SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K


      (Mark One)
         [X]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                                  SECURITIES EXCHANGE ACT OF 1934
                            For the fiscal year ended December 31, 2001
                                               OR
         [ ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                                THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from _____________ to _____________
                        Commission File Number: 033-78954

                             SCOTSMAN HOLDINGS, INC.
             (Exact name of Registrant as specified in its Charter)


                   Delaware                                52-1862719
       (State or other jurisdiction of                  (I.R.S. Employer
        incorporation or organization)                 Identification No.)

            8211 Town Center Drive                            21236
             Baltimore, Maryland                           (Zip Code)
   (Address of principal executive offices)



Registrants'  telephone number,  including area code: (410) 931-6000
Securities registered pursuant to Section 12(b) of the Act:

  Title of each class                 Name of each exchange on which registered
  -------------------                 -----------------------------------------
         None                                             None
--------------------------    -------------------------------------------------

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


                                      None
-------------------------------------------------------------------------------
                                (Title of class)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No__

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

         As of March 29, 2002, 6,194,799 shares of common stock ("Common Stock")
of the Registrant were outstanding.


<PAGE>


                                     PART I
Item 1.  Business

General

         Scotsman Holdings,  Inc. was incorporated under the laws of Delaware in
November 1993 for the purpose of acquiring Williams Scotsman, Inc. ("Scotsman").
We conduct business solely as a holding company,  our only significant  asset is
the capital stock of Scotsman.  Therefore,  we are dependent upon the cash flows
of Scotsman for all of our cash needs. Founded in 1946, Williams Scotsman,  Inc.
is the second largest lessor of mobile office and storage units in North America
with  approximately  93,900  units  leased  through a network of branch  offices
located  throughout  the  United  States and  Canada.  Our fleet  provides  high
quality,  cost-effective  relocatable  space solutions to  approximately  25,000
customers in approximately  470 industries  including  construction,  education,
healthcare and retail. In addition to our core leasing  operations,  we sell new
and previously leased mobile office units and provide delivery, installation and
other ancillary products and services.

         Our  mobile  office  fleet  is  generally  comprised  of  standardized,
versatile  products  that can be  configured  to meet a wide variety of customer
needs.  Most units are fitted  with axles and  hitches  and are towed to various
locations.  Most  units  are wood  frame  mounted  on a steel  chassis,  contain
materials used in conventional buildings, and are equipped with air conditioning
and heating,  electrical  outlets and,  where  necessary,  plumbing  facilities.
Mobile  office units are durable and have an estimated  useful life of 20 years.
Storage products are windowless and are typically used for secure storage space.
There are generally two types: ground-level entry storage containers and storage
trailers  with axles and wheels.  The basic  storage unit  features a roll-up or
swing door at one end. Units are made of heavy exterior  metals for security and
water  tightness.  The average age of our mobile office units is approximately 8
years while the average age of the storage units is  approximately 11 years. The
average age of the total fleet is approximately 8 years.

         Based on its experience,  management  estimates that the North American
mobile office industry (excluding manufacturing operations) exceeds $3.0 billion
and has been growing in recent years.  This growth has been primarily  driven by
positive  demographic trends,  economic expansion,  an increase in the number of
applications  for  modular  space and a  greater  recognition  of the  product's
positive attributes. By outsourcing their space needs, our customers are able to
achieve  flexibility,  preserve capital for core  operations,  and convert fixed
costs into variable costs.

         We purchase our new mobile office units through  third-party  suppliers
and purchase storage units in the aftermarket  directly from shipping  companies
or  through  brokers.  We  believe  that there are  numerous  manufacturers  and
suppliers  of mobile  office and  storage  units that supply  these  products at
competitive  prices throughout the United States and Canada. We anticipate being
able to  procure an  adequate  supply of  product  on  acceptable  terms to meet
projected customer  requirements.  We do not believe that the loss of any one of
our suppliers would have a material adverse effect on our operations.

Forward Looking Statements

         Certain  statements  in this Form 10-K for the year ended  December 31,
2001 constitute  "forward-looking  statements" within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E
of the Securities  Exchange Act of 1934, as amended (the "Exchange  Act").  Such
forward-looking  statements  involve known and unknown risks,

                                       1
<PAGE>


uncertainties  and other  factors that may cause  actual  results to differ
materially  from future  results  expressed  or implied by such  forward-looking
statements.  Such factors  include,  among others,  the  following:  substantial
leverage and the ability to service debt;  changing  market trends in the mobile
office industry;  general economic and business conditions including a prolonged
or  substantial  recession;  the ability to finance fleet and branch  expansion,
locate and finance acquisitions, and integrate recently acquired businesses; our
ability to implement  our business and growth  strategy and maintain and enhance
our competitive strengths; our ability to obtain financing for general corporate
purposes; intense industry competition;  availability of key personnel; industry
over-capacity;  and  changes  in,  or the  failure  to comply  with,  government
regulations.  No assurance can be given as to future  results and neither we nor
any other person assumes  responsibility  for the accuracy and  completeness  of
these  forward-looking  statements.  Consequently,  you should  not place  undue
reliance  on such  forward-looking  statements,  which speak only as of the date
hereof.  We  undertake  no  obligation  to  publicly  release  the result of any
revision to these forward-looking  statements that may be made to reflect events
or  circumstances  after  the  date  hereof  or to  reflect  the  occurrence  of
unanticipated events.

Acquisition of Mckinney Mobile Modular

         On February  1, 2001,  we  acquired  the sales and leasing  business of
Mckinney Mobile Modular, a privately held California corporation (Mckinney) in a
transaction  accounted  for  under the  purchase  method  of  accounting.  Total
consideration for the acquisition of Mckinney was  approximately  $26.1 million,
including the repayment of existing indebtedness of Mckinney. The purchase price
paid was allocated to the identifiable assets acquired of $21.6 million with the
excess of $5.5 million  representing  goodwill and other intangible  assets. The
purchase  price  allocation  was based upon  estimates  of the fair value of the
assets  acquired.  The  acquisition,  which added over 1,600 units at a value of
approximately  $21.4  million,  was financed with  borrowings  under our amended
credit facility.

Acquisition of Evergreen Mobile Company

         On  February  1, 1999,  we  acquired  all of the  outstanding  stock of
Evergreen Mobile Company, a privately held Washington corporation ("Evergreen"),
at a net purchase price of $36.2 million,  in a transaction  accounted for under
the purchase method of accounting. At the time of the acquisition, Evergreen was
the largest  mobile  office  dealer in the state of  Washington  with a fleet of
approximately  2,000 units.  The acquisition was financed with borrowings  under
our amended credit facility.

Recapitalization

         Pursuant  to a  recapitalization  agreement,  on May 22,  1997,  we (i)
repurchased 3,210,679 shares of our outstanding common stock for an aggregate of
approximately  $293.8  million  in  cash  and  approximately  $21.8  million  in
promissory  notes  which were repaid in January  1998 and (ii) issued  1,475,410
shares of common stock for an aggregate of approximately $135.0 million in cash.
Such amounts have not been restated for the three-for-one stock split granted in
December  1997.  In  related  transactions,  we  purchased  or repaid all of the
outstanding  indebtedness.  In  conjunction  with  the debt  extinguishment,  we
recognized an extraordinary  loss of $13.7 million.  The transactions  described
above are collectively referred to herein as the "Recapitalization".

         In connection with the Recapitalization, (i) we accelerated the payment
of  deferred

                                       2
<PAGE>


compensation under its long term incentive plan, (ii) all outstanding stock
options  under our  employee  stock  option plan  vested and became  immediately
exercisable  and (iii) we canceled a portion of the  outstanding  stock options.
Accordingly,  we recognized $5.1 million of Recapitalization  expenses including
$2.5 million in connection with the  acceleration of deferred  compensation  and
$2.6 million in connection with the cancellation of the stock options.

         In order to finance the  Recapitalization,  we issued  $400  million in
9.875%  senior  notes due 2007 and entered into a $300  million  revolving  bank
facility.   Scotsman   paid  a  dividend   of  $178.7   million  to  us  to  pay
Recapitalization  expenses,  to repurchase  common stock and to purchase certain
notes.

Operating Strategy

         Due to the local and regional nature of our business,  our goals are to
become the leader in each of the local markets in which we compete and to expand
our coverage to additional local markets. To achieve market leadership,  we have
implemented  a  strategy  which   emphasizes  (i)  superior   service,   (ii)  a
well-maintained,  readily-available  and versatile lease fleet,  (iii) effective
fleet  management  using  proprietary  information  systems,  and (iv)  targeted
marketing  through an experienced  and motivated sales force. We believe that we
are generally the first or second largest provider of relocatable  space in each
of our regional markets as measured by lease fleet size and revenues. Our branch
offices are distributed  throughout the United States and Canada and are located
in a majority of the major metropolitan areas.

         Management's business and growth strategy includes the following:

         Fleet and Branch  Expansion.  We plan to continue to  capitalize on the
industry's  favorable long-term growth trends by increasing customer penetration
and fleet size in existing markets. In addition, we plan to open branches in new
markets where  positive  business  fundamentals  exist.  From January 1, 1999 to
December 31, 2001,  we  increased  our number of branches  from 80 to 88 and the
number of units from approximately 70,200 to 93,900 as a result of general fleet
expansion and to a much lesser extent, through acquisitions.

         Selective  Fleet  Acquisitions.  To complement  our internal  fleet and
branch  expansion,   we  plan  to  continue  to  capitalize  on  the  industry's
fragmentation   and  expand  our   geographic   coverage  by  making   selective
acquisitions  of mobile  offices and storage  product lease  fleets.  Typically,
there is a low cost of  integrating  acquired  fleets  and  acquired  units have
existing  leases that generate  immediate  revenues and EBITDA.  From January 1,
1999 to December 31, 2001,  we made four  acquisitions  of  approximately  5,100
units  for a  total  purchase  price  of  $66.9  million.  Units  added  through
acquisitions  have  accounted  for  approximately  20% of the value of our total
fleet purchases during this period.

         Ancillary   Products  and   Services.   We  continue  to  identify  new
applications for our existing products, diversify into new product offerings and
deliver ancillary products and services to leverage our existing branch network.
For example,  in 1996,  we began  focusing on the  expanding  market for storage
product units,  which are used for secured storage space. Since January 1, 1996,
we have grown our storage  product  fleet by over 16,400 units,  through  direct
purchases as well as nine acquisitions that totaled  approximately 6,000 storage
units.  Ancillary  products  and  services  also  include  the  rental of steps,
furniture,  ramps and security systems; sales of parts and supplies; and charges
for granting insurance waivers and for damage billings.

                                       3
<PAGE>


         Education   Market   Trends.   The  education   market   accounted  for
approximately  21% of our 2001  revenues and offers  growth  opportunities  as a
result  of the  following:  (1) an  increase  in  state  and  local  initiatives
governing  maximum class sizes,  (2) state and local  governmental  pressures to
find cost-effective ways to expand classroom capacity,  (3) increased interstate
and intrastate  migrations  necessitating rapid expansion of education space and
(4) the predicted growth of the school age population.

Competition

         Although our competition  varies  significantly  by market,  the mobile
office industry,  in general,  is highly  competitive.  We compete  primarily in
terms of product  availability,  customer service and price. We believe that our
reputation  for  customer  service and our ability to offer a wide  selection of
units  suitable  for  many  uses  at  competitive  prices  allow  us to  compete
effectively.  However,  certain of our  competitors,  such as GE Capital Modular
Space, are less leveraged,  have greater market share or product availability in
a given market and have greater financial resources than we do.

Employees

         At December 31, 2001, we employed  approximately 1,300 persons. None of
our  employees  are covered by a  collective  bargaining  agreement.  Management
considers  its  relationship  with  its  employees  to be  good.  We have  never
experienced  any  material  labor  disruption  and are unaware of any efforts or
plans to organize our employees.

Regulatory Matters

         We must comply with  various  federal,  state and local  environmental,
transportation,  health and safety laws and  regulations in connection  with our
operations. We believe that we are in substantial compliance with these laws and
regulations.  In addition to  compliance  costs,  we may incur costs  related to
alleged environmental damage associated with past or current properties owned or
leased by us. We  believe  that our  liability,  if any,  for any  environmental
remediation will not have a material adverse effect on our financial condition.

         A portion of our units is subject to regulation in certain states under
motor vehicle and similar  registration  and certificate of title  statutes.  We
believe that we have  complied in all material  respects  with all motor vehicle
registration  and similar  certificate  of title  statutes in states  where such
statutes  clearly  apply to mobile  office  units.  If laws in other  states are
changed to require  registration,  we could be subject to additional costs, fees
and taxes.  We do not believe that these costs would be material to our business
or financial condition.

Item 2.  Properties

         Our headquarters is a three-story  modular office structure  located on
3.1 acres in suburban Baltimore, Maryland.  Additionally, we lease approximately
73% of our 88 branch locations and we own the balance.  Management believes that
none of our leased facilities, individually, is material to our operations.

Item 3.  Legal Proceedings

         We are involved in certain legal actions arising in the ordinary course
of business.

                                       4
<PAGE>


We  believe  that  none of these  actions,  either  individually  or in the
aggregate,  will have a  material  adverse  effect on our  business,  results of
operations or financial condition.

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

         None.

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

         There is no established public trading market for our Common Stock.

         Scotsman  does not  intend to pay any  dividends  except for our normal
operating  expenses,  but reserves the right to do so. Scotsman's ability to pay
dividends to us is limited to amounts for corporate and administrative expenses.
(See Note 4 of Notes to the Company's Consolidated Financial Statements.)

         Pursuant to the our Amended and  Restated  1997  Employee  Stock Option
Plan (the "1997 Plan"),  options for the purchase of 23,300 shares of our common
stock were granted  during 2001.  No options were  exercised  during 2001 and no
shares of the our common  stock were  issued  during  2001 upon the  exercise of
previously granted options.

                                       5
<PAGE>


Item 6. Selected Historical Financial Data


The following tables summarize certain selected historical  financial data which
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition and Results of  Operations"  and the  Financial  Statements
appearing  elsewhere herein.  The selected  historical  financial data set forth
below has been derived from the audited Financial Statements
<TABLE>
<CAPTION>

                                                                         Year Ended December 31,
                                                     -------------------------------------------------------------
                                                        1997         1998         1999         2000          2001
                                                        ----         ----         ----         ----          ----
                                                             (Dollars in thousands, except per share amounts)
Statement of Operations Data:
Revenues:
<S>                                                   <C>          <C>          <C>          <C>           <C>
     Leasing                                          $120,266     $152,221     $201,820     $220,547      $238,151
     Sales:
         New units                                      41,926       46,448       73,001       73,291        91,114
         Rental equipment                               13,120       15,530       22,369       21,571        22,212
     Delivery and installation                          38,626       47,002       71,245       79,097        97,342
     Other                                              22,252       25,893       37,370       37,640        43,437
                                                      --------     --------     --------     --------      --------
         Total                                        $236,190     $287,094     $405,805     $432,146      $492,256
-------------------------------------------------------------------------------------------------------------------

Gross profit:
     Leasing                                          $ 71,237     $101,036     $136,543     $148,454      $153,281
     Sales:
         New units                                       6,685        8,099       12,678       13,023        15,945
         Rental equipment                                3,521        3,730        5,133        5,266         5,326
     Delivery and installation                          10,914       12,083       18,886       19,427        19,003
     Other                                              15,480       20,393       29,949       31,057        35,063
                                                      --------      -------      -------      -------        ------
         Total                                        $107,837     $145,341     $203,189     $217,227      $228,618
-------------------------------------------------------------------------------------------------------------------

Selling, general and administrative
     expenses                                         $ 46,312     $ 58,152     $ 71,480     $ 76,872      $ 82,573
Casualty loss                                              ---          ---          ---          ---         1,500
Recapitalization expenses (1)                            5,105          ---          ---          ---           ---
Earnings from continuing operations
     before extraordinary item                           4,530        3,724       17,271       16,083        22,629
Earnings from continuing operations
     before extraordinary item per
     common share                                     $    .65     $    .70     $   2.79     $   2.60      $   3.65
                                                         =====        =====        =====         ====          ====
Earnings from continuing operations
     before extraordinary item per
     common share, assuming dilution                  $    .63     $    .66     $   2.64     $   2.46      $   3.46
                                                         =====        =====         ====         ====          ====

Ratio of earnings to fixed charges (2)                    1.2x         1.2x         1.4x         1.3x          1.5x


EBITDA (3)                                            $ 92,351     $117,519     $168,161     $177,554      $187,528
-------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>

                                                                         Year Ended December 31,
                                                    --------------------------------------------------------------
                                                        1997        1998         1999         2000          2001
                                                        ----        ----         ----         ----          ----
                                                           (Dollars in thousands, except per share amounts)

Balance Sheet Data:
<S>                                                 <C>          <C>          <C>          <C>           <C>
Rental equipment, net                               $  403,528   $  640,634   $  726,924   $  799,994    $  866,867
Total assets                                           514,175      941,291    1,066,467    1,145,901     1,244,986
Long-term debt                                         533,304      845,447      915,823      959,110     1,022,972
Stockholder's equity (deficit)                        (128,849)     (57,853)     (38,683)     (22,578)       (1,279)

</TABLE>

          (1)     Recapitalization  expenses  recognized  in the  amount of $5.1
                  million  represent  costs  incurred  in  connection  with  the
                  recapitalization  of the Company in May 1997.  These  expenses
                  include $2.5 million in connection  with the  acceleration  of
                  deferred  compensation and $2.6 million in connection with the
                  cancellation of the stock options.

         (2)      The ratio of earnings to fixed charges is computed by dividing
                  fixed charges into earnings from continuing  operations before
                  income taxes and extraordinary items plus fixed charges. Fixed
                  charges include interest,  expensed or capitalized,  including
                  amortization of deferred financing costs and debt discount and
                  the estimated interest component of rent expense.

         (3)      We define EBITDA as earnings before deducting interest, income
                  taxes,   depreciation  and  amortization,   non-cash  charges,
                  recapitalization  expenses and  extraordinary  items.  EBITDA,
                  which  is  not  a  measure  of  financial   performance  under
                  generally accepted accounting principles, is presented because
                  this data is used by some  investors to determine  our ability
                  to meet historical debt service requirements.

<TABLE>
<CAPTION>

Selected Quarterly Financial Data (Unaudited):

(In thousands except per share data)                       Year ended December 31, 2001
--------------------------------------------------------------------------------------------------------------
Quarter                                First         Second          Third         Fourth         Year
--------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>            <C>            <C>
Revenues                             $105,366       $119,897       $140,891       $126,102       $492,256
Gross Profit                           53,791         58,088         59,558         57,181        228,618
Income before income taxes              4,591          9,077         13,666         12,880         40,214
Net income                              2,524          4,949          7,515          7,641         22,629
Net income per common share               .41            .80           1.21           1.23           3.65
Net  income   per   common   share,
assuming dilution                         .39            .76           1.15           1.16           3.46

---------------------------------------------------------------------------------------------------------------
</TABLE>
                                       7
<PAGE>

<TABLE>
<CAPTION>


(In thousands except per share data)                       Year ended December 31, 2000
--------------------------------------------------------------------------------------------------------------
Quarter                                First         Second          Third         Fourth          Year
--------------------------------------------------------------------------------------------------------------
<S>                                  <C>            <C>            <C>            <C>           <C>
Revenues                             $ 95,733       $103,132       $124,766       $108,515      $432,146
Gross Profit                           51,565         53,090         57,234         55,338       217,227
Income before income taxes              4,495          7,464         10,759          8,303        31,021
Net income                              2,218          4,004          5,980          3,881        16,083
Net income per common share               .36            .65            .97            .62          2.60
Net  income   per   common   share,
assuming dilution                         .34            .61            .91            .60          2.46
---------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>


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

         The following  discussion regarding our financial condition and results
of  operations  for the three  years ended  December  31, 2001 should be read in
conjunction with the more detailed information and Financial Statements included
elsewhere herein. Certain statements in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" are  forward-looking  statements.
See "Forward-Looking Statements".

Critical Accounting Policies and Estimates

         General.  This  discussion and analysis of our financial  condition and
results of operations is based upon our consolidated financial statements, which
have been prepared in accordance with accounting  principles  generally accepted
in the United States. The preparation of these financial  statements requires us
to make  estimates  and  judgments  that affect the reported  amounts of assets,
liabilities,  revenues  and  expenses,  and  related  disclosure  of  contingent
liabilities.  (See note 1 of the Notes to Consolidated Financial Statements.) On
an on-going basis, we evaluate estimates,  including those related to bad debts,
contingencies and litigation,  intangible  assets, and income taxes. We base our
estimates on historical  experience  and on various other  assumptions  that are
believed to be reasonable under the circumstances, the results of which form the
basis for making  judgments  about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

         In December,  2001, the Securities and Exchange Commission (SEC) issued
a statement  regarding  the  selection  and  disclosure  by public  companies of
critical  accounting  policies and practices.  The SEC indicated that a critical
accounting policy is one which is both important to the portrayal of a company's
financial  condition  and results,  and requires  management's  most  difficult,
subjective or complex judgments, often as a result of the need to make estimates
about the effect of  matters  that are  inherently  uncertain.  We  believe  the
following critical accounting policies affect our more significant judgments and
estimates used in the preparation of the consolidated financial statements.

         Allowance  for  doubtful  accounts.  We are  required to  estimate  the
collectibility of our trade  receivables.  Accordingly,  allowances for doubtful
accounts are maintained for estimated losses resulting from the inability of our
customers  to make  required  payments.  We  evaluate  a variety  of  factors in
assessing the ultimate  realization of these  receivables  including the current
credit-worthiness   of  customers.   The  allowance  for  doubtful  accounts  is
determined  based on  historical  collection  results in  addition to an ongoing
review of specific  customers.  If the financial condition of our customers were
to  deteriorate,  resulting in an impairment of their ability to make  payments,
additional allowances may be required, resulting in decreased net income.

         Contingencies.  We are  subject  to  proceedings,  lawsuits,  and other
claims related to environmental,  product and other matters, and are required to
assess the  likelihood of any adverse

                                       9
<PAGE>


judgments  or  outcomes  to these  matters as well as  potential  ranges of
probable losses. A determination of the amount of reserves required, if any, for
these  contingencies  is made after  analysis  of each  individual  matter.  The
required  reserves  may  change in the future  due to new  developments  in each
matter or changes in approach such as a change in settlement strategy in dealing
with these matters.

         Goodwill and  Intangible  Impairment.  We have  significant  intangible
assets related to goodwill and other acquired intangibles as well as capitalized
software costs. The  determination of related estimated useful lives and whether
or not these  assets are impaired  involves  significant  judgments.  Changes in
strategy and/or market conditions could significantly impact these judgments and
require adjustments to recorded asset balances.

         Income  Taxes.  As part of the process of  preparing  our  consolidated
financial  statements,  we are required to estimate  income taxes in each of the
jurisdictions  in which we  operate.  The  process  involves  estimating  actual
current tax expense along with assessing  temporary  differences  resulting from
differing treatment of items for book and tax purposes. These timing differences
result in  deferred  tax  assets  and  liabilities,  which are  included  in our
consolidated  balance  sheet.  We record a  valuation  allowance  to reduce  our
deferred  tax assets to the amount that is more likely than not to be  realized.
We have considered future taxable income and ongoing tax planning  strategies in
assessing the need for the valuation allowance.

General

     On February 1, 2001, we acquired the sales and leasing business of Mckinney
Mobile Modular. See "Acquisition of Mckinney Mobile Modular."

     On February 1, 1999, we acquired all of the outstanding  stock of Evergreen
Mobile Company. See "Acquisition of Evergreen Mobile Company."

         We are a holding  company  formed in  November  1993,  and  conduct our
business solely through  Scotsman,  our wholly-owned  subsidiary.  We derive our
revenues  and  earnings  from the leasing and sale of mobile  office and storage
units,  delivery  and  installation  of those units and the  provision  of other
ancillary products and services.  Leasing  operations,  which primarily comprise
the leasing of mobile  office  units and the sale of units from our lease fleet,
account for a majority of our revenues  and gross  profits.  Used mobile  office
units are sold from our lease fleet in the ordinary course of business at either
fair market  value or, to a lesser  extent,  pursuant to  pre-established  lease
purchase  options.  The sale of used units  results in the  availability  of the
total cash  proceeds and  generally  results in the reporting of gross profit on
such sales.

         New unit  sales  revenues  are  derived  from  the  sale of new  mobile
offices,  similar  to those  units  leased by us.  Revenues  from  delivery  and
installation   result  from  activities   related  to  the   transportation  and
installation of and site  preparation  for both leased and sold products.  Other
revenues are derived  from other  products  and  services  including:  rental of
steps,  furniture,  ramps and

                                       10
<PAGE>


security  systems;  sales of parts and  supplies;  and charges for granting
insurance waivers and for damage billings.

         Although a portion of our business is with customers in industries that
are  cyclical in nature and subject to changes in general  economic  conditions,
management  believes that certain  characteristics  of the mobile office leasing
industry and their operating  strategies  should help to mitigate the effects of
economic downturns.  These  characteristics  include (i) our typical lease terms
which  include  contractual  provisions  requiring  customers to retain units on
lease for, on average,  12 months,  (ii) the flexibility and low cost offered to
our  customers  by leasing  which may be an  attractive  alternative  to capital
purchases,  (iii) our ability to redeploy units during  regional  recessions and
(iv) the diversity of our industry  segments and the  geographic  balance of our
operations  (historically during economic slowdowns,  the construction  industry
which represented  approximately 33% of 2001 revenues,  experiences  declines in
utilization  rates,  while other customer  segments,  including  education which
represented approximately 21% of revenues in 2001, are more stable).

Results of Operations

         2001 Compared With 2000.  Revenues in 2001 were $492.3 million, a $60.1
million or 13.9%  increase from revenues of $432.1 million in 2000. The increase
resulted  from a $17.6  million or 8.0%  increase  in leasing  revenue,  a $17.8
million  or 24.3%  increase  in sales of new  units,  an $18.2  million or 23.1%
increase in  delivery  and  installation  revenue,  and a $5.8  million or 15.4%
increase in other revenue.  The increase in leasing revenue is attributable to a
10.7%  increase in the average  lease fleet to  approximately  92,300  units for
2001, combined with an increase of $3 in the average monthly rental rate, offset
by a decrease  in the  average  fleet  utilization  of two  percent to 82%.  The
increase  in the  average  monthly  rental  rate is a  result  of  overall  rate
improvement  in some of our  products  combined  with  changes in fleet mix. The
decrease in average fleet utilization is attributable to the softening  economic
and related  business  conditions.  The increase in sales of new units is due to
contracts assumed in connection with the Mckinney  acquisition  completed in the
first quarter,  as well as overall  system growth.  The increase in delivery and
installation  revenue is  attributable to the increase in sales of new units and
leasing revenue. Other revenue increased as a result of increases in high margin
ancillary products and services, primarily steps, ramps, relocations of customer
owned units, and charges for granting insurance waivers.

         Gross  profit in 2001 was  $228.6  million,  an $11.4  million  or 5.2%
increase  from 2000  gross  profit of $217.2  million.  The  increase  primarily
resulted from a $4.8 million or 3.3%  increase in leasing  gross profit,  a $2.9
million or 22.4% increase in new unit sales gross profit,  and a $4.0 million or
12.9% increase in gross profit from other revenue. The increase in leasing gross
profit is a result of the increase in leasing revenue  described above offset by
a decline in  leasing  margins  from  67.3% in 2000 to 64.4% in 2001.  Excluding
depreciation and  amortization,  leasing margins decreased from 84.0% in 2000 to
81.9% in 2001. This margin  suppression was attributable to a decline in average
fleet  utilization  coupled with  incremental  costs  associated  with increased
turnover of existing  fleet in certain  markets.  The increase in new unit sales
and other gross  profit is the result

                                       11
<PAGE>


of the increase in the revenue described above.

         Selling, general and administrative (SG&A) expenses were $82.6 million,
a $5.7 million or 7.4% increase from 2000. The overall increase in SG&A expenses
is  due  to an  increase  in  field  related  expenses,  primarily  payroll  and
occupancy,  incurred in  connection  with the fleet  growth  described  above in
addition to the underlying cost of doing business.

         During June 2001,  we suffered a flood in one of our branch  locations.
The estimated write off of destroyed fleet units is $1.5 million.

         Interest expense  decreased by 6.9% to $85.5 million in 2001 from $91.9
million in 2000. This decrease is the result of a decrease of approximately  220
basis points in effective interest rates on our variable bank debt for 2001 from
2000, partially offset by increased borrowings to finance fleet growth.

         The  difference  between our reported tax  provision for the year ended
December 31, 2001 and the tax  provision  computed  based on statutory  rates is
primarily  attributable to non-deductible  goodwill amortization expense of $5.1
million.

         2000 Compared With 1999.  Revenues in 2000 were $432.1 million, a $26.3
million or 6.5% increase from revenues of $405.8  million in 1999.  The increase
resulted  from a $18.7  million or 9.3%  increase in leasing  revenue and a $7.9
million or 11.0% increase in delivery and installation  revenue. The increase in
leasing  revenue is  attributable to a 10.4% increase in the average lease fleet
to approximately 83,300 units for 2000, combined with a slight increase of $1 in
the average  monthly  rental  rate,  offset by a slight  decrease in the average
fleet  utilization  of  one  percent  to  84%.  The  increase  in  delivery  and
installation  revenue is  attributable  to the  increase  in leasing  revenue as
described above

     Gross profit in 2000 was $217.2  million,  a $14.0 million or 6.9% increase
from 1999 gross profit of $203.2 million. The increase primarily resulted from a
$11.9  million or 8.7%  increase in leasing  gross  profit and to a minor extent
from a $1.1  million or 3.7%  increase in gross profit from other  revenue.  The
increase in leasing gross profit is a result of the increase in leasing  revenue
described above combined with stable leasing margins. Excluding depreciation and
amortization,  leasing margins decreased slightly from 84.8% in 1999 to 84.0% in
2000. Although other revenue was essentially flat, the increase in related gross
profit was attributed to a favorable mix of higher margin ancillary products, as
1999 results included revenue  associated with a large (lower margin) project to
relocate customer-owned units.

         SG&A  expenses  in 2000 were  $76.9  million,  a $5.4  million  or 7.5%
increase from 1999. The increase is the result of the growth  experienced by the
Company, both in terms of number of branches and fleet size as compared to 1999.
The Company's  branch network has expanded from 83 branches at December 31, 1999
to 88 branches at December 31, 2000,  while the fleet has grown by approximately
8,700 units from  December 31, 1999.  The increase in SG&A expenses is due to an

                                       12
<PAGE>


increase in field related expenses, primarily payroll and occupancy, incurred in
connection with this branch expansion and fleet growth.

         Interest  expense in 2000 was $91.9  million,  an $8.0  million or 9.5%
increase from 1999. This increase is a result of increased average borrowings of
approximately  $38.9  million to finance  fleet and branch growth in addition to
increases in interest rates on our variable bank debt. The effect of market rate
increases in 2000 was partially offset by a 25 basis point reduction in February
2000 on bank credit  facility  borrowings  as we  achieved a specified  leverage
ratio threshold.

         The  difference  between our reported tax  provision for the year ended
December 31, 2000 and the tax  provision  computed  based on statutory  rates is
primarily  attributable to non-deductible  goodwill amortization expense of $4.9
million.

Liquidity and Capital Resources

         During 1999, 2000 and 2001, our principal sources of funds consisted of
cash  flow from  operating  and  financing  sources.  Cash  flow from  operating
activities of $72.3 million in 1999,  $86.9 million in 2000 and $61.2 million in
2001 was largely generated by the rental of units from our lease fleet and sales
of new mobile office units.

         We have increased our EBITDA and believe that EBITDA  provides the best
indication  of our  financial  performance  and provides the best measure of our
ability  to meet  historical  debt  service  requirements.  We define  EBITDA as
earnings before  interest,  income taxes,  depreciation  and  amortization,  and
non-cash  charges.  EBITDA as we define it,  does not  represent  cash flow from
operations as defined by generally accepted accounting principles and should not
be considered  as an  alternative  to cash flow as a measure of  liquidity,  nor
should it be considered as an  alternative  to net income as an indicator of our
operating  performance.  Our EBITDA increased by $10.0 million or 5.6% to $187.5
million in 2001 compared to $177.6  million in 2000.  This increase in EBITDA is
primarily the result of increased leasing and new unit sales activity  described
above,  partially  offset  by  increased  SG&A  expenses.  In 2000,  our  EBITDA
increased by $9.4 million or 5.6% to $177.6  million  compared to $168.2 million
in 1999.  This  increase  in EBITDA is a result of  increased  leasing  activity
described above, partially offset by increased SG&A expenses.

         Cash flow used in  investing  activities  was  $142.7  million in 1999,
$128.3  million  in 2000  and  $126.4  million  in  2001.  Our  primary  capital
expenditures are for the discretionary purchase of new units for the lease fleet
and units purchased through acquisitions. We seek to maintain our lease fleet in
good  condition  at all times and we  generally  increase  the size of our lease
fleet only in those local or regional markets  experiencing  economic growth and
established  unit demand.  These  expenditures  increased the size of the rental
fleet by  approximately  9,400 units  during  1999,  8,700 units during 2000 and
5,700 units during  2001.  This  activity was in response to increased  customer
demand  and,  for the  first  half of  2001,  was a  continuation  of our  fleet
acquisition  strategy and branch  expansion.  The following table sets forth our
investment in our lease fleet for the periods indicated.

                                       13
<PAGE>

<TABLE>
<CAPTION>

                                                                           Year Ended December 31,
                                                                    -----------------------------------
                                                                      1999         2000         2001
                                                                      ----         ----         ----
                                                                           (Dollars in millions)
Gross capital expenditures for rental equipment:
<S>                                                                  <C>          <C>          <C>
      New units and betterments                                      $115.0       $118.6       $106.2
      Fleet acquisitions, excluding acquired businesses                  --          4.0         21.4
                                                                     ------       ------       ------
                                                                      115.0        122.6        127.6
Purchase price allocated to fleet of acquired businesses               24.2          5.3           --
Proceeds from sale of used rental equipment                           (22.4)       (21.6)       (22.2)
                                                                     ------       ------       ------

Net capital expenditures for rental equipment                        $116.8       $106.3       $105.4
                                                                     ======       ======       ======

Lease fleet maintenance expenses included
     in the statement of operations                                   $30.5        $35.1        $43.0
                                                                      =====        =====        =====

</TABLE>

         We believe we can manage the capital  requirements  of our lease fleet,
and thus our cash  flow,  through  the  careful  monitoring  of our lease  fleet
additions.  During 1999,  2000 and 2001,  we were able to sell used units in the
ordinary course of business  (excluding units sold pursuant to purchase options)
at an average of more than 95% of their total  capitalized cost and at a premium
to net book value.  Such capitalized  costs include the cost of the unit as well
as costs of significant  improvements made to the unit. See further  explanation
below  and  Note  2  of  the  Notes  to   Consolidated   Financial   Statements.
Historically, we have recognized net gains on the sale of used units.

         Our maintenance and  refurbishment  program is designed to maintain the
value of lease fleet units and realize  rental  rates and  operating  cash flows
from older units  comparable  to those from newer units.  The sale of used units
helps  preserve the overall  quality of our lease fleet and enhances  cash flow.
Generally,  costs of improvements  and betterments  aggregating less than $1,000
per unit are  expensed  as  incurred.  Expenditures  greater  than  $1,000  that
significantly extend the economic useful life of a unit or that materially alter
a unit's  configuration  are  capitalized.  We estimate that the current  annual
capital  expenditures  (net of proceeds  from sales of used units)  necessary to
maintain our lease fleet and  facilities at their current size and condition are
approximately $25 million.

         Other capital  expenditures  of $13.9 million,  $18.6 million and $16.3
million in 1999,  2000 and 2001,  respectively,  consist  of items not  directly
related to the lease fleet, such as branch buildings, land, equipment, leasehold
improvements and management information systems.

         Cash provided by financing activities of $70.3 million,  $43.3 million,
and $63.3 million in 1999, 2000 and 2001,  respectively,  is comprised primarily
of long-term borrowings, net of repayments, under our revolving credit facility,
which was further amended in January 2001 to provide for revolver  borrowings up
to $600 million.  Scotsman  paid  dividends to the Company in the amount of $60,
$55  and  $55 to  fund  normal  operating  expenses  in  2001,  2000  and  1999,
respectively.

                                       14
<PAGE>


         At December  31, 2001 we had $400  million of 9.875%  Senior  Notes due
2007. In February  2002,  we issued $150 million of additional  senior notes due
2007 under the existing  indenture.  Net proceeds from the issuance were used to
permanently  repay our $58.1 million term loan and to repay borrowings under the
existing revolving credit facility.

         On March 26, 2002, we entered into a new credit facility  providing for
revolver  borrowings  up to $460  million  and a $210  million  term  loan.  The
facility also  provides for up to an additional  $30 million in term or revolver
commitments.  Principal  payments  due on the term loan are equal to 1% per year
payable  quarterly  beginning  June 30,  2002,  with the  remaining  balance due
December 31,  2006.  Borrowings  under the new credit  facility are based upon a
borrowing base  calculation.  The new loan agreement  requires  compliance  with
certain financial covenants including capital  expenditures,  interest coverage,
and  leverage and fleet  utilization  levels.  Net proceeds  from the new credit
facility,  which matures  December 31, 2006, were used to refinance the existing
credit facility.
         We believe we will have  sufficient  liquidity  under our new revolving
line of credit and from cash  generated  from  operations to fund our operations
for the next 12 months.

         A  summary  of  our  significant   contractual  obligations  and  other
commercial  commitments is as follows:
o    Debt - Item 8.  Financial  Statements  and  Supplementary  Data - Notes  to
     Consolidated Financial Statements - Notes 4 and 9
o    Operating  Leases Item 8.  Financial  Statements and  Supplementary  Data -
     Notes to Consolidated Financial Statements - Note 6
o    Standby Letters of Credit  Financial  Statements and  Supplementary  Data -
     Notes to Consolidated Financial Statements - Note 4

Seasonality

         Although demand from certain of our customers is somewhat seasonal, our
operations as a whole are not seasonal to any significant extent.

Inflation

         We believe that inflation has not had a material  effect on our results
of operations.  However,  an inflationary  environment could materially increase
interest rates on our floating rate debt. The price of used units sold by us and
the  replacement  cost of such units could also increase in such an environment.
Our standard lease  generally  provides for annual rental rate escalation at the
inflation  rate as determined  by the Consumer  Price Index after the end of the
initial lease term.  In addition,  we may seek to limit our exposure to interest
rate fluctuations by utilizing certain hedging mechanisms, although we are under
no obligation to do so.

                                       15
<PAGE>


Recent Accounting Pronouncements

       Goodwill  and  Other  Intangible  Assets.  In June  2001,  the  Financial
Accounting  Standards Board issued Statement of Financial  Accounting  Standards
No. 142 ("FAS No. 142"),  Goodwill and Other  Intangible  Assets,  effective for
fiscal years  beginning after December 15, 2001.  Under the new rules,  goodwill
(and  intangible  assets  deemed  to have  indefinite  lives)  will no longer be
amortized but will be subject to annual  impairment tests in accordance with the
Statement.  Other  intangible  assets will  continue to be amortized  over their
useful lives.

       We will  apply  the new  rules  on  accounting  for  goodwill  and  other
intangible  assets  beginning in the first quarter of 2002.  Application  of the
nonamortization provisions of the Statement is expected to result in an increase
in net income of $4.6  million,  , ($0.74 per basic  share and $0.70 per diluted
share)  per  year.  During  2002,  we will  perform  the  first of the  required
impairment  tests of goodwill as of January 1, 2002.  The results of these tests
are not  expected  to have a  material  effect  on our  earnings  and  financial
position.

     Impairment or Disposal of Long-Lived  Assets. In August 2001, the Financial
Accounting  Standards Board issued Statement of Financial  Accounting  Standards
No. 144 ("FAS No. 144"), Accounting for the Impairment or Disposal of Long-Lived
Assets, which addresses financial accounting and reporting for the impairment or
disposal  of  long-lived  assets.  FAS No. 144 is  effective  for  fiscal  years
beginning  after December 15, 2001. We expect to adopt FAS No. 144 as of January
1, 2002 and do not  anticipate it to have a material  effect on our earnings and
financial position.

                                       16
<PAGE>


Item 8.  Financial Statements and Supplementary Data
<TABLE>
<CAPTION>


                        INDEX TO FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULES

Financial Statements:
                                                                                                               Page
                                                                                                               ----
Scotsman Holdings, Inc. and Subsidiaries:
         Report of Independent Auditors..........................................................................18
         Consolidated Balance Sheets as of December 31, 2001 and 2000............................................19
         Consolidated Statements of Operations for the years ended
                   December 31, 2001, 2000 and 1999..............................................................20
         Consolidated Statements of Changes in Stockholders' Deficit for the years
                  ended December 31, 2001, 2000 and 1999.........................................................21
         Consolidated Statements of Cash Flows for the years ended
                  December 31, 2001, 2000 and 1999...............................................................22
<S>                                                                                                          <C>
         Notes to Consolidated Financial Statements...........................................................23-35

Williams Scotsman, Inc. and Subsidiaries:
         Report of Independent Auditors..........................................................................36
         Consolidated Balance Sheets as of December 31, 2001 and 2000............................................37
         Consolidated Statements of Operations for the years ended
                  December 31, 2001, 2000 and 1999...............................................................38
         Consolidated Statements of Changes in Stockholder's Deficit for the years
                  ended December 31, 2001, 2000 and 1999.........................................................39
         Consolidated Statements of Cash Flows for the years ended
                  December 31, 2001, 2000 and 1999...............................................................40
         Notes to Consolidated Financial Statements...........................................................41-56

Financial Statement Schedules:
   Scotsman Holdings, Inc. and Subsidiaries:
         Schedule I - Condensed Financial Information of Registrant...........................................76-77

   Scotsman Holdings, Inc. and Subsidiaries:
         Schedule II - Valuation and Qualifying Accounts.........................................................78
</TABLE>

                  All schedules not listed have been omitted either because they
are not required or, if required, the required information is included elsewhere
in the financial statements or notes thereto.

                                       17
<PAGE>


                         Report of Independent Auditors


Board of Directors
Scotsman Holdings, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of  Scotsman
Holdings, Inc. and subsidiaries as of December 31, 2001 and 2000 and the related
consolidated statements of operations,  stockholders' deficit and cash flows for
each of the three years in the period ended  December 31, 2001.  Our audits also
included the financial  statement  schedules  listed in the Index at Item 14(a).
These consolidated  financial statements and schedules are the responsibility of
the Company's  management.  Our  responsibility  is to express an opinion on the
consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of Scotsman Holdings,
Inc. and subsidiaries at December 31, 2001 and 2000 and the consolidated results
of their  operations  and their  cash  flows for each of the three  years in the
period  ended  December  31,  2001  in  conformity  with  accounting  principles
generally  accepted in the United  States.  Also,  in our  opinion,  the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial  statements taken as a whole,  present fairly in all material respects
the information set forth therein.



                                                          /s/ Ernst & Young LLP
Baltimore, Maryland
February 20, 2002, except for Note 9 for which the date is
March 26, 2002

                                       18
<PAGE>

<TABLE>
<CAPTION>


                    Scotsman Holdings, Inc. and Subsidiaries
                           Consolidated Balance Sheets


                                                                                               December 31
                                                                                         2001                2000
                                                                                ---------------------------------------
                                                                                             (In thousands)
Assets
<S>                                                                                  <C>                 <C>
Cash                                                                                 $      586          $    2,549
Trade accounts receivable, net of allowance for doubtful accounts of $1,298
   in 2001 and $983 in 2000                                                              74,336              53,916
Prepaid expenses and other current assets                                                25,628              18,142
Rental equipment, net of accumulated depreciation
   of $178,046 in 2001 and $155,434 in 2000                                             866,867             799,994
Property and equipment, net                                                              73,782              64,766
Deferred financing costs, net                                                            10,696              15,408
Goodwill and other intangible assets, net                                               172,057             172,218
Other assets                                                                             21,034              18,908
                                                                                ---------------------------------------
                                                                                     $1,244,986          $1,145,901
                                                                                =======================================
Liabilities and stockholders' deficit
Accounts payable and accrued expenses                                                $   50,297          $   54,747
Rents billed in advance                                                                  25,796              24,757
Revolving credit facility                                                               564,922             500,460
Long-term debt                                                                          458,050             458,650
Deferred income taxes                                                                   147,200             129,865
                                                                                ---------------------------------------
Total liabilities                                                                     1,246,265           1,168,479
                                                                                ---------------------------------------

Stockholders' deficit:
   Common stock, $.01 par value.  Authorized: 10,000,000 shares; issued:
     9,507,407 shares in 2001 and 2000                                                       95                  95
   Additional paid-in capital                                                           233,926             234,204
   Cumulative foreign currency translation adjustment                                    (1,505)               (457)
   Retained earnings                                                                     62,065              39,436
                                                                                ---------------------------------------
                                                                                        294,581             273,278
Less treasury stock - 3,310,808 common shares in 2001 and 3,310,733 common
   shares in 2000, at cost                                                             (295,860)           (295,856)
                                                                                ---------------------------------------
Net stockholders' deficit                                                                (1,279)            (22,578)
                                                                                ---------------------------------------
                                                                                     $1,244,986          $1,145,901
                                                                                =======================================
See accompanying notes.
</TABLE>

                                       19
<PAGE>

<TABLE>
<CAPTION>

                    Scotsman Holdings, Inc. and Subsidiaries
                      Consolidated Statements of Operations

                                                                    Year ended December 31
                                                               2001            2000              1999
                                                     ------------------------------------------------------
                                                            (In thousands except per share amounts)
Revenues
<S>                                                         <C>              <C>               <C>
Leasing                                                     $238,151         $220,547          $201,820
Sales:
   New units                                                  91,114           73,291            73,001
   Rental equipment                                           22,212           21,571            22,369
Delivery and installation                                     97,342           79,097            71,245
Other                                                         43,437           37,640            37,370
                                                     ------------------------------------------------------
Total revenues                                               492,256          432,146           405,805
                                                     ------------------------------------------------------

Cost of sales and services
Leasing:
   Depreciation and amortization                              41,761           36,720            34,553
   Other direct leasing costs                                 43,109           35,373            30,724
Sales:
   New units                                                  75,169           60,268            60,323
   Rental equipment                                           16,886           16,305            17,236
   Delivery and installation                                  78,339           59,670            52,359
   Other                                                       8,374            6,583             7,421
                                                     ------------------------------------------------------
         Total costs of sales and services                   263,638          214,919           202,616
                                                     ------------------------------------------------------
Gross profit                                                 228,618          217,227           203,189
                                                     ------------------------------------------------------

Selling, general and administrative expenses                  82,573           76,872            71,480
Other depreciation and amortization                           18,845           17,474            15,866
Interest, including amortization of deferred
   financing costs of $5,269, $4,931, and $4,913              85,486           91,860            83,878
Non-cash charge for casualty loss                              1,500                -                 -
                                                     ------------------------------------------------------
Total operating expenses                                     188,404          186,206           171,224
                                                     ------------------------------------------------------
Income before income taxes                                    40,214           31,021            31,965
Income tax expense                                            17,585           14,938            14,694
                                                     ------------------------------------------------------
Net income                                                  $ 22,629         $ 16,083          $ 17,271
                                                     ======================================================


Earnings per common share:                                  $   3.65         $   2.60          $   2.79
                                                     ======================================================

Earnings per common share, assuming dilution:
                                                            $   3.46         $   2.46          $   2.64
                                                     ======================================================


See accompanying notes.
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>

                    Scotsman Holdings, Inc. and Subsidiaries
           Consolidated Statements of Changes in Stockholders' Deficit





                                                                                             Cumulative
                                           Common Stock         Additional                Foreign Currency
                                      -----------------------     Paid-in      Retained      Translation     Treasury
                                          Shares      Amount      Capital      Earnings      Adjustment       Stock         Total
                                      ---------------------------------------------------------------------------------------------
                                                                            (In thousands)

<S>                                       <C>           <C>      <C>           <C>           <C>            <C>          <C>
Balance at December 31, 1998               6,197        $95      $231,826      $  6,082      $      -       $(295,856)   $(57,853)

Appreciation in value of stock options         -          -         1,899             -             -               -       1,899
Net income                                     -          -             -        17,271             -               -      17,271
                                      --------------------------------------------------------------------------------------------
Balance at December 31, 1999               6,197         95       233,725        23,353             -        (295,856)    (38,683)

Appreciation in value of stock options         -          -           479            -              -               -         479
Foreign currency translation                   -          -             -            -           (457)              -        (457)
   adjustment
Net income                                     -          -             -        16,083             -               -      16,083
                                      --------------------------------------------------------------------------------------------
Balance at December 31, 2000               6,197         95       234,204        39,436          (457)       (295,856)    (22,578)

Purchase of 75 shares of treasury
   stock                                       -          -             -             -             -              (4)         (4)
Decrease in value of stock options             -          -          (278)            -             -               -        (278)
Foreign currency translation
   adjustment                                  -          -             -             -        (1,048)              -      (1,048)
Net income                                     -          -             -        22,629             -               -      22,629
                                      --------------------------------------------------------------------------------------------

Balance at December 31, 2001               6,197       $95       $233,926      $ 62,065      $ (1,505)      $(295,860)    $(1,279)
                                      =============================================================================================


See accompanying notes.
</TABLE>

                                       21
<PAGE>

<TABLE>
<CAPTION>

                    Scotsman Holdings, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                                                                          Year ended December 31
                                                                                    2001            2000            1999
                                                                           ----------------------------------------------------
                                                                                               (In thousands)
Cash flows from operating activities
<S>                                                                            <C>             <C>              <C>
Net income                                                                     $   22,629      $   16,083       $  17,271
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                                 65,875          59,125          55,332
     Provision for bad debts                                                        4,204           3,697           3,756
     Deferred income tax expense                                                   17,333          14,683          13,818
     Non-cash option compensation expense                                            (278)            479           1,899
     Gain on sale of rental equipment                                              (5,326)         (5,266)         (5,133)
     Increase in net trade accounts receivable                                    (24,624)           (337)        (18,058)
     (Decrease)/increase in accounts payable and accrued expenses,                 (5,451)          1,579           9,248
       including reserve for casualty loss
     Other                                                                        (13,200)         (3,121)         (5,851)
                                                                           -----------------------------------------------------
Net cash provided by operating activities                                          61,162          86,922          72,282
                                                                           -----------------------------------------------------

Cash flows from investing activities
Rental equipment additions                                                       (106,177)       (122,617)       (115,024)
Proceeds from sales of rental equipment                                            22,212          21,571          22,369
Acquisition of businesses, net of cash acquired                                   (26,114)         (8,687)        (36,208)
Purchase of property and equipment, net                                           (16,347)        (18,571)        (13,860)
                                                                           -----------------------------------------------------
Net cash used in investing activities                                            (126,426)       (128,304)       (142,723)
                                                                           -----------------------------------------------------

Cash flows from financing activities
Proceeds from debt                                                                547,129         493,748         483,525
Repayment of debt                                                                (483,267)       (450,461)       (413,149)
Increase in deferred financing costs                                                 (557)              -             (91)
Payments to acquire treasury stock                                                     (4)              -               -
                                                                           ----------------------------------------------------
Net cash provided by financing activities                                          63,301          43,287          70,285
                                                                           ----------------------------------------------------
Net increase (decrease) in cash                                                    (1,963)          1,905            (156)

Cash at beginning of period                                                         2,549             644             800
                                                                           ----------------------------------------------------
Cash at end of period                                                          $      586      $    2,549       $     644
                                                                           ====================================================

Supplemental cash flow information:
   Cash paid (refunds recovered) for income taxes                              $      306      $     196        $     (10)
                                                                        =======================================================
   Cash paid for interest                                                      $   89,351      $  81,653        $  76,920
                                                                        =======================================================
See accompanying notes.
</TABLE>

                                       22
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements

                (Dollars in thousands, except per share amounts)
                           December 31, 2001 and 2000


1.  Organization and Basis of Presentation

Scotsman  Holdings,  Inc.  was  organized  in  November  1993 for the purpose of
acquiring  Williams Scotsman  (Scotsman).  The operations of Scotsman  Holdings,
Inc. and  subsidiaries  (the Company)  consist of the leasing and sale of mobile
offices, storage products, and their delivery and installation.  Included in the
operations of Scotsman are two wholly own subsidiaries,  Willscot Equipment, LLC
(Willscot) and Williams Scotsman of Canada, Inc., whose operations have not been
significant to date. Willscot,  a special purpose subsidiary,  was formed in May
1997.  Willscot is a guarantor of Scotsman's  credit facility and acts as a full
and unconditional,  and joint and several  subordinated  guarantor of the 9.875%
senior  notes.  The  operations  of  Willscot  are limited to the leasing of its
mobile office units to Scotsman under a master lease.

Acquisition of Mckinney Mobile Modular

On February  1, 2001,  the Company  acquired  the sales and leasing  business of
Mckinney Mobile Modular, a privately held California corporation (Mckinney) in a
transaction  accounted  for  under the  purchase  method  of  accounting.  Total
consideration for the acquisition of Mckinney was  approximately  $26.1 million,
including the repayment of existing indebtedness of Mckinney. The purchase price
paid was allocated to the identifiable assets acquired of $21.6 million with the
excess of $5.5 million  representing  goodwill and other intangible  assets. The
purchase price  allocation was based upon the estimates of the fair value of the
assets  acquired.  The  acquisition,  which added over 1,600 units at a value of
approximately  $21.4 million,  was financed with borrowings  under the Company's
amended credit facility.

Acquisition of Evergreen Mobile Company

On  February 1, 1999,  the  Company  acquired  all of the  outstanding  stock of
Evergreen Mobile Company, a privately held Washington  corporation  (Evergreen),
in a transaction  accounted for under the purchase  method of accounting.  Total
consideration for the acquisition of Evergreen was $36.2 million,  including the
repayment of existing  indebtedness  of Evergreen.  The purchase  price paid was
allocated  to the net  identifiable  assets  acquired of $19.7  million with the
excess of $16.5 million  representing  goodwill and other intangible assets. The
purchase price allocation was based upon the

                                       23
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


1.  Organization and Basis of Presentation (continued)

estimates  of the fair value of the net assets  acquired.  The  acquisition  was
financed with borrowings under the Company's amended credit facility.

New Accounting Pronouncements

Goodwill and Other  Intangible  Assets.  In June 2001, the Financial  Accounting
Standards Board issued Statement of Financial Accounting Standards No. 142 ("FAS
No.  142"),  Goodwill and Other  Intangible  Assets,  effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill (and intangible
assets deemed to have indefinite  lives) will no longer be amortized but will be
subject to annual  impairment  tests in  accordance  with the  Statement.  Other
intangible assets will continue to be amortized over their useful lives.

The  Company  will  apply the new rules on  accounting  for  goodwill  and other
intangible  assets  beginning in the first quarter of 2002.  Application  of the
nonamortization provisions of the Statement is expected to result in an increase
in net income of $4.6  million,  , ($0.74 per basic  share and $0.70 per diluted
share) per year. During 2002, the Company will perform the first of the required
impairment  tests of goodwill as of January 1, 2002.  The results of these tests
are not  expected  to have a  material  effect  on the  earnings  and  financial
position of the Company.

Impairment  or Disposal of  Long-Lived  Assets.  In August 2001,  the  Financial
Accounting  Standards Board issued Statement of Financial  Accounting  Standards
No. 144 ("FAS No. 144"), Accounting for the Impairment or Disposal of Long-Lived
Assets, which addresses financial accounting and reporting for the impairment or
disposal  of  long-lived  assets.  FAS No. 144 is  effective  for  fiscal  years
beginning  after December 15, 2001. The Company  expects to adopt FAS No. 144 as
of January 1, 2002 and does not  anticipate it to have a material  impact on the
Company's financial position and results of operations.

2.  Summary of Significant Accounting Policies

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation.

                                       24
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


2.  Summary of Significant Accounting Policies (continued)

 (a)   Use of Estimates

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

(b)    Leasing Operations

       Equipment is leased generally under operating  leases and,  occasionally,
       under  sales-type  lease  arrangements.  Operating  lease terms generally
       range  from  3  months  to  60   months,   and   contractually   averaged
       approximately 12 months at December 31, 2001. Rents billed in advance are
       initially  deferred  and  recognized  as  revenue  over  the  term of the
       operating  leases.  Rental equipment is depreciated by the  straight-line
       method using an estimated  economic  useful life of 10 to 20 years and an
       estimated residual value of 50%.

       Costs of improvements and betterments are  capitalized,  whereas costs of
       replacement  items,  repairs and  maintenance  are  expensed as incurred.
       Costs incurred for equipment to meet particular lease  specifications are
       capitalized  and  depreciated  over  the  lease  term.   However,   costs
       aggregating less than $1 per unit are generally expensed as incurred.

(c)    Deferred Financing Costs

       Costs of obtaining debt are amortized using the straight-line method over
       the term of the debt.

(d)    Property and Equipment

       Depreciation  is computed  by the  straight-line  method  over  estimated
       useful lives ranging from 15 to 40 years for  buildings and  improvements
       and 3 to 10 years for furniture and  equipment.  Maintenance  and repairs
       are charged to expense as incurred.

(e)    Goodwill and Other Intangible Assets

       The excess of cost over fair  values of net assets  acquired  in purchase
       transactions  has been  recorded as goodwill and is being  amortized on a
       straight-line  basis over 20 to 40 years.

                                       25
<PAGE>

                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


2.     Summary of Significant Accounting Policies (continued)

       Other identifiable  intangibles acquired of $6,452 include assembled
       workforce,  covenant not to compete and customer base which are being
       amortized on a straight line basis over periods of21  to  228  months.
       As of  December  31,  2001  and  2000, accumulated amortization  of
       goodwill  and other  intangible  assets was $17,532 and $11,932,
       respectively.  As discussed in Note 1, upon the adoption of FAS No. 142,
       the Company will cease amortization of goodwill.

       On a periodic  basis,  the Company  evaluates  the carrying  value of its
       intangible  assets to  determine if the facts and  circumstances  suggest
       that  intangible  assets may be impaired.  If this review  indicates that
       intangible   assets  may  not  be  recoverable,   as  determined  by  the
       undiscounted  cash  flow  of  the  entity  acquired  over  the  remaining
       amortization  period,  the Company's  carrying value of intangible assets
       would  be  reduced  by  the  estimated  shortfall  of  cash  flows,  on a
       discounted  basis.  Upon the adoption of FAS No. 142, as discussed above,
       the Company will modify their approach for reviewing for impairment.


(f)    Income Taxes

       Deferred tax assets and  liabilities  are  recognized  for the  estimated
       future tax consequences attributable to differences between the financial
       statement  carrying  amounts of existing assets and liabilities and their
       respective tax bases.  Deferred tax assets and  liabilities  are measured
       using  enacted tax rates in effect for the year in which those  temporary
       differences  are  expected  to be  recovered  or  settled.  The effect on
       deferred  tax  assets  and  liabilities  of a  change  in  tax  rates  is
       recognized in income in the period that includes the enactment date.

(g)    Revenue Recognition

       The Company's  revenue  recognition  policy is to recognize rental income
       ratably over the month on a daily basis.  Billings for periods  extending
       beyond the month end are recorded as deferred  income.  Sales  revenue is
       recognized at the time the units are delivered  and  installed,  with the
       exception  of  long-term  construction-type  sales  contracts  for  which
       revenue is recognized  under the percentage of completion  method.  Under
       this method,  income is  recognized  based on the incurred  costs to date
       compared to estimated  total costs.  All other revenue is recognized when
       related services have been performed.

(h)    Reclassifications

       Certain prior year amounts have been  reclassified  to conform to current
       year presentation.

                                       26
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


3.     Summary of Significant Accounting Policies (continued)


 (i)   Earnings Per Share

       The following  table sets forth the  components  of the  weighted-average
       shares   outstanding  for  the  basic  and  diluted  earnings  per  share
       computations:
<TABLE>
<CAPTION>

                                                                         December 31
                                                       2001                  2000                1999
                                              -----------------------------------------------------------
       Weighted-average shares-
<S>                                                  <C>                  <C>                  <C>
         basic earnings per share                    6,196,623            6,196,674            6,196,674

       Effect of employee stock options                338,068              340,787              349,591
                                              -----------------------------------------------------------
       Weighted-average shares-
         diluted earnings per share                  6,534,691            6,537,461            6,546,265
                                              ============================================================
</TABLE>

 (j)   Accounts Receivable

       The Company's  accounts  receivable consist of amounts due from customers
       throughout  the United  States and Canada.  Collateral  is generally  not
       required.  The  Company  provides  an  allowance  for  doubtful  accounts
       receivable  by a charge to  operations  in amounts equal to the estimated
       losses  expected  to be  incurred  in  collection  of the  accounts.  The
       estimated  losses are based on  historical  collection  experience  and a
       review  of the  current  status  of the  existing  receivables.  Customer
       accounts are written off against the allowance for doubtful accounts when
       an account is determined to be uncollectible.

3.  Property and Equipment

Property and equipment consist of the following:

                                                     December 31
                                                 2001            2000
                                         ---------------------------------

Land                                           $ 17,223       $ 13,089
Buildings and improvements                       28,162         28,464
Furniture and equipment                          59,755         47,106
                                         ---------------------------------
                                                105,140         88,659
Less accumulated depreciation                    31,358         23,893
                                         ---------------------------------
Net property and equipment                     $ 73,782       $ 64,766
                                         =================================

                                       27
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


4.  Revolving Credit Facility and Long-Term Debt

Debt consists of the following:

                                                          December 31
                                                      2001            2000
                                              ---------------------------------

Borrowings under revolving credit facility         $  564,922      $  500,460
Term loan                                              58,050          58,650
9.875% senior notes                                   400,000         400,000
                                             ----------------------------------
                                                   $1,022,972      $  959,110
                                             ==================================

The loan agreement for the credit  facility  provides for a $600,000  (increased
from $540,000 effective January 26, 2001) revolving credit facility maturing May
21, 2002 and a $60,000 term loan maturing May 21, 2005.  Availability  under the
revolver,  which is based upon a  borrowing  base  calculation,  was  $32,258 at
December 31, 2001.  Interest was payable at a rate of either prime plus 0.75% or
the  Eurodollar  rate plus 2.0%.  The  weighted  average  interest  rates of the
revolver  under the credit  agreement  were 4.22% and 8.85% at December 31, 2001
and 2000, respectively.  Principal payments due on the term loan are equal to 1%
per year  payable  quarterly  through  March  31,  2002,  with  equal  quarterly
installments commencing June 30, 2002. Interest on the term loan is payable at a
rate of either prime plus 2.0% or the Eurodollar  rate plus 3.25%.  The weighted
average  interest  rates of the term loan under the credit  agreement were 5.25%
and 10.06% at December 31, 2001 and 2000, respectively.

Borrowings  under the  revolving  credit  facility  are  secured by a first
priority  lien on and  security  interest  in the  Company's  rental  equipment,
accounts receivable and property and equipment.  In addition to the restrictions
and limitations  described under the note agreement,  including  restrictions on
the amount of dividends that Holdings can pay the Company,  the revolving credit
facility loan agreement  requires  compliance with certain  financial  covenants
including capital expenditures,  interest coverage and fleet utilization levels.
The Company was in compliance with such covenants during 2001.

The 9.875% senior notes are due June 1, 2007 with interest payable semi-annually
on June 1 and December 1 of each year.  On or after June 1, 2002,  the notes are
redeemable at the option of the Company,  at  redemption  prices of 104.938% and
102.469%  during  the  12-month  periods   beginning  June  1,  2002  and  2003,
respectively,  and 100% thereafter.  Upon the occurrence of a change of control,
the  notes  may be  redeemed  as a  whole  at the  option  of the  Company  at a
redemption  price  of  100%  plus  the  applicable  premium  as  defined  in the
agreement.

                                       28
<PAGE>

                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


4.  Revolving Credit Facility and Long-Term Debt (continued)

The notes are general unsecured  obligations of the Company and are subordinated
in right of payment to all  secured  indebtedness.  Additionally,  the notes are
guaranteed by Willscot, the Company's wholly owned subsidiary.  Such guaranty is
full and  unconditional,  and joint and several.  The note  agreement  limits or
restricts  the  Company's  ability  to  incur  additional   indebtedness;   make
distributions of capital in an amount not to exceed 50% of accumulated earnings,
dispose of property;  incur liens on property;  pay  dividends to Holdings;  and
merge with or acquire other companies.

At  December  31,  2001  and  2000,  the fair  value  of debt was  approximately
$1,016,972 and $883,110,  respectively,  based on the quoted market price of the
senior  notes and the book value of the credit  facility,  which are  adjustable
rate notes.

Letter of credit obligations at December 31, 2001 were $2,820.

See Note 9 of Notes to the Consolidated Financial Statements, Subsequent Events,
regarding financing activities after December 31, 2001.

                                       29
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


5.  Income Taxes

Deferred income taxes related to temporary  differences between the tax bases of
assets and  liabilities  and the  respective  amounts  reported in the financial
statements are summarized as follows:
<TABLE>
<CAPTION>

                                                                                        December 31
                                                                                    2001            2000
                                                                                -----------------------------
Deferred tax liabilities:
   Cost basis in excess of tax basis of assets and accelerated tax depreciation:
<S>                                                                               <C>             <C>
        Rental equipment                                                          $243,222        $220,502
        Property and equipment                                                         818           1,074
       Other                                                                         2,626           2,631
                                                                                -----------------------------
           Total deferred tax liabilities                                          246,666         224,207
                                                                                -----------------------------
Deferred tax assets:
   Allowance for doubtful accounts                                                     467             390
   Rents billed in advance                                                          10,321          10,127
   Net operating loss carryovers                                                    85,849          80,196
   Alternative minimum tax credit carryovers                                         1,759           1,759
   Other                                                                             4,470           5,270
                                                                                -----------------------------
                                                                                   102,866          97,742
   Less:  valuation allowance                                                       (3,400)         (3,400)
                                                                                -----------------------------
         Total deferred tax assets                                                  99,466          94,342
                                                                                -----------------------------
Net deferred tax liabilities                                                      $147,200        $129,865
                                                                                =============================
</TABLE>

At December 31, 2001,  the Company had net operating loss  carryovers  available
for  federal  income  tax  purposes  of  $215,197  (net  of  related   valuation
allowance),  of which $80,186 (net of related  valuation  allowance)  relates to
pre-recapitalization  loss  carryovers  that are subject to certain  limitations
under the Internal Revenue Code. The Company is in the process of implementing a
strategy to  effectively  release these  limitations.  However,  ultimately  the
results  may not be known for some time.  These net  operating  loss  carryovers
expire at various dates from 2003 to 2021. Also,  alternative minimum tax credit
carryovers of approximately $1,759 are available without expiration limitations.
An investment  credit  carryover of  approximately  $860 expired on December 31,
2000, and the Company recorded a charge to income tax expense accordingly.

                                       30
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


5.  Income Taxes (continued)

Income tax expense consists of the following:
<TABLE>
<CAPTION>
                                                                       Years ended December 31
                                                                2001             2000              1999
                                                       -----------------------------------------------------

<S>                                                           <C>              <C>               <C>
Current                                                       $   252          $   255           $   876
Deferred                                                       17,333           14,683            13,818
                                                       -----------------------------------------------------
                                                              $17,585          $14,938           $14,694
                                                       =====================================================

Federal                                                       $13,683          $12,626           $12,596
State                                                           2,489            2,312             2,098
Foreign                                                         1,413                -                 -
                                                       -----------------------------------------------------
                                                              $17,585          $14,938           $14,694
                                                       =====================================================

The provision for income taxes is reconciled to the amount  computed by applying
the Federal corporate tax rate of 35% to income before income taxes as follows:

                                                                       Years ended December 31
                                                                2001             2000              1999
                                                       -----------------------------------------------------

Income tax at statutory rate                                  $14,076          $10,857           $11,188
State income taxes, net of federal tax benefit                  1,618            1,503             1,144
Amortization of goodwill and other
    Intangible assets                                           1,776            1,702             1,838
Increase in valuation allowance                                     -                -                 -
Other                                                             115              876               524
                                                       -----------------------------------------------------
                                                              $17,585          $14,938           $14,694
                                                       =====================================================
</TABLE>
                                       31
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)

6.  Commitments

The  Company  is  obligated  under  noncancelable  operating  leases of  certain
equipment, vehicles and parcels of land. At December 31, 2001 approximate future
minimum rental payments are as follows:

         2002                                               $    8,407
         2003                                                    6,692
         2004                                                    5,442
         2005                                                    4,439
         2006                                                    3,244
         Thereafter                                              3,541
                                                         ------------------
         Total minimum future lease payments                $   31,765
                                                         ==================
Rent expense was $11,490 in 2001, $9,839 in 2000, and $8,817 in 1999.

7.  Employee Benefit Plans

The Company has adopted a defined  contribution  plan (the 401(k) Plan) which is
intended  to satisfy the tax  qualification  requirements  of  Sections  401(a),
401(k),  and 401(m) of the Internal  Revenue Code of 1986 (the Code). The 401(k)
Plan covers  substantially all employees and permits  participants to contribute
the lessor of (i) 15% of their annual  compensation from the Company or (ii) the
dollar limit  described  in Section  402(g) of the Code  ($10,500 in 2001).  All
amounts deferred under this salary reduction feature are fully vested.

The 401(k) Plan has a "matching"  contribution  feature  under which the Company
may  contribute a percentage of the amount  deferred by each  participant.  Such
percentage, if any, is determined by the Board of Directors at their discretion.
The Plan also has a "profit  sharing"  feature,  under  which  the  Company  may
contribute, at its discretion, an additional amount allocable to the accounts of
active  participants  meeting  the  aforementioned   eligibility   requirements.
Contributions  made by the Company on behalf of a 401(k) Plan  participant  vest
ratably during the first five years of employment and 100% thereafter.  Matching
contributions by the Company to the 401(k) Plan were approximately $587 in 2001,
$477 in 2000 and $395 in 1999.  No  contributions  have been made by the Company
under the profit-sharing feature.

The Company has adopted a Deferred  Compensation  Plan for  Executives  which is
meant to be an unfunded deferred compensation plan maintained for a select group
of management within the meaning of Sections 201(2),  301(a)(3) and 401(a)(1) of
the  Employee  Retirement  Income  Security  Act of 1974.  This plan  allows key
employees to defer a specified amount of their compensation until termination or
upon the occurrence of other  specified  events.  Such amounts are placed in the
investment vehicles of the employee's choice. As of December 31, 2001, the total
amount deferred under this plan, including earnings, was $1,370.

                                       32
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.  Employee Benefit Plans (continued)

The Company  adopted a stock option plan for certain key  employees of Scotsman.
The plan was  subsequently  amended  and  restated  in 1998  (the  "Amended  and
Restated  1997  Employee  Stock  Option  Plan").  Under the plan,  up to 479,500
options to purchase  Holdings'  outstanding  common  stock may be  granted.  The
options are granted with an exercise price equal to the fair value of the shares
as of the date of grant.  Fifty percent of the options granted vest ratably over
five  years,  and  fifty  percent  vest  based on the  Company  meeting  certain
financial goals over the same five periods. All options expire 10 years from the
date of grant. The Company is accounting for the options using the variable plan
accounting.  Under this plan, 23,300 and 46,100 options were granted in 2001 and
2000,  respectively.  For those  options  in which  both the grant  date and the
measurement   date   were   known,   the   Company    recognized    compensation
(income)/expense  in the amount of ($278),  $479, and $1,899 in 2001,  2000, and
1999, respectively.

Prior to the 1997 recapitalization,  the Company had adopted a stock option plan
for certain key employees ("1994 Employee Stock Option Plan").  The options were
granted  with an exercise  price equal to the fair value of the shares as of the
date of grant.  All options  outstanding  under this plan became fully vested in
conjunction with the recapitalization.

Pro forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  and has been  determined as if the Company had accounted for its
employee  stock options under the minimum  value method of that  Statement.  The
minimum  value  for  these  options  was  estimated  at the  date  of  grant  by
calculating  the excess of the fair value of the stock at the date of grant over
the present value of both the exercise price and the expected dividend payments,
each  discounted at the risk free rate,  over the expected  exercise life of the
option. The following weighted average assumptions were used for 2001, 2000, and
1999:  risk-free interest rate of 4.5%, 6.3%, and 5.6%,  respectively;  weighted
average expected life of the options of 5 years; and no dividends.

For  purposes  of pro forma  disclosures,  the  estimated  minimum  value of the
options is amortized to expense over the options' vesting period.  Note that the
effects of applying  SFAS 123 for pro forma  disclosure  in the current year are
not necessarily representative of the effects on pro forma net income for future
years. The Company's pro forma information follows:

                                     2001           2000            1999
                                 -------------------------------------------

Pro forma net income               $22,882        $15,446         $16,910
Pro forma earnings per share       $  3.69        $  2.49         $  2.73

                                       33
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries
             Notes to Consolidated Financial Statements (continued)


7.  Employee Benefit Plans (continued)

A summary of stock option  activity and related  information for the years ended
December 31 follows.  Amounts  have been  restated for the  three-for-one  stock
split granted by Holdings in December 1997:
<TABLE>
<CAPTION>

                                            2001                     2000                       1999
                                  -------------------------------------------------------------------------------
                                                Weighted                  Weighted                    Weighted
                                                 Average                   Average                     Average
                                                Exercise                  Exercise                    Exercise
                                    Options       Price       Options       Price       Options         Price
                                  -------------------------------------------------------------------------------

<S>                                <C>             <C>       <C>            <C>        <C>              <C>
Beginning balance                  1,120,540       $23.56    1,107,840      $22.68     1,099,640        $22.12

Granted                               23,300        50.67       46,100       50.67        29,800         50.67
Canceled                                   -            -            -           -             -             -
Forfeited                            (18,700)      (38.45)     (33,400)     (31.77)      (21,600)       (32.07)
                                  -------------------------------------------------------------------------------
Ending balance                     1,125,140        23.87    1,120,540       23.56     1,107,840        $22.68

Exercisable at end of year           975,506        20.26      871,030       18.54       950,165        $19.94

Weighted average minimum value
   of options granted during
   year                                             $9.34                   $19.45                      $12.08
</TABLE>

Exercise prices for options  outstanding as of December 31, 2001 are detailed in
the following table. The  weighted-average  remaining  contractual life of those
options is 5.38 years.


-------------------------------------------------------------------------------
                                                                  Weighted
                Shares Outstanding at  Shares Exercisable at       Average
Exercise Price    December 31, 2001      December 31, 2001        Remaining
                                                              Contractual Life
-------------------------------------------------------------------------------
   $ 4.59              73,200                 73,200              3.3 years
   $ 9.60             278,100                278,100              4.3 years
   $18.39             275,190                275,190              5.3 years
   $30.50             344,000                296,761              6.0 years
   $50.67             154,650                 52,255              7.9 years
-------------------------------------------------------------------------------
                                       34
<PAGE>


8. Contingencies

The Company is involved in various lawsuits and claims arising out of the normal
course of its business. In addition, the Company has insurance policies to cover
general  liability and workers  compensation  related claims.  In the opinion of
management,  the ultimate amount of liability not covered by insurance,  if any,
under pending litigation and claims will not have a materially adverse effect on
the financial position or operating results of the Company.

9. Subsequent Events

In February  2002,  the Company  issued  $150,000 of  additional  9.875%  senior
unsecured notes under its existing  indenture.  The additional notes,  which are
subject to all of the same terms and  conditions  as the $400,000 of  previously
issued notes, were issued at a price of 98.751%.  Net proceeds from the issuance
were used to permanently repay the outstanding balance of the term loan ($58,050
plus accrued interest) and to reduce outstanding borrowings under the revolver.

In March 2002, the Company entered into a new credit facility,  the net proceeds
from which were used to refinance  its existing  credit  facility.  The new loan
agreement  provides  for a $460  million  revolving  credit  facility and a $210
million term loan both maturing on December 31, 2006. The facility also provides
for up to an additional $30 million in term or revolver commitments. Interest on
borrowings under both the term and revolver is payable at a rate of either prime
plus 1.75% or the Eurodollar rate plus 3.00%. Such rates may decrease based upon
the Company achieving  specified  leverage ratio thresholds.  Principal payments
due on the term loan are equal to 1% per year payable  quarterly  beginning June
30, 2002, with the remaining balance due December 31, 2006.

Borrowings under the new credit facility,  which are based upon a borrowing base
calculation,  are secured by a first  priority lien on and security  interest in
the Company's rental equipment,  accounts receivable and property and equipment.
In  addition  to the  restrictions  and  limitations  described  under  the note
agreement,  including  restrictions  on the amount of dividends that the Company
can pay to Holdings,  the new loan agreement  requires  compliance  with certain
financial covenants including capital expenditures,  interest coverage, leverage
and fleet utilization levels.

                                       35
<PAGE>


                         Report of Independent Auditors

Board of Directors
Williams Scotsman, Inc.

We have  audited  the  accompanying  consolidated  balance  sheets  of  Williams
Scotsman,  Inc.  and  subsidiaries  as of December  31,  2001 and 2000,  and the
related consolidated  statements of operations,  stockholder's  deficit and cash
flows for each of the three years in the period ended  December  31,  2001.  Our
audits also included the  financial  statement  schedule  listed in the Index at
Item  14(a).  These  consolidated  financial  statements  and  schedule  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on the consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of Williams Scotsman,
Inc.  and  subsidiaries  at  December  31, 2001 and 2000,  and the  consolidated
results of their  operations and their cash flows for each of the three years in
the period ended  December 31, 2001, in conformity  with  accounting  principles
generally  accepted in the United  States.  Also,  in our  opinion,  the related
financial statement schedule, when considered in relation to the basic financial
statements  taken  as a whole,  present  fairly  in all  material  respects  the
information set forth therein.



                                                        /s/ Ernst & Young LLP
Baltimore, Maryland
February 20, 2002, except for Note 11 for which the date is
March 26, 2002

                                       36
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                           Consolidated Balance Sheets
<TABLE>
<CAPTION>

                                                                                         December 31
                                                                                   2001              2000
                                                                            -----------------------------------
                                                                                       (In thousands)
Assets
<S>                                                                            <C>              <C>
Cash                                                                           $      584       $    2,546
Trade accounts receivable, net of allowance for doubtful accounts of
   $1,298 in 2001 and $983 in 2000                                                 74,336           53,916
Prepaid expenses and other current assets                                          25,628           20,685
Rental equipment, net of accumulated depreciation of $178,046 in 2001
   and $155,434 in 2000                                                           866,867          799,994
Property and equipment, net                                                        73,782           64,766
Deferred financing costs, net                                                      10,696           15,408
Goodwill and other intangible assets, net                                         172,057          172,218
Other assets                                                                       21,034           16,365
                                                                            -----------------------------------
                                                                               $1,244,984       $1,145,898
                                                                            ===================================
Liabilities and stockholder's deficit
Accounts payable and accrued expenses                                          $   50,287       $   54,735
Rents billed in advance                                                            25,796           24,757
Revolving credit facility                                                         564,922          500,460
Long-term debt                                                                    458,050          458,650
Deferred income taxes                                                             152,670          135,317
                                                                            -----------------------------------
         Total liabilities                                                      1,251,725        1,173,919
                                                                            -----------------------------------

Stockholder's deficit:
   Common stock, $.01 par value.  Authorized 10,000,000 shares; issued
     and outstanding 3,320,000 shares                                                  33               33
   Additional paid-in capital                                                     126,289          126,567
   Cumulative foreign currency translation adjustment                              (1,505)            (457)
   Retained deficit                                                              (131,558)        (154,164)
                                                                            -----------------------------------
Total stockholder's deficit                                                        (6,741)         (28,021)
                                                                            -----------------------------------
                                                                               $1,244,984       $1,145,898
                                                                            ===================================
See accompanying notes.
</TABLE>

                                       37
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>


                                                                              Year ended December 31
                                                                       2001            2000            1999
                                                              --------------------------------------------------
                                                                              (In thousands except
                                                                               per share amounts)
Revenues
<S>                                                                  <C>             <C>            <C>
Leasing                                                              $238,151        $220,547       $201,820
Sales:
   New units                                                           91,114          73,291         73,001
   Rental equipment                                                    22,212          21,571         22,369
Delivery and installation                                              97,342          79,097         71,245
Other                                                                  43,437          37,640         37,370
                                                              --------------------------------------------------
         Total revenues                                               492,256         432,146        405,805
                                                              --------------------------------------------------

Cost of sales and services
Leasing:
   Depreciation and amortization                                       41,761          36,720         34,553
   Other direct leasing costs                                          43,109          35,373         30,724
Sales:
   New units                                                           75,169          60,268         60,323
   Rental equipment                                                    16,886          16,305         17,236
Delivery and installation                                              78,339          59,670         52,359
Other                                                                   8,374           6,583          7,421
                                                              --------------------------------------------------
         Total costs of sales and services                            263,638         214,919        202,616
                                                              --------------------------------------------------
        Gross profit                                                  228,618         217,227        203,189
                                                              --------------------------------------------------

Selling, general and administrative expenses                           82,516          76,817         71,425
Other depreciation and amortization                                    18,845          17,474         15,866
Interest, including amortization of deferred financing
   costs of $5,269, $4,931 and $4,913                                  85,486          91,860         83,878
Non-cash charge for casualty loss                                       1,500              --             --
                                                              --------------------------------------------------
         Total operating expenses                                     188,347         186,151        171,169
                                                              --------------------------------------------------


         Income before income taxes                                    40,271          31,076         32,020
Income tax expense                                                     17,605          14,957         14,713
                                                              --------------------------------------------------
         Net income                                                  $ 22,666        $ 16,119       $ 17,307
                                                              ==================================================

Earnings per common share                                            $   6.83        $   4.86       $   5.21
                                                              ==================================================

See accompanying notes.
</TABLE>
                                       38
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
           Consolidated Statements of Changes in Stockholder's Deficit

<TABLE>
<CAPTION>
                                                                                                 Cumulative
                                                                                                  Foreign
                                                               Additional                         Currency
                                           Common Stock          Paid-in        Retained        Translation
                                         Shares     Amount       Capital        Deficit          Adjustment          Total
                                      -------------------------------------------------------------------------------------------
                                                              (In thousands)

<S>                 <C> <C>               <C>         <C>        <C>           <C>               <C>                <C>
Balance at December 31, 1998              3,320       $33        $124,189      $(187,480)        $     -            $(63,258)
Appreciation in value of stock options        -         -           1,899              -               -               1,899
Dividends to parent--$.02 per share           -         -               -            (55)              -                 (55)
Net income                                    -         -               -         17,307               -              17,307
                                      -------------------------------------------------------------------------------------------
Balance at December 31, 1999              3,320        33         126,088       (170,228)              -             (44,107)
Appreciation in value of stock options        -         -             479              -               -                 479
Dividends to parent--$.02 per share           -         -               -            (55)              -                 (55)
Foreign currency translation
   adjustment                                 -         -               -              -            (457)               (457)
Net income                                    -         -               -         16,119               -              16,119
                                      -------------------------------------------------------------------------------------------
Balance at December 31, 2000              3,320        33         126,567       (154,164)           (457)            (28,021)
Decrease in value of stock options            -         -            (278)             -               -                (278)
Dividends to parent--$.02 per share           -         -               -            (60)              -                 (60)
Foreign currency translation
   adjustment                                 -         -               -              -          (1,048)             (1,048)
Net income                                    -         -               -         22,666               -              22,666
                                      -------------------------------------------------------------------------------------------

Balance at December 31, 2001              3,320       $33        $126,289      $(131,558)        $(1,505)           $ (6,741)
                                      ===========================================================================================


See accompanying notes.
</TABLE>

                                       39
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                       Year ended December 31
                                                                            2001                2000                1999
                                                                     ------------------------------------------------------------
                                                                                           (In thousands)
Cash flows from operating activities
<S>                                                                       <C>                <C>                 <C>
Net income                                                                $  22,666          $  16,119           $  17,307
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                           65,875             59,125              55,332
     Provision for bad debts                                                  4,204              3,697               2,254
     Deferred income tax expense                                             17,353             14,703              13,837
     Non-cash option compensation (income)/expense                             (278)               479               1,899
     Gain on sale of rental equipment                                        (5,326)            (5,266)             (5,133)
     Increase in net trade accounts receivable                              (24,624)              (337)            (16,556)
     (Decrease)/increase in accounts payable and accrued expenses,
       including reserve for casualty loss                                   (5,452)             1,578               9,249
     Other                                                                  (13,199)            (3,121)             (5,851)
                                                                     ------------------------------------------------------------
Net cash provided by operating activities                                    61,219             86,977              72,338
                                                                     ------------------------------------------------------------

Cash flows from investing activities
Rental equipment additions                                                 (106,177)          (122,617)           (115,024)
Proceeds from sales of rental equipment                                      22,212             21,571              22,369
Acquisition of businesses, net of cash acquired                             (26,114)            (8,687)            (36,208)
Purchase of property and equipment, net                                     (16,347)           (18,571)            (13,860)
                                                                     ------------------------------------------------------------
Net cash used in investing activities                                      (126,426)          (128,304)           (142,723)
                                                                     ------------------------------------------------------------

Cash flows from financing activities
Proceeds from debt                                                          547,129            493,748             483,525
Repayment of debt                                                          (483,267)          (450,461)           (413,149)
Increase in deferred financing costs                                           (557)                 -                 (91)
Cash dividends paid                                                             (60)               (55)                (55)
                                                                     ------------------------------------------------------------
Net cash provided by financing activities                                    63,245             43,232              70,230
                                                                     -----------------------------------------------------------
Net (decrease) increase in cash                                              (1,962)             1,905                (155)

Cash at beginning of period                                                   2,546                641                 796
                                                                     ------------------------------------------------------------
Cash at end of period                                                     $     584          $   2,546           $     641
                                                                     ============================================================

Supplemental cash flow information:
   Cash paid (refunds received) for income taxes                          $     306          $     196           $     (10)
                                                                     ============================================================
   Cash paid for interest                                                 $  89,351          $  81,653           $  76,920
                                                                     ============================================================
See accompanying notes.
</TABLE>

                                       40
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements

                (Dollars in thousands, except per share amounts)
                           December 31, 2001 and 2000


1.  Organization and Basis of Presentation

Williams  Scotsman,  Inc. (the Company) is a wholly owned subsidiary of Scotsman
Holdings,  Inc.  (Holdings),  a corporation which was organized in November 1993
for the purpose of acquiring the Company.  The Company's  operations include two
wholly owned  subsidiaries,  Willscot  Equipment,  LLC  (Willscot)  and Williams
Scotsman of Canada,  Inc.,  whose  operations have not been significant to date.
Willscot,  a  special  purpose  subsidiary,  was  formed  in May  1997  and is a
guarantor of the Company's credit facility and acts as a full and unconditional,
and joint and several  subordinated  guarantor of the 9.875% senior  notes.  The
operations  of Willscot are limited to the leasing of its mobile office units to
the Company under a master lease.

The  operations  of the  Company  consist  primarily  of the leasing and sale of
mobile  offices  and  storage  products   (equipment)  and  their  delivery  and
installation.

Acquisition of Mckinney Mobile Modular

On February  1, 2001,  the Company  acquired  the sales and leasing  business of
Mckinney Mobile Modular, a privately held California corporation (Mckinney) in a
transaction  accounted  for  under the  purchase  method  of  accounting.  Total
consideration for the acquisition of Mckinney was  approximately  $26.1 million,
including the repayment of existing indebtedness of Mckinney. The purchase price
paid was allocated to the identifiable assets acquired of $21.6 million with the
excess of $5.5 million  representing  goodwill and other intangible  assets. The
purchase price  allocation was based upon the estimates of the fair value of the
assets  acquired.  The  acquisition,  which added over 1,600 units at a value of
approximately  $21.4 million,  was financed with borrowings  under the Company's
amended credit facility.

Acquisition of Evergreen Mobile Company

On  February 1, 1999,  the  Company  acquired  all of the  outstanding  stock of
Evergreen Mobile Company, a privately held Washington  corporation  (Evergreen),
in a transaction  accounted for under the purchase  method of accounting.  Total
consideration for the acquisition of Evergreen was $36.2 million,  including the
repayment of existing  indebtedness  of Evergreen.  The purchase  price paid was
allocated  to the net  identifiable  assets  acquired of $19.7  million with the
excess of $16.5 million  representing  goodwill and other intangible assets. The
purchase price  allocation was based upon the estimates of the fair value of the
net assets  acquired.  The acquisition  was financed with  borrowings  under the
Company's amended credit facility.

                                       41
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


1.  Organization and Basis of Presentation (continued)

New Accounting Pronouncements

Goodwill and Other  Intangible  Assets.  In June 2001, the Financial  Accounting
Standards Board issued Statement of Financial Accounting Standards No. 142 ("FAS
No.  142"),  Goodwill and Other  Intangible  Assets,  effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill (and intangible
assets deemed to have indefinite  lives) will no longer be amortized but will be
subject to annual  impairment  tests in  accordance  with the  Statement.  Other
intangible assets will continue to be amortized over their useful lives.

The  Company  will  apply the new rules on  accounting  for  goodwill  and other
intangible  assets  beginning in the first quarter of 2002.  Application  of the
nonamortization provisions of the Statement is expected to result in an increase
in net income of $4.6  million,  ($1.39 per share) per year.  During  2002,  the
Company will perform the first of the required  impairment  tests of goodwill as
of January 1,  2002.  The  results  of these  tests are not  expected  to have a
material effect on the earnings and financial position of the Company.

Impairment  or Disposal of  Long-Lived  Assets.  In August 2001,  the  Financial
Accounting  Standards Board issued Statement of Financial  Accounting  Standards
No. 144 ("FAS No. 144"), Accounting for the Impairment or Disposal of Long-Lived
Assets, which addresses financial accounting and reporting for the impairment or
disposal  of  long-lived  assets.  FAS No. 144 is  effective  for  fiscal  years
beginning  after December 15, 2001. The Company  expects to adopt FAS No. 144 as
of January 1, 2002 and does not  anticipate it to have a material  impact on the
Company's financial position and results or operations.


2.  Summary of Significant Accounting Policies

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly owned subsidiaries. Significant intercompany accounts and
transactions have been eliminated in consolidation.

(a)    Use of Estimates

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

                                       42
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements

2.  Summary of Significant Accounting Policies (continued)

(b)    Leasing Operations

       Equipment is leased generally under operating  leases and,  occasionally,
       under  sales-type  lease  arrangements.  Operating  lease terms generally
       range  from  3  months  to  60   months,   and   contractually   averaged
       approximately 12 months at December 31, 2001. Rents billed in advance are
       initially  deferred  and  recognized  as  revenue  over  the  term of the
       operating  leases.  Rental equipment is depreciated by the  straight-line
       method using an estimated  economic  useful life of 10 to 20 years and an
       estimated residual value of 50%.

       Costs of improvements and betterments are  capitalized,  whereas costs of
       replacement  items,  repairs and  maintenance  are  expensed as incurred.
       Costs incurred for equipment to meet particular lease  specifications are
       capitalized  and  depreciated  over  the  lease  term.   However,   costs
       aggregating less than $1 per unit are generally expensed as incurred.

(c)    Deferred Financing Costs

       Costs of obtaining debt are amortized using the straight-line method over
       the term of the debt.

(d)    Property and Equipment

       Depreciation  is computed  by the  straight-line  method  over  estimated
       useful lives ranging from 15 to 40 years for  buildings and  improvements
       and 3 to 10 years for furniture and  equipment.  Maintenance  and repairs
       are charged to expense as incurred.

(e)    Goodwill and Other Intangible Assets

       The excess of cost over fair  values of net assets  acquired  in purchase
       transactions  has been  recorded as goodwill and is being  amortized on a
       straight-line  basis over 20 to 40 years. Other identifiable  intangibles
       acquired of $6,452 include assembled  workforce,  covenant not to compete
       and customer base which are being amortized on a straight line basis over
       periods  of 21  to  228  months.  As  of  December  31,  2001  and  2000,
       accumulated  amortization  of goodwill  and other  intangible  assets was
       $17,532  and  $11,932,  respectively.  As  discussed  in Note 1, upon the
       adoption of FAS No. 142, the Company will cease amortization of goodwill.

       On a periodic  basis,  the Company  evaluates  the carrying  value of its
       intangible  assets to  determine if the facts and  circumstances  suggest
       that  intangible  assets may be impaired.  If this review  indicates that
       intangible   assets  may  not  be  recoverable,   as  determined  by  the
       undiscounted  cash  flow  of  the  entity  acquired  over  the  remaining
       amortization  period,  the Company's  carrying value of intangible assets
       would  be  reduced  by  the  estimated  shortfall  of  cash  flows,  on a
       discounted  basis.  Upon the adoption of FAS No. 142, as discussed above,
       the Company will modify their approach for reviewing for impairment.

                                       43
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


2.  Summary of Significant Accounting Policies (continued)

(f)    Income Taxes

       Deferred tax assets and  liabilities  are  recognized  for the  estimated
       future tax consequences attributable to differences between the financial
       statement  carrying  amounts of existing assets and liabilities and their
       respective tax bases.  Deferred tax assets and  liabilities  are measured
       using  enacted tax rates in effect for the year in which those  temporary
       differences  are  expected  to be  recovered  or  settled.  The effect on
       deferred  tax  assets  and  liabilities  of a  change  in  tax  rates  is
       recognized in income in the period that includes the enactment date.

(g)    Earnings Per Share

       Earnings per share is computed based on weighted average number of common
       shares outstanding of 3,320,000 shares for 2001, 2000 and 1999.

(h)    Revenue Recognition

       The Company's  revenue  recognition  policy is to recognize rental income
       ratably over the month on a daily basis.  Billings for periods  extending
       beyond the month end are recorded as deferred  income.  Sales  revenue is
       recognized at the time the units are delivered  and  installed,  with the
       exception  of  long-term  construction-type  sales  contracts  for  which
       revenue is recognized  under the percentage of completion  method.  Under
       this method,  income is  recognized  based on the incurred  costs to date
       compared to estimated  total costs.  All other revenue is recognized when
       related services have been performed.

(i)    Accounts Receivable

       The Company's  accounts  receivable consist of amounts due from customers
       throughout  the United  States and Canada.  Collateral  is generally  not
       required.  The  Company  provides  an  allowance  for  doubtful  accounts
       receivable  by a charge to  operations  in amounts equal to the estimated
       losses  expected  to be  incurred  in  collection  of the  accounts.  The
       estimated  losses are based on  historical  collection  experience  and a
       review  of the  current  status  of the  existing  receivables.  Customer
       accounts are written off against the allowance for doubtful accounts when
       an account is determined to be uncollectible.

(j)    Reclassifications

       Certain prior year amounts have been  reclassified  to conform to current
       year presentation.

                                       44
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


3.  Property and Equipment

Property and equipment consist of the following:

                                                     December 31
                                                2001             2000
                                         -----------------------------------

Land                                            $17,223          $13,089
Buildings and improvements                       28,162           28,464
Furniture and equipment                          59,755           47,106
                                         -----------------------------------
                                                105,140           88,659
Less accumulated depreciation                    31,358           23,893
                                         -----------------------------------
Net property and equipment                      $73,782          $64,766
                                         ===================================


4.  Revolving Credit Facility and Long-Term Debt

Debt consists of the following:
                                                       December 31
                                                 2001             2000
                                           ----------------------------------

Borrowings under revolving credit facility    $564,922          $500,460
Term loan                                       58,050            58,650
9.875% senior notes                            400,000           400,000
                                           ----------------------------------
                                            $1,022,972          $959,110
                                           ==================================

The loan agreement for the credit  facility  provides for a $600,000  (increased
from $540,000 effective January 26, 2001) revolving credit facility maturing May
21, 2002 and a $60,000 term loan maturing May 21, 2005.  Availability  under the
revolver,  which is based upon a  borrowing  base  calculation,  was  $32,258 at
December 31, 2001.  Interest was payable at a rate of either prime plus 0.75% or
the  Eurodollar  rate plus 2.0%.  The  weighted  average  interest  rates of the
revolver  under the credit  agreement  were 4.22% and 8.85% at December 31, 2001
and 2000, respectively.  Principal payments due on the term loan are equal to 1%
per year  payable  quarterly  through  March  31,  2002,  with  equal  quarterly
installments commencing June 30, 2002. Interest on the term loan is payable at a
rate of either prime plus 2.0% or the Eurodollar  rate plus 3.25%.  The weighted
average  interest  rates of the term loan under the credit  agreement were 5.25%
and 10.06% at December 31, 2001 and 2000, respectively.

                                       45
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


4.  Revolving Credit Facility and Long-Term Debt (continued)

Borrowings  under the revolving  credit facility are secured by a first priority
lien on and  security  interest  in the  Company's  rental  equipment,  accounts
receivable  and  property and  equipment.  In addition to the  restrictions  and
limitations  described under the note agreement,  including  restrictions on the
amount of dividends that the Company can pay to Holdings,  the revolving  credit
facility loan agreement  requires  compliance with certain  financial  covenants
including capital expenditures,  interest coverage and fleet utilization levels.
The Company was in compliance with such covenants during 2001.

The 9.875% senior notes are due June 1, 2007 with interest payable semi-annually
on June 1 and December 1 of each year.  On or after June 1, 2002,  the notes are
redeemable at the option of the Company,  at  redemption  prices of 104.938% and
102.469%  during  the  12-month  periods   beginning  June  1,  2002  and  2003,
respectively,  and 100% thereafter.  Upon the occurrence of a change of control,
the  notes  may be  redeemed  as a  whole  at the  option  of the  Company  at a
redemption  price  of  100%  plus  the  applicable  premium  as  defined  in the
agreement.

The notes are general unsecured  obligations of the Company and are subordinated
in right of payment to all  secured  indebtedness.  Additionally,  the notes are
guaranteed by Willscot, the Company's wholly owned subsidiary.  Such guaranty is
full and  unconditional,  and joint and several.  The note  agreement  limits or
restricts  the  Company's  ability  to  incur  additional   indebtedness;   make
distributions of capital in an amount not to exceed 50% of accumulated earnings,
dispose of property;  incur liens on property;  pay  dividends to Holdings;  and
merge with or acquire other companies.

At  December  31,  2001  and  2000,  the fair  value  of debt was  approximately
$1,016,972 and $883,110,  respectively,  based on the quoted market price of the
senior  notes and the book value of the credit  facility,  which are  adjustable
rate notes.

Letter of credit obligations at December 31, 2001 were $2,820.

See  Note 11 of  Notes  to the  Consolidated  Financial  Statements,  Subsequent
Events, regarding financing activities after December 31, 2001.

                                       46
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


5.  Income Taxes

Deferred income taxes related to temporary  differences between the tax bases of
assets and  liabilities  and the  respective  amounts  reported in the financial
statements are summarized as follows:
<TABLE>
<CAPTION>

                                                                                       December 31
                                                                                   2001           2000
                                                                                --------------------------
Deferred tax liabilities:
   Cost basis in excess of tax basis of assets and accelerated tax depreciation:
<S>                                                                             <C>             <C>
        Rental equipment                                                        $243,222        $220,502
        Property and equipment                                                       818           1,074
        Other                                                                      2,626           2,631
                                                                                --------------------------
           Total deferred tax liabilities                                        246,666         224,207
                                                                                --------------------------
Deferred tax assets:
   Allowance for doubtful accounts                                                   467             390
   Rents billed in advance                                                        10,321          10,127
   Net operating loss carryovers                                                  80,379          74,743
   Alternative minimum tax credit carryovers                                       1,759           1,759
   Other                                                                           4,470           5,271
                                                                                --------------------------
                                                                                  97,396          92,290
   Less:  valuation allowance                                                     (3,400)         (3,400)
                                                                                --------------------------
         Total deferred tax assets                                                93,996          88,890
                                                                                --------------------------
Net deferred tax liabilities                                                    $152,670        $135,317
                                                                                ==========================
</TABLE>

At December 31, 2001,  the Company had net operating loss  carryovers  available
for  federal  income  tax  purposes  of  $199,562  (net  of  related   valuation
allowance),  of which $80,186 (net of related  valuation  allowance)  relates to
pre-recapitalization  loss  carryovers  that are subject to certain  limitations
under the Internal Revenue Code. The Company is in the process of implementing a
strategy to  effectively  release these  limitations.  However,  ultimately  the
results  may not be known for some time.  These net  operating  loss  carryovers
expire at various dates from 2003 to 2021. Also,  alternative minimum tax credit
carryovers of approximately $1,759 are available without expiration limitations.
An investment  credit  carryover of  approximately  $860 expired on December 31,
2000, and the Company recorded a charge to income tax expense accordingly.

                                       47
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


5.  Income Taxes (continued)

Income tax expense consists of the following:
<TABLE>
<CAPTION>

                                                                         Years ended December 31
                                                                     2001          2000          1999
                                                                -------------------------------------------

<S>                                                                  <C>           <C>          <C>
Current                                                              $   252       $   254      $   876
Deferred                                                              17,353        14,703       13,837
                                                                -------------------------------------------
                                                                     $17,605       $14,957      $14,713
                                                                ===========================================

Federal                                                              $13,703       $12,644      $12,615
State                                                                  2,489         2,313        2,098
Foreign                                                                1,413             -            -
                                                                -------------------------------------------
                                                                     $17,605       $14,957      $14,713
                                                                ===========================================

The provision for income taxes is reconciled to the amount  computed by applying
the Federal corporate tax rate of 35% to income before income taxes as follows:

                                                                         Years ended December 31
                                                                     2001          2000          1999
                                                                -------------------------------------------

Income tax at statutory rate                                         $14,096       $10,876      $11,207
State income taxes, net of federal tax benefit                         1,618         1,503        1,144
Amortization of goodwill and other intangible assets                   1,776         1,702        1,838
Other                                                                    115           876          524
                                                                -------------------------------------------
                                                                     $17,605       $14,957      $14,713
                                                                ===========================================
</TABLE>

                                       48
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


6.  Commitments

The  Company  is  obligated  under  noncancelable  operating  leases of  certain
equipment, vehicles and parcels of land. At December 31, 2001 approximate future
minimum rental payments are as follows:


         2002                                                        $ 8,407
         2003                                                          6,692
         2004                                                          5,442
         2005                                                          4,439
         2006                                                          3,244
         Thereafter                                                    3,541
                                                                       -----

         Total minimum future lease payments                         $31,765
                                                                     =======

Rent expense was $11,490 in 2001, $9,839 in 2000, and $8,817 in 1999.


7.  Employee Benefit Plans

The Company has adopted a defined  contribution  plan (the 401(k) Plan) which is
intended  to satisfy the tax  qualification  requirements  of  Sections  401(a),
401(k),  and 401(m) of the Internal  Revenue Code of 1986 (the Code). The 401(k)
Plan covers  substantially all employees and permits  participants to contribute
the lesser of (i) 15% of their annual  compensation from the Company or (ii) the
dollar limit  described  in Section  402(g) of the Code  ($10,500 in 2001).  All
amounts deferred under this salary reduction feature are fully vested.

The 401(k) Plan has a "matching"  contribution  feature  under which the Company
may  contribute a percentage of the amount  deferred by each  participant.  Such
percentage, if any, is determined by the Board of Directors at their discretion.
The Plan also has a "profit  sharing"  feature,  under  which  the  Company  may
contribute, at its discretion, an additional amount allocable to the accounts of
active  participants  meeting  the  aforementioned   eligibility   requirements.
Contributions  made by the Company on behalf of a 401(k) Plan  participant  vest
ratably during the first five years of employment and 100% thereafter.  Matching
contributions by the Company to the 401(k) Plan were approximately $587 in 2001,
$477 in 2000, and $395 in 1999. No  contributions  have been made by the Company
under the profit-sharing feature.

The Company has adopted a Deferred  Compensation  Plan for  Executives  which is
meant to be an unfunded deferred compensation plan maintained for a select group
of management within the meaning of Sections 201(2),  301(a)(3) and 401(a)(1) of
the  Employee  Retirement  Income  Security  Act of 1974.  This plan  allows key
employees to defer a specified amount of their compensation until termination or
upon the occurrence of other specified events. Such amounts are placed in the

                                       49
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


7.  Employee Benefit Plans (continued)

investment vehicles of the employee's choice. As of December 31, 2001, the total
amount deferred under this plan, including earnings, was $1,370.

Holdings  adopted a stock option plan for certain key  employees of the Company.
The plan was  subsequently  amended  and  restated  in 1998  (the  "Amended  and
Restated  1997  Employee  Stock  Option  Plan").  Under the plan,  up to 479,500
options to purchase  Holdings'  outstanding  common  stock may be  granted.  The
options are granted with an exercise price equal to the fair value of the shares
as of the date of grant.  Fifty percent of the options granted vest ratably over
five  years,  and  fifty  percent  vest  based on the  Company  meeting  certain
financial goals over the same five periods. All options expire 10 years from the
date of grant.  The Company is accounting  for the options  using  variable plan
accounting.  Under this plan, 23,300 and 46,100 options were granted in 2001 and
2000,  respectively.  For those  options  in which  both the grant  date and the
measurement   date   were   known,   the   Company    recognized    compensation
(income)/expense  in the amount of ($278),  $479 and $1,899 in 2001,  2000,  and
1999, respectively.

Prior to the 1997 recapitalization,  the Company had adopted a stock option plan
for certain key employees ("1994 Employee Stock Option Plan").  The options were
granted  with an exercise  price equal to the fair value of the shares as of the
date of grant.  All options  outstanding  under this plan became fully vested in
conjunction with the recapitalization.

Pro forma information regarding net income and earnings per share is required by
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation,"  and has been  determined as if the Company had accounted for its
employee  stock options under the minimum  value method of that  Statement.  The
minimum  value  for  these  options  was  estimated  at the  date  of  grant  by
calculating  the excess of the fair value of the stock at the date of grant over
the present value of both the exercise price and the expected dividend payments,
each  discounted at the risk free rate,  over the expected  exercise life of the
option. The following weighted average  assumptions were used for 2001, 2000 and
1999:  risk-free interest rate of 4.5%, 6.3%, and 5.6%,  respectively;  weighted
average expected life of the options of 5 years; and no dividends.

For  purposes  of pro forma  disclosures,  the  estimated  minimum  value of the
options is amortized to expense over the options' vesting period.  Note that the
effects of applying  SFAS 123 for pro forma  disclosure  in the current year are
not necessarily representative of the effects on pro forma net income for future
years. The Company's pro forma information follows:

                                   2001               2000               1999
                             --------------------------------------------------
Pro forma net income             $22,919            $15,482            $16,946
Pro forma earnings per share     $  6.90            $  4.66            $  5.10

                                       50
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


7.  Employee Benefit Plans (continued)

A summary of stock option  activity and related  information for the years ended
December 31 follows.  Amounts  have been  restated for the  three-for-one  stock
split granted by Holdings in December 1997:
<TABLE>
<CAPTION>

                                            2001                      2000                       1999
                                   -------------------------------------------------------------------------------
                                                Weighted                  Weighted                    Weighted
                                                 Average                   Average                     Average
                                                Exercise                  Exercise                    Exercise
                                    Options       Price       Options       Price       Options         Price
                                   -------------------------------------------------------------------------------

<S>                                <C>             <C>       <C>            <C>        <C>              <C>
Beginning balance                  1,120,540       $23.56    1,107,840      $22.68     1,099,640        $22.12

Granted                               23,300        50.67       46,100       50.67        29,800         50.67
Canceled                                   -            -            -           -             -             -
Forfeited                            (18,700)      (38.45)     (33,400)     (31.77)      (21,600)       (32.07)
                                   -------------------------------------------------------------------------------
Ending balance                      1,125,140       23.87    1,120,540       23.56     1,107,840        $22.68

Exercisable at end of year            975,506       20.26      871,030       18.54       950,165        $19.94

Weighted average minimum value
   of options granted during
   year                                            $ 9.34                   $19.45                      $12.08
</TABLE>

Exercise prices for options  outstanding as of December 31, 2001 are detailed in
the following table. The  weighted-average  remaining  contractual life of those
options is 5.38 years.


-------------------------------------------------------------------------------
                                                                  Weighted
                Shares Outstanding at   Shares Exercisable at      Average
Exercise Price    December 31, 2001       December 31, 2001       Remaining
                                                              Contractual Life
-------------------------------------------------------------------------------
    $ 4.59             73,200                  73,200             3.3 years
    $ 9.60            278,100                 278,100             4.3 years
    $18.39            275,190                 275,190             5.3 years
    $30.50            344,000                 296,761             6.0 years
    $50.67            154,650                  52,255             7.9 years
-------------------------------------------------------------------------------

                                       51
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


8.  Supplemental Condensed Consolidating Financial Information

The 9.875% senior notes issued by the Company are guaranteed by its wholly owned
subsidiary,  Willscot,  which  acts as a full and  unconditional,  and joint and
several subordinated guarantor of the notes. See Note 1 for a description of the
operations  of  this  subsidiary.  Additionally,  Willscot  has  entered  into a
management agreement with the Company whereby it pays a fee to the Company in an
amount  equal to the rental and other  income (net of  depreciation  expense) it
earns from the Company.  Therefore,  Willscot earns no net income. The following
summarizes  condensed   consolidating  financial  information  for  the  Company
(Parent) and Willscot (Guarantor Subsidiary).
<TABLE>
<CAPTION>

                                                                     As of December 31, 2001
                                                  -------------------------------------------------------------
                                                                  Guarantor
                                                     Parent      Subsidiary     Eliminations    Consolidated
                                                  -------------------------------------------------------------
Balance Sheet
 Assets:
<S>                                                 <C>            <C>           <C>              <C>
    Rental equipment, at cost                       $  305,549     $  739,364    $       -        $1,044,913

    Less accumulated depreciation                       61,980        116,066                        178,046
                                                  ------------------------------------------------------------
    Net rental equipment                               243,569        623,298            -           866,867

    Property and equipment, net                         73,782                                        73,782
    Investment in Willscot                             629,747                    (629,747)                -
    Other assets                                       297,886          6,449            -           304,335
                                                  --------------------------------------------------------------
Total assets                                        $1,244,984     $  629,747    $(629,747)       $1,244,984
                                                  ==============================================================

 Liabilities:
     Accounts payable and accrued expenses          $   50,287     $        -    $       -        $   50,287
    Long-term debt and revolving credit facility     1,022,972                                     1,022,972
    Other liabilities                                  178,466                                       178,466
                                                  -------------------------------------------------------------
    Total liabilities                                1,251,725              -            -         1,251,725
                                                  -------------------------------------------------------------

 Equity (deficit):                                      (6,741)       629,747     (629,747)           (6,741)
                                                  -------------------------------------------------------------
Total liabilities and stockholder's equity          $1,244,984     $  629,747    $(629,747)       $1,244,984
(deficit)                                         =============================================================

</TABLE>

                                       52
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


8.  Supplemental Condensed Consolidating Financial Information (continued)
<TABLE>
<CAPTION>

                                                                  As of December 31, 2000
                                                 ----------------------------------------------------------
                                                                  Guarantor
                                                      Parent     Subsidiary   Eliminations    Consolidated
                                                 -----------------------------------------------------------
Balance Sheet
 Assets:
<S>                                                <C>          <C>            <C>            <C>
    Rental equipment, at cost                      $  263,768   $  691,660     $       -      $  955,428

    Less accumulated depreciation                      57,390       98,044                       155,434
                                                 ----------------------------------------------------------
    Net rental equipment                              206,378      593,616             -         799,994

    Property and equipment, net                        64,766                                     64,766
    Investment in Willscot                            597,673                   (597,673)              -
    Other assets                                      277,081        4,057             -         281,138
                                                 ------------------------------------------------------------
Total assets                                       $1,145,898   $  597,673     $(597,673)     $1,145,898
                                                 ============================================================

 Liabilities:
    Accounts payable and accrued expenses          $   54,735   $        -     $       -      $   54,735
    Long-term   debt   and   revolving   credit
    facility                                          959,110                                    959,110
    Other liabilities                                 160,074                                    160,074
                                                 -----------------------------------------------------------
    Total liabilities                               1,173,919            -             -       1,173,919
                                                 -----------------------------------------------------------

 Equity (deficit):                                    (28,021)     597,673      (597,673)        (28,021)
                                                 ----------------------------------------------------------
Total liabilities and stockholder's equity         $1,145,898   $  597,673     $(597,673)     $1,145,898
(deficit):                                       ==========================================================




                                                            For the Year Ended December 31, 2001
                                                 ---------------------------------------------------------
                                                                Guarantor
                                                    Parent     Subsidiary    Eliminations     Consolidated
                                                 ---------------------------------------------------------
Results of Operations
Total revenues                                     $  431,703   $   73,698     $ (13,145)     $  492,256


Gross profit                                          180,637       47,981             -         228,618

Other expenses                                        153,511       47,981       (13,145)        188,347

Net income                                         $   22,666   $        -     $       -      $   22,666


</TABLE>

                                       53
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


8.  Supplemental Condensed Consolidating Financial Information (continued)
<TABLE>
<CAPTION>

                                                          For the Year Ended December 31, 2000
                                               -----------------------------------------------------------
                                                               Guarantor
                                                   Parent      Subsidiary    Eliminations   Consolidated
                                               -----------------------------------------------------------
              Results of Operations
<S>                                                <C>          <C>          <C>              <C>
    Total revenues                                 $381,430     $ 66,190     $ (15,474)       $432,146


    Gross profit                                    173,751       43,476             -         217,227

    Other expenses                                  158,149       43,476       (15,474)        186,151

    Net income                                     $ 16,119     $      -     $       -        $ 16,119


                                                         For the Year Ended December 31, 1999
                                               -----------------------------------------------------------
                                                              Guarantor
                                                  Parent      Subsidiary    Eliminations    Consolidated
                                               -----------------------------------------------------------
              Results of Operations
    Total revenues                                 $362,123     $ 60,476     $ (16,794)       $405,805

    Gross profit                                    162,788       40,401             -         203,189

    Other expenses                                  147,562       40,401       (16,794)        171,169

    Net income                                     $ 17,307     $      -     $       -        $ 17,307


                                                           For the Year Ended December 31, 2001
                                               ------------------------------------------------------------
                                                              Guarantor
                                                  Parent      Subsidiary    Eliminations     Consolidated
                                               ------------------------------------------------------------
                   Cash Flows
    Cash provided by operating activities          $ 39,674     $ 21,545     $       -        $ 61,219


    Cash used in investing activities               (71,027)     (55,399)            -        (126,426)

    Cash (used in) provided by financing
          Activities                                 28,494       34,751             -          63,245
                                               ------------------------------------------------------------

    Net change in cash                               (2,859)         897             -          (1,962)
    Cash at beginning of period                       2,546            -             -           2,546
                                               ------------------------------------------------------------

     (Overdraft)/cash at end of period             $   (313)    $    897     $       -       $     584
                                               ============================================================
</TABLE>
                                       54
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


8.  Supplemental Condensed Consolidating Financial Information (continued)
<TABLE>
<CAPTION>

                                                          For the Year Ended December 31, 2000
                                                ---------------------------------------------------------
                                                               Guarantor
                                                    Parent      Subsidiary    Eliminations   Consolidated
                                               -----------------------------------------------------------
                   Cash Flows
<S>                                                <C>          <C>          <C>              <C>
    Cash provided by operating activities          $ 65,403     $ 21,574     $        -       $  86,977

    Cash used in investing activities               (56,446)     (71,858)             -        (128,304)

    Cash (used in) provided by financing
          Activities                                 (7,052)      50,284              -          43,232
                                               -----------------------------------------------------------

    Net change in cash                                1,905            -              -           1,905
    Cash at beginning of period                         641            -              -             641
                                               -----------------------------------------------------------

    Cash at end of period                          $  2,546     $      -     $        -       $   2,546
                                               ============================================================


                                                           For the Year Ended December 31, 1999
                                               ------------------------------------------------------------
                                                              Guarantor
                                                  Parent      Subsidiary    Eliminations     Consolidated
                                               ------------------------------------------------------------
                   Cash Flows
    Cash provided by operating activities          $ 50,291     $ 22,047     $        -       $  72,338


    Cash used in investing activities               (61,417)     (81,306)             -        (142,723)

    Cash provided by financing activities            10,971       59,259              -          70,230
                                               ------------------------------------------------------------

    Net change in cash                                 (155)           -              -            (155)
    Cash at beginning of period                         796            -              -             796
                                               ------------------------------------------------------------

    Cash at end of period                          $    641     $      -     $        -       $     641
                                               =============================================================
</TABLE>

                                       55
<PAGE>


                    Williams Scotsman, Inc. and Subsidiaries
                   Notes to Consolidated Financial Statements


9. Related Party Transactions

During 2001,  2000 and 1999,  the Company paid  dividends of $60,  $55, and $55,
respectively, to Holdings primarily to fund normal operating expenses.


10. Contingencies

The Company is involved in various lawsuits and claims arising out of the normal
course of its business. In addition, the Company has insurance policies to cover
general  liability and workers  compensation  related claims.  In the opinion of
management,  the ultimate amount of liability not covered by insurance,  if any,
under pending litigation and claims will not have a materially adverse effect on
the financial position or operating results of the Company.

11. Subsequent Events

In February  2002,  the Company  issued  $150,000 of  additional  9.875%  senior
unsecured notes under its existing  indenture.  The additional notes,  which are
subject to all of the same terms and  conditions  as the $400,000 of  previously
issued notes, were issued at a price of 98.751%.  Net proceeds from the issuance
were used to permanently repay the outstanding balance of the term loan ($58,050
plus accrued interest) and to reduce outstanding borrowings under the revolver.

In March 2002, the Company entered into a new credit facility,  the net proceeds
from which were used to refinance  its existing  credit  facility.  The new loan
agreement  provides  for a $460  million  revolving  credit  facility and a $210
million term loan both maturing on December 31, 2006. The facility also provides
for up to an additional $30 million in term or revolver commitments. Interest on
borrowings under both the term and revolver is payable at a rate of either prime
plus 1.75% or the Eurodollar rate plus 3.00%. Such rates may decrease based upon
the Company achieving  specified  leverage ratio thresholds.  Principal payments
due on the term loan are equal to 1% per year payable  quarterly  beginning June
30, 2002, with the remaining balance due December 31, 2006.

Borrowings under the new credit facility,  which are based upon a borrowing base
calculation,  are secured by a first  priority lien on and security  interest in
the Company's rental equipment,  accounts receivable and property and equipment.
In  addition  to the  restrictions  and  limitations  described  under  the note
agreement,  including  restrictions  on the amount of dividends that the Company
can pay to Holdings,  the new loan agreement  requires  compliance  with certain
financial covenants including capital expenditures,  interest coverage, leverage
and fleet utilization levels.

                                       56
<PAGE>


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

         None.

                                       57
<PAGE>


PART III

Item 10. Directors and Executive Officers of the Registrant

Directors and Officers

         Our directors and executive officers are as follows:

Name                Age                    Position
----                ---                    --------
Barry P.  Gossett   61  Director and Chairman Emeritus of the Board
Gerard E. Holthaus  52  President and Chief Executive Officer; Director and
                        Chairman of the Board
James N. Alexander  42  Director
Michael F. Finley   40  Director
Steven B. Gruber    44  Director
Brian Kwait         40  Director
David P. Spalding   47  Director
Joseph F. Donegan   51  Executive Vice President - U.S. Field Operations
J. Collier Beall    54  Senior Vice President and Southern Region Vice President
Gerard E. Keefe     45  Senior Vice President and Chief Financial Officer
William C. LeBuhn   39  Senior Vice President - Marketing and Human Resources
Dean T. Fisher      55  Vice President - Operations
William G. Gessner  43  Vice President - Information Services
John B. Ross        53  Vice President and General Counsel
---------------

         The directors are elected annually and serve until their successors are
duly  elected and  qualified.  No director of the Company  receives  any fee for
attendance at Board of Directors meetings or meetings of Committees of the Board
of  Directors.  Outside  directors  are  reimbursed  for their  expenses for any
meeting attended.

         Executive officers of the Company are elected by the Board of Directors
and serve at the discretion of the Board of Directors.

     Barry P.  Gossett is  Chairman  Emeritus  of the Board.  He is  currently a
partner in Pascal Turner  Partners,  a real estate  investment firm. He formerly
served  as  Chairman  of the Board  from  October  1995 to April  1999 and Chief
Executive Officer of the Company from October 1995 to April 1997. Prior to this,
he served as President and Chief  Executive  Officer of the Company from 1990 to
October 1995. Mr. Gossett has been a director and employee of the Company or its
predecessor for over thirty years. Before joining the Company, Mr. Gossett was a
partner at Buchanan and Company, a Washington, D.C. accounting firm. Mr. Gossett
was one of the founders of the Modular  Building  Institute,  an industry  trade
group which represents member companies. Mr. Gossett also serves on the Board of
Directors of Nanofab Inc.,  DeCorp Inc. and several  charitable and  educational
institutions.

         Gerard E. Holthaus was elected  Chairman of the Board in April 1999 and
has been President and Chief Executive  Officer of the Company since April 1997.
He has been with the Company since June 1994,  and served as President and Chief
Operating  Officer  from  October  1995 to  April  1997 and was  Executive  Vice
President and Chief Financial Officer prior thereto. He has served as a director

                                       58
<PAGE>


since June 1994. Before joining the Company,  Mr. Holthaus served as Senior Vice
President  of MNC  Financial,  Inc.  from April 1988 to June 1994.  From 1971 to
1988,  Mr.  Holthaus was associated  with the  accounting  firm of Ernst & Young
(Baltimore),  where he served as a partner from 1982 to 1988.  He also serves on
the Board of Directors of Grove Worldwide, LLC and The Baltimore Life Companies.

     James N.  Alexander  was  elected as a director of the Company in May 1997.
Mr.  Alexander has been Chief  Financial  Officer of Keystone since January 2000
and a Vice President of Keystone since August 1995. He has been a Partner of Oak
Hill Capital  Management,  Inc., which provides  investment advisory services to
Oak Hill Capital Partners, L.P., since February 1999. Prior to joining Keystone,
he worked at Goldman,  Sachs & Co.  where he was a Vice  President  in the Fixed
Income Division from August 1993 to July 1995. Mr.  Alexander is also a director
for FEP Capital  Holdings,  L.P.,  Oak Hill Strategic  Partners,  L.P., 230 Park
Investors, L.L.C. and 237 Park Investors, L. L. C.

     Michael F. Finley was elected as a director of the Company in May 1997. Mr.
Finley has been a Managing  Director of Cypress since 1998 and has been a member
of Cypress since its formation in April 1994. Prior to joining Cypress, he was a
Vice President in the Merchant Banking Group at Lehman Brothers Inc.

     Steven B. Gruber was elected as a director of the Company in February 2002.
From  February 1999 to present,  Mr.  Gruber has been a Managing  Partner of Oak
Hill Capital  Management,  Inc., the manager of Oak Hill Capital Partners,  L.P.
From March 1992 to present he has been a Managing Director of Oak Hill Partners,
Inc.  From  February  1994 to  present,  Mr.  Gruber has also been an officer of
Insurance Partners Advisors,  L.P., an investment advisor to Insurance Partners,
L.P.  From  October 1992 to present,  he has been a Vice  President of Keystone,
Inc. Mr. Gruber is also a director of American Skiing Company, Travel Centers of
America,  Inc.,  SNTL  Corporation  and  several  private  companies  related to
Keystone, Inc. and Oak Hill Capital Partners L.P.

     Brian Kwait was elected as a director of the Company in September  1998 and
also served in that capacity from December 1993 through May 1997. Mr. Kwait is a
Member and Managing  Principal of Odyssey Investment  Partners,  LLC since April
1997 and was a Principal of Odyssey Partners, LP from August 1989 to March 1997.
Mr. Kwait is also a director of Velocita Corp. and IWO Holdings, Inc.

     David P. Spalding was elected as a director of the Company in May 1997. Mr.
Spalding has been a Vice  Chairman of Cypress since its formation in April 1994.
Prior to joining  Cypress,  he was a Managing  Director in the Merchant  Banking
Group at Lehman  Brothers  Inc. Mr.  Spalding is also a director of AMTROL Inc.,
Frank's Nursery & Crafts, and Lear Corporation.

         Joseph F.  Donegan has been  Executive  Vice  President  of U.S.  Field
Operations  of the  Company  since May 2001.  He was Senior Vice  President  and
Northern  Division Manager of the Company since September 1996 and served as the
Northeast Regional Manager prior thereto. Mr. Donegan's responsibilities include
the implementation of corporate  policies,  attainment of branch  profitability,
fleet utilization  management and development of personnel for the entire United
States branch  network.  Mr. Donegan has over 20 years of experience  within the
industry.  From 1991 through May 1994, Mr.  Donegan held similar  positions with
Space Master Buildings, Kullman Industries and Bennett Mobile Offices.

                                       59
<PAGE>


         J. Collier Beall has been Senior Vice  President and Southern  Division
Manager since  September  1996 and was the Southeast  Regional  Manager prior to
that.  Mr.  Beall's  responsibilities  include the  implementation  of corporate
policies,  attainment of branch profitability,  fleet utilization management and
development of personnel.  Prior to joining the Company in 1977, Mr. Beall was a
Regional Manager for Modular Sales and Leasing Company based in Georgia.

         Gerard E. Keefe has been  Senior  Vice  President  and Chief  Financial
Officer of the Company since April 1997. He formerly  served as Vice  President,
Fleet and Finance with  responsibilities  including overall fleet management and
purchasing,  treasury  functions,  planning and budgeting  from February 1995 to
April 1997. Prior to joining the Company, Mr. Keefe was with The Ryland Group, a
national homebuilder,  from 1993 to 1995. From 1991 to 1993, he was a management
consultant  serving  the  manufacturing,  distribution  and  financial  services
industries, and from 1977 to 1991, he was with Ernst & Young, (Baltimore),  most
recently as a Senior Manager.

         William C. LeBuhn has been Senior Vice  President - Marketing and Human
Resources of the Company since March 2002. He formerly  served as Vice President
-  Marketing  and Human  Resources  from July 1999 to March  2002,  and was Vice
President  of Human  Resources  from  January  1994 to July  1999.  While  still
involved  in  the  Human  Resource  related   programs,   Mr.  LeBuhn's  primary
responsibilities  now include the overall  strategic  marketing plans.  Prior to
joining the Company,  Mr.  LeBuhn was HR Manager for  Sherwin-Williams'  Eastern
Division   from  1992  to  January  1994,   Director  of  HR  for   Consolidated
International  Insurance  Group,  Inc.  from 1988 to 1992,  and HR  Officer  for
Meridian Bancorp from 1984 to 1988.

         Dean T. Fisher  joined our company as Vice  President of  Operations in
October  2001.  His  operational  responsibilities  include  credit,  invoicing,
document compliance,  cash posting,  collections and recovery.  Prior to joining
our  company,  Mr.  Fisher was Senior Vice  President,  Division  Head of Global
Customer Services for VISA International, a major credit card company, from 1997
to 2001.  From  1986 to 1997,  he was with some of the  predecessors  to Bank of
America as a Senior Vice President. From 1977 to 1986, he was with a predecessor
company of Key Corp., a financial institution.

         William G. Gessner has been Vice President of  Information  Services of
the Company  since  November  1998 with  responsibilities  including the overall
management  of  the  Company's  business   information  systems  and  technology
initiatives.  He formerly  served as Director of Information  Services from July
1996 to November 1998. Prior to joining the Company, Mr. Gessner was Director of
Corporate  Information Systems at ARINC,  Incorporated,  an engineering services
and telecommunications company in Annapolis, Maryland, from 1988 to 1996.

         John B.  Ross has been  Vice  President  and  General  Counsel  for the
Company  since  February  1995.  Prior to  joining  the  Company,  Mr.  Ross was
Corporate  Counsel  for MNC  Leasing  Corporation  from 1983 to 1991 and Special
Assets Counsel for MNC Financial,  Inc. from 1991 to 1993.  Prior to joining MNC
Leasing  Corporation  and during the period from 1993 to 1995, he was engaged in
the private practice of law in both North Carolina and Maryland.

                                       60
<PAGE>


Item 11.

Executive Compensation

                           Summary Compensation Table

         The  following  table sets forth  certain  information  concerning  the
compensation  paid or accrued for the last three  completed  fiscal years of our
five highest paid officers (the "Named  Executive  Officers") who received total
compensation in excess of $100,000 during 2001.
<TABLE>
<CAPTION>

                                                                                                    Long-Term
                                                                                                  Compensation
                                                                                                    Awards
                                                                             Annual             ---------------
                                                                          Compensation             Securities          All Other
                                                                          ------------             Underlying        Compensation
                                                          Year        Salary        Bonus          Options(1)            $ (2)
                                                          ----        ------        -----        --------------   -----------------
Gerard E. Holthaus
<S>                                                      <C>         <C>          <C>               <C>                  <C>
President and Chief Executive Officer ....................2001       $439,177     $139,500               --             $9,433
                                                          2000        413,600      103,500               --              9,433
                                                          1999        371,292      112,500               --              9,183

Joseph F. Donegan
Executive Vice President - U.S. Field Operations..........2001        305,245       45,000               --              5,375
                                                          2000        260,609       33,750            1,000              4,625
                                                          1999        247,387       36,000               --              4,149

J. Collier Beall
Senior Vice President and Southern Region V.P.............2001        275,074       40,500               --              2,616
                                                          2000        258,837       33,750               --              2,637
                                                          1999        244,432       36,000               --              2,270

Gerard E. Keefe
Senior Vice President and Chief Financial Officer.........2001        174,513       54,000               --              4,500
                                                          2000        159,675       40,500               --              4,125
                                                          1999        149,387       45,000               --              3,825

William C. LeBuhn
Senior Vice President-Marketing and Human Resources.......2001        144,073       43,200               --              1,938
                                                          2000        133,708       33,000            1,000                 --
                                                          1999        124,746       36,000               --                 --

</TABLE>



(1)      Represents options granted to purchase shares of Holdings pursuant to
         the 1997 Plan for options granted in 2000.

(2)      Represents  employer match under the 401(k) plan. In addition,  amounts
         for Mr. Holthaus  include a disability  insurance  premium of $4,058 in
         each of 2001, 2000 and 1999.

                                       61
<PAGE>


               Aggregated Option Exercises in Last Fiscal Year and
                          Fiscal Year-End Option Values




The  following  table  contains  information  covering  the  number and value of
unexercised stock options held by the Named Executive Officers at the end of the
fiscal year.

                          Number of Securities
                         Underlying Unexercised         Value of Unexercised
                               Options at               In-the-Money Options
                           Fiscal Year End (1)         At Fiscal Year End ($)
Name                 Exercisable/Unexercisable (2)  Exercisable/Unexercisable(3)
-------------        -----------------------------  ----------------------------

Gerard E. Holthaus.....   273,013 / 21,478             $8,343,167 / $175,066

Joseph F. Donegan .....    100,875 / 7,975                3,036,840 / 71,665

J. Collier Beall.......    101,725 / 7,175                3,084,521 / 71,665

Gerard E. Keefe........     88,250 / 6,650                2,603,591 / 61,427

William C. LeBuhn......     92,650 / 6,350                2,923,655 / 61,427




(1)      No options were exercised by the Named Executive Officers during fiscal
         2001.
(2)      For options  granted  under the 1997 Plan,  50% vest  ratably over five
         years  and 50% vest  ratably  based  on us  meeting  certain  financial
         targets  over the same five  periods.  All other  options  became fully
         vested in conjunction with the Recapitalization.
(3)      Based on the estimated fair market value at December 31, 2001.

                                       62
<PAGE>


Scotsman Holdings, Inc. 1994 Employee Stock Option Plan

         In March 1995,  a stock  option plan was adopted for certain of our key
employees.  All  options  outstanding  under this plan  became  fully  vested in
conjunction with the Recapitalization.  The options are exercisable for a period
of 10 years from date of grant.

Scotsman Holdings, Inc. Amended and Restated 1997 Employee Stock Option Plan

         In December  1997,  a stock  option plan was adopted for certain of our
key employees,  which was amended and restated in December 1998. Under the plan,
up to 479,500  options to purchase  Holdings'  common  stock may be granted.  In
2001,  23,300  options were granted  under this plan at an offer price of $50.67
per share. Fifty percent of the options granted vest ratably over five years and
fifty  percent  vest  ratably  based on the Company  meeting  certain  financial
targets over the same five periods. All options expire 10 years from the date of
grant.

401(k)/Defined Contribution Plan

         On May 1, 1993,  we adopted a defined  contribution  plan (the  "401(k)
Plan")  which is  intended  to satisfy  the tax  qualification  requirements  of
Sections  401(a),  401(k),  and 401(m) of the Internal  Revenue Code of 1986, as
amended (the "Code").  Each of our employees is eligible to  participate  in the
salary   reduction   feature  of  the  401(k)  Plan.  The  401(k)  Plan  permits
participants  to contribute  the lesser of (i) 15% of their annual  compensation
from the Company or (ii) the dollar  limit  described  in Section  402(g) of the
Code ($10,500 in 2001). All amounts  deferred by a participant  under the 401(k)
Plan's salary reduction feature by a participant are fully vested.

         The 401(k) Plan has a "matching"  contribution  feature under which the
we may contribute a percentage of the amount  deferred by each  participant  who
makes salary  reduction  deferrals to the 401(k) Plan,  and is employed by us on
the last day of the year. This percentage, if any, is determined by the Board of
Directors at their  discretion and is communicated  to 401(k) Plan  participants
during  the year for  which the  matching  contribution  will be made.  Matching
contributions  made on behalf of a 401(k)  Plan  participant  are  subject  to a
deferred  vesting  schedule based on the number of years a participant  has been
employed by us. A participant  becomes 20%, 40%, 60%, 80% and 100% vested in the
matching  contributions  made  to the  401(k)  Plan on his or her  behalf  after
completion of 1, 2, 3, 4 and 5 years of service with us, respectively.

         The 401(k) Plan also has a "profit sharing" feature, under which we may
contribute,  in our discretion,  an additional  amount which is allocated to the
accounts of active participants who have been employed for 12 consecutive months
by the Company,  who have completed  1,000 hours of service during the Plan Year
and who are  employed on the last day of the year,  based on such  participants'
compensation  for the year.  The vesting  schedule  for these  contributions  is
identical to that for matching contributions.

                                       63
<PAGE>


         A  participant's  401(k) Plan  benefits  generally are payable upon the
participant's death, disability, retirement, or other termination of employment.
Payments under the 401(k) Plan are made in a lump sum.

         In 2001, we made matching contributions to the 401(k) Plan participants
in an aggregate amount of $586,507.

Deferred Compensation Plan for Executives

         During 1997,  we adopted a deferred  compensation  plan for  executives
(the  "Plan")  which is  meant  to be an  unfunded  deferred  compensation  plan
maintained  for a select  group of  management  within the  meaning of  Sections
201(2),  301(a)(3) and 401 (a)(1) of the Employee Retirement Income Security Act
of 1974.  The Plan allows key  employees  to defer a  specified  amount of their
compensation until termination or upon the occurrence of other specified events.
Such amounts are placed in the investment  vehicles of the employee's choice. As
of December  31,  2001,  the total amount  deferred  under this Plan,  including
earnings, was $1,369,542.

Compensation Committee Interlocks and Insider Participation

     During  2001,  the  Compensation  Committee  was  comprised  of two outside
directors:  David P. Spalding and Daniel L. Doctoroff.  Mr. Doctoroff, who was a
managing  partner of Oak Hill Capital  Management,  Inc. and a Vice President of
Keystone,  and a director of our company since May 1997, resigned from our board
in December,  2001.  Steven B. Gruber has replaced Mr.  Doctoroff as a member of
our  Compensation  Committee  in  2002.  No  member  of the  Committee  has  any
interlocking  or insider  relationship  with the Company which is required to be
reported  under the  applicable  rules and  regulations  of the  Securities  and
Exchange Commission.

                                       64
<PAGE>


Item 12. Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth certain information regarding the beneficial
ownership  of  our  Common  Stock  by  (i)  all  persons  owning  of  record  or
beneficially  to the  knowledge  of the  Company  5% or more of the  issued  and
outstanding Common Stock, (ii) each director individually,  (iii) each executive
officer named in the Summary Compensation Table, and (iv) all executive officers
and directors as a group.
<TABLE>
<CAPTION>

                                                                      Shares of
Name                                                                Common Stock              Percentage
----                                                                ------------              ----------
Cypress Merchant Banking Partners L.P.(1)(2)(3)
     c/o The Cypress Group L.L.C.
     65 East 55th Street
<S>                   <C>                                              <C>                      <C>
         New York, NY 10022........................................    2,431,523                39.24%

Cypress Offshore Partners L.P.(1)(2)(3)
     Bank of Bermuda (Cayman) Limited
     P.O. Box 513 G.T.
     Third Floor
     British American Tower
     George Town, Grand Cayman
     Cayman Islands, B.W.I.............................................  125,939                  2.03

Scotsman Partners, L.P.(2)(3)(4)
     201 Main Street
     Fort Worth, TX 76102  ............................................2,557,462                 41.27

Odyssey Investment Partners Fund, LP(3)(5)
     280 Park Avenue
     New York, NY 10017    ............................................  716,536                 11.56

James N. Alexander(6)      ............................................      ---                   ---
Michael F. Finley(7)       ............................................      ---                   ---
Steven B. Gruber(6)        ............................................      ---                   ---
Brian Kwait(8).........................................................      ---                   ---
David P. Spalding(7)...................................................      ---                   ---
Barry P. Gossett (3)(9)................................................  124,407                  2.01
Gerard E. Holthaus (10)(11)(12)........................................  311,113                  4.81
Joseph F. Donegan (10)(11)(12).........................................  104,475                  1.66
J. Collier Beall (10)(11)(12)..........................................  106,225                  1.69
Gerard E. Keefe (10)(11)(12)...........................................   89,750                  1.43
William C. LeBuhn (10)(11)(12).........................................   95,650                  1.52

All executive officers and directors as a group........................  910,145                 13.13
</TABLE>

(1)  Cypress Merchant  Banking Partners L.P. and Cypress Offshore  Partners L.P.
     are controlled by The Cypress Group L.L.C. or affiliates  thereof.  Certain
     executives of The Cypress Group L.L.C.,  including Messrs.  Jeffrey Hughes,
     James Singleton, David Spalding and James Stern,

                                       65
<PAGE>


     may  be deemed to share beneficial ownership of the shares shown as
     beneficially owned by Cypress  Merchant  Banking  Partners  L.P.  and
     Cypress  Offshore Partners L.P. Each of such individuals  disclaims
     beneficial  ownership of such shares.

(2)  Does not include shares beneficially owned by members of management,  as to
     which the Investor Group (as defined herein) has an irrevocable proxy.

(3)  Under the Investor Stockholders  Agreement (as defined herein), the Cypress
     Stockholders  (as defined  herein),  Scotsman  Partners,  L.P., and Odyssey
     Investment  Group (as defined  herein) have agreed to vote their shares for
     certain   nominees  for   director  and  other   matters  and  the  Cypress
     Stockholders,  Scotsman  Partners,  L.P.,  Odyssey Investment Group and Mr.
     Gossett have agreed to restrict  the  transfer of their  shares  subject to
     certain    exceptions.    See    "Certain    Relationships    and   Related
     Transactions--Investor Stockholders Agreement."

(4)  The  shares  of  Holdings  Common  Stock  beneficially  owned  by  Scotsman
     Partners,  L.P. may be deemed to be owned by J. Taylor Crandall,  Group 31,
     Inc. ("Group 31") and Arbor Scotsman, L.P. ("AS"). Mr. Crandall is the sole
     stockholder  of Group 31,  which is the general  partner of AS,  which,  in
     turn, is the general  partner of Scotsman  Partners,  L.P.  Group 31 and AS
     disclaim such beneficial ownership.  The address of Mr. Crandall,  Group 31
     and AS is the same as Scotsman Partners. Mr. Crandall is a Managing Partner
     of Oak Hill Capital Management, Inc.

(5)  Includes 1,461 shares that are beneficially  owned by Odyssey  Coinvestors,
     LLC, an affiliate of Odyssey Investment Partners,  LLC (together,  "Odyssey
     Investor Group").  The General Partner of Odyssey Investment Partners Fund,
     LP is Odyssey Capital  Partners,  LLC a Delaware limited  liability company
     (the  "General  Partner of  Odyssey")  and the  Managing  Member of Odyssey
     Coinvestors,  LLC is Odyssey Investment  Partners,  LLC, a Delaware limited
     liability company. Paul D. Barnett,  Stephen Berger, William Hopkins, Brian
     Kwait and Muzzi Mirza are Managing Members of Odyssey Capital Partners, LLC
     and Odyssey Investment Partners, LLC, and, therefore, may each be deemed to
     share voting and investment  power with respect to 716,536 shares and votes
     deemed to be owned by the General Partner of Odyssey and Odyssey Investment
     Partners,  LLC.  Each Messrs.  Barnett,  Berger,  Hopkins,  Kwait and Mirza
     disclaims beneficial ownership of such shares.

(6)  Such person's address is c/o Scotsman Partners, L.P.

(7)  Such person's address is c/o Cypress Merchant Banking Partners L.P.

(8)  Such person's address is c/o Odyssey Investment Partners Fund, LP.

(9)  Such person's address is c/o Pascal-Turner Partners, 3300 Eastern
     Boulevard, Baltimore, Maryland  21220-2825.

(10) Such person's address is the address of the Company's principal executive
     offices.

                                       66
<PAGE>


(11) Each member of management is a party to the Stockholders' Agreement whereby
     he or she has agreed to limit the transferability of his or her shares. See
     "Certain Relationships and Related Transactions--Stockholders' Agreement."

(12) Includes 273,013, 100,875, 101,725, 88,250, 92,650, and 733,538 shares held
     as options by Messrs.  Holthaus,  Donegan,  Beall, Keefe and LeBuhn and all
     executive officers as a group,  respectively,  which are exercisable within
     60 days.

                                       67
<PAGE>


Item 13. Certain Relationships and Related Transactions

The Recapitalization

     Holdings,  the Odyssey Investor Group, certain other existing  stockholders
of Holdings,  certain partnerships  affiliated with The Cypress Group L.L.C. and
Scotsman Partners, L.P. are parties to a Recapitalization  Agreement dated April
11,   1997   pursuant   to   which   the    Recapitalization    occurred.    See
"Recapitalization".

Stockholders' Agreement

         Cypress Merchant Banking  Partners,  L.P.,  Cypress Offshore  Partners,
L.P.,  Scotsman  Partners,   L.P.   (collectively  the  "Investor  Group"),  the
Management  Stockholders and Holdings are parties to a Management  Stockholders'
and Optionholders'  Agreement dated as of September 14, 1998 (the "Stockholders'
Agreement"),  which contains certain rights and restrictions with respect to the
transfer  of  each  Management   Stockholder's   shares  of  Common  Stock.  The
Stockholders'  Agreement prohibits the transfer of any shares of Common Stock by
Management  Stockholders  (other  than sales  required  in  connection  with the
disposition  of all shares of Common Stock owned by the  Investor  Group and its
affiliates)  until the earlier of twelve months after an initial public offering
of the  equity of  Holdings  for  designated  officers  (and sixty days after an
initial  public  offering  for  non-designated  officers)  or the day  after the
Investor  Group and its  affiliates  have  disposed of more than  33-1/3% of the
shares  of  Common  Stock  originally   acquired  by  the  Investor  Group,  and
thereafter,  the  aggregate  number of shares which may be  transferred  by each
Management  Stockholder in any calendar year (other than certain required sales)
may not exceed 25% of the number of shares acquired pursuant to the Subscription
Agreement  between  Holdings and such Management  Stockholder plus the number of
any shares  acquired  pursuant to the  exercise of stock  purchase  options.  In
addition, the Stockholders' Agreement restricts the transfer of shares of Common
Stock by each Management Stockholder for a period of five years from the date of
purchase of such  shares,  except  certain  permitted  transfers  and  transfers
pursuant to an effective  registration  statement or in accordance with Rule 144
under the Securities Act. Upon the expiration of such five-year period,  subject
to the foregoing  restrictions,  each  Management  Stockholder  may transfer his
shares after giving to the Investor Group and Holdings, respectively, a right of
first refusal to purchase such shares.

         Each Management Stockholder has the right (and in limited circumstances
the  obligation) to sell his shares in connection  with certain  dispositions of
shares by the Investor Group and the right to cause his shares to be included in
certain  registrations  of  Common  Stock on behalf of the  Investor  Group.  In
addition, upon termination of any Management Stockholder's employment,  Holdings
may elect to require such Management  Stockholder to sell to Holdings all of his
shares.

Investor Stockholders Agreement

         On May 22, 1997,  Holdings,  certain  partnerships  affiliated with The
Cypress Group, L.L.C. (the "Cypress  Stockholders") and Scotsman Partners,  L.P.
(collectively,    including   their   permitted   transferees,   the   "Investor
Stockholders") and the Odyssey Investor Group,  Barry P. Gossett,  BT Investment
Partners,  Inc. and certain other  stockholders  (together with their  permitted
transferees and

                                       68
<PAGE>


the Investor  Stockholders,  the  "Stockholders")  entered into an investor
stockholders agreement, which was subsequently amended on September 1, 1998 (the
"Investor Stockholders Agreement").

         Under  the  terms  of  the  Investor  Stockholders  Agreement,   unless
otherwise  agreed to by the  Investor  Stockholders,  the board of  directors of
Holdings  (the  "Board of  Directors")  will  consist of nine  directors:  three
persons  nominated  by the Cypress  Stockholders,  three  persons  nominated  by
Scotsman  Partners,  one person  nominated  by  Odyssey  Investment  Group,  the
Chairman  of the Board of  Directors  and the  President  of  Holdings.  Each of
Cypress Stockholders, Scotsman Partners and Odyssey Investment Group is entitled
to remove and replace any or all of their  respective  designees on the Board of
Directors  and each is entitled to remove the director or directors  who are the
Chairman  of the Board and the  President  of Holdings  in  accordance  with the
provisions of the Investor Stockholders  Agreement. If the Holdings Common Stock
held by either the Cypress  Stockholders  or Scotsman  Partners is reduced to an
amount less than 20% of the outstanding Holdings Common Stock, but 5% or more of
the  outstanding  Holdings  Common Stock,  the Cypress  Stockholders or Scotsman
Partners,  as the case may be, will be entitled to designate one director.  Each
of the  Cypress  Stockholders  or  Scotsman  Partners  will  lose  the  right to
designate one director when the Cypress  Stockholders or Scotsman  Partners,  as
the case may be, no longer holds at least 5% of the outstanding  Holdings Common
Stock.  From and after the date that Odyssey  Investment Group owns less than 5%
of the  outstanding  Holdings  Common  Stock,  it will no longer be  entitled to
designate any director for election or removal. If any of Cypress  Stockholders,
Scotsman Partners and Odyssey Investment Group is entitled to designate a lesser
number of directors pursuant to the Investor Stockholders  Agreement,  then they
will vote their  shares to cause the number of the entire  Board of Directors to
be reduced by the number of directors they are no longer entitled to designate.

         Under the Investor  Stockholders  Agreement,  until such time as either
the Cypress  Stockholders  or the  Scotsman  Partners  is no longer  entitled to
designate three  directors,  without the approval of a majority of the directors
designated  by  each  of  the  Cypress   Stockholders  and  Scotsman   Partners,
respectively,  Holdings  will  not  take  certain  actions  (including  mergers,
consolidations,  sales of all or substantially all assets,  electing or removing
the Chairman or President of Holdings,  issuing  securities,  incurring  certain
indebtedness,  making  certain  acquisitions,  approving  operating  and capital
budgets and other major transactions).

         Under the Investor Stockholders Agreement, prior to the consummation of
an initial public offering of Holdings Common Stock (an "IPO"), each Stockholder
will have the right to acquire  shares of Holdings  Common  Stock in  connection
with  certain new  issuances  of Holdings  Common  Stock,  on the same terms and
conditions,  for the amount necessary to allow the participating  Stockholder to
maintain its percentage holding of the outstanding Holdings Common Stock.

         The Investor  Stockholders  Agreement contains  provisions limiting the
ability of Stockholders to transfer their shares in certain circumstances. Among
other provisions,  the Investor  Stockholders  Agreement  includes (i) rights of
first  offer in favor of the  Investor  Stockholders  with  respect to  proposed
transfers of shares to a third party and (ii) tag-along  rights in favor of each
Stockholder  pursuant to which a selling Stockholder would be required to permit
the other  Stockholders to participate on a proportional  basis in a transfer of
shares to a third party. Also, if one or more Stockholders  holding at least 60%
of the  outstanding  Holdings  Common Stock  determine to sell shares to a third
party, in certain  circumstances such Stockholders have the right to require the
other

                                       69
<PAGE>


Stockholders to sell their shares to such third party.

         Under the Investor  Stockholders  Agreement,  the Stockholders have the
right to require the Company to register  their shares of Holdings  Common Stock
under the  Securities Act in certain  circumstances,  including upon a demand of
certain of the Stockholders.

         The Investor Stockholders Agreement (other than the registration rights
provisions)  will  terminate  (unless  earlier  terminated  as  specified in the
Investor  Stockholders  Agreement) upon the earlier of (i) May 22, 2007 and (ii)
completion of an IPO.

Employment Arrangement

         During  2001,  Mr.  Gossett  was  engaged by the Company to assist with
mergers and acquisitions, real estate project management,  strategic initiatives
and other general business  services.  As compensation  for these services,  Mr.
Gossett  received  $120,000 for the year ended  December 31, 2001.  Mr.  Gossett
currently serves as Chairman Emeritus of the Company's Board of Directors.

                                       70
<PAGE>


                                     PART IV

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

         (a)      Financial Statements and Financial Statement Schedules
                  (1) and (2). See Index to Financial  Statements  and
                  Supplemental  Schedules at Item 8 of this Annual Report on
                  Form 10-K.

         (b)      Reports on Form 8-K filed in the fourth quarter of 2001.

                  None.

         (c)      Exhibits

  Exhibit Number
  --------------

   2.1  --    Recapitalization Agreement, dated as of April 11, 1997.
              (Incorporated by reference to Exhibit 2 of Form 8-K dated
              May 22, 1997.)

   2.2  --    Stock Purchase  Agreement,  dated as of July 23, 1998.
             (Incorporated  by reference to Exhibit 2 of Form 8-K
              dated September 1, 1998.)

   3.1  --    Certificate of Incorporation of Williams Scotsman, Inc.,
              as amended.  (Incorporated by reference to Exhibit 3(i)
              of Form 8-K dated November 27, 1996).

   3.2  --    By-laws of Williams Scotsman, Inc.  (Incorporated
              by reference to Exhibit 3.2 of Registration Statement
              on Form S-l, Commission File No. 33-68444).

   4.1  --    Indenture dated as of May 15, 1997 among Williams
              Scotsman, Inc., Mobile Field Office Company, Willscot
              Equipment, LLC and The Bank of New York, as trustee.
              (Incorporated by reference to Exhibit 4.1 of Registration
              Statement on Form S-4, Commission File No. 333-30753).

   10.1  --   Credit Agreement, dated as of May 22, 1997 and Amended
              and Restated as of September 1, 1998, by and among
              Williams Scotsman, Inc., Scotsman Holdings, Inc.
              each of the financial institutions named therein, Bankers
              Trust Company, as issuing bank and BT Commercial
              Corporation, as agent.  (Incorporated by reference to Exhibit 10.1
              to the annual report on Form 10-K of Williams Scotsman, Inc.
              (Commission Act File No.: 33-68444) for the year ended
              December 31, 1998 (the Company's 1998 Form 10-K)).

                                       71
<PAGE>



   10.2  --   Investor Stockholders Agreement, dated as of May 22, 1997, among
              Scotsman Partners, L.P., Cypress Merchant Banking
              Partners, L.P., Cypress Offshore Partners, L.P., Odyssey
              Partners, L.P., Barry P. Gossett, BT Investment Partners, Inc.
              and certain other stockholders.  (Incorporated by reference
              to Exhibit 10.3 of Registration Statement on Form S-4,
              Commission File No.333-30753).

   10.3  --   Amendment No. 1 to Investor Stockholders Agreement, dated as of
              September 1, 1998, among Scotsman Partners, L.P.
              Cypress Merchant Banking Partners, L.P., Cypress Offshore
              Partners, L.P., Odyssey Partners, L.P., Barry P. Gossett,
              BT Investment Partners, Inc. and certain other stockholders.
              (Incorporated by reference to Exhibit 10.3 of the Company's
              1998 Form 10-K.)

   10.4  --   Management Stockholders' and Optionholders' Agreement,
              dated as of September 14, 1998, among Scotsman Partners, L.P.,
              Cypress Merchant Banking Partners, L.P., Cypress Offshore
              Partners, L.P., and certain management stockholders of Holdings.
              (Incorporated by reference to Exhibit 10.4 of the Company's
              1998 Form 10-K.)

   10.5  --   Scotsman Holdings, Inc. Employee Stock Purchase Plan.
              (Incorporated by reference to Exhibit 10.8 of Registration
              Statement on Form S-1 of Scotsman Holdings, Inc.
              Commission File No.:33-68444).

   10.6  --   Scotsman Holdings, Inc. 1994 Employee Stock Option
              Plan.  (Incorporated by reference to Exhibit 10.11 of
              the Company's Form 10-K for the year ended
              December 31, 1994).

   10.7  --   Scotsman Holdings, Inc. Amended and Restated 1997 Employee
              Stock Option Plan. (Incorporated by reference to Exhibit 10.7
              of the Company's 1998 Form 10-K.)

   10.8 --    First Amendment to Credit Agreement dated as of July 7, 1999.
              (Incorporated by reference to Exhibit 10.8 to the quarterly report
              on Form 10-Q of Williams Scotsman, Inc. (Commission Act File
              No.: 33-68444) for the quarter ended September 30, 1999
              (the Company's 1999 3Q 10-Q)).

                                       72
<PAGE>


   10.9  --   Second Amendment to Credit Agreement dated as of
              September 15, 1999.  (Incorporated by reference to Exhibit 10.9
              to the Company's 1999 3Q 10-Q).

   10.10 --   Third  Amendment to Credit  Agreement  dated as of January 26,
              2001.  (Incorporated  by Reference to Exhibit 99.1 of the
              Company's Form 8-K dated February 12, 2001).

   12.1  --   Statement regarding computation of ratios.

   21.1  --   Subsidiaries of Registrant: Willscot Equipment, LLC,
              and Space Master International, Inc.

                                       73
<PAGE>


                                   SIGNATURES

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

                                            By: /s/ Gerard E. Keefe
                                                ------------------------
                                                Gerard E. Keefe
                                                Senior Vice President and
                                                Chief Financial Officer
Dated:  March 29, 2002

         KNOW  ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears  below   constitutes   and  appoints   Gerard  E.  Keefe,   his  or  her
attorney-in-fact,  with the power of substitution, for him or her in any and all
capacities,  to sign any  amendments  to this Report,  and to file the same with
exhibits  thereto  and  other  documents  in  connection  therewith,   with  the
Securities  and Exchange  Commission,  hereby  ratifying and confirming all that
each of said attorney-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.

         Name               Capacity                            Date
         ----               --------                            ----

/s/ Gerard E. Holthaus      Chairman, President, Chief          March 29, 2002
-------------------------
Gerard E. Holthaus          Executive Officer and Director

/s/ Gerard E. Keefe         Senior Vice President and           March 29, 2002
-------------------------
Gerard E. Keefe             Chief Financial Officer

/s/ Glenn A. Schultz        Controller                          March 29, 2002
-------------------------
Glenn A. Schultz

/s/ Barry P. Gossett        Chairman Emeritus of the            March 29, 2002
-------------------------
Barry P. Gossett            Board

/s/ James N. Alexander      Director                            March 29, 2002
-------------------------
James N. Alexander

/s/ Michael F. Finley       Director                            March 29, 2002
-------------------------
Michael F. Finley

                                       74
<PAGE>


         Name               Capacity                            Date
         ----               --------                            ----

/s/ Steven B. Gruber        Director                            March 29, 2002
-----------------------
Steven B. Gruber

/s/ Brian Kwait             Director                            March 29, 2002
-----------------------
Brian Kwait

/s/ David P. Spalding       Director                            March 29, 2002
-----------------------
David P. Spalding

                                       75
<PAGE>


                    SCOTSMAN HOLDINGS, INC. AND SUBSIDIARIES

           Schedule I - Condensed Financial Information of Registrant

<TABLE>
<CAPTION>

Condensed Balance Sheets                                                 December 31,
                                                              -----------------------------------
                                                                    2001             2000
                                                                    ----             ----
                                                                        (in thousands)

                  Assets
<S>                                                            <C>              <C>
         Cash                                                  $        2       $        3
         Investment in subsidiary                                  (7,991)         (30,598)
         Deferred income taxes                                      5,472            5,452
                                                                  -------         --------
                                                               $   (2,517)      $  (25,143)
                                                                  =======         ========

Liabilities and Stockholders' Deficit
         Accrued expenses                                      $       13       $       12
                                                                  -------         --------

         Stockholders' deficit:
                  Common stock                                         95               95
                  Additional paid-in capital                      229,101          229,101
                  Retained earnings                                64,134           41,505
                                                                 --------         --------
                                                                  293,330          270,701
                  Treasury stock                                 (295,860)        (295,856)
                                                                  -------          -------
                                                                   (2,530)         (25,155)
                                                                    -----           ------
                                                               $   (2,517)      $  (25,143)
                                                                   ======           ======
</TABLE>
<TABLE>
<CAPTION>

Condensed Statements of Operations                                           Year Ended December 31,
                                                                   -----------------------------------------
                                                                       2001         2000          1999
                                                                       ----         ----          ----
                                                                               (In thousands)

<S>                                                                <C>            <C>           <C>
         Revenue                                                   $    --        $    --       $    --

         Selling, general and administrative expenses                   57             55            55
         Interest                                                       --             --            --
                                                                    ------         ------        ------
                                                                        57             55            55
                                                                    ------         ------        ------

                  Loss before income taxes                             (57)           (55)          (55)
         Income tax benefit                                             20             19            19
                                                                    ------         ------        ------

                  Loss before equity in earnings of
                     subsidiaries and extraordinary item               (37)           (36)          (36)

         Equity in earnings of subsidiaries                         22,666         16,119        17,307
                                                                   -------        -------       -------
                  Net income                                       $22,629        $16,083       $17,271
                                                                   =======        =======       =======
</TABLE>

                                       76
<PAGE>


                    SCOTSMAN HOLDINGS, INC. AND SUBSIDIARIES

      Schedule I - Condensed Financial Information of Registrant, Continued


<TABLE>
<CAPTION>


Statement of Cash Flows                                                     Year Ended December 31,
                                                                      ----------------------------------
                                                                        2001          2000         1999
                                                                        ----          ----         ----
                                                                                 (in thousands)
Cash flows from operating activities:
<S>                                                                  <C>            <C>          <C>
         Net income                                                  $22,629        $16,083      $17,271
         Adjustments to reconcile net income to net cash
            provided by (used in) operating activities:
               Deferred income tax benefit                               (20)           (20)         (19)
               Undistributed earnings of subsidiary                  (22,666)       (16,119)     (17,307)
               Other                                                      --              1           (1)
                                                                     -------        -------      -------

                   Net cash used in operating activities                 (57)           (55)         (56)
                                                                     -------        -------      -------

Cash flows from financing activities:
         Dividends received from subsidiary                               60             55           55
         Payments to acquire treasury stock                               (4)            --           --
                                                                     -------        -------      -------

                  Net cash provided by financing activities               56             55           55
                                                                     -------        -------      -------

                  Net (decrease) increase in cash                         (1)            --           (1)
         Cash at beginning of period                                       3              3            4
                                                                     -------        -------      -------
         Cash at end of period                                       $     2        $     3      $     3
                                                                     =======        =======      =======
</TABLE>

                                       77
<PAGE>


                    SCOTSMAN HOLDINGS, INC. AND SUBSIDIARIES

                 Schedule II - Valuation and Qualifying Accounts

<TABLE>
<CAPTION>


                                                                       Year ended December 31,
                                                              ------------------------------------------
                                                                2001              2000             1999
                                                                ----              ----             ----
                                                                            (In thousands)
Allowance for Doubtful Accounts:
<S>                                                             <C>              <C>              <C>
     Balance at beginning of the period                         $  983           $1,058           $  839
     Provision charged to expense                                4,204            3,697            2,254
     Acquired allowance                                              -                -              115
     Accounts receivable written-off                            (3,889)          (3,772)          (2,150)
                                                                 -----            -----            -----

     Balance at end of the period                               $1,298           $  983           $1,058
                                                                 =====            =====            =====
</TABLE>

                                       78
<PAGE>


                              EXHIBITS TO FORM 10-K
                             SCOTSMAN HOLDINGS, INC.
                                  EXHIBIT INDEX

                                                               Sequentially
                                                                 Numbered
Exhibit No.       Description of Document                           Page
-----------       -----------------------                      --------------

12.1 --           Statement regarding computation of ratios.        80

                                       79
<PAGE>


                                                                 Exhibit 12.1

                    SCOTSMAN HOLDINGS, INC. AND SUBSIDIARIES

                Computation of Ratio of Earnings to Fixed Charges

<TABLE>
<CAPTION>



                                                                          Year Ended December 31
                                                      -------------------------------------------------------------
                                                         1997         1998        1999         2000          2001
                                                         ----         ----        ----         ----          ----
                                                                         (Dollars in thousands)
Earnings:
     Earnings from continuing
       operations before income taxes
<S>                                                    <C>          <C>         <C>          <C>           <C>
       and extraordinary item                          $ 9,965      $12,456     $ 31,965     $ 31,021      $ 40,214
     Fixed charges from below                           44,900       67,346       86,817       95,140        89,316
                                                        ------       ------      -------      -------       -------
       Total earnings                                  $54,865      $79,802     $118,782     $126,161      $129,530
                                                        ------       ------      -------      -------       -------

Fixed Charges:
     Interest                                          $43,611      $65,110     $ 83,878     $ 91,860      $ 85,486
       Interest component of rent expense:
       Total rent expense                              $ 3,866      $ 6,708     $  8,817     $  9,839      $ 11,490
       Portion considered interest expense                 33%          33%          33%          33%           33%
                                                       -------      -------      -------       ------       -------
         Interest component                            $ 1,289      $ 2,236     $  2,939     $  3,280      $  3,830
                                                       -------      -------      -------      -------       -------
         Total fixed charges                           $44,900      $67,346     $ 86,817     $ 95,140      $ 89,316
                                                       -------      -------       ------       ------        ------

Earnings to Fixed Charges                                 1.2x         1.2x         1.4x         1.3x          1.5x
                                                          ====         ====         ====         ====          ====

</TABLE>
                                       80