and  conditions  approved  by  holders of a
majority of the Holdings  Common Stock then  outstanding.  In the event Holdings
proposes  to issue  and sell  (other  than in a public  offering  pursuant  to a
registration  statement)  any shares of Holdings  Common Stock  and/or  Holdings
Preferred  Stock or any securities  containing  options or rights to acquire any
shares  of  Holdings  Common  Stock  and/or  Holdings  Preferred  Stock  or  any
securities  convertible  into Holdings  Common Stock and/or  Holdings  Preferred
Stock to CVC or its corporate  affiliates,  Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
are not applicable in certain circumstances  including the issuance of shares of
Holdings  Common Stock and/or  Holdings  Preferred  Stock upon the conversion of
shares of one class of Holdings  Common Stock and/or  Holdings  Preferred  Stock
into shares of the other class or upon an initial public offering.

          The  Stockholders'  Agreement  also  provides  for certain  additional
restrictions on transfer of shares by Management Investors,  including the right
of  Holdings  to  repurchase  shares  upon  termination  of  such  stockholder's
employment prior to 2002, at a formula price, and in certain  circumstances  the
grant of a right of first refusal in favor of Holdings in the event a Management
Investor elects to transfer shares of Holdings Common Stock.

Registration Rights Agreement

          In  connection  with  their  entry into the  Stockholders'  Agreement,
Holdings,  CVC,  Dr.  Martin  M.  Dorio,  Jr.,  Thomas J.  Snyder  and the other
stockholders  of Holdings  entered into a  Registration  Rights  Agreement  (the
"Holdings Registration Rights Agreement"). Pursuant to the Holdings Registration
Rights  Agreement,  upon the  written  request  of CVC,  Holdings  has agreed to
(subject to certain exceptions)  prepare and file a registration  statement with
the Securities and Exchange  Commission  concerning the  distribution  of all or
part  of the  shares  held  by CVC  and  use its  best  efforts  to  cause  such
registration  statement to become  effective.  If at any time  Holdings  files a
registration  statement for the Holdings  Common Stock  pursuant to a request by
CVC or otherwise  (other than a registration  statement on Form S-8, Form S-4 or
any similar form, a  registration  statement  filed in  connection  with a share
exchange or an offering solely to Holdings' employees or existing  stockholders,
or a registration statement registering a unit offering),  Holdings will use its
best  efforts to allow the other  parties to the  Holdings  Registration  Rights
Agreement to have their  shares of Holdings  Common Stock (or a portion of their
shares under certain circumstances) included in such offering of Holdings Common
Stock if the registration  form proposed to be used may be used to register such
shares.   Registration   expenses  of  the  selling   stockholders  (other  than
underwriting  fees,  brokerage fees and transfer taxes  applicable to the shares
sold by such  stockholders  or the fees and expenses of any accountants or other
representatives retained by a selling stockholder) are to be paid by Holdings.

Item 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Service Agreement

          In connection with the Acquisition, the Company entered into a service
agreement (the "Service  Agreement") with the  Predecessor's  Parent pursuant to
which the Company shares space in the Southaven  Facility with another  division
of the Predecessor's Parent. In addition, pursuant to such agreement the Company
hired  approximately  38 employees who are responsible for aftermarket  customer
support and administration.  The Company pays an aggregate annual fee under such
Service  Agreement of  approximately  $5.9 million (the "Base Fee"),  payable in
monthly  installments.  In addition to the Base Fee,  certain  provisions of the
Service  Agreement  may require  each of the  Predecessor's  Parent and CLARK to
share the  responsibility for additional costs and savings resulting from, among
other  things,  changes  or  increases  in  the  provision  of  services  or the
implementation  of certain cost savings.  The term of the agreement is for three
years.  Provisions  have been made to extend  this term as  desired.  Management
believes that the terms of the Service  Agreement  are no less  favorable to the
Company than those that could have been obtained from non-affiliated  parties at
the time the agreement was entered into.


                                       20
<PAGE>
Tax Sharing Agreement

          Holdings and the Company will be included in the  consolidated  United
States federal income tax return of Holdings.  Holdings and the Company  entered
into a tax sharing agreement (the "Tax Sharing  Agreement")  whereby the Company
will pay Holdings  (or Holdings  will pay the Company) its pro rata share of the
total tax liability,  as set out in the Tax Sharing Agreement.  In the event the
Company is included in a joint, combined, consolidated or unitary state or local
income or franchise tax return with Holdings, the Company shall make payments to
Holdings,  and  Holdings  shall  make  payments  to  the  Company,  in a  manner
consistent with that described above for federal tax purposes.

License Agreement

          In connection with the Acquisition,  Holdings acquired certain patents
and patent applications related to the Company's business from the Predecessor's
Parent.  Pursuant to a License Agreement dated as of November 27, 1996, Holdings
granted  to  the  Company  a  perpetual,   world-wide,  exclusive  royalty-free,
fully-paid-up  license to practice methods,  and to make, use, import, offer for
sale or sell any products, covered by such patents and patent applications.

Other

          At the  time of the  Acquisition,  it was  contemplated  that  certain
shares  of  capital  stock  of  Holdings  would  be  issued  to the  members  of
management.  In  furtherance  of that intent,  effective as of as of January 31,
1997,  Holdings  repurchased  certain  outstanding  shares of Holdings Preferred
Stock and Holdings Class B Stock having an aggregate value of approximately $1.1
million  from CVC and,  simultaneously  therewith,  issued  and sold  shares  of
Holdings Preferred Stock and Holdings Common Stock having an equivalent value to
Dr.  Martin M.  Dorio,  Jr.,  and other  members of  management.  In  connection
therewith,  the Company loaned Dr. Dorio  $200,000  toward the purchase price of
the  securities  acquired by him. Such loan is evidenced by a demand  promissory
note that does not bear interest.

                                     PART IV

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

(a)(1)   List of Financial Statements.

         Financial Data Schedule

          The following Consolidated Financial Statements of the Company and the
Report  of  Independent  Accountants  set  forth  on  pages  F-1  through  F-32,
respectively,  are  incorporated  by reference into this item 14 of Form 10-K by
item 8 hereof:

         See Index to Consolidated Financial Statements on page F-1.

 (a) (2) Financial Statement Schedules.

          No financial  statement  schedules have been filed herewith since they
are either not required,  are not  applicable,  or the required  information  is
shown in the consolidated financial statements or related notes.

                                       21
<PAGE>
(a) (3) Exhibits.

Exhibit 
No.         Description
--          -----------
3.1    Certificate of Incorporation, as amended, of the Company (incorporated by
       reference to Exhibit 3.1 to the Company's Registration Statement on Form 
       S-4, Registration No. 333-18957)

3.2    By-laws of the Company (incorporated by reference to Exhibit 3.2 to the
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

4.1    Indenture dated as of November 27, 1996 between the Company and United 
       States Trust Company of New York, as Trustee (incorporated by reference
       to Exhibit 4.1 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

4.2    Registration Rights Agreement dated as of November 27, 1996 among the
       Company, Jefferies & Company, Inc. and Bear, Stearns & Co. Inc. 
       (incorporated by reference to Exhibit 4.2 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

4.3    Form of 103/4% Senior Notes due 2006 (included in Exhibit 4.1) 
       (incorporated by reference to Exhibit 4.3 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957) 

4.4    Indenture dated as of July 17, 1998 between the Company and United States
       Trust Company of New York, as Trustee (incorporated by reference to 
       Exhibit 4.4 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-62845)

4.5    Registration Rights Agreement dated as of July 17, 1998 among the 
       Company, Jeffries & Company, Inc. and Bear, Stearns & Co. Inc. 
       (incorporated by reference to Exhibit 4.5 to the Company's Registration 
       Statement on Form S-4, Registration No. 333-62845)

4.6    Registration Rights Agreement dated as of July 17, 1998 among the
       Company, Jeffries & Company, Inc. and Bear, Stearns & Co. Inc. 
       (incorporated by reference to Exhibit 4.6 to the Company's Registration 
       Statement on Form S-4, Registration No. 333-62845)

4.7    Form of 103/4% Senior Notes due 2006 (included in Exhibit 4.4)
       (incorporated by reference to Exhibit 4.7 to the Company's Registration
       Statement on Form S-4, Registration No. 333-62845)

4.8    Indenture dated as of July 17, 1998 between the Company and U.S. Trust
       Company of Texas, N.A. (incorporated by reference to Exhibit 4.8 to the
       Company's Registration Statement on Form S-4, Registration 
       No. 333-62845)

4.9    First Supplemental Indenture dated as of August 18, 1998 between the 
       Company and United States Trust Company of New York, as Trustee
       (incorporated by reference to Exhibit 4.9 to the Company's Registration
       Statement on Form S-4, Registration No. 333-62845)

10.1   Purchase Agreement dated November 22, 1996 among the Company, Jefferies 
       & Company, Inc. and Bear, Stearns & Co. Inc.(incorporated by reference to
       Exhibit 10.1 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

10.2   Loan and Security Agreement dated November 27, 1996 by and between
       Congress Financial Corporation and the Company (incorporated by reference
       to Exhibit 10.2 to the Company's Registration Statement on Form S-4,
       Registration No. 333-18957)

10.3   Stock and Asset Purchase and Sale Agreement, dated as of November 9, 1996
       among the Terex Corporation, and certain of its subsidiaries and the 
       Company (incorporated by reference to Exhibit 10.3 to the Company's 
       Registration Statement on Form S-4, Registration No. 333-18957)

10.4   Service Agreement dated as of November 27, 1996 between the Terex 
       Corporation and the Company (incorporated by reference to Exhibit 10.4 to
       the Company's Registration Statement on Form S-4, Registration No. 
       333-18957)

10.5   Indemnity as to Letters of Credit, Performance Bonds, Appeal Bonds, 
       Guaranties, etc. dated November 27, 1996 by the Company in favor of the
       Terex Corporation, for itself and as successor to CMH Acquisition Corp., 
       CMH Acquisition International Corp., CLARK Material Handling Company
       and CLARK Material Handling International, Inc.(incorporated by reference
       to Exhibit 10.5 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

10.6   Employment Agreement dated as of November 27, 1996 between Holdings and
       Dr. Martin M. Dorio, Jr. (incorporated by reference to Exhibit 10.6 to 
       the Company's Registration Statement on Form S-4, Registration No. 
       333-18957)

10.7   Tax Sharing Agreement made as of November 27, 1996 between Holdings and 
       the Company (incorporated by reference to Exhibit 10.7 to the Company's
       Registration Statement on Form S-4, Registration No. 333-18957)


                                       22
<PAGE>
10.8   Stock Purchase Agreement, dated as of May 27, 1992, by and between CLARK
       Equipment Company and the Terex Corporation (incorporated by reference to
       Exhibit 10.8 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

10.9   First Amendment to the Stock Purchase Agreement, dated as of July 31, 
       1992, by and between CLARK Equipment Company and Terex Corporation
       (incorporated by reference to Exhibit 10.9 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.10  Trademark Assignment Agreement, dated as of July 31,1992, by and between
       CLARK Equipment Company and CLARK Material Handling Company (incorporated
       by reference to Exhibit 10.10 to the Company's Registration Statement on 
       Form S-4, Registration No. 333-18957)

10.11  Second Amended and Restated General Operating Agreement, dated November 
       29, 1990, by and between CLARK Material Handling Company and Chase 
       Manhattan Leasing Company, Inc. (incorporated by reference to 
       Exhibit 10.11 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

10.12  Second Amendment to the Second Amended and Restated General Operating 
       Agreement, dated April 15, 1994, by and among CLARK Material Handling 
       Company, Drexel dated August 1, 1994, by and between CLARK Material 
       Handling Company and CLARK Credit Corporation (incorporated by reference
       to Exhibit 10.13 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

10.14  Assignment of Second Amended and Restated General Operating Agreement, 
       dated March 22, 1995, by and between CLARK Material Handling Company,
       CLARK Credit Corporation, f/k/a Chase Manhattan Leasing Company, and
       Associates Commercial Corporation (incorporated by reference to
       Exhibit 10.14 to the Company's Registration Statement on Form S-4,
       Registration No. 333-18957)

10.15  Master Software License and Service Agreement, dated May 17, 1996, 
       between CLARK Material Handling Company and SDRC Operations (incorporated
       by reference to Exhibit 10.15 to the Company's Registration Statement on 
       Form S-4, Registration No. 333-18957)

10.16  Letter Agreement, dated October 26, 1995, between CLARK Material Handling
       Company, Manufacturers Distribution Services, Inc. and Maine Rubber 
       International (incorporated by reference to Exhibit 10.16 to the 
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.17  MCI Services Agreement, effective as of July 1, 1995, between MCI
       Telecommunications Corporation and CLARK Material Handling Company
       (incorporated by reference to Exhibit 10.17 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)
 
10.18  Agreement for Systems Operations Services, dated as of March 2, 1992,
       between CLARK Material Handling Company and Integrated Systems Solutions
       Corporation, as amended by Amendments #1 through #5 (incorporated by
       reference to Exhibit 10.18 to the Company's Registration Statement on
       Form S-4, Registration No. 333-18957)

10.19  Supply Agreement, dated December 14, 1994, between CLARK Material
       Handling Company and Funk Manufacturing Company (incorporated by 
       reference to Exhibit 10.19 to the Company's Registration Statement on 
       Form S-4, Registration No. 333-18957)
 
10.20  Supply Agreement, dated July 1, 1995, between CLARK Material Handling
       Company and Funk Manufacturing Company (incorporated by reference to
       Exhibit 10.20 to the Company's Registration Statement on Form S-4,
       Registration No. 333-18957)

10.21  Agreement, dated June 1, 1983, between CLARK Equipment Company and
       Mitsubishi Corporation, Mitsubishi Heavy Industries, Ltd. and Mitsubishi
       Motors Corporation, as amended (incorporated by reference to 
       Exhibit 10.24 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-18957)

10.22  Master Contract for Purchase and Sale, dated July 17,1995, between CLARK
       Material Handling Company and Custom Tool and Manufacturing Company
       (incorporated by reference to Exhibit 10.25 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.23  Supply Agreement, dated December 20, 1991, between CLARK Material
       Handling Company and Dixson, Inc. (incorporated by reference to
       Exhibit 10.26 to the Company's Registration Statement on Form S-4,
       Registration No. 333-18957)

                                       23
<PAGE>
10.24  Lease Agreement, dated as of April 15, 1987, between Vergil D. Kelly and
       Kenny Angelucci and CLARK Equipment Company with respect to 172 Trade
       Street, Lexington, Kentucky, as amended by Amendment #1 to Lease dated
       April 15, 1987 (incorporated by reference to Exhibit 10.27 to the 
       Company's Registration Statement on Form S-4, Registration No. 333-18957)

10.25  Standard Form Dealer Sales Agreements between CLARK Material Handling
       Company and domestic dealer entities (incorporated by reference to 
       Exhibit 10.28 to the Company's Registration Statement on Form S-4,
       Registration No. 333-18957)

10.26  Agreement, dated as of September 12, 1995, by and between CLARK Material
       Handling Company and Nissan Forklift Corporation, North America
       (incorporated by reference to Exhibit 10.29 to the Company's Registration
       Statement on Form S-4, Registration No. 333-18957)

10.27  License Agreement, dated as of November 27, 1996, between Holdings and
       the Company (incorporated by reference to Exhibit 10.30 to the Company's
       Registration Statement on Form S-4, Registration No. 333-18957)

10.28  Asset Purchase Agreement, dated as of November 6, 1997, between Clark
       Material Handling of Canada Ltd. and Blue Giant Limited (incorporated by
       reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K
       for the year ended December 31, 1997)

10.29  Asset Purchase Agreement, dated as of October 31, 1997 between Blue Giant
       Corporation and Blue Giant USA Corporation (incorporated by reference to
       Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year
       ended December 31, 1997)

10.30  Asset Purchase Agreement, dated as of June 5, 1998, by and between the
       Company and Samsung Heavy Industries Co., Ltd. (incorporated by reference
       to Exhibit 10.30 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-62845).

10.31  Purchase Agreement dated as of July 13, 1998 among the Company, Jeffries 
       & Company, Inc. and Bear, Stearns, & Co. Inc. (incorporated by reference
       to Exhibit 10.31 to the Company's Registration Statement on Form S-4, 
       Registration No. 333-62845).

21.1   Subsidiaries of the Company



                                       24
<PAGE>

(b)    Reports on Form 8-K.

       None


                                       25
<PAGE>
SIGNATURES


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


                                CLARK Material Handling Company

                                BY:  /s/  Martin M. Dorio, Jr. 
                                Dr. Martin M. Dorio, Jr.
                                President and CEO
                                March 31, 1999

          Pursuant to the  requirements of the securities  exchange act of 1934,
as amended this report has been signed below by the following  persons on behalf
of the registrant and in the capacities indicated on March 31, 1999.


   /s/ Martin M. Dorio, Jr.      President, Chief Executive Officer and Director
       Martin M. Dorio, Jr.      (Principal Executive Officer)


   /s/ Joseph F. Lingg           Vice President, Finance, and Treasurer
       Joseph F. Lingg           (Principal Financial and Accounting Officer)



   /s/ James A. Urry             Director
       James A. Urry



   /s/ Thomas J. Snyder          Director
       Thomas J. Snyder



   /s/ Michael A. Delaney        Director
       Michael A. Delaney



   /s/ Diether Klingelnberg      Director
       Diether Klingelnberg


                                       26
<PAGE>




                         CLARK MATERIAL HANDLING COMPANY
                           AND PREDECESSOR BUSINESSES


                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES



                                                                            Page
Report of independent accountants                                            F-2
Consolidated balance sheet                                                   F-3
Consolidated statement of operations                                         F-4
Consolidated statement of stockholder's equity and comprehensive income      F-5
Consolidated statement of cash flows                                         F-6
Notes to consolidated financial statements                                   F-7

Schedules  for which  provision  is made in the  applicable  regulations  of the
Securities   and  Exchange   Commission  are  not  required  under  the  related
instructions  or the  information  is included in the notes to the  consolidated
financial statements, or are not applicable, and therefore have been omitted.



                                       F-1
<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Stockholder of CLARK Material
Handling Company


In our opinion, the consolidated financial statements listed in the accompanying
index present  fairly,  in all material  respects,  the  consolidated  financial
position of CLARK Material  Handling  Company and its predecessor  businesses at
December 31, 1998 and December 31, 1997 and the results of their  operations and
their cash flows for the years ended  December 31, 1998 and 1997,  the one month
period ended  December  31, 1996 and the eleven month period ended  November 26,
1996,  in  conformity  with  generally  accepted  accounting  principles.  These
financial statements are the responsibility of 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.


PricewaterhouseCoopers LLP
Cincinnati, Ohio
March 25, 1999


                                     F-2

<PAGE>



CLARK Material Handling Company
Consolidated Balance Sheet    (in thousands, except share amounts)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                December 31,       December 31,
                                                                    1997               1998
Current assets                                                      ----               ---- 
<S>                                                            <C>                <C>      
   Cash and cash equivalents                                   $   6,334          $   9,661
   Restricted cash                                                   320                197
   Accounts receivable (less allowance of $1,906 at
    December 31, 1997 and $4,864 at December 31, 1998)            47,018             68,903
   Net inventories                                                70,784            102,399
   Other current assets                                            7,281              9,609
                                                               ---------          ---------

       Total current assets                                      131,737            190,769

Long term assets
   Property, plant and equipment-net                              47,836             69,877
   Goodwill, net of accumulated amortization of $3,081 at
    December 31, 1997 and $6,069 at December 31, 1998            114,887            112,781
   Other assets                                                   18,794             24,631
                                                               ---------          ---------  

       Total assets                                            $ 313,254          $ 398,058
                                                               =========          =========

Current liabilities
   Notes payable                                               $   3,184          $  28,922
   Current portion of capital lease obligations                    2,732              3,313
   Trade accounts payable                                         62,002             75,378
   Accrued compensation and benefits                               5,730              5,551
   Accrued warranties and product liability                       20,774             17,384
   Other current liabilities                                      10,728             17,526
                                                               ---------          ---------

       Total current liabilities                                 105,150            148,074

Non-current liabilities
   Senior notes payable                                          130,000            150,000
   Capital lease obligations, less current portion                 3,864              4,480
   Accrued warranties and product liability                       38,497             35,537
   Other non-current liabilities                                  12,002             17,469
                                                               ---------          ---------

       Total liabilities                                         289,513            355,560
                                                               ---------          ---------


Commitments and contingencies (Note 11)                                -                  -

Redeemable preferred stock                                             -             21,202
                                                               ---------          ---------

Stockholder's equity
   Common stock, par value $1 per share, 1,000
    shares authorized, issued and outstanding                           1                  1
   Paid-in capital                                                 24,999             23,948
   Retained earnings                                                8,406                987
   Cumulative translation adjustment                               (9,665)            (3,640)
                                                               ----------         ----------

       Total stockholder's equity                                  23,741             21,296
                                                               ----------         ----------

       Total liabilities and stockholder's equity              $  313,254         $  398,058
                                                               ==========         ==========
                                                                
   The accompanying notes are an integral part of these financial statements.

</TABLE>

                                       F-3

<PAGE>



CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Operations
(in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                        Predecessor                     The Company
                                                      ---------------     ------------------------------------------
                                                            Eleven            One
                                                            Months           Month          Year           Year
                                                             Ended           Ended          Ended          Ended
                                                          November 26,    December 31,   December 31,   December 31,
                                                              1996            1996           1997           1998

<S>                                                       <C>              <C>           <C>            <C>       
Net sales                                                 $  404,629       $  46,763     $  489,892     $  538,881
Cost of goods sold                                           359,061          41,905        431,127        475,857
                                                          ----------       ---------      ---------     ----------

       Gross profit                                           45,568           4,858         58,765         63,024

Engineering, selling and administrative expenses              26,613           2,923         37,731         49,320

Parent company management fees                                 5,672               -              -              -
                                                          ----------       ---------      ---------     ----------
       Income from operations                                 13,283           1,935         21,034         13,704

Other income (expense):
   Interest expense                                             (370)         (1,393)       (15,086)       (16,867)
   Allocated interest expense from parent
    company                                                  (14,656)              -              -              -
   Interest income                                               220              25            809          1,131
   Amortization expense from parent company                     (349)              -              -              -
   Other income (expense) - net                                 (223)            (32)         1,598         (3,409)
                                                      
                                                          ----------       ---------      ---------     ----------
       Income (loss) before income taxes                      (2,095)            535          8,355         (5,441)

Provision for income taxes                                         -               -            484            776
                                                          ----------       ---------      ---------     ----------
   Net income (loss)                                      $   (2,095)     $      535     $    7,871     $   (6,217)
                                                          ==========      ==========     ==========     ==========

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

</TABLE>
                                                        F-4

<PAGE>


CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Stockholder's Equity and Comprehensive Income
(in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                       Stockholder's Equity
                                                   ---------- ----------------------------------------------------
                                                                                                Foreign
                                                                                 Retained       Currency
                                                  Common          Paid-in        Earnings      Translation
                                                   Stock          Capital        (Deficit)     Adjustments
                                                -----------     -----------     -----------    -----------  

PREDECESSOR
<S>                                            <C>              <C>             <C>            <C>        
Balance at December 31, 1995                                                    $  (94,873)    $   (1,849)
Net loss for the eleven months ended
    November 26, 1996                                                               (2,095)             -
Translation adjustment                                                                   -         (2,546)
                                                                                ----------     ----------

Balance at November 26, 1996                                                    $  (96,968)    $   (4,395)
                                                                                ==========     ==========

THE COMPANY

Issuance of common stock                                  1      $  24,999       $       -     $        -
Net income for the month ended
    December 31, 1996                                     -              -             535              -
Translation adjustment                                    -              -               -           (462)
                                                -----------    -----------      ----------     ----------

Balance at December 31, 1996                              1         24,999             535           (462)

Net income for the year ended
    December 31, 1997                                     -              -           7,871              -
Translation adjustment                                    -              -               -         (9,203)
                                                -----------    -----------      ----------     ----------
Balance at December 31, 1997                              1         24,999            8,406        (9,665)

Preferred stock issuance costs                            -         (1,051)              -              -
Net loss for the year ended
   December 31, 1998                                      -              -          (6,217)             -
Translation adjustment                                    -              -               -          6,025
Preferred stock dividends                                 -              -          (1,202)             -
                                                -----------    -----------      ----------     ----------
Balance at December 31, 1998                    $         1    $    23,948      $      987     $   (3,640)
                                                ===========    ===========      ==========     ==========

                                                                        Comprehensive Income
                                                   ---------------------------------------------------------
                                                   --------------  -----------------------------------------
                                                    Predecessor                     The Company
                                                   --------------  -----------------------------------------
                                                  Eleven Months   One Month         Year           Year
                                                     Ended          Ended           Ended          Ended
                                                  November 26,    December 31,   December 31,   December 31,
                                                     1996            1996           1997           1998
                                                 -----------    -----------      -----------    -----------  
Net income (loss)                                $    (2,095)   $       535      $     7,871    $    (6,217)
Translation adjustment, net of income taxes           (2,546)          (462)          (9,203)         6,025
                                                 -----------    -----------      -----------    -----------

Comprehensive income (loss)                      $    (4,641)   $        73      $    (1,332)   $      (192) 
                                                 ===========    ===========      ===========    ===========



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

                                                        F-5

<PAGE>



CLARK Material Handling Company
and Predecessor Businesses
Consolidated Statement of Cash Flows
(in thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                           Predecessor                  The Company
                                                          -------------- ----------------------------------------------
                                                               Eleven           One
                                                               Months          Month            Year            Year
                                                               Ended           Ended            Ended           Ended
                                                            November 26,    December 31,     December 31,    December 31,
                                                                1996            1996             1997            1998
                                                                ----            ----             ----            ----       
Operating activities:
<S>                                                          <C>             <C>              <C>             <C>         
   Net income (loss)                                         $    (2,095)    $       535      $     7,871     $    (6,217)
   Adjustments to reconcile net income (loss)
    to cash provided by operating activities:
     Depreciation                                                  9,312             778            8,900           9,475
     Amortization                                                  1,099             322            3,350           5,666
     Loss (gain) on sale of property, plant and equipment             31              70               24              (8)
     Changes in operating assets and liabilities
      excluding business combinations:
       Restricted cash                                              (220)           (136)             638             140
       Trade receivables                                          (2,406)          2,800           (8,732)          1,547
       Net inventories                                            (2,696)          9,801           (7,015)        (16,397)
       Trade accounts payable                                         61         (11,265)           7,866           7,735
       Accrued compensation and benefits                             409            (609)            (156)           (325)
       Accrued warranties and product liability                   (2,248)            237            3,581          (6,892)
       Due to parent company                                       8,720               -                -               -
       Other assets and liabilities, net                          (5,876)            223           (5,218)         (5,149)
                                                             -----------     -----------      -----------     -----------
       Net cash provided by (used in) operating activities         4,091           2,756           11,109         (10,425)
                                                             -----------     -----------      -----------     -----------
Investing activities:
     Business combinations                                             -               -          (14,646)        (32,093)
     Capital expenditures                                         (3,208)           (317)          (6,340)        (21,629)
     Proceeds from sale of assets                                    139               -                -             558
                                                             -----------     -----------      -----------     -----------
         Net cash used in investing activities                    (3,069)           (317)         (20,986)        (53,164)
                                                             -----------     -----------      -----------     -----------
Financing activities:
     Issuance of current notes payable                                 -               -            1,182          27,928
     Repayment of current notes payable                                -               -           (1,020)         (1,868)
     Issuance of senior notes payable, net of
       issuance costs                                                  -               -                -          19,372
     Issuance of preferred stock, net of issuance costs                -               -                -          18,949
     Other, net                                                    1,481             293              147           1,618
                                                             -----------     -----------      -----------     -----------
         Net cash provided by financing activities                 1,481             293              309          65,999
                                                             -----------     -----------      -----------     -----------
Effect of exchange rate changes on cash and
 cash equivalents                                                 (1,262)           (306)            (652)            917
                                                             -----------     -----------      -----------     -----------
Net increase (decrease) in cash and cash equivalents               1,241           2,426          (10,220)          3,327
Cash and cash equivalents at beginning of period                     819          14,128           16,554           6,334
                                                             -----------     -----------      -----------     -----------
Cash and cash equivalents at end of period                   $     2,060     $    16,554      $     6,334     $     9,661
                                                             ===========     ===========      ===========     ===========
Supplemental disclosures
     Cash paid for interest                                  $       337     $        86      $    14,465     $    16,702
     Income taxes paid                                       $        17     $         -      $         -     $       455

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

</TABLE>
                                      F-6
<PAGE>

CLARK Material Handling Company
and Predecessor Businesses
Notes to Consolidated Financial Statements (in thousands)
--------------------------------------------------------------------------------

NOTE 1 - REPORTING ENTITY AND BASIS OF PRESENTATION

CLARK Material Handling Company (the "Company") is a wholly-owned  subsidiary of
CMH Holdings Corporation ("Holdings").  Prior to November 27, 1996, Holdings had
no previous business  operations and was formed for the purpose of acquiring the
Company and its  subsidiaries  from Terex  Corporation  ("Parent  Company") in a
purchase business combination.  That acquisition was consummated on November 27,
1996. See Note 3 for information regarding the acquisition.

Prior to the acquisition,  the Company's predecessor businesses  ("Predecessor")
operated as wholly-owned  subsidiaries  of the Parent Company.  Reference to the
Company relates to the period  subsequent to November 26, 1996,  while reference
to the Predecessor  relates to operations on or prior to November 26,  1996. The
Parent  Company  acquired  the  Predecessor  in  1992  in  a  purchase  business
combination and the Parent Company's  basis,  including its acquisition debt and
goodwill  associated  with  the  1992  acquisition,  was  "pushed  down"  to the
Predecessor's financial statements.

The Predecessor's  financial  statements  include  allocations of Parent Company
acquisition  debt and related interest  expense.  Management fees, which include
corporate overhead costs (including legal,  treasury and other shared services),
were  allocated  to  the  Predecessor  based  generally  on  the  percentage  of
Predecessor revenues to the Parent Company's consolidated revenues. Interest was
charged on the  management fee allocated and the due to Parent Company at a rate
of 13% compounded monthly.

The Company and the  Predecessor  design,  manufacture,  market,  distribute and
support, on a world-wide basis, internal combustion and electric lift trucks and
related components and replacement parts.  Segment  information is shown in Note
13.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of  consolidation.  The Company's  financial  statements  include the
accounts  of the  Company  and  its  subsidiaries.  Minority  interests  are not
material.  The  Predecessor's  financial  statements  include  the U.S,  German,
Brazilian and Korean material handling operations of the Parent Company prior to
their  acquisition  on November  27,  1996,  on a combined  basis.  All material
intercompany balances, transactions and profits have been eliminated.

Cash and cash equivalents. Cash equivalents consist of highly liquid investments
with original  maturities of three months or less.  The carrying  amount of cash
and cash equivalents approximates their fair value.


                                       F-7
<PAGE>

Restricted  cash. The Company has certain cash and cash equivalents that are not
fully  available  for  use  in  operations.   Certain  international  operations
collateralize letters of credit and performance bonds with cash deposits.

Inventories.  Inventories  are stated at the lower of cost or market value.  The
Company  determines  cost on the  first-in,  first-out  ("FIFO")  method for all
inventories.  The  Predecessor  determined  cost  using the  last-in,  first-out
("LIFO")  method for U.S.  inventories and by the FIFO method for inventories of
international operations.

Goodwill.  Goodwill represents the difference between the purchase price and the
fair value of assets and liabilities  (tangible and intangible)  acquired at the
date of acquisition.  Goodwill  related to the Company is being amortized on the
straight-line method over forty years. The Company reviews the carrying value of
goodwill for impairment  whenever  events or changes in  circumstances  indicate
that the carrying amount may not be  recoverable.  Measurement of any impairment
would include a comparison of discounted  estimated  future operating cash flows
anticipated  to be generated  during the  remaining  amortization  period of the
goodwill to the net carrying value of goodwill.

Debt issuance  costs.  Debt issuance costs of the Company have been  capitalized
and are being amortized on the straight-line method over the term of the related
debt.  Debt issuance  costs are included in other assets and totaled  $6,241 and
$6,006 at December 31, 1997 and 1998, respectively.  Amortization of these costs
totaled  $625  and  $863  for the  years  ended  December  31,  1997  and  1998,
respectively.

Property, plant and equipment. Property, plant and equipment are stated at cost.
Expenditures  for  major  renewals  and   improvements  are  capitalized   while
expenditures  for  maintenance and repairs not expected to extend the life of an
asset  beyond its normal  useful  life are  charged  to expense  when  incurred.
Depreciation   is  determined  for  financial   reporting   purposes  using  the
straight-line  method over the estimated useful asset lives,  generally 20 to 35
years for  buildings,  eight to twelve years for machinery and equipment and two
to eight years for other assets.

Revenue recognition.  Revenue and costs are generally recorded when products are
shipped and invoiced to  customers.  Certain new units may be invoiced  prior to
the time customers take physical possession. Revenue is recognized in such cases
only when the customer has a fixed  commitment to purchase the units,  the units
have been  completed,  tested and made  available  to the customer for pickup or
delivery,  and the customer has  requested  that the units be held for pickup or
delivery at a time  specified  by the customer in the sales  documents.  In such
cases,  the units are invoiced under the customary  billing terms,  title to the
units and risks of ownership pass to the customer upon invoicing,  the units are
segregated  from  inventories  and  identified  as belonging to the customer and
there are no further obligations under the order.


                                       F-8
<PAGE>

Accrued  warranties and product  liability.  Accruals for potential warranty and
product liability claims are recorded based on past claims experience.  Warranty
costs are accrued at the time revenue is recognized. Self-insurance accruals are
provided for  estimated  product  liability  experience  on known claims and for
claims  anticipated  to have been  incurred  which  have not yet been  reported.
Product liability accruals are presented on a gross settlement basis.

Foreign currency translation. Assets and liabilities of international operations
are translated at year-end exchange rates. Income and expenses are translated at
average exchange rates prevailing during the year.  Foreign  operations  utilize
the local  currency as the  functional  currency;  translation  adjustments  are
accumulated in the cumulative translation adjustment account in equity. Gains or
losses resulting from foreign currency transactions are included in other income
(expense)  and totaled  ($1,055),  ($149),  $1,536 and  ($1,426)  for the eleven
months ended  November 26, 1996,  the one month ended  December 31, 1996 and the
years ended December 31, 1997 and 1998, respectively.

Income taxes.  Income taxes are provided  using the asset and  liability  method
required by  Statement  of  Financial  Accounting  Standards  ("SFAS")  No. 109.
Pursuant to a tax sharing  agreement with  Holdings,  the Company is included in
the consolidated  federal return of Holdings.  The tax sharing  arrangement does
not differ  materially  from that which would occur on a separate  entity basis.
The Predecessor provided for income taxes on a separate entity basis.

Use of estimates.  The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting periods. Actual results could differ from those estimates.

Segment  information.  In 1998,  the Company  adopted SFAS No. 131,  Disclosures
About Segments of an Enterprise and Related Information. SFAS No. 131 supersedes
SFAS  No.  14,  Financial  Reporting  for  Segments  of a  Business  Enterprise,
replacing the "industry  segment" approach with the "management"  approach.  The
management  approach  designates  the  internal  organization  that  is  used by
management  for making  operating  decisions  and assessing  performance  as the
source of the Company's  reportable  segments.  The adoption of SFAS No. 131 did
not affect  results  of  operations  or  financial  position  but did affect the
disclosure of segment information.

Reclassifications.  Certain  reclassifications  of prior year  amounts have been
made to conform with the current year presentation.


                                       F-9
<PAGE>

NOTE 3 - ACQUISITION

On  November  27,  1996   Holdings   acquired  the  Company  and  the  Company's
subsidiaries in a purchase business  combination.  The aggregate  purchase price
for the  acquisition  was  $139,500,  which was  subject to  certain  immaterial
post-closing  adjustments,  and was financed through a $25,000 equity investment
by Holdings in the common  stock of the Company and the  issuance of $130,000 in
Senior Notes due 2006 by the Company.  The purchase  price was  allocated to the
estimated  fair values of the Company's  tangible and intangible net assets with
the remainder  allocated to goodwill.  The excess of purchase price over the net
assets  acquired of $116,942 is being  amortized on a  straight-line  basis over
forty years.

The operating results of the Company are included in the consolidated results of
operations since November 27, 1996.  Unaudited pro forma consolidated results of
operations for the year ended December 31, 1996, assuming Holdings had completed
the acquisition on January 1, 1996, are as follows:


          Net sales                            $451,392
                                               --------
          Income from operations               $ 16,976
                                               --------
          Net income                           $  1,881
                                               --------


NOTE 4 - BUSINESS COMBINATIONS

In July,  1998 the Company,  through a newly created,  wholly-owned  subsidiary,
acquired substantially all of the assets and certain liabilities of the forklift
business of Samsung Heavy Industries ("Samsung Forklift Business") in a purchase
business  combination.  The  purchase  price,  which is  subject  to  subsequent
adjustments  relating  to  determination  of the value of  certain of the assets
acquired, totaled $30,400 plus transaction related expenses and was allocated to
the fair value of the net tangible and intangible  assets  acquired.  These fair
values exceeded the Company's  purchase price and long-lived assets were reduced
accordingly.  The purchase transaction also required the Company to set aside in
a separate bank account $7,800,  pending the realization of accounts  receivable
of the acquired entity. By agreement with the seller,  this cash has been offset
against  amounts  owed to the  seller,  and is  expected  to be  resolved at the
conclusion of the accounts receivable collection period in February, 2000.

Additionally,  during 1998 the Company acquired two dealerships in North America
in purchase business  combinations for an aggregate  purchase price of $963. The
purchase  price  was  allocated  to the  fair  value  of the  net  tangible  and
intangible assets. Goodwill arising in these transactions was not material.

The results of operations  of the entities  acquired in 1998 are included in the
consolidated  results of operations  from their  respective  acquisition  dates.
These acquisitions were not significant and pro forma data is not presented.


                                      F-10

<PAGE>



On November 7, 1997 the Company closed its acquisitions of substantially  all of
the assets and certain  liabilities  of Blue Giant USA  Corporation  ("BGU") and
Blue Giant Canada Limited ("BGC")  (collectively,  "Blue Giant") in two separate
purchase business  combinations  effective  November 1, 1997.  Although separate
legal entities,  BGU and BGC were under the common control of substantially  the
same stockholder group. The purchase price for the acquisitions comprised $9,365
in cash  (of  which  $200  was  paid to a  shareholder  of  Blue  Giant  under a
noncompete  agreement),  an obligation  payable over three years totaling $1,105
under a noncompete  agreement with a shareholder  of Blue Giant and  transaction
related  expenses.  The purchase price was allocated to the estimated fair value
of the tangible and  intangible  net assets  acquired,  with the residual  being
allocated  to  goodwill.  The  goodwill  of  $1,026  is  being  amortized  on  a
straight-line basis over forty years.

The operating results of Blue Giant are included in the consolidated  results of
operations  since  November 1, 1997.  The following  unaudited pro forma summary
presents the consolidated results of operations as though the acquisition of the
Company described in Note 3 had been completed and the Company had completed the
acquisition of Blue Giant on January 1 of each period presented.

                                               Year Ended December 31,
                                               -----------------------         
                                                1996             1997
                                                ----             ----

          Net sales                         $ 477,254        $ 509,187
                                            ---------        ---------
          Income from operations            $  17,293        $  21,583
                                            ---------        ---------
          Net income (loss)                 $   1,415        $   8,320
                                            ---------        ---------


On February 28, 1997, the Company  purchased  substantially all of the assets of
Hydroelectric Lift Trucks, Inc., (HLT) a supplier of upright material handling
equipment,  for  $4,948.  Assets  acquired  included  inventory,  equipment  and
tooling.  The purchase was financed  through a short-term  note which matured in
the second quarter of 1997. The Company is leasing the former company's facility
and is continuing  production of the  equipment,  primarily for its own use. The
acquisition was not significant and pro forma data is not presented.


                                      F-11
<PAGE>

NOTE 5 - INVENTORIES

Inventories consist of the following:

                                                   December 31,    December 31,
                                                       1997              1998

Finished equipment                                  $  12,000         $  22,104
Replacement parts                                      28,302            29,967
Work-in-progress                                        5,356             9,482
Raw material and supplies                              25,126            40,846
                                                    ---------         ---------

       Net inventories                              $  70,784         $ 102,399
                                                    ---------         --------- 

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

                                                 December 31,       December 31,
                                                     1997               1998

Property                                           $   7,005          $  13,171
Plant                                                 14,574             22,571
Equipment                                             33,854             50,728
                                                   ---------          ---------

                                                      55,433             86,470
Less:  accumulated depreciation                       (7,597)           (16,593)
                                                   ---------          ---------
                                                    
Net property, plant and equipment                  $  47,836          $  69,877
                                                   ---------          ---------

NOTE 7 - BORROWINGS, LINES OF CREDIT, PREFERRED STOCK AND OTHER INDEBTEDNESS

Long-term debt is summarized as follows:

                                                  December 31,      December 31,
                                                      1997               1998

10.75% Senior Notes due 2006                        $ 130,000         $ 150,000
Capital lease obligations (Note 8)                      6,596             7,793
                                                   ----------         ---------

Total long-term debt                                  136,596           157,793
Less:  current portion                                 (2,732)           (3,313)
                                                   ----------         ---------

Long-term debt, less current portion               $  133,864         $ 154,480
                                                   ----------         ---------


                                     F-12
<PAGE>

Senior Notes Due 2006

The Senior Notes due 2006 ("Senior Notes") were originally  issued in the amount
of $130,000 in connection  with the  acquisition  of the Company;  an additional
$20,000  of Senior  Notes  were  issued  in July,  1998 in  connection  with the
acquisition of the Samsung Forklift Business described in Note 4. The 1998 issue
carries terms and conditions  equivalent to the original issue. The Senior Notes
are due on  November  15,  2006.  The  Senior  Notes are not  redeemable  at the
Company's option prior to November 15, 2001.  Thereafter,  the Senior Notes will
be subject to redemption at the option of the Company, in whole or in part, upon
not  less  than 30 nor  more  than  60 days  notice,  at the  redemption  prices
(expressed as percentages of principal  amount) set forth below plus accrued and
unpaid  interest  thereon,  if any, to the  applicable  date of  redemption,  if
redeemed  during  the 12 month  period  beginning  on  November  15 of the years
indicated below:

          Year                                 Percentage
          ----                                 ----------
          2001                                    105.375%
          2002                                    102.688%
          2003 and thereafter                     100.000%


The Senior Notes also contain provision for early redemption upon the occurrence
of  certain  significant  corporate  events,  including  an  offering  of equity
securities or a change in control of the Company.

Revolving Line of Credit

The Company has three revolving credit  facilities (the  "Facilities")  totaling
$41.6  million,  comprising  $30  million in the United  States,  $10 million in
Germany  and $1.6  million  in  Canada.  Borrowings  under  the  Facilities  are
available for working capital and general corporate purposes,  including letters
of credit.  The  Facilities  are secured by first priority liens on all accounts
receivable and inventory of the Company's domestic operations (excluding HLT and
BGU) and the German and Canadian operations, respectively.

These  Facilities  expire in  October -  November  1999 and are  expected  to be
renewed or replaced in the ordinary course of business. Interest rates per annum
applicable to the Facilities  generally are the Eurodollar rate, the prime rate,
or the LIBOR rate, as elected by the Company and as announced periodically, plus
50 to 250 basis points,  depending on the interest rate selected. The Facilities
permit the Company to prepay loans and to permanently  reduce  revolving  credit
commitments  or letters of credit,  in whole or in part,  at any time in certain
minimum amounts.  The Company is required to pay certain fees in connection with
the  Facilities,  including a commitment fee of 0.25% on the undrawn  portion of
the revolving credit commitments.

The Facilities contain customary  representations and warranties,  and events of
default and certain other covenants. Borrowings on the Facilities are classified
in the consolidated  balance sheet as notes payable and were $799 and $24,642 at
December  31,  1997  and  1998,  respectively.  The  average  interest  rate  on
borrowings during 1998 was 8.25%.


                                      F-13
<PAGE>

Redeemable Preferred Stock

In July,  1998  the  Company  issued  $20,000  face  value  Senior  Exchangeable
Preferred  Stock  ("Preferred  Stock") in connection with the acquisition of the
Samsung  Forklift  Business  described in Note 4. The Preferred Stock carries an
annual  dividend  rate of 13.00%,  which may be paid with  additional  shares of
Preferred Stock through July 2003, and in cash thereafter.  The Preferred Stock,
and any unpaid dividends thereon, are redeemable on July 15, 2007.

Additionally,  the Preferred  Stock may be redeemed at any time on or after July
15, 2003, in whole or in part, at the option of the Company,  at the  redemption
prices  (expressed as a percentage of the  liquidation  preference  thereof) set
forth  below,  plus an  amount  in cash  equal  to all  accumulated  and  unpaid
dividends,  if redeemed during the 12-month period  beginning July 15 of each of
the years set forth below:

          Year                                        Percentage
          ----                                        ----------
          2003                                           106.500%
          2004                                           104.333%
          2005                                           102.167%
          2006 and thereafter                            100.000%


The  Preferred  Stock also contains  provisions  for early  redemption  upon the
occurrence of certain  significant  corporate  events,  including an offering of
equity securities or a change in control of the Company.
 
Fair Value Disclosures

The fair value of the Company's Senior Notes and Preferred Stock at December 31,
1998  approximates  their  carrying  values  given  the  recent  sale  of  these
securities to  investors.  The Company  believes that the carrying  value of its
other  borrowings  approximates  fair value by virtue of the  variable  interest
rates associated with these borrowings.

Liquidity

In 1998,  the  Company  converted  its  U.S.  operations  (except  BGU) to a new
information  system.  The  conversion  did not proceed  well,  and in the fourth
quarter of 1998,  the Company  lost  visibility  to many of the key  elements of
information needed to administer the business.  As a result,  production slowed,
sales declined and inventories and receivables grew  substantially.  In order to
finance the growth in working capital,  the Company borrowed heavily on its U.S.
credit  facilities  and  began  to  approach  its  maximum  borrowing   capacity
subsequent to December 31, 1998.


                                      F-14
<PAGE>

During the first  quarter  of 1999,  the  Company  substantially  corrected  its
information  system problems and began to correct  working  capital  levels.  To
further enhance  liquidity,  the Company received a short-term  expansion of its
U.S.  credit  facility  in the  amount of $5  million.  Should  the need  arise,
management  could  increase  liquidity by further  utilizing its foreign  credit
facilities,  utilizing  appreciated real estate to obtain  additional  financing
and,  subject to an early  withdrawal  penalty of 10%,  gain  access to the cash
described in Note 4.


NOTE 8 - LEASE COMMITMENTS

The Company leases certain facilities, machinery and equipment and vehicles with
varying terms under operating leases. In most leasing arrangements,  the Company
pays the property  taxes,  insurance,  maintenance  and expenses  related to the
leased property.

Most of the Company's  operating  leases  provide the Company with the option to
renew the leases for  varying  periods  after the  initial  lease  terms.  These
renewal  options  enable the  Company  to renew the  leases  based upon the fair
rental  values at the date of  expiration  of the initial  lease.  Total  rental
expense under operating leases was as follows:

     Eleven months ended November 26, 1996                   $ 1,886
                                                             -------
     One month ended December 31, 1996                       $   191
                                                             -------
     Year ended December 31, 1997                            $ 2,807
                                                             -------
     Year ended December 31, 1998                            $ 3,162
                                                             -------

The Company also routinely enters into  sale-leaseback  arrangements for certain
equipment,  which is similarly sold to third-party  customers  under  sales-type
lease  agreements.  The Company  maintains  a net  investment  in these  leases,
represented by the present value of payments  receivable  under the leases.  The
Company's net investment in sales-type  leases was $7,901 and $9,265 at December
31,  1997  and  1998,  respectively,  and  is  included  in  other  current  and
non-current assets on the consolidated balance sheet.

In  connection  with the original  sale-leaseback  arrangements  underlying  the
customer  lease  program,  the Company  has an  outstanding  rental  installment
obligation  which is recorded based on the present value of minimum payments due
under the leases of $7,793, of which $3,313 is current at December 31, 1998.


                                      F-15
<PAGE>

Future  minimum  capital and  noncancelable  operating  lease  payments  and the
related  present  value of capital  lease  payments at December  31, 1998 are as
follows:

                                                      Capital        Operating
                                                      Leases         Leases
                                                     ----------      ----------
1999                                                  $   3,637      $    2,635
2000                                                      2,546           1,155
2001                                                      1,637             590
2002                                                        818              46
2003                                                        455               -
Thereafter                                                    -               -
                                                      ---------       ---------
Total minimum obligations                                 9,093       $   4,426
                                                      ---------
Less: amount representing interest                       (1,300)
                                                      ---------
Present value of net minimum obligations                  7,793
Less: current portion                                    (3,313)
                                                      ---------
Long-term obligations                                 $   4,480
                                                      =========

NOTE 9 - INCOME TAXES

The components of income (loss) before income taxes are as follows:

<TABLE>
<CAPTION>
                                  Eleven            One
                                  Months            Month            Year             Year
                                  Ended             Ended            Ended            Ended
                               November 26,     December 31,       December 31,   December 31,
                                   1996             1996             1997             1998

<S>                             <C>                <C>             <C>             <C>       
United States                   $   2,541          $    165        $  4,080        $  (4,106)
Foreign                            (4,636)              370           4,275           (1,335)
                                ---------          --------        --------        ---------

Income (loss) before income 
taxes and extraordinary items   $  (2,095)         $    535        $  8,355        $  (5,441)
                                ---------          --------        --------        ---------
</TABLE>


                                      F-16
<PAGE>
As a result of the  Predecessor's  operating  losses for book and tax  purposes,
there was no provision for income taxes for the eleven months ended November 26,
1996.

The  following  table  summarizes  the  provision  for income  taxes for periods
subsequent to November 26, 1996:
                             
                                   One
                                  Month             Year           Year
                                  Ended            Ended          Ended
                                December 31,     December 31,    December 31,
                                   1996             1997            1998
                                   ----             ----            ----
Current
     U.S. Federal                 $  -             $  -            $  -
     Foreign                         -               55             415
     State and local                 -              429             361

Deferred
     U.S. Federal                    -                -               -
     Foreign                         -                -               -
     State and local                 -                -               -
                                ------           ------          ------

                                   $ -            $ 484           $ 776
                                ------           ------          ------

The Company did not provide for U. S. federal or foreign income taxes during any
of the  periods  shown  above as the  result  of  incurring  a  taxable  loss or
utilizing net operating loss  carryforwards  ("NOL") to offset  taxable  income,
except for  Canadian  income  taxes where no NOL exists.  State and local income
taxes are provided in jurisdictions that do not recognize NOLs.

The  provision  for income  taxes is  different  from the amount  which would be
provided by applying  the  statutory  federal  income tax rate to income  (loss)
before income taxes. The reasons for the difference are summarized below:
<TABLE>
<CAPTION>
                                              Eleven             One
                                              Months            Month            Year             Year
                                              Ended             Ended            Ended            Ended
                                            November 26,     December 31,       December 31,   December 31,
                                               1996             1996             1997             1998
                                               ----             ----             ----             ----

<S>                                            <C>               <C>             <C>             <C>       
Expected income tax at U.S. Federal rates      $    (712)        $     182       $   2,841        $  (1,850)
NOL with no current benefit                        1,575                 -               -            1,850
Foreign NOL carryforward benefit                       -              (166)         (1,987)               -
Benefit of domestic NOL                             (863)              (56)         (1,387)               -
Foreign tax differential on income/
 losses of foreign subsidiaries                        -                40             533              415
State and local taxes                                  -                 -             484              361
                                               ---------         ---------       ---------        ---------

       Total provision for income taxes        $       -         $       -       $     484        $     776
                                               ---------         ---------       ---------        ---------
</TABLE>

The tax effects of the basis  differences and NOL  carryforwards  as of December
31, 1997 and December 31, 1998 are summarized below:
<TABLE>
<CAPTION>

                                                        1997           1998
                                                        ----           ----
<S>                                                    <C>             <C>      
Property, plant and equipment                          $ (1,846)       $ (1,564)
Goodwill                                                   (942)           (582)
                                                       --------        --------
       Total deferred tax liabilities                    (2,788)         (2,146)
                                                       --------        --------

Warranties and product liability                         21,478          18,829
Net inventories                                             975           1,192
Receivables                                                 414             211
Other                                                     1,620           1,154
Benefit of net operating loss carryforwards              19,293          20,255
                                                       --------        --------
       Total deferred tax assets                         43,780          41,641
                                                       --------        --------
Deferred tax valuation allowance                        (40,992)        (39,495)
                                                       --------        --------
       Net deferred taxes                              $      -        $      -
                                                       --------        --------
</TABLE>

Basis  differences  between  the amounts  assigned  to net assets for  financial
reporting  purposes and the amounts assigned for tax purposes  resulted in a net
deferred  tax asset of  $39,495.  In light of the  Company's  and  Predecessor's
operating history, management provided a valuation allowance in the same amount.

At December 31, 1998, the Company had U.S. federal NOL  carryforwards of $10,698
which begin to expire in 2011.

In addition,  the Company's foreign  subsidiaries have approximately  $45,318 of
loss  carryforwards,  $19,538  in  corporate  losses  for  Germany,  $22,056  in
municipal losses for Germany and $3,724 in other countries,  which are available


                                      F-17
<PAGE>
to offset future foreign taxable income.  The loss  carryforwards in Germany are
available without  expiration.  The loss carryforwards in other countries expire
in the years 1999 through 2002.


                                      F-18
<PAGE>
                           NOTE 10 - RETIREMENT PLANS

Pension Plans

Certain of the Company's German employees are covered by noncontributory defined
benefit pension plans. The Company also maintains separate pension benefit plans
for German executive  employees and for other staff. The executive pension plans
are based on final pay and service,  and, in some cases, are dependent on social
security pensions while the other staff plans are based on fixed amounts applied
to the number of years of service rendered. The plans are unfunded.


The components of pension expense  relating to defined benefit plans for each of
the reporting periods covered by these financial statements are as follows:
<TABLE>
<CAPTION>

                                               Eleven            One
                                               Months           Month           Year           Year
                                               Ended            Ended           Ended          Ended
                                            November 26,     December 31,    December 31,   December 31,
                                               1996             1996            1997           1998
                                               ----             ----            ----           ----
<S>                                          <C>              <C>            <C>             <C>    
Current service cost                         $   38           $    2         $    37         $    36
Interest cost                                   840               52             837             827
Net amortization and deferrals                  107                7               -               -
                                             ------           ------         -------         -------

             Net pension cost                $  985           $   61         $   874         $   863
                                             ------           ------         -------         -------

</TABLE>

The accumulated  benefit obligations do not differ materially from the projected
benefit  obligations,  and totaled  $11,073 and $12,367 at December 31, 1997 and
1998, respectively.


The  following  table  sets  forth  the  plan's  obligations   recorded  on  the
consolidated balance sheet at December 31, 1998:

     Benefit obligations, January 1, 1998                          $11,073
     Service cost                                                       36
     Interest cost                                                     827
     Actuarial loss                                                  1,015
     Benefits paid                                                    (584)
                                                                   -------

     Benefit obligations, December 31, 1998                        $12,367
                                                                   -------


A discount  rate of 7.5% was used in 1997 and 1998 to  determine  the  projected
benefit obligations.


                                      F-19
<PAGE>

Savings Plans

The Company  sponsors  various tax deferred  savings  plans into which  eligible
employees  may elect to contribute a portion of their  compensation.  Generally,
the Company  matches  contributions  up to a maximum of 3% of  compensation.  In
connection with the required match,  the Company's  contribution to the plan was
$237,  $30,  $512 and $565 for the eleven month period ended  November 26, 1996,
the one month  period ended  December 31, 1996 and the years ended  December 31,
1997 and 1998, respectively.

Other Postemployment Benefits

The Company does not have any benefit  programs which provide  retiree health or
life insurance benefits.


NOTE 11 - LITIGATION, COMMITMENTS AND CONTINGENCIES

In the normal course of business,  lawsuits have been filed alleging damages for
accidents relating to use of the Company's products.  As part of the acquisition
of the Predecessor,  the Company assumed both the outstanding and future product
liability  exposures related to such operations.  As of December 31, 1998, there
were lawsuits  outstanding  alleging damages for injuries or deaths arising from
accidents  involving  forklift  products.  Most of the  foregoing  suits  are in
various  stages of  pretrial  completion,  and  certain  plaintiffs  are seeking
punitive as well as compensatory  damages.  The Company is  self-insured,  up to
certain limits,  for these product liability  exposures,  as well as for certain
exposures related to general,  workers'  compensation and automobile  liability.
Insurance  coverage is obtained for  catastrophic  losses as well as those risks
required  to be  insured  by law or  contract.  The  Company  has  recorded  and
maintains an estimated liability,  based in part upon actuarial  determinations,
in the amount of management's  estimate of the Company's  aggregate exposure for
such self-insured risks.

The Company is involved in various other legal  proceedings which have arisen in
the normal course of business. The Company has recorded provisions for estimated
losses in  circumstances  where a loss is  probable  and the  amount or range of
possible amounts of the loss is estimable.

The Company is  contingently  liable as a guarantor  for certain of its dealers'
financing arrangements with a financial institution. In certain circumstances of
dealer  default,  the  Company is  obligated  to: a)  repurchase  new  equipment
financed under dealer floor plan obligations and b) purchase dealers'  long-term
rental equipment  contracts with customers for which financing has been provided
by the financial institution to the dealer. The guarantees


                                      F-20
<PAGE>

under these financing arrangements aggregated approximately $30,000 and $96,000,
respectively,  at December 31, 1998.  When a dealer  default does occur, a newly
selected dealer generally assumes the assets of the prior dealer and any related
financial  obligations.  Historically,  the  Company  and the  Predecessor  have
incurred only minimal losses relating to these arrangements.

The  Company  is  contingently  liable for a portion  of the  residual  value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms  generally  ranging from three to five
years.  Historically,  the Company and the Predecessor have made a profit on the
subsequent  resale of  repurchased  machines.  At December 31, 1998, the maximum
contingent liability was approximately $4,900. At December 31, 1997 and December
31, 1998, there were $1,887 and $1,900,  respectively,  of repurchased  machines
included in inventory.

The Company is  contingently  liable on guarantees  given by the  Predecessor to
financial   institutions  relating  to  loans  and  other  dealer  and  customer
obligations  arising in the ordinary  course of its  business.  Such  guarantees
approximated  $1,900 at December 31,  1998.  Estimated  losses,  if any, on such
guarantees  are accrued as a component of the allowance  for doubtful  accounts.
Historically,  the Company and the Predecessor have not incurred material losses
on these guarantees.

The Company's outstanding letters of credit totaled $1,600 at December 31, 1998.
The letters of credit  generally  serve as  collateral  for certain  liabilities
included  in the  balance  sheet.  Certain  of the  letters  of credit  serve as
collateral guaranteeing the Company's performance under contracts.

The Company is a wholly-owned subsidiary of Holdings.  Other than its investment
in the  Company,  Holdings  has no  other  substantive  business  activities  or
operations.  Holdings  has financed its  investment  in the Company  through the
issuance of $7,000 of Junior  Subordinated  Debentures,  bearing interest at 12%
per  annum  and  maturing  2007,  $17,000  of  preferred  stock  with an  annual
cumulative dividend of 12% and $1,000 of common stock.  Although the Company has
not  guaranteed  Holdings'  debt or preferred  stock  dividend  obligations,  or
otherwise assumed such  obligations,  Holdings will look to the Company's assets
and cash flows to meet its interest,  debt and dividend  obligations when and if
they are paid.


                                      F-21
<PAGE>

NOTE 12 - RELATED PARTY TRANSACTIONS

The following table  summarizes  related party  transactions  conducted with the
Parent Company:

<TABLE>
<CAPTION>
                                               Eleven              One
                                               Months             Month            Year            Year
                                               Ended              Ended           Ended           Ended
                                            November 26,      December 31,     December 31,    December 31,
                                                1996              1996             1997            1998
                                                ----              ----             ----            ----
<S>                                          <C>                 <C>            <C>             <C>     
Distribution and parts warehousing expenses  $  6,100            $  490         $  5,580        $  5,593
Management fee allocation                       5,672                 -                -               -
Interest expense                               14,656                 -                -               -
Interest income                                   150                 -                -               -

</TABLE>

NOTE 13 - SEGMENT INFORMATION

The Company manages its operations,  assesses  performance of business  entities
and allocates  resources on a geographic  basis.  Thus,  the Company's  segments
represent its operations in The Americas,  Europe and Asia. Each of the segments
is involved in the design, manufacture,  marketing,  distribution and support of
internal  combustion  and  electric  lift  trucks  and  related  components  and
replacements.

The accounting  policies of the segments are the same as those  described in the
"Summary of Significant  Accounting  Policies." To reconcile segment information
to the Company's  consolidated  statement of operations and consolidated balance
sheet,  amounts have been  eliminated  to arrive at the  Company's  consolidated
totals.

The table below presents information about reported segments for the years ended
December  31, 1998 and 1997,  for the one month ended  December 31, 1996 and the
eleven months ended November 26, 1996:


                                      F-22
<PAGE>

For the year ended December 31, 1998:
<TABLE>
<CAPTION>
                                              The
                                            Americas        Europe          Asia       Eliminations      Total
                                          -------------  -------------  -------------  ------------- --------------

<S>                                          <C>            <C>             <C>           <C>            <C>      
Net sales                                    $ 393,247      $ 143,153       $ 26,799      $ (24,318)     $ 538,881
Interest expense                             $  16,064      $    (149)      $    952      $       -      $  16,867
Depreciation and amortization                $   9,789      $   4,958       $    394      $       -      $  15,141
Income (loss) before income taxes            $  (4,117)     $   1,842       $ (2,781)     $    (385)     $  (5,441)
Capital expenditures                         $  11,840      $   2,108       $  7,681      $       -      $  21,629
Total assets                                 $ 388,772      $  98,087       $ 56,845      $(145,646)     $ 398,058

For the year ended December 31, 1997:
                                              The
                                            Americas        Europe          Asia       Eliminations      Total
                                          -------------  -------------  -------------  ------------- --------------
Net sales                                    $ 367,859      $ 134,436       $  1,028      $ (13,431)     $ 489,892
Interest expense                             $  15,156      $    (125)      $     55      $       -      $  15,086
Depreciation and amortization                $   7,733      $   4,517       $      -      $       -      $  12,250
Income (loss) before income taxes            $   3,329      $   3,983       $  1,036      $       7      $   8,355
Capital expenditures                         $   5,014      $   1,319       $      7      $       -      $   6,340
Total assets                                 $ 296,588      $  79,249       $  4,348      $ (66,931)     $ 313,254

For the one month ended December 31, 1996:
                                              The
                                            Americas        Europe          Asia       Eliminations      Total
                                          -------------  -------------  -------------  ------------- --------------
Net sales                                    $  31,710      $  15,789       $      -      $    (736)     $  46,763
Interest expense                             $   1,400      $      (7)      $      -      $       -      $   1,393
Depreciation and amortization                $     682      $     418       $      -      $       -      $   1,100
Income (loss) before income taxes            $     125      $     372       $     37      $       1      $     535
Capital expenditures                         $     117      $     200       $      -      $       -      $     317
Total assets                                 $ 266,537      $  89,859       $  7,497      $ (62,586)     $ 301,307

For the eleven months ended November 26, 1996:
                                              The
                                            Americas        Europe          Asia       Eliminations      Total
                                          -------------  -------------  -------------  ------------- --------------
Net sales                                    $ 287,077      $ 126,045       $      -      $  (8,493)     $ 404,629
Interest expense                             $     312      $      58       $      -      $       -      $     370
Depreciation and amortization                $   7,218      $   3,193       $      -      $       -      $  10,411
Income (loss) before income taxes            $   2,100      $  (3,558)      $   (702)     $      65      $  (2,095)
Capital expenditures                         $   2,429      $     779       $      -      $       -      $   3,208
Total assets                                 $  98,175      $  96,595       $ 10,417      $ (12,480)     $ 192,707

</TABLE>

                                      F-23
<PAGE>

No customer accounted for more than 10% of revenue for any period presented. The
following  table provides  additional  information  with respect to domestic and
foreign operations:

                              Eleven Months                One Month
                                  Ended                      Ended
                            November 26, 1996          December 31, 1996
                       ------------------------    ------------------------
                          U.S.         Foreign         U.S.        Foreign
                       ---------      ---------    ---------      --------- 
Net sales              $ 280,450      $ 124,179    $  30,769      $  15,994
Long lived assets      $  24,346      $  47,874    $ 135,776      $  43,035

                            Year Ended                Year Ended
                            December 31, 1997       December 31, 1998
                         U.S.          Foreign         U.S.         Foreign

Net sales              $ 359,211      $ 130,681    $ 361,514      $ 177,367
Long lived assets      $ 146,335      $  35,182    $ 152,161      $  55,128


                                      F-24
<PAGE>

NOTE 14 - FINANCIAL  INFORMATION  FOR SUBSIDIARY  GUARANTORS  AND  NON-GUARANTOR
SUBSIDIARIES

The Company conducts a portion of its business through subsidiaries.  The Senior
Notes  referred  to  in  Note  7 are  unconditionally  guaranteed,  jointly  and
severally, by certain subsidiaries (the "Subsidiary Guarantors") which presently
constitute HLT and BGU.  Certain of the Company's  subsidiaries do not guarantee
the Senior Notes (the  "Non-Guarantor  Subsidiaries"),  presently  the Company's
foreign subsidiaries.

Presented  below  is  condensed  financial  information  for  the  Company,  the
Subsidiary  Guarantors and the  Non-Guarantor  Subsidiaries at December 31, 1997
and 1998.

The equity  method has been used by the Company with respect to  investments  in
subsidiaries.  Separate financial  statements for Subsidiary  Guarantors are not
presented  based  on  management's   determination  that  they  do  not  provide
additional information that is material to investors.


                                      F-25
<PAGE>

<TABLE>
<CAPTION>
                                               Consolidating Balance Sheet
                                                    December 31, 1998

                                                     CLARK Material
                                                    Handling Company              Non-
                                             (Parent Company   Subsidiary      Guarantor
                                                    Only)      Guarantors    Subsidiaries    Eliminations   Consolidated
                                               -------------  -------------   -------------  -------------  -------------           
Current assets
<S>                                                <C>            <C>            <C>            <C>           <C>      
   Cash and cash equivalents                       $       -      $       2      $   9,659      $       -      $   9,661
   Restricted cash                                         -              -            197              -            197
   Trade receivables                                  27,308          1,479         43,438         (3,322)        68,903
   Affiliate accounts receivable                      34,974         11,916         13,019        (59,909)             -
   Net inventories                                    62,949          5,881         33,985           (416)       102,399
   Other current assets                                1,351            818          7,440              -          9,609
                                                   ---------      ---------      ---------      ---------      ---------

       Total current assets                          126,582         20,096        107,738        (63,647)       190,769
Long term assets
   Property, plant and equipment-net                  23,204          2,192         44,481              -         69,877
   Goodwill                                          110,786          2,295           (300)             -        112,781
   Investment in affiliates                           93,968              -              -        (93,968)             -
   Other assets                                       13,131             63         24,004        (12,567)        24,631
                                                   ---------      ---------      ----------     ---------      ---------

       Total assets                                $ 367,671      $  24,646      $ 175,923      $(170,182)     $ 398,058
                                                   ---------      ---------      ---------      ---------      ---------

Current liabilities
   Notes payable                                   $  16,612      $       -      $  12,864      $    (554)     $  28,922
   Current portion of capital lease obligations            -              -          3,313              -          3,313
   Trade accounts payable                             44,792          1,369         26,592          2,625         75,378
   Affiliate accounts payable                         48,065          9,981          8,025        (66,071)             -
   Accrued compensation and benefits                   2,619            439          2,493              -          5,551
   Accrued warranties and product liability           15,124            218          2,042              -         17,384
   Other current liabilities                           3,969          1,150         12,569           (162)        17,526
                                                   ---------      ---------      ---------      ---------      ---------

       Total current liabilities                     131,181         13,157         67,898        (64,162)       148,074

Non-current liabilities
   Senior notes payable                              150,000              -              -              -        150,000
   Capital lease obligations, less current portion         -              -          4,480              -          4,480
   Accrued warranties and product liability           35,537              -              -              -         35,537
   Other non-current liabilities                       9,998            170         19,059        (11,758)        17,469
                                                   ---------      ---------      ---------      ---------      ---------

       Total liabilities                             326,716         13,327         91,437        (75,920)       355,560
                                                   ---------      ---------      ---------      ---------      ---------

Commitments and contingencies                              -              -              -              -              -

Redeemable preferred stock                            21,202              -              -              -         21,202
                                                   ---------      ---------      ---------      ---------      ---------

Stockholder's equity
   Common stock                                            1              -              -              -              1
   Paid-in-capital                                    23,948              -              -              -         23,948
   Retained earnings                                  (4,196)         2,135          3,342           (294)           987
   Subsidiary investment                                   -          9,184         84,784        (93,968)             -
   Cumulative translation adjustment                       -              -         (3,640)             -         (3,640)
                                                   ---------      ---------      ---------      ---------      ---------

       Total stockholder's equity                     19,753         11,319         84,486        (94,262)        21,296
                                                   ---------      ---------      ---------      ---------      ---------

  Total liabilities and stockholder's equity       $ 367,671      $  24,646      $ 175,923      $(170,182)     $ 398,058
                                                   ---------      ---------      ---------      ---------      ---------

</TABLE>

                                      F-26
<PAGE>

                                       Consolidating Statement of Operations
                                            Year Ended December 31, 1998
<TABLE>
<CAPTION>
                                                CLARK Material
                                               Handling Company             Non-
                                        (Parent Company   Subsidiary      Guarantor
                                               Only)     Guarantors     Subsidiaries   Eliminations    Consolidated 
                                         -------------  -------------   -------------  -------------  -------------
<S>                                        <C>             <C>            <C>            <C>            <C>       
Net sales                                  $   357,470     $    42,377    $   195,414    $   (56,380)   $   538,881
Cost of goods sold                             317,613          38,702        175,608        (56,066)       475,857
                                           -----------     -----------    -----------    -----------    -----------

       Gross profit                             39,857           3,675         19,806           (314)        63,024

Engineering, selling and administrative
  expenses                                      30,602           2,641         16,077              -         49,320
                                           -----------     -----------    -----------    -----------    -----------

       Income from operations                    9,255           1,034          3,729           (314)        13,704
Other income (expense):
   Interest income                                 704               -            427              -          1,131
   Interest expense                            (14,429)           (673)        (1,765)             -        (16,867)
   Other income (expense) - net                   (184)             83         (3,308)             -         (3,409)
                                           -----------     -----------    -----------    -----------    -----------

       Income (loss) before income taxes        (4,654)            444           (917)          (314)        (5,441)

Equity in results of subsidiaries               (1,244)              -              -          1,244              -
Provision for income taxes                         319              42            415              -            776
                                           -----------     -----------    -----------    -----------    ----------- 

Net income (loss)                          $    (6,217)    $       402    $    (1,332)   $       930    $    (6,217)
                                           -----------     -----------    -----------    -----------    -----------

</TABLE>

                                      F-27
<PAGE>

                                     Consolidating Statement of Cash Flows
                                          Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                      CLARK Material
                                                     Handling Company                 Non-
                                                Parent Company    Subsidiary       Guarantor
                                                      Only)       Guarantors      Subsidiaries     Consolidated 
                                                ---------------  ---------------  -------------   --------------
<S>                                                <C>                <C>            <C>             <C>        
Net cash provided by (used in) operating
  activities                                       $  (12,371)        $      890     $    1,056       $  (10,425)
                                                   ----------         ----------     ----------       ----------


Investing activities:
     Business combinations                            (32,093)                 -              -          (32,093)
     Capital expenditures                              (9,816)            (1,447)       (10,366)         (21,629)
     Proceeds from sale of assets                           -                558              -              558
                                                   ----------         ----------     ----------       ----------

Net cash used in investing activities                 (41,909)              (889)       (10,366)         (53,164)
                                                   ----------         ----------     ----------       ----------


Financing activities:
     Issuance of current notes payable                 15,889                  -          12,039           27,928
     Repayment of current notes payable                     -                  -          (1,868)          (1,868)
     Issuance of senior notes payable,
       net of issuance costs                           19,372                  -               -           19,372
     Issuance of preferred stock, net
       of issuance costs                               18,949                  -               -           18,949
     Other, net                                             -                  -           1,618            1,618
                                                   ----------         ----------      ----------       ----------

Net cash provided by financing activities              54,210                  -          11,789           65,999
                                                   ----------         ----------      ----------       ----------

Effect of exchange rate changes on cash and
 cash equivalents                                           -                  -             917              917
                                                   ----------         ----------      ----------       ----------

Net increase (decrease) in cash and
  cash equivalents                                        (70)                 1           3,396            3,327
Cash and cash equivalents at beginning
  of period                                                70                  1           6,263            6,334
                                                   ----------         ----------      ----------       ----------

Cash and cash equivalents at end of period         $        -         $        2      $    9,659       $    9,661
                                                   ==========         ==========      ==========       ==========
</TABLE>
                                                      

                                      F-28
<PAGE>
                                               Consolidating Balance Sheet
                                                    December 31, 1997

<TABLE>
<CAPTION>
                                                       CLARK Material
                                                      Handling Company              Non-
                                                (Parent Company  Subsidiary      Guarantor
                                                     Only)       Guarantors     Subsidiaries   Eliminations   Consolidated
                                                  ----------     ----------      ----------     ----------     ----------
Current assets
<S>                                               <C>            <C>             <C>            <C>            <C>      
   Cash and cash equivalents                      $       70     $        1      $    6,263     $        -     $    6,334
   Cash securing letters of credit                         -              -             320              -            320
   Trade receivables                                  24,224          3,081          19,713              -         47,018
   Affiliate accounts receivable                       4,900         11,982             189        (17,071)             -
   Net inventories                                    47,331          5,106          18,347              -         70,784
   Other current assets                                1,614            552           5,115              -          7,281
                                                  ----------     ----------      ----------     ----------     ----------

       Total current assets                           78,139         20,722          49,947        (17,071)       131,737
Long term assets
   Property, plant and equipment-net                  18,275          1,639          27,922              -         47,836
   Goodwill                                          113,861          1,026               -              -        114,887
   Investment in affiliates                           60,844              -               -        (60,844)             -
   Other assets                                        9,638          1,178           7,978              -         18,794
                                                  ----------     ----------      ----------     ----------     ----------

       Total assets                               $  280,757     $   24,565      $   85,847     $  (77,915)    $  313,254
                                                  ----------     ----------      ----------     ----------     ----------

Current liabilities
   Notes payable                                  $    1,261     $        -      $    1,923     $        -     $    3,184
   Current portion of capital lease obligations            -              -           2,732              -          2,732
   Trade accounts payable                             44,437          3,664          13,901              -         62,002
   Affiliate accounts payable                         12,043          1,680           2,707        (16,430)             -
   Accrued compensation and benefits                   3,051            503           2,176              -          5,730
   Accrued warranties and product liability           19,345            196           1,233              -         20,774
   Other current liabilities                           4,424            303           6,001              -         10,728
                                                  ----------     ----------      ----------     ----------     ----------

       Total current liabilities                      84,561          6,346          30,673        (16,430)       105,150

Non-current liabilities
   Senior notes payable                              130,000              -               -              -        130,000
   Capital lease obligations, less current portion         -              -           3,864              -          3,864
   Accrued warranties and product liability           38,497              -               -              -         38,497
   Other non-current liabilities                         730          7,168           4,745           (641)        12,002
                                                  ----------     ----------      ----------     ----------     ----------

       Total liabilities                             253,788         13,514          39,282        (17,071)       289,513
                                                  ----------     ----------      ----------     ----------     ----------

Commitments and contingencies                              -              -               -              -              -

Stockholder's equity
   Common stock                                            1              -               -              -              1
   Paid-in-capital                                    24,999              -               -              -         24,999
   Retained earnings                                   1,969          1,741           4,696              -          8,406
   Subsidiary investment                                   -          9,310          51,534        (60,844)             -
   Cumulative translation adjustment                       -              -          (9,665)             -         (9,665)
                                                  ----------     ----------      ----------     ----------     ----------

       Total stockholder's equity                     26,969         11,051          46,565        (60,844)        23,741
                                                  ----------     ----------      ----------     ----------     ----------

    Total liabilities and stockholder's equity   $   280,757     $   24,565      $   85,847     $  (77,915)    $  313,254
                                                  ----------     ----------      ----------     ----------     ----------
</TABLE>
                                                      

                                      F-29
<PAGE>

                                       Consolidating Statement of Operations
                                            Year Ended December 31, 1997

<TABLE>
<CAPTION>
                                              CLARK Material
                                             Handling Company             Non-
                                        (Parent Company  Subsidiary      Guarantor
                                             Only)       Guarantors     Subsidiaries   Eliminations   Consolidated 
                                          ----------     ----------      ----------     ----------     ----------
<S>                                       <C>            <C>             <C>            <C>            <C>       
Net sales                                 $  358,701     $   27,849      $  140,499     $  (37,157)   $   489,892
Cost of goods sold                           316,068         24,579         127,535        (37,055)       431,127
                                          ----------     ----------      ----------     ----------     ----------

       Gross profit                           42,633          3,270          12,964           (102)        58,765

Engineering, selling and administrative
  expenses                                    27,516          1,399           8,816              -         37,731
                                          ----------     ----------      ----------     ----------     ----------

       Income from operations                 15,117          1,871           4,148           (102)        21,034
Other income (expense):
   Interest income                               699              8             102              -            809
   Interest expense                          (14,480)           (48)           (558)             -        (15,086)
   Other income - net                            907              6             685              -          1,598
                                          ----------     ----------      ----------     ----------     ----------

       Income before income taxes              2,243          1,837           4,377           (102)         8,355

Equity in results of subsidiaries              5,952              -               -         (5,952)             -
Provision for income taxes                       324            105              55              -            484
                                          ----------     ----------      ----------     ----------     ----------

Net income                                $    7,871     $    1,732      $    4,322      $  (6,054)    $    7,871
                                          ----------     ----------      ----------     ----------     ----------
</TABLE>


                                      F-30
<PAGE>

                                     Consolidating Statement of Cash Flows
                                          Year Ended December 31, 1997

<TABLE>
<CAPTION>
                                                        CLARK Material
                                                       Handling Company              Non-
                                                 (Parent Company   Subsidiary      Guarantor
                                                       Only)       Guarantors     Subsidiaries   Consolidated 
                                                    ----------     ----------      ----------     ----------
<S>                                                 <C>            <C>             <C>            <C>       
Net cash provided by operating activities           $    3,347     $      326      $   7 ,436     $   11,109
                                                    ----------     ----------      ----------     ----------
Investing activities:
     Business combinations                             (14,646)             -               -        (14,646)
     Capital expenditures                               (4,532)          (325)         (1,483)        (6,340)
                                                    ----------     ----------      ----------     ----------
Net cash used in investing activities                  (19,178)          (325)         (1,483)       (20,986)
                                                    ----------     ----------      ----------     ----------


Financing activities:
     Issuance of current notes payable                     822              -             360          1,182
     Repayment of current notes payable                      -              -          (1,020)        (1,020)
     Other, net                                              -              -             147            147
                                                    ----------     ----------      ----------     ----------
Net cash provided by (used in)
  financing activities                                     822              -            (513)           309
                                                    ----------     ----------      ----------     ----------

Effect of exchange rate changes on cash and
 cash equivalents                                            -              -            (652)          (652)
                                                    ----------     ----------      ----------     ----------

Net increase (decrease) in cash and
  cash equivalents                                     (15,009)             1           4,788        (10,220)
Cash and cash equivalents at beginning
  of period                                             15,079              -           1,475         16,554
                                                    ----------     ----------      ----------     ----------
Cash and cash equivalents at end of period          $       70     $        1      $    6,263     $    6,334
                                                    ----------     ----------      ----------     ----------
</TABLE>


                                      F-31
<PAGE>

NOTE 15 - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
                                                 Balance
                                                    at                                               Balance
                                                Beginning                                            at End
                                                of Period   Provision   Other (1)   Deductions (2)  of Period
                                                ---------   ---------   ---------   --------------  ---------
<S>                                                <C>          <C>        <C>          <C>            <C>    
Allowance for Doubtful Accounts

The Predecessor
---------------
Eleven months ended November 26, 1996              $ 2,867      $   59     $   (48)     $    (740)     $ 2,138

The Company
-----------

One month ended December 31, 1996                  $ 2,063      $  164     $   (12)      $      -      $ 2,215

Year ended December 31, 1997                       $ 2,215      $   27     $  (123)     $    (213)     $ 1,906

Year ended December 31, 1998                       $ 1,906      $  277     $ 3,061      $    (380)     $ 4,864


(1)  Reflects the effect of exchange rates, except for 1998 which also
       includes the impact of business combinations
(2)  Utilization of established reserves, net of recoveries
</TABLE>

                                      F-32
<PAGE>