SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

(Mark One)   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   [X]                SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 1996
                                      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: 033-68444

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

               Delaware                                 52-1862719
    (State or other juri sdiction 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 28, 1997,  3,472,968 shares of the common stock ("Common Stock")
of the Registrant were outstanding.



<PAGE>


                                     PART I
Item 1.  Business

General

     Scotsman  Holdings,  Inc.  ("Holdings" or the  "Company") was  incorporated
under  the laws of  Delaware  in  November  1993 for the  purpose  of  acquiring
Williams Scotsman,  Inc.,  formerly The Scotsman Group, Inc.  ("Scotsman").  The
Company  conducts  business solely as a holding  company,  the only  significant
asset of which is the capital stock of Scotsman.  Therefore,  any cash dividends
to be paid on the Company's  common stock,  or cash interest to be paid on notes
of the  Company,  are  dependent  upon the cash  flows of  Scotsman.  Based upon
management's  assessment of the industry,  the Company believes that Scotsman is
the second  largest lessor of mobile office units in the United States as ranked
by lease fleet size and revenues.  Scotsman  maintains a fleet of  approximately
40,600  units  which are  leased  through a network  of 56 branch  offices in 32
states. To a lesser extent, Scotsman also sells new and used mobile office units
and sells and leases modular  structures.  Scotsman's products provide flexible,
relocatable,   cost-effective  and  timely  solutions  for  space  requirements.
Scotsman  has over  12,500  customers  operating  in  approximately  450 diverse
industries including education,  utilities, health care, chemicals,  engineering
services and construction.

     Scotsman's  primary  business is the leasing of mobile office units.  These
units  typically  range in size from eight to 14 feet in width and 16 to 70 feet
in length and are generally  constructed using a steel frame  undercarriage with
an exterior of wood or aluminum.  Scotsman has the  flexibility to readily adapt
its lease fleet units to meet a wide  variety of  customer  needs.  Units can be
configured  using any  combination  of Scotsman's  standard  products  which are
offered in a variety of sizes and floor plans.  The basic  functional  design of
mobile office units has remained virtually  unchanged since the inception of the
industry in the 1940s.  Mobile  office units are  extremely  durable and, due in
part to an active  maintenance  program,  Scotsman's  units retain a significant
percentage of their original value. Scotsman's lease fleet units have an average
age of  approximately  eight  years and an  estimated  economic  useful  life of
approximately 20 years.

     To a lesser  extent,  Scotsman  also  sells,  leases and  services  modular
structures,   which  compete  with  conventional  space  alternatives.   Modular
structures revenues represented less than 1% of total revenues in the year ended
December 31, 1996.  Each modular  structure  typically is three thousand  square
feet or more in size and  comprises  several  smaller  units which are assembled
into a single structure at the building site.  Modular  structures can generally
be dismantled and refurbished as individual  mobile office units and returned to
Scotsman's lease fleet.

     On December 16, 1993,  Holdings  acquired all of the issued and outstanding
capital  stock of Scotsman.  In  connection  with the  acquisition,  and related
refinancing  (the  "Acquisition"),  Scotsman  issued  $165.0  million  aggregate
principal amount of 9 1/2% Senior Secured Notes Due 2000 and entered into a Loan
and Security  Agreement  with  Congress  Financial  Corporation  and the Company
issued $20.6  million of  convertible  promissory  notes (the "3.83%  Notes") to



                                       1
<PAGE>


Odyssey Partners. Upon consummation of the Acquisition, Scotsman retired certain
existing  indebtedness  consisting of $175.0 million  principal amount of 11.31%
Senior Secured notes and a $15.6 million senior secured credit facility.

     Scotsman  and its  predecessors  have  operated  in the  mobile  office and
modular  structures  industry since 1945. In 1990 Scotsman more than doubled its
size through the combination (the "Williams  Merger") of Scotsman  Manufacturing
Co.,  Inc.  ("Scotsman   Manufacturing")  with  Williams  Mobile  Offices,  Inc.
("Williams").  Since  1990,  Scotsman  has  substantially  eliminated  duplicate
functions of the two predecessor companies, eliminated manufacturing operations,
and  repositioned   itself  to  significantly   reduce  its  modular  structures
operations  and  focus on its  core  leasing  activities,  which  accounted  for
substantially all of the total gross profit in the year ended December 31, 1996.

     Scotsman purchases its new units through  third-party  suppliers.  Scotsman
believes there are numerous  manufacturers  and suppliers of mobile office units
and  modular  structures  which  supply  these  products at  competitive  prices
throughout  the United  States.  Scotsman  anticipates  being able to procure an
adequate  supply of product on acceptable  terms for its  projected  operational
requirements.  Scotsman  does  not  believe  that  the  loss  of any  one of its
suppliers would have a material adverse effect on its operations.

Recent Developments

     The  Company  has  announced  that  it  is  considering  various  strategic
alternatives,  including a sale of the Company. In this connection, Holdings has
retained  Goldman,  Sachs  & Co.  as  its  financial  advisor.  There  can be no
assurance that any transaction will be consummated.

Operating Strategy

     Due to the local and regional nature of its business,  Scotsman's goals are
to become the leader in each of the local  markets in which it  competes  and to
expand its coverage to additional local markets.  To achieve market  leadership,
Scotsman has 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.  Scotsman  believes
that it is generally the first or second largest  provider of relocatable  space
in each of its  regional  markets as measured by lease fleet size and  revenues.
Scotsman's  branch offices are distributed  throughout the United States and are
located in the majority of the major metropolitan areas.

     To further its market  leadership,  expand its coverage to additional local
markets and leverage its existing cost structure,  Scotsman plans to continue to
capitalize  on the  industry's  fragmentation  by acquiring  mobile office lease
fleets.  During 1994,  Scotsman acquired  approximately  5,500 units through the


                                       2
<PAGE>


acquisition of Mobile  Holdings,  Inc. ("MFO") in September and from other lease
fleet  acquisitions.  During  1995  and  1996,  Scotsman  acquired  a  total  of
approximately  3,600 units through the acquisition of various lease fleets.  See
note 1 of Notes to Financial  Statements  included  elsewhere herein.  Increased
penetration in existing markets through  acquisitions of competitors  allows the
elimination of duplicate branch offices and overhead,  an expanded customer base
and facilitates  higher  profitability.  Expanded  coverage to additional  local
markets  allows  Scotsman  to  capitalize  on   market-specific   opportunities,
diversify geographically and further leverage its cost structure.

Competition

     Although Scotsman's  competition varies significantly by market, the mobile
office and  modular  structure  industry,  in  general,  is highly  competitive.
Scotsman competes primarily in terms of product  availability,  customer service
and price.  Scotsman  believes that its reputation for customer  service and its
ability to offer a wide  selection  of units  suitable  for many  varied uses at
competitive  prices  allow  it  to  compete  effectively.  However,  certain  of
Scotsman's competitors are less leveraged,  have greater market share or product
availability  in a given  market  and  have  greater  financial  resources  than
Scotsman.

Employees

     At December 31, 1996,  Scotsman  employed 607 persons.  None of  Scotsman's
employees are covered by a collective bargaining  agreement.  Scotsman considers
its relationship with its employees to be good.

     The Company has no employees other than its officers,  all of whom are also
officers of Scotsman.

Regulatory Matters

     Scotsman must comply with various federal,  state and local  environmental,
health  and safety  laws and  regulations  in  connection  with its  operations.
Scotsman  believes  that  it  is  in  substantial   compliance  with  applicable
environmental, health and safety laws and regulations. In addition to compliance
costs,  Scotsman  may  incur  costs  related  to  alleged  environmental  damage
associated  with past or  current  properties  owned or  leased by it.  Scotsman
believes that its liability, if any, for any environmental remediation will have
no material adverse effect on its financial condition.



                                       3
<PAGE>


Item 2.  Properties

     Scotsman's  headquarters is a three-story  modular office structure located
on 3.1 acres in suburban Baltimore,  Maryland.  The location,  ownership status,
approximate  size and primary use of Scotsman's  other principal  properties are
set forth in the table below.
<TABLE>
<CAPTION>


                              Ownership     Size
Location                       Status     In Acres        Primary Use
--------                       ------     --------        -----------
<S>                           <C>            <C>             <C>

Albuquerque, NM                Owned        2.0          Branch Office
Albuquerque, NM                Leased       1.7          Drop Lot
Allentown, PA                  Leased       4.8          Branch Office
Atlanta, GA                    Owned        6.2          Branch Office
Atlanta, GA                    Owned        30.82        Branch Office (future)
Baltimore, MD                  Owned        7.3          Branch Office
Berlin, NJ                     Owned        26.0         Branch Office
Birmingham, AL                 Leased       4.9          Branch Office
Boise, ID                      Leased       2.0          Branch Office
Casper, WY                     Leased       2.0          Branch Office
Charles City, VA               Owned        9.2          Branch Office (future)
Charleston, SC                 Leased       3.0          Branch Office
Charleston, SC                 Owned        1.5          Branch Office
Charlestown, WV                Leased       10.5         Branch Office
Cherry Hill, NJ                Owned        4.3          Branch Office
Cherry Hill, NJ                Leased       18.6         Branch Office (future)
Cherry Hill (Mt. Laurel), NJ   Leased       7.5          Storage Lot
Cheshire, CT                   Leased       9.6          Branch Office
Chicago, IL                    Owned        6.5          Branch Office
Cincinnati, OH                 Owned        6.2          Branch Office
Cleveland, OH                  Owned        8.0          Branch Office
Columbus, OH                   Leased       1.1          Branch Office
Dallas, TX                     Leased       4.4          Branch Office
Denver, CO                     Leased       4.0          Branch Office
Detroit, MI                    Leased       4.6          Branch Office
Durham, NC                     Leased       4.4          Branch Office
Ellwood City, PA               Leased       5.0          Storage Lot
Fresno, CA                     Leased       3.5          Branch Office
Ft. Lauderdale, FL             Leased       6.0          Branch Office
Ft. Myers, FL                  Owned        8.9          Branch Office
Ft. Myers, FL                  Owned        1.9          Storage Lot
Grand Junction, CO             Leased       0.65         Branch Office
Houston, TX                    Owned        7.87         Branch Office
Jacksonville, FL               Leased       2.3          Branch Office
Langhorne, PA                  Leased       *            Sales Office
Kansas City, MO                Leased       2.19         Branch Office
Irmo, SC                       Owned        5.0          Branch Office
Kingwood, TX                   Leased       *            Administrative Office
Kinston, NC                    Leased       3.0          Storage Lot




                                       4
<PAGE>



Lafayette, LA                  Leased       4.0          Branch Office
Las Vegas, NV                  Leased       2.5          Branch Office
Long Island, NY                Leased       3.1          Storage Lot
Louisville, KY                 Leased       3.0          Branch Office
Manassas, VA                   Leased       2.7          Branch Office
Mira Loma, CA                  Leased       17.0         Branch/Storage
Mobile, AL                     Leased       3.0          Branch Office
New Orleans, LA                Leased       10.15        Branch Office
Norfolk, VA                    Leased       5.5          Branch Office (future)
North East, MD                 Owned        33.1         Leased Property
Orlando, FL                    Leased       5.5          Branch Office
Orlando, FL                    Owned        4.0          Service Facility
Pelham, NH                     Owned        16.0         Branch Office
Phoenix, AZ                    Leased       2.2          Branch Office
Phoenix, AZ                    Leased       10.0         Branch Office (future)
Pittsburgh, PA                 Leased       2.0          Branch Office
Portland, OR                   Leased       1.3          Branch Office
Richmond, VA                   Owned        6.6          Branch Office
Riverside, CA                  Leased       13.5         Branch Office
Rotterdam, NY                  Leased       2.1          Branch Office
Salt Lake City, UT             Leased       4.7          Branch Office
San Antonio, TX                Leased       2.6          Branch Office
San Diego, CA                  Leased       1.3          Branch Office
Santa Fe Springs, CA           Leased       16.5         Branch Office
Seattle, WA                    Leased       1.4          Branch Office
South Kearny, NJ               Leased       5.0          Branch Office
St. Charles, MO                Leased       2.5          Branch Office
Statesville, NC                Leased       3.0          Storage Lot
Syracuse, NY                   Leased       5.0          Branch Office
Tampa, FL                      Owned        4.8          Branch Office
Tulsa, OK                      Leased       2.1          Branch Office
Tulsa, OK                      Owned        4.3          Branch Office
Vacaville, CA                  Leased       11.0         Branch Office

*    Less than .1 acre.
     ---------------
</TABLE>

     Scotsman  believes  that its  existing  owned  and  leased  facilities  are
adequate for its operations.

Item 3.  Legal Proceedings

     Scotsman is  involved  in certain  legal  actions  arising in the  ordinary
course  of  business.  Scotsman  believes  that  none of these  actions,  either
individually  or in the  aggregate,  will have a material  adverse effect on its
business, results of operations or financial condition.

     The Company is not a party to any legal proceedings.




                                       5
<PAGE>



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

     None.



































                                       6
<PAGE>

                                     PART II

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

     There is no  established  public  trading  market for the Company's  Common
Stock.

     During 1996, Scotsman paid dividends to the Company in the aggregate amount
of $2,070,000, in accordance with provisions of the Note Indenture.  Neither the
Company nor Scotsman  intends to pay any further  dividends  in the  foreseeable
future but reserves the right to do so.

     Pursuant to the Scotsman  Holdings,  Inc. 1994  Employee  Stock Option Plan
(the "Plan"),  options for 115,050  shares of Holdings were granted during 1996.
No shares of Holdings' common stock were issued during 1996 upon the exercise of
the options  previously granted under the Plan. This transaction was exempt from
the  registration  requirements  of the  Securities  Act of  1933,  as  amended,
pursuant to Section 4(2) thereunder.



                                       7
<PAGE>


                   ITEM 6. SELECTED HISTORICAL FINANCIAL DATA

The following tables summarize  certain  selected  historical  financial data of
Scotsman,  the  predecessor  company,  and the company  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 for the fiscal
years ended December 31, 1992,  1993,  1994,  1995 and 1996 and as of the end of
each of such periods have been derived from the audited Financial Statements.

<TABLE>
<CAPTION>

                                               Fiscal Years Ended (1)
                                               ----------------------
                                          Scotsman             Company
                                          --------       --------------------
                                       1992     1993     1994    1995    1996
                                       ----     ----     ----    ----    ----
                                                (Dollars in thousands)
Statement of Operations Data:
Revenues:
<S>                                <C>       <C>      <C>      <C>      <C>
 Leasing                           $  72,744 $ 73,384 $ 79,342 $ 96,498 $116,769
 New units sales                      27,709   18,501   22,290   23,126   28,042
 Delivery and installation            28,369   24,237   26,511   28,162   32,767
 Other                                 3,712    3,011    5,832   10,734   17,568
                                   --------- -------- -------- -------- --------
                  Total             $132,534 $119,133 $133,975 $158,520 $195,146
--------------------------------------------------------------------------------
Gross profit:
 Leasing                              41,146 $ 39,340 $ 39,960 $ 49,978  $59,534
 New unit sales                        3,354    2,534    2,854    3,853    4,999
 Delivery and installation             4,874    3,363    4,942    6,114    7,520
 Other                                 2,515    1,639    4,285    8,108   13,594
                                    -------- -------- -------- -------- --------
                  Total             $ 51,889 $ 46,876 $ 52,041 $ 68,053 $ 85,647
--------------------------------------------------------------------------------
Selling, general and administrative
 expenses                           $ 28,237 $ 24,264 $ 29,376 $ 36,366 $ 42,320
Restructuring costs (2)                1,921    6,082      912      ---      ---
Earnings (loss) from continuing
 operations before extraordinary item   (582)  (3,841)    (432)   2,679    7,086
Earnings (loss) from continuing
 operations before extraordinary
 item per common share                 (0.17)   (1.15)   (0.13)    0.77     2.08
                                        ====     ====     ====     ====     ====
Ratio of earnings to fixed charges (3)  1.0x     0.7x     1.0x     1.2x     1.4x
--------------------------------------------------------------------------------
                                    Scotsman               Company
                                    -------- -----------------------------------
Balance Sheet Data (4):
Rental equipment, net               $209,388 $246,550 $283,181 $324,207 $356,183
Total assets                         263,287  296,062  336,786  384,616  429,546
Long-term debt                       191,019  197,044  226,879  265,812  294,827
Stockholder's equity                  17,585   36,421   38,667   41,346   46,443
--------------------------------------------------------------------------------
</TABLE>


                                       8
<PAGE>



(1)  On  December  16,  1993,  the  Company  purchased  all  of the  issued  and
     outstanding stock of Scotsman.  The acquisition was accounted for under the
     purchase method of accounting by Holdings and, accordingly,  the total cost
     was allocated to the assets acquired and liabilities assumed based on their
     estimated fair values.  Scotsman  restated its balance sheet to "push down"
     the effects of the purchase accounting adjustments.

(2)  Restructuring  costs consist primarily of costs incurred in connection with
     the acquisition of Scotsman by Holdings in December 1993.

(3)  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.

(4)  Balance sheet data at December 31, 1993 reflect the acquisition of Scotsman
     by the  Company  and the related  "push  down" of the  purchase  accounting
     adjustments. See note (1) above.



                                       9
<PAGE>


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

     The following  discussion  regarding the financial condition and results of
operations  of the Company for the three  fiscal  years ended  December 31, 1996
should be read in conjunction  with the more detailed  information and Financial
Statements included elsewhere herein.

General

     The Company is a holding  company formed in November 1993, and conducts its
business solely through Scotsman, its wholly-owned subsidiary.  Scotsman derives
its revenues and earnings  from the leasing and sale of mobile  office units and
modular  structures  and their  delivery and  installation.  Leasing  operations
account for a majority of  Scotsman's  revenues and gross  profits and primarily
comprise  the  leasing  of  mobile  office  units  and the  sale of  units  from
Scotsman's  lease  fleet.  Used mobile  office units are sold by Scotsman in the
ordinary  course of its  business  at either  fair  market  value or pursuant to
pre-established  lease  purchase  options.  Scotsman's  cash flow  from  leasing
operations is favorably affected by the sale of used units from Scotsman's lease
fleet,  as the costs of such units  generally  have been  incurred  in  previous
fiscal periods.  Accordingly, the sale of used units results in the availability
of the total cash proceeds and 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  rented  by  Scotsman,  and  from  the sale of  modular
structures.  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 the sale of parts,
granting of insurance waivers and other services provided by Scotsman.

     Scotsman's  business is affected by the economic conditions of the local or
regional markets in which it operates.  Economic  conditions have an impact upon
rental rates, fleet utilization and new unit sales. Scotsman,  however, believes
that mobile office leasing is less affected by unfavorable  economic  conditions
than its other  operations and that during periods of economic  uncertainty many
businesses  postpone or delay making major capital  expenditures for space needs
and instead choose the flexibility and lower cost of leasing mobile offices.



                                       10
<PAGE>


Results of Operations

     Fiscal 1996 Compared With Fiscal 1995.  Revenues in fiscal 1996 were $195.1
million,  a $36.6 million or 23.1%  increase from revenues of $158.5  million in
fiscal 1995.  The increase  resulted from a $20.3  million or 21.0%  increase in
leasing revenue,  a $4.9 million or 21.3% increase in new sales revenue,  a $4.6
million or 16.4%  increase  in  delivery  and  installation  revenue  and a $6.8
million or 63.3% increase in other revenue.  The increase in leasing  revenue is
attributable  to a 10%  increase  in the average  lease  fleet to  approximately
38,600 units, an increase in the average fleet utilization of approximately four
percentage  points to 85% and an increase of $10 in the average  monthly  rental
rate.  The increase in new sales revenue is primarily due to the overall  branch
expansion that the Company has experienced during 1995 and 1996. The increase in
delivery  and  installation  revenue is  attributable  to the  increases  in the
leasing and new unit sales revenue described above. Other revenue increased as a
result of  increases  in the  rental of steps,  ramps and  furniture  as well as
miscellaneous revenue related to services provided for customer-owned units.

     Gross  profit in fiscal 1996 was $85.6  million,  a $17.6  million or 25.8%
increase  from  fiscal  1995 gross  profit of $68.1  million.  This  increase is
primarily  a result of an increase in leasing  gross  profit of $9.6  million or
19.1% and gross profit from other revenue of $5.5 million or 67.6%. The increase
in gross  profit from  leasing is a result of the  increase  in leasing  revenue
described above while the leasing profit margins dropped slightly.  This decline
in leasing  profit  margins is a result of the  increases  in  depreciation  and
amortization   expense   during   fiscal  1996.   Excluding   depreciation   and
amortization,  leasing margins increased from 76.1% for fiscal 1995 to 77.2% for
fiscal  1996.  The  increase in gross  profit  from other  revenue is due to the
increase in other revenue described above.

     Selling,  general and  administrative  (S,G&A)  expenses  increased by $6.0
million or 16.4% from fiscal 1995, primarily due to an increase in field related
expenses. This increase is a result of the branch expansion activity experienced
by the Company  during  fiscal 1995 and 1996 and is  comprised of a $3.6 million
increase  in  personnel  expenses  and a  $0.7  million  increase  in  occupancy
expenses.

     Interest  expense  increased by 14.3% to $28.9  million in fiscal 1996 from
$25.3  million  in fiscal  1995  primarily  as a result of the  increase  in the
average  balances  outstanding  under Scotsman's  revolving line of credit.  The
increase is due to financing the fleet  expansion and growth  experienced by the
Company during 1996.

     Fiscal 1995 Compared With Fiscal 1994.  Revenues in fiscal 1995 were $158.5
million,  a $24.5 million or 18.3%  increase from revenues of $134.0  million in
fiscal  1994.  The increase  resulted  primarily  from a $17.2  million or 21.6%
increase  in  leasing  revenue  and a $4.9  million or 84.1%  increase  in other
revenue.  The increase in leasing revenue is attributable to a 23.9% increase in



                                       11
<PAGE>


the average  lease fleet to  approximately  35,000 units,  while average  rental
rates declined slightly due to a change in the fleet mix and utilization dropped
slightly.  The increase in the fleet  reflects the  acquisition  activity by the
Company  during 1995 as well as general fleet  expansion.  The increase in other
revenue  is  due to the  overall  increases  in  revenue  enhancement  programs,
primarily  the  rental of steps,  as well as  miscellaneous  revenue  related to
services provided for customer-owned units.

     Gross  profit in fiscal 1995 was $68.1  million,  a $16.0  million or 30.8%
increase  from  fiscal  1994 gross  profit of $52.0  million.  This  increase is
primarily a result of an increase in leasing  gross  profit of $10.0  million or
25.1% and gross  profit from other  revenue  which  increased by $3.8 million or
89.2%.  The increase in gross profit from leasing is a result of the increase in
leasing  revenue  described  above as well as an increase in the leasing  profit
margin to 51.8% from 50.4% in 1994.  Excluding  depreciation  and  amortization,
leasing margins increased from 74.1% in fiscal 1994 to 76.1% in fiscal 1995. The
increase  in gross  profit  from other  revenue is due to the  increase in other
revenue described above.

     Selling,  general and  administrative  (S,G&A)  expenses  increased by $7.0
million or 23.8% from fiscal 1994.  This increase is comprised of a $5.1 million
increase in field related expenses,  a $0.8 million increase in expenses related
to the deferred  compensation  plan and a $1.1  million  increase in other S,G&A
expenses.  The increase in field  related  expenses is the result of lease fleet
acquisitions  and branch  expansion  activity  experienced by the Company during
fiscal 1995 and is comprised  primarily of a $3.9 million  increase in personnel
expenses and a $0.9 million increase in occupancy expenses.

     Interest  expense  increased  by 19.9% to $25.3  million in 1995 from $21.1
million in fiscal  1994  primarily  as a result of the  increase  in the average
balances outstanding under Scotsman's revolving line of credit during 1995. This
increase is the result of financing fleet expansion and acquisitions made by the
Company.

Liquidity and Capital Resources

     During fiscal 1994, 1995 and 1996,  Scotsman's  principal  sources of funds
consisted of cash flow from  operating  and  financing  sources.  Cash flow from
operating  activities of $21.6  million in fiscal 1994,  $33.8 million in fiscal
1995 and $46.0  million in fiscal  1996 was  largely  generated  by its  leasing
operations  which included the rental and sale of units from the Company's lease
fleet.  Mobile office leasing  operations  have been the most reliable source of
the Company's cash flow.

     The Company has increased its EBITDA and believes that EBITDA  provides the
best indicator of its financial performance and provides the best measure of its
ability to meet historical debt service requirements. The Company defines EBITDA
as  net  income  before  depreciation,  amortization,  interest,  provision  for



                                       12
<PAGE>


deferred  compensation,  and income taxes. EBITDA as defined by the Company 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 the Company's operating performance. The Company's
EBITDA  increased  by $18.8  million or 33.4% to $75.3  million  in fiscal  1996
compared to $56.5 million in fiscal 1995. This increase in EBITDA is a result of
increased leasing activity  resulting from the overall increase in the number of
units in the fleet,  and new unit sales activity,  partially offset by increased
SG&A expenses to support the increased activities during fiscal 1996.

     Cash flow used in investing  activities  was $46.7  million in fiscal 1994,
$68.0  million  in fiscal  1995 and $70.0  million  in fiscal  1996.  Scotsman's
primary  capital  requirements  are for the  purchase of new units for its lease
fleet and units purchased  through  acquisition.  Scotsman seeks to maintain its
lease fleet in good  condition at all times and generally  increases the size of
its lease fleet only in those local or regional  markets  experiencing  economic
growth. During fiscal 1994, 1995 and 1996, Scotsman significantly  increased its
net capital  expenditures  through  purchases of new units for the rental fleet,
capital  improvements and betterments for existing units and the acquisitions of
existing rental fleets including the acquisition of MFO in 1994,  increasing the
size of the rental fleet by  approximately  8,000 units during 1994, 4,000 units
during 1995 and 3,000 during 1996.  This  increased  activity was in response to
increased  customer  demand and the  implementation  of  Scotsman's  acquisition
strategy.  The  following  table sets forth  Scotsman's  investment in its lease
fleet for the periods indicated.

<TABLE>
<CAPTION>

                                                         Fiscal Years Ended
                                                            December 31,
                                                            ------------
                                                 1994         1995         1996
                                                 ----         ----         ----
                                                      (Dollars in millions)

Gross capital expenditures for rental
 equipment:
<S>                                              <C>          <C>          <C>
   Acquisitions..............................    $21.2        $25.0        $3.1
   New units and betterments.................     40.6         47.1        69.2
                                                 -----        -----        ----
                                                  61.8         72.1        72.3
Book values of sold, used units..............     (6.4)        (7.7)       (9.7)
                                                 -----        -----        ----
Net capital expenditures for rental
  equipment..................................    $55.4        $64.4       $62.6
                                                 =====        =====       =====
Lease fleet maintenance expenses.............    $13.9        $15.3       $16.7
                                                 =====        =====       =====
</TABLE>

     Scotsman  believes  it can manage its  capital  requirements  for its lease
fleet, and thus its cash flow, through the careful monitoring of its lease fleet
additions.  For instance,  Scotsman believes that during an economic downturn it



                                       13
<PAGE>



can sell used units while limiting additions to its lease fleet to maintain cash
flow.  Selling used units during an economic  downturn may result in lower sales
prices for the Units. During fiscal 1994, 1995 and 1996, selling prices for used
units (excluding units sold pursuant to purchase options) averaged approximately
102%, 101% and 97%,  respectively,  of total  capitalized cost of the unit. Such
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 Notes to Financial
Statements.  Historically, Scotsman has recognized net gains on the sale of used
units.

     Lease  fleet  maintenance  expenses  represent  the  costs  for  repairing,
refurbishing  and servicing  used units and are included in  Scotsman's  cost of
leasing.  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 composition are capitalized.  Scotsman's  maintenance and refurbishment
program is designed to help (i) maintain the value of lease fleet units and (ii)
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 high
quality of Scotsman's lease fleet and enhances cash flow.

     Other capital expenditures of $1.2 million,  $6.9 million and $10.3 million
in  fiscal,  1994,  1995  and  1996,  respectively,  consist  of  those  capital
expenditures for items not directly related to the lease fleet such as branch or
headquarters  equipment,   leasehold  improvements  and  management  information
systems.

     Cash  provided by financing  activities  was $24.3  million in 1994,  $33.8
million in 1995 and $24.0  million in 1996.  Cash flow was  generated  primarily
from net borrowings of long term debt, proceeds from issuance of common stock in
1994, offset by the purchase of treasury stock in 1996.

     Scotsman's credit facility, at December 31, 1996, provides for a total line
of credit up to an  aggregate  principal  amount of $120.0  million  at any time
outstanding.  Effective  January 31, 1997,  the facility was amended to increase
the total line of credit to an aggregate principal amount of $140.0 million. The
credit facility has three components, as amended: (i) a revolving line of credit
in an aggregate  amount of up to $20.0 million at any one time outstanding to be
used by Scotsman for general  operating and working capital purposes of Scotsman
and other corporate purposes (other than non-ordinary course acquisitions), (ii)
a line of credit in an amount of up to $110.0 million to be used to purchase new
fleet or to pay the cash purchase price (and related  expenses) for future arm's
length  acquisitions  of assets  or stock of  companies  in the same or  similar
businesses  as the business in which  Scotsman is currently  engaged and (iii) a
line of credit in an aggregate  amount of up to $10.0  million which may be used
either for the purposes  described in subsection (i) or subsection (ii) above at
Scotsman's  option.  The credit  facility,  as amended,  matures on December 16,
1997,  and is  secured  by a first  lien on  substantially  all of the assets of
Scotsman  and can be extended to December 16, 1998 at the option of the Company.
Approximately  $103.8  million  is  outstanding  under the  credit  facility  at



                                       14
<PAGE>



December 31, 1996. The credit facility contains certain financial  covenants and
provides  for  certain  events  of  default  as  are  customarily  contained  in
facilities of a similar type.

     Interest on the loans  under the credit  facility,  as amended,  is payable
monthly  at the rate of 0.25% per annum in excess of the prime rate from time to
time publicly  announced by Philadelphia  National Bank,  changing  monthly with
each  change in prime  rate or 2.50%  per  annum in  excess  of LIBOR,  with the
applicable rate to be selected at Scotsman's option.

     The  Company  believes  that  Scotsman  will have,  for the next 12 months,
sufficient  liquidity  under its credit  facility and from cash  generated  from
operations to meet its expected obligations as they arise.

Seasonality

     Scotsman's  operations are somewhat seasonal,  with some effect on revenues
but little or no seasonal effect upon earnings.

Inflation

     Scotsman  believes  that  inflation  has not had a  material  effect on its
results of operations.  However,  an inflationary  environment  could materially
increase  interest  rates on Scotsman's  floating rate debt and the  replacement
cost of units in  Scotsman's  lease  fleet.  The  price  of used  units  sold by
Scotsman could also increase in such an environment.  In addition,  Scotsman may
seek to limit its exposure to interest rate  fluctuations  by utilizing  certain
hedging mechanisms, although it is under no obligation to do so.



                                       15
<PAGE>



Item 8.
                        INDEX TO FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULES

Financial Statements:
                                                                            Page
 Scotsman Holdings, Inc. and Subsidiaries:
   Independent Auditors' Reports............................................ 17
   Consolidated Balance Sheets as of December 31, 1996 and 1995............. 19
   Consolidated Statements of Operations for the years ended
     December 31, 1996, 1995 and 1994....................................... 20
   Consolidated Statements of Changes in Stockholders' Equity for the years
     ended December 31, 1996, 1995 and 1994................................. 21
   Consolidated Statements of Cash Flows for the years ended
     December 31, 1996, 1995 and 1994....................................... 22
   Notes to Consolidated Financial Statements............................... 24

Williams Scotsman, Inc. and Subsidiary:
   Independent Auditors' Reports............................................ 35
   Consolidated Balance Sheets as of December 31, 1996 and 1995............. 37
   Consolidated Statements of Operations for the years ended
     December 31, 1996, 1995 and 1994....................................... 38
   Consolidated Statements of Changes in Stockholders' Equity for the years
     ended December 31, 1996, 1995 and 1994................................. 39
   Consolidated Statements of Cash Flows for the years ended
     December 31, 1996, 1995 and 1994....................................... 40
   Notes to Consolidated Financial Statements............................... 42

Finacial Statement Schedules:
 Scotsman Holdings, Inc. and Subsidiaries:
   Schedule I - Condensed Financial Information of Registrant............... 69

 Williams Scotsman, Inc. and Subsidiary:
   Schedule II - Valuation and Qualifying Accounts.......................... 71

     All  schedules  not listed have been omitted  because of the absence of the
conditions under which they are required or the required information is included
elsewhere in the financial statements or notes thereto.



                                       16
<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, 1996 and 1995 and the related
consolidated  statements of operations,  stockholders' equity and cash flows for
the years then  ended.  Our audits  also  included  the 1996 and 1995  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 and schedules based on our audits.

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

In our opinion, the 1996 and 1995 consolidated  financial statements referred to
above  present  fairly,  in all material  respects,  the  financial  position of
Scotsman  Holdings,  Inc. and  subsidiaries as of December 31, 1996 and 1995 and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.  Also, in our opinion,
the related 1996 and 1995  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.

                                             ERNST & YOUNG LLP




Baltimore, Maryland
January 24, 1997



                                       17
<PAGE>




                          Independent Auditors' Report
                          ----------------------------





The Board of Directors
Scotsman Holdings, Inc.


We have audited the accompanying  consolidated statement of operations,  changes
in  stockholders'  equity  and  cash  flows  of  Scotsman  Holdings,   Inc.  and
subsidiaries (Holdings) for the year ended December 31, 1994. These consolidated
financial  statements  are  the  responsibility  of  Holdings'  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
Scotsman Holdings, Inc. and subsidiaries for the year ended December 31, 1994 in
conformity with generally accepted accounting principles.

                                        KPMG PEAT MARWICK LLP



Baltimore, Maryland
March 10, 1995









                                       18
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

                           Consolidated Balance Sheets


<TABLE>
<CAPTION>

                                                              December 31
                                                          1996           1995
                                                       -------------------------
                                                              (In thousands)
Assets
Cash, and temporary investments of
<S>      <C>      <C>     <C>                           <C>           <C>
  $13 in 1996 and $263 in 1995                          $   426       $    734
Trade accounts receivable, net of
  allowance for doubtful accounts of $258
  in 1996 and $447 in 1995 (Note 3)                       23,145        17,372
Prepaid expenses and other current assets                  9,295         7,048
Rental equipment, net of accumulated
   depreciation of $67,520 in 1996
and $40,162 in 1995 (Note 3)                             356,183       324.207
Property, plant and equipment, net(Notes 2 & 3)           29,032        21,088
Deferred financing costs, net                              6,268         8,712
Other assets                                               5,197         5,455
                                                       -------------------------
                                                        $429,546      $384,616
                                                       =========================
Liabilities and stockholders' equity
Accounts payable                                        $  9,826      $  6,667
Accrued expenses                                           9,957         9,078
Rents billed in advance                                   10,621         9,809
Long-term debt (Note 3)                                  294,827       265,812
Deferred compensation (Note 6)                             3,300         1,900
Deferred income taxes (Note 4)                            54,572        50,004
                                                       -------------------------
   Total liabilities                                     383,103       343,270
                                                       -------------------------

Stockholders' equity:
   Common stock, $.01 par value.  Authorized
     10,000,000 shares; issued and
     outstanding 3,472,968 shares                       $     35      $     35
   Additional paid-in capital                             39,064        39,064
   Retained earnings                                       9,333         2,247
                                                       -------------------------
                                                          48,432        41,346
Less treasury stock - 97,354 common shares at cost        (1,989)           --
                                                       -------------------------
   Net stockholders' equity                               46,443        41,346
                                                       =========================
                                                        $429,546      $384,616
                                                       =========================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       19
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

                      Consolidated Statements of Operations

<TABLE>
<CAPTION>


                                                      Year ended December 31
                                                   1996        1995       1994
                                              ----------------------------------
                                                      (In thousands except
                                                        per share amounts)
Revenues
<S>                                              <C>        <C>        <C>
Leasing                                          $116,769   $ 96,498   $ 79,342
Sales of new units                                 28,042     23,126     22,290
Delivery and installation                          32,767     28,162     26,511
Other                                              17,568     10,734      5,832
                                              ----------------------------------
         Total revenues                           195,146    158,520    133,975
                                              ----------------------------------
Cost of sales and services
Leasing:
   Depreciation and amortization                   30,588     23,417     18,804
   Other direct leasing costs                      26,647     23,103     20,578
Sales of new units                                 23,043     19,273     19,436
Delivery and installation                          25,247     22,048     21,569
Other                                               3,974      2,626      1,547
                                              ----------------------------------
         Total costs of sales and services        109,499     90,467     81,934
                                              ----------------------------------
         Gross profit                              85,647     68,053     52,041
                                              ----------------------------------

Selling, general and administrative expenses       42,320     36,366     30,288
Other depreciation and amortization                 2,411      1,851      1,349
Interest, including amortization of deferred
   financing costs of $2,557, $1,708,
   and $1,517                                      28,936     25,306     21,106
                                              ----------------------------------
         Total operating expenses                  73,667     63,523     52,743
                                              ----------------------------------

         Income (loss) before income taxes         11,980      4,530      (702)
Income tax expense (benefit) (Note 4)               4,894      1,851      (270)
                                              ----------------------------------
Net income (loss)                                $  7,086      2,679      (432)
                                              ==================================
Net income (loss) per common share               $   2.08   $    .77   $  (.13)
                                              ==================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       20
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

           Consolidated Statements of Changes in Stockholders' Equity


<TABLE>
<CAPTION>


                                        Common Stock         Additional
                                   ----------------------     Paid-in      Retained      Treasury
                                      Shares      Amount      Capital      Earnings        Stock       Total
                                   ------------------------------------------------------------------------------
                                                                  (In thousands)

<S>                                     <C>       <C>          <C>         <C>            <C>        <C>
Balance at December 31, 1993            3,245     $ 32         $36,389     $    -         $  -       $36,421
Issuance of common stock in
   connection with private
   placement of debt (Note 3)             174        2           2,040          -            -         2,042
Issuance of common stock                   54        1             635          -            -           636
Net loss                                    -        -               -       (432)           -          (432)
                                   ------------------------------------------------------------------------------
Balance at December 31, 1994            3,473       35          39,064       (432)           -        38,667

Net income                                  -        -               -      2,679            -         2,679
                                   ------------------------------------------------------------------------------
Balance at December 31, 1995            3,473       35          39,064      2,247            -        41,346
                                   ------------------------------------------------------------------------------

Purchase of 97,354 shares of
   treasury stock                         (97)       -               -          -        (1,989)      (1,989)
Net income                                  -        -               -      7,086            -         7,086
                                   ------------------------------------------------------------------------------
Balance at December 31, 1996            3,376     $ 35         $39,064     $9,333       $(1,989)     $46,443
                                   ==============================================================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       21
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                     Year ended December 31
                                                               1996               1995              1994
                                                           --------------------------------------------------
                                                                         (In Thousands)
Cash flows from  operating activities
<S>                                                           <C>               <C>               <C>
Net income (loss)                                             $ 7,086           $ 2,679           $  (432)
Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:
     Depreciation and amortization                             35,694            27,027            21,833
     Non-cash charges for interest                              2,819             2,533             1,162
     Provision for bad debts                                    2,209             1,509             1,207
     Deferred income tax expense (benefit)                      4,568             1,751              (370)
     Provision for deferred compensation                        1,400             1,375               525
     Gain on sale of rental equipment                          (2,618)           (2,080)           (1,620)
     Increase in net trade accounts receivable                 (7,982)               (4)           (2,072)
     Other                                                      2,790              (995)            1,385
                                                           --------------------------------------------------
         Net cash provided by operating activities             45,966            33,795            21,618
                                                           --------------------------------------------------

Cash flows from investing activities
Redemption of certificates of deposit                             250             1,255             1,267
Rental equipment additions                                    (72,277)          (72,096)          (45,174)
Proceeds from sales of rental equipment                        12,331             9,733             8,045
Purchase of property, plant and equipment, net                (10,284)           (6,871)           (1,286)
Net assets of business acquired, including rental
   equipment of $16,648 (Note 1)                                    -                 -            (9,538)
                                                           --------------------------------------------------
Net cash used in investing activities                        (69,980)           (67,979)          (46,686)
                                                           ==================================================
</TABLE>



                                       22
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

                Consolidated Statements of Cash Flows (continued)


<TABLE>
<CAPTION>

                                                                        Year ended December 31
                                                               1996            1995             1994
                                                           ----------------------------------------------
                                                                           (In Thousands)

Cash flows from financing activities
<S>                                                          <C>            <C>              <C>
Proceeds from long-term debt                                 $ 219,420      $ 204,389        $ 192,609
Repayment of long-term debt                                   (193,362)      (168,040)        (169,604)
Increase in deferred financing costs                              (113)        (2,555)          (1,348)
Proceeds from issuance of common stock                               -              -            2,678
Payments to acquire treasury stock                              (1,989)             -                -
                                                           ----------------------------------------------
Net cash provided by financing activities                       23,956         33,794           24,335
                                                           ----------------------------------------------
Net decrease in cash                                               (58)          (390)            (733)

Cash at beginning of period                                        471            861            1,594
                                                           ----------------------------------------------
Cash at end of period                                        $     413      $     471        $     861
                                                           ==============================================

Supplemental cash flow information:
   Cash paid for (received from) income taxes                $     110      $      (5)       $    (453)
                                                           ==============================================
   Cash paid for interest                                    $  23,888      $  21,068        $  17,086
                                                           ==============================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       23
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                (Dollars in thousands, except per share amounts)



1. Organization and Basis of Presentation

Scotsman  Holdings,  Inc.  was  organized  in  November  1993 for the purpose of
acquiring  The Scotsman  Group,  Inc.  Effective  January 1, 1997,  The Scotsman
Group, Inc. changed its name to Williams Scotsman, Inc. (Williams Scotsman).

The operations of Scotsman Holdings, Inc. and subsidiaries (the Company) consist
of the  leasing and sale of mobile  offices  and,  to a lesser  extent,  modular
structures  (equipment) and their delivery and installation.  Leasing operations
account  for a majority  of the  Company's  revenues  and gross  profits and are
primarily  comprised of the leasing of mobile  office and storage  units and the
sale of units from the Company's lease fleet.

1994 Acquisition

On September 14, 1994, the Company  purchased all of the  outstanding  shares of
common stock of Mobile Holdings,  Inc. (Mobile) for an aggregate cost of $9,538.
The  acquisition,  which was effective as of August 31, 1994,  was accounted for
under the purchase  method of accounting  and,  accordingly,  the total cost has
been  allocated to the assets  acquired and  liabilities  assumed based on their
estimated fair values as follows:

         Rental equipment                                      $16,648
         Property, plant and equipment                           2,055
         Long-term debt assumed                                 (5,505)
         Deferred income taxes recorded                         (4,313)
         Other net liabilities assumed                            (702)
                                                               -------
         Net assets acquired                                     8,183

         Excess of cost over net assets acquired (goodwill)      1,355
                                                               -------
         Total cost                                            $ 9,538
                                                               =======

The long-term debt was repaid  subsequent to the acquisition.  A deferred income
tax liability was recorded for the tax effect of  differences  between the bases
of Mobile's assets and liabilities for tax and financial reporting purposes.




                                       24
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements

                (Dollars in thousands, except per share amounts)



1. Organization and Basis of Presentation

Unaudited pro forma results of operations  for the year ended December 31, 1994,
assuming  that the  acquisition  of Mobile had occurred on January 1, 1994,  are
presented below:

         Total revenues                                     $   140,365
         Net income                                                (267)
         Net income per common share                        $     (0.08)

The pro forma  results  include the  historical  accounts of the Company and the
historical   accounts  for  the  acquired   business  adjusted  to  reflect  (1)
depreciation  and  amortization  of  the  acquired   identifiable  tangible  and
intangible  assets based on the new cost basis of the acquisition,  (2) interest
on acquisition financing and (3) the elimination of non-recurring  expenses. The
pro forma results of operations  are not necessary  indicative of actual results
which might have occurred had the operations and management teams of the Company
and the acquired company been combined in prior years.

Summary of Significant Accounting Principles

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.



                                       25
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)

1. Summary of Significant Accounting Policies (continued)

(b)    Leasing Operations (continued)

       Equipment is leased generally under operating  leases and,  occasionally,
       under  sales-type  lease  arrangements.  Operating  lease terms generally
       range  from  3  months  to  36   months,   and   contractually   averaged
       approximately 12 months at December 31, 1996. 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 either $1,000 or 20%. 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
       $1,000 per unit are generally expensed as incurred.

(c)    Deferred Financing Costs

       Costs of obtaining long-term debt are amortized over the term of the debt
       by the interest method.

(d)    Property, Plant and Equipment

       Depreciation  is computed  by the  straight-line  method  over  estimated
       useful lives ranging from 20 to 40 years for  buildings and  improvements
       and 3 to 12 years for furniture and equipment.
       Maintenance and repairs are charged to expense as incurred.

(e)    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.



                                       26
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)


1. Summary of Significant Accounting Policies (continued)

(f)    Earnings Per Share

       Earnings per share is computed based on weighted average number of common
       shares  outstanding of 3,402,430  shares for 1996,  3,472,968  shares for
       1995 and 3,412,979 shares for 1994.


2. Property, Plant and Equipment

Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>

                                                       December 31
                                                   1996            1995
                                              ----------------------------

<S>                                             <C>           <C>
Land                                            $ 6,889        $ 5,018
Buildings and improvements                       12,820         11,052
Furniture and equipment                          13,870          7,428
                                              ----------------------------
                                                 33,579         23,498
Less accumulated depreciation                     4,547          2,410
                                              ----------------------------
Net property, plant and equipment               $29,032        $21,088
                                              ============================
</TABLE>

3. Long-Term Debt

Long-term debt consists of the following:

<TABLE>
<CAPTION>

                                                       December 31
                                                   1996            1995
                                               ---------------------------

<S>                                             <C>            <C>
Borrowings under revolving credit facility      103,753        $ 77,695
9.5% senior secured notes                       165,000         165,000
11% Series B senior notes                        26,074          23,117
                                               ===========================
                                                294,827        $265,812
                                               ===========================
</TABLE>

The loan agreement for the revolving credit facility, as amended, provides for a
$120,000  revolving  credit facility which matures  December 16, 1997 and can be
extended  for an  additional  year at the  option of the  Company.  Interest  is
payable at a rate of either prime plus .25% or LIBOR plus 2.50% at the option of
the Company.  The weighted average interest rate was 8.18% at December 31, 1996.



                                       27
<PAGE>



                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



3.   Long-Term Debt (continued)

Borrowings under the credit facility are secured by a first priority lien on and
security  interest in the Company's rental  equipment,  accounts  receivable and
property,  plant and equipment.  In addition to the restrictions and limitations
described under the note agreement,  the credit facility loan agreement requires
compliance with certain financial covenants including maintenance of minimum net
worth,  working  capital,   number  of  units  in  the  lease  fleet  and  fleet
utilization.

The 9.5% senior  secured notes are due December 15, 2000 with  interest  payable
semi-annually  on June 15 and December 15 of each year. On or after December 15,
1997,  the notes are  redeemable  at the option of the  Company,  at  redemption
prices of 103.167% and 101.583% during the 12 month periods  beginning  December
15,  1997  and  1998,  respectively,  and  100%  thereafter  (subject  to  price
adjustment  under certain  events).  Upon the occurrence of a change of control,
the holders of the notes have the right to require the Company to repurchase the
notes at a purchase  price of 101%.  The notes are secured by a second  priority
lien on and security  interest in the collateral under the revolving credit loan
agreement. The note agreement limits or restricts the Company's ability to incur
additional indebtedness, issue preferred stock, make distributions of capital in
an amount not to exceed 50% of accumulated earnings,  dispose of property, incur
liens on property and merge with or acquire other companies.

On March 2, 1994, the Company completed a private placement of 21,250 securities
consisting of $21,250 principal amount of 11% Series A senior notes due March 1,
2004 and 173,648  shares of the  Company's  common  stock.  The common stock was
assigned a value of $2,042 based on a per share price of $11.76.  The  remaining
proceeds of $19,208  were  assigned to the notes.  The  discount on the notes of
$2,042 is being accreted over the maturity period. The proceeds of this offering
were used to retire unsecured  convertible notes payable to a stockholder of the
Company  of  $20,000.  Interest  on the 11% notes is  payable  semi-annually  in
additional  notes or cash through March 1, 1999, and payable in cash thereafter.
The  Company  elected  to pay all  interest  payments  due  under  the  notes in
additional notes payable  aggregating  $6,514.  These notes bear interest at 11%
and are due March 1, 2004. On or after March 1, 1999,  the notes are  redeemable
at the option of the Company,  at redemption  prices of $104.125%,  102.750% and
101.375%  during the 12 month periods  beginning  March 1, 1999,  2000 and 2001,
respectively,  and 100% thereafter.  Upon the occurrence of a change of control,
the holders of the notes have the right to require the Company to repurchase the
notes at a purchase price of 101%.




                                       28
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



3. Long-Term Debt (continued)

Effective August 12, 1994, the Company  completed the registration of 11% Series
B notes.  Such notes have been exchanged for all of the outstanding 11% Series A
senior notes. The form and terms of the Series B notes are identical to the form
and  terms  of the  Series A notes  except  that the  Series B notes  have  been
registered  under the  Securities  Act of 1933, as amended,  and do not bear any
legends restricting the transfer thereof.

At  December  31,  1996  and  1995,   the  fair  value  of  long-term  debt  was
approximately  $297,000 and $266,000  respectively,  based on the quoted  market
prices of the senior secured notes and the Series B notes, and the book value of
the revolving credit facility, which is an adjustable rate note.

4. 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
                                                         1996           1995
                                                      --------------------------
Deferred tax liabilities:
   Cost basis in excess of tax basis of assets
      and accelerated tax depreciation:
<S>                                                      <C>           <C>
         Rental equipment                                $94,050       $86,718
         Property, plant and equipment                       983           983
                                                      --------------------------
         Total deferred tax liabilities                   95,033        87,701
                                                      --------------------------
Deferred tax assets:
   Allowance for doubtful accounts                           100           177
   Rents billed in advance                                 3,317         2,759
   Pre-acquisition separate company net
      operating loss carryovers                           25,816        26,273
   Net operating loss carryovers                           3,972         2,728
   Alternative minimum tax credit carryovers               1,465         1,296
   Investment tax credit carryovers                          860           860
   Holdings interest expense                               2,504         1,982
   Other                                                   2,427         1,622
                                                      --------------------------
         Total deferred tax assets                        40,461        37,697
                                                      ==========================
Net deferred tax liabilities                             $54,572       $50,004
                                                      ==========================
</TABLE>



                                       29
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



4. Income Taxes (continued)

In December 1993, the Company  purchased all of the issued and outstanding stock
of Williams  Scotsman.  For financial  statement  purposes,  the acquisition was
accounted  for under  the  purchase  method of  accounting  by the  Company.  In
connection  with the  acquisition  of  Williams  Scotsman,  the tax bases of the
assets and liabilities of Williams Scotsman prior to the acquisition are carried
over and  continue  as the tax bases of  Williams  Scotsman.  As a  result,  the
Company recorded deferred income tax liabilities of $13,455 representing the tax
effect  of the  differences  between  such tax  bases  and the  related  amounts
recorded as the cost of the acquisition for financial reporting purposes.

At December 31, 1996,  the Company had net operating loss  carryovers  available
for  federal   income  tax   purposes  of   approximately   $77,369,   including
pre-acquisition  separate  company loss carryovers  available for federal income
tax purposes of approximately  $67,315,  and investment tax credit carryovers of
approximately  $860. These carryovers expire at various dates from 2000 to 2009.
Also,  alternative  minimum tax credit  carryovers of  approximately  $1,465 are
available  without  expiration  limitations.   The  annual  utilization  of  the
preacquisition  net operating loss carryovers is subject to certain  limitations
under the Internal Revenue Code.

The income tax expense (benefit) consists of the following:

<TABLE>
<CAPTION>
                                              Years ended December 31
                                      1996            1995              1994
                                 -----------------------------------------------
<S>                                  <C>             <C>              <C>
Current                              $  326          $  100           $  100
Deferred                              4,568           1,751             (370)
                                 -----------------------------------------------
                                     $4,894          $1,851           $ (270)
                                 ===============================================

Federal                              $4,235          $1,602            $(323)
State                                   659             249               53
                                 -----------------------------------------------
                                     $4,894          $1,851            $(270)
                                 ===============================================
</TABLE>




                                       30
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



4. Income Taxes (continued)

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

<TABLE>
<CAPTION>
                                                     Years ended December 31
                                                   1996        1995      1994
                                                  -------------------------------

<S>                                               <C>         <C>       <C>
Income tax (benefit) at statutory rate            $4,193      $1,540    $(239)
State income taxes, net of federal tax benefit       542          66       35
Other                                                159         245      (66)
                                                 -------------------------------
                                                  $4,894      $1,851    $(270)
                                                 ===============================
</TABLE>

5. Commitments

The  Company  is  obligated  under  noncancellable  operating  leases of certain
equipment, vehicles and parcels of land. At December 31, 1996 approximate future
minimum rental payments are as follows:

         1997                                                  $ 1,525
         1998                                                      883
         1999                                                      758
         2000                                                      495
         2001 and thereafter                                       126
                                                               -------
                                                               $ 3,787
                                                               =======

Rent expense was $2,875 in 1996, and $2,605 in 1995 and $2,288 in 1994.

6. 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 and (ii) the
dollar  limit  described  in Section  402(g) of the Code  ($9,500 in 1996).  All
amounts under this salary reduction feature are fully vested.




                                       31
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



6. Employee Benefit Plans (continued)

The 401(k) Plan has a "matching"  contribution  feature  under which the Company
may contribute a percentage of the amount deferred by each participant. 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 by the Company to the 401(k) Plan were approximately $243 in 1996,
$129 in 1995 and $54 in 1994.

The  Company   recorded  $1,800,   $1,775  and  $925  of  management   incentive
compensation  in  1996,  1995  and  1994,   respectively,   including   deferred
compensation of $1,400 in 1996,  $1,375 in 1995, and $525 in 1994, in connection
with the Incentive  Compensation Plan (the Plan). The Plan covers  approximately
40  management  members of the Company.  Under the terms of the Plan,  incentive
compensation  is payable  annually to members of the Plan,  based upon  Williams
Scotsman achieving certain earnings before interest, income taxes, provision for
deferred  compensation,  depreciation  and  amortization  (EBITDA)  targets.  In
addition, if certain cumulative EBITDA targets are met over the five year period
ending December 31, 1998, additional compensation will be payable in 1999.

In  March  1995,  the  Company  adopted  a stock  option  plan for  certain  key
employees.  Under the plan, employees may be granted options to purchase up to a
total of 7.5% of the Company's outstanding common stock. The options are granted
with an  exercise  price equal to the fair value of the shares as of the date of
grant . The options  vest ratably over 5 years and expire 10 years from the date
of the grant.  The Company  accounts for stock option grants in accordance  with
APB  Opinion  No.  25,   "Accounting  for  Stock  Issued  to  Employees",   and,
accordingly, recognizes no compensation expense for the stock option grants.




                                       32
<PAGE>


                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



6.   Employee Benefit Plans (continued)

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 1996 and 1995,
respectively:  risk free interest rate of 6%; 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.  The effects of
applying  SFAS  123  for pro  forma  disclosures  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:

<TABLE>
<CAPTION>
                                                     1996              1995
                                                   -----------------------------

<S>                                                <C>               <C>
Pro forma net income                               $ 6,967           $ 2,663
Pro forma earnings per share                       $  2.05           $   .77
</TABLE>

A summary of stock option  activity and related  information  for the year ended
December 31 follows:

<TABLE>
<CAPTION>
                                        1996                     1995
                              ------------------------ -------------------------
                                           Weighted                   Weighted
                              Options       Average      Options       Average
                                        Exercise Price                Exercise
                                                                       Price
                              ------------------------ -------------------------

<S>                           <C>         <C>             <C>          <C>
Beginning balance              38,200     $ 13.78              -       $    -
Granted                       115,050       28.80         38,200        13.78
Exercised                           -           -              -            -
Forfeited                      (2,200)      20.61              -            -
                              ------------------------ -----------------------
Ending balance                151,000     $ 25.12         38,200       $13.78

Exercisable at end of year     37,610     $ 22.89          7,640       $13.78

Weighted  average  minimum
   value of options granted
   during year                            $  7.28                      $ 3.48

</TABLE>


                                       33
<PAGE>

                    Scotsman Holdings, Inc. and Subsidiaries

             Notes to Consolidated Financial Statements (continued)



6.   Employee Benefit Plans (continued)

Exercise  prices for options  outstanding as of December 31, 1996 are $13.78 and
$28.80. The weighted average remaining contractual life of those options is 8.75
years.

7. Related Party Transactions

In connection with the acquisition of Williams Scotsman by the Company, Williams
Scotsman entered into a management  agreement with a subsidiary of the principal
stockholder of the Company.  The agreement  provides that Williams Scotsman will
pay an  annual  fee of up to  $250  in  consideration  for  certain  management,
consulting and financial  advisory  services.  The Company incurred  expenses of
$250 for these services in 1996, 1995 and 1994.

8.   Other

The Company is considering various strategic  alternatives,  including a sale of
the Company. There can be no assurance that any transaction will be consummated.



                                       34
<PAGE>





                         Report of Independent Auditors


Board of Directors
Williams Scotsman, Inc.
(formerly The Scotsman Group, Inc.)

We have  audited  the  accompanying  consolidated  balance  sheets  of  Williams
Scotsman, Inc. (formerly The Scotsman Group, Inc.) and subsidiary as of December
31,  1996 and 1995,  and the  related  consolidated  statements  of  operations,
stockholder's  equity and cash flows for the years then  ended.  Our audits also
included the 1996 and 1995 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  and  schedule  based on our
audits.

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

In our opinion, the 1996 and 1995 consolidated  financial statements referred to
above  present  fairly,  in all material  respects,  the  financial  position of
Williams Scotsman, Inc. (formerly The Scotsman Group, Inc.) and subsidiary as of
December 31, 1996 and 1995,  and the results of their  operations and their cash
flows for the years then ended in conformity with generally accepted  accounting
principles.  Also, in our opinion, the related 1996 and 1995 financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.

                                             ERNST & YOUNG LLP




Baltimore, Maryland
January 24, 1997



                                       35
<PAGE>





                          Independent Auditors' Report
                          ----------------------------






The Board of Directors
Williams Scotsman, Inc.
(formerly The Sctotsman Group, Inc.)

We have audited the accompanying  consolidated statement of operations,  changes
in stockholder's equity and cash flows of Williams Scotsman,  Inc. (formerly The
Scotsman Group, Inc.) and subsidiary  (Scotsman) for the year ended December 31,
1994.  These  consolidated   financial  statements  are  the  responsibility  of
Scotsman's  management.  Our  responsibility  is to  express an opinion on these
consolidated financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the results of operations and cash flows of
Williams  Scotsman,  Inc. (formerly The Scotsman Group, Inc.) and subsidiary for
the  year  ended  December  31,  1994  in  conformity  with  generally  accepted
accounting principles.

                                        KPMG PEAT MARWICK LLP




Baltimore, Maryland
March 10, 1995








                                       36


<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                           Consolidated Balance Sheets


<TABLE>
<CAPTION>
                                                             December 31,
                                                        1996             1995
                                                      --------------------------
                                                            (In Thousands)
Assets
Cash, and temporary investments of
<S>                                                   <C>              <C>
   $13 in 1996 and $263 in 1995                       $    351         $    679
Trade accounts receivable, net of
   allowance for doubtful accounts of
   $258 in 1996 and $447 in 1995 (Note 3)               23,145           17,372
Prepaid expenses and other current assets                9,295            7,048
Rental equipment, net of accumulated
   depreciation of $67,520 in 1996
   and $40,162 in 1995 (Note 3)                        356,183          324,207
Property, plant and equipment, net (Notes 2 & 3)        29,032           21,088
Deferred financing costs, net                            5,494            7,830
Other assets                                             5,197            5,455
                                                      --------------------------
                                                      $428,697         $383,679
                                                      ==========================
Liabilities and stockholder's equity
Accounts payable                                      $  9,826         $  6,667
Accrued expenses                                         8,924            8,114
Rents billed in advance                                 10,621            9,809
Long-term debt (Note 3)                                268,753          242,695
Deferred compensation (Note 7)                           3,300            1,900
Deferred income taxes (Note 5)                          57,640           51,986
                                                      --------------------------
   Total liabilities                                   359,064          321,171
                                                      --------------------------

Stockholder's equity:
   Common stock, $.01 par value.
     Authorized 10,000,000 shares; issued
     and outstanding 3,320,000 shares                       33               33
   Additional paid-in capital                           56,844           56,844
   Retained earnings                                    12,756            5,631
                                                      --------------------------
Total stockholder's equity                              69,633           62,508
                                                      --------------------------
                                                      $428,697         $383,679
                                                      ==========================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       37
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                      Consolidated Statements of Operations


<TABLE>
<CAPTION>
                                                     Year ended December 31
                                                1996        1995          1994
                                              ----------------------------------
                                                    (In thousands except
                                                     per share amounts)
Revenues
<S>                                           <C>           <C>        <C>
Leasing                                       $ 116,769     $96,498    $ 79,342
Sales of new units                               28,042      23,126      22,290
Delivery and installation                        32,767      28,162      26,511
Other                                            17,564      10,734       5,832
                                              ---------------------------------
       Total revenues                           195,142      58,520     133,975
                                              ---------------------------------

Cost of sales and services
Leasing:
   Depreciation and amortization                 30,588      23,417      18,804
   Other direct leasing costs                    26,647      23,103      20,578
Sales of new units                               23,043      19,273      19,436
Delivery and installation                        25,247      22,048      21,569
Other                                             3,974       2,626       1,547
                                              ---------------------------------
       Total costs of sales and services        109,499      90,467      81,934
                                              ---------------------------------
       Gross profit                              85,643      68,053      52,041
                                              ---------------------------------

Selling, general and administrative expenses     42,260      36,295      30,215
Other depreciation and amortization               2,411       1,851       1,349
Interest, including amortization of
   deferred financing costs of $2,449,
   $1,601, and $1,439                            25,797      22,485      18,705
                                              ---------------------------------
       Total operating expenses                  70,468      60,631      50,269
                                              ---------------------------------

       Income before income taxes                15,175       7,422       1,772
Income tax expense (Note 5)                       5,980       2,863         700
                                              ---------------------------------
       Net income                             $   9,195     $ 4,559   $   1,072
                                              =================================
       Net income per common share            $    2.77     $  1.37   $    0.32
                                              =================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       38
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

           Consolidated Statements of Changes in Stockholder's Equity

<TABLE>
<CAPTION>

                                                             Additional
                                           Common Stock       Paid-in        Retained
                                        Shares       Amount    Capital       Earnings       Total
                                    ----------------------------------------------------------------
                                                             (In Thousands)

<S>                                       <C>       <C>       <C>           <C>          <C>
Balance at December 31, 1993              3,320     $ 33      $ 56,844      $     -      $ 56,877
Net income                                    -        -             -         1,072        1,072
                                    ----------------------------------------------------------------
Balance at December 31, 1994              3,320       33        56,844         1,072       57,949

Net income                                    -        -             -         4,559        4,559
                                    ----------------------------------------------------------------
Balance at December 31, 1995              3,320       33        56,844         5,631       62,508
Dividends - $ .62 per share                   -        -             -        (2,070)      (2,070)
Net income                                    -        -             -         9,195        9,195
                                    ----------------------------------------------------------------
Balance at December 31, 1996              3,320     $ 33      $ 56,844      $ 12,756     $ 69,633
                                    ================================================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       39
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                             Year ended December 31
                                                                       1996            1995          1994
                                                                 --------------------------------------------
                                                                               (In Thousands)

Cash flows from  operating activities
<S>                                                                  <C>            <C>           <C>
Net income                                                           $  9,195       $  4,559      $  1,072
Adjustments to reconcile net income to net cash provided by
   operating activities:
     Depreciation and amortization                                     35,448         26,869        21,592
     Provision for bad debts                                            2,209          1,509         1,207
     Deferred income tax expense                                        5,654          2,763           600
     Provision for deferred compensation                                1,400          1,375           525
     Gain on sale of rental equipment                                  (2,618)        (2,080)       (1,620)
     Increase in net trade accounts receivable                         (7,982)            (4)       (2,072)
     Other                                                              2,721         (1,087)          513
                                                                 --------------------------------------------
         Net cash provided by operating activities                     46,027         33,904        21,817
                                                                 --------------------------------------------

Cash flows from investing activities
Redemption of certificates of deposit                                     250          1,255         1,267
Rental equipment additions                                            (72,277)       (72,096)      (45,174)
Proceeds from sales of rental equipment                                12,331          9,733         8,045
Purchase of property, plant and equipment, net                        (10,284)        (6,871)       (1,286)
Net assets of business acquired, including rental equipment of
   $16,648 (Note 1)                                                         -              -        (9,538)
                                                                 ============================================
         Net cash used in investing activities                       $(69,980)      $(67,979)     $(46,686)
                                                                 ============================================
</TABLE>





                                       40
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                Consolidated Statements of Cash Flows (continued)

<TABLE>
<CAPTION>

                                                            Year ended December 31
                                                  1996            1995               1994
                                              -----------------------------------------------
                                                                (In Thousands)

Cash flows from financing activities
<S>                                             <C>              <C>              <C>
Proceeds from long-term debt                    $ 219,420        $204,389         $ 173,401
Repayment of long-term debt                      (193,362)       (168,040)         (148,968)
Increase in deferred financing costs                 (113)         (2,555)             (281)
Cash dividends paid                                (2,070)              -                 -
                                              -----------------------------------------------
Net cash provided by financing activities          23,875          33,794            24,152
                                              -----------------------------------------------
         Net decrease in cash                         (78)           (281)             (717)

Cash at beginning of period                           416             697             1,414
                                              -----------------------------------------------
Cash at end of period                           $     338        $    416         $     697
                                              ===============================================

Supplemental cash flow information:
   Cash paid for (received from) income taxes   $     110        $     (5)        $    (453)
                                              ===============================================
   Cash paid for interest                       $  23,888        $ 21,068         $  17,086
                                              ===============================================
</TABLE>


See accompanying notes to consolidated financial statements.



                                       41
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

                   Notes to Consolidated Financial Statements

                (Dollars in thousands, except per share amounts)



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 changed its name from The
Scotsman Group, Inc. to Williams Scotsman, Inc. effective January 1, 1997.

The operations of the Company  consist of the leasing and sale of mobile offices
and, to a lesser extent,  modular structures  (equipment) and their delivery and
installation.  Leasing  operations  account  for a  majority  of  the  Company's
revenues and gross profits and are primarily  comprised of the leasing of mobile
office and storage units and the sale of units from the Company's lease fleet.

1994 Acquisition

On September 14, 1994, the Company  purchased all of the  outstanding  shares of
common stock of Mobile Holdings,  Inc. (Mobile) for an aggregate cost of $9,538.
The  acquisition,  which was effective as of August 31, 1994,  was accounted for
under the purchase  method of accounting  and,  accordingly,  the total cost has
been  allocated to the assets  acquired and  liabilities  assumed based on their
estimated fair values as follows:

    Rental equipment                                           $ 16,648
    Property, plant and equipment                                 2,055
    Long-term debt assumed                                       (5,505)
    Deferred income taxes recorded                               (4,313)
    Other net liabilities assumed                                  (702)
                                                            ---------------
    Net assets acquired                                           8,183
                                                            ---------------

    Excess of cost over net assets acquired (goodwill)            1,355
                                                            ---------------
    Total cost                                                  $ 9,538
                                                            ===============

The long-term debt was repaid  subsequent to the acquisition.  A deferred income
tax liability was recorded for the tax effect of  differences  between the bases
of Mobile's assets and liabilities for tax and financial reporting purposes.




                                       42
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



1. Organization and Basis of Presentation (continued)

Unaudited pro forma results of operations  for the year ended  December 31, 1994
assuming  that the  acquisition  of Mobile had occurred on January 1, 1994,  are
presented below:

         Total revenue                                     $140,365
         Net income                                           1,242
         Net income per share                              $   0.37

The pro forma  results  include the  historical  accounts of the Company and the
historical   accounts  for  the  acquired   business  adjusted  to  reflect  (1)
depreciation  and  amortization  of  the  acquired   identifiable  tangible  and
intangible  assets based on the new cost basis of the acquisition,  (2) interest
on acquisition financing and (3) the elimination of non-recurring  expenses. The
pro forma results of operations are not necessarily indicative of actual results
which might have occurred had the operations and management teams of the Company
and the acquired company been combined in prior years.

Summary of Significant Accounting Policies

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly owned subsidiary.  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.

(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  36   months,   and   contractually   averaged
       approximately 12 months at December 31, 1996. 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




                                       43
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



1. Organization and Basis of Presentation (continued)

(b)    Leasing Operations (continued)

       method  using an estimated  economic  useful life  of 10 to 20 years and
       an  estimated  residual  value  of  either  $1,000  or  20%.   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  $1,000  per unit  are  generally  expensed   as
       incurred.

(c)    Deferred Financing Costs

       Costs of obtaining long-term debt are amortized over the term of the debt
       by the interest method.

(d)    Property, Plant and Equipment

       Depreciation  is computed  by the  straight-line  method  over  estimated
       useful lives ranging from 20 to 40 years for  buildings and  improvements
       and 3 to 12 years for furniture and equipment.
       Maintenance and repairs are charged to expense as incurred.

(e)    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. The
       Company is  included  in the  consolidated  federal  income tax return of
       Holdings.  Income  taxes  are  included  in  the  accompanying  financial
       statements on a separate return basis.




                                       44
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



1. Organization and Basis of Presentation (continued)

(f)    Earnings Per Share

       Earnings per share is computed based on weighted average number of common
       shares outstanding of 3,320,000 shares for 1996, 1995, and 1994.

2. Property, Plant and Equipment

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
                                                          December 31
                                                        1996        1995
                                                  --------------------------

<S>                                                   <C>         <C>
Land                                                  $ 6,889     $ 5,018
Buildings and improvements                             12,820      11,052
Furniture and equipment                                13,870     $ 7,428
                                                  --------------------------
                                                      $33,579      23,498
Less accumulated depreciation                           4,547       2,410
                                                  --------------------------
Net property, plant and equipment                     $29,032     $21,088
                                                  ==========================
</TABLE>

3. Long-Term Debt

Long-term debt consists of the following:

<TABLE>
<CAPTION>

                                                          December 31
                                                      1996           1995
                                                 ---------------------------

<S>                                                <C>           <C>
Borrowings under revolving credit facility         $ 103,753     $  77,695
9.5% senior secured notes                            165,000       165,000
                                                 ---------------------------
                                                   $ 268,753     $ 242,695
                                                 ===========================
</TABLE>

The loan agreement for the revolving credit facility, as amended, provides for a
$120,000  revolving  credit facility which matures  December 16, 1997 and can be
extended  for an  additional  year at the  option of the  Company.  Interest  is
payable at a rate of either prime plus .25% or LIBOR plus 2.50% at the option of
the Company.  The weighted average interest rate was 8.18% at December 31, 1996.
Borrowings under the credit facility are secured by a first priority lien on and




                                       45
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



3. Long Term Debt (continued)

security  interest  in  the  Company's  rental  equipment,  accounts  receivable
and  property,  plant  and  equipment.  In  addition  to  the  restrictions  and
limitations  described  under  the note  agreement,  the  credit  facility  loan
agreement  requires   compliance  with  certain  financial  covenants  including
maintenance of minimum net worth, working capital,  number of units in the lease
fleet and fleet utilization.

The 9.5% senior  secured notes are due December 15, 2000 with  interest  payable
semi-annually  on June 15 and December 15 of each year. On or after December 15,
1997,  the notes are  redeemable  at the option of the  Company,  at  redemption
prices of 103.167% and 101.583% during the 12 month periods  beginning  December
15,  1997  and  1998,  respectively,  and  100%  thereafter  (subject  to  price
adjustment  under certain  events).  Upon the occurrence of a change of control,
the holders of the notes have the right to require the Company to repurchase the
notes at a purchase  price of 101%.  The notes are secured by a second  priority
lien on and  security  interest in the  collateral  under the  revolving  credit
facility loan  agreement.  The note agreement  limits or restricts the Company's
ability  to  incur  additional   indebtedness,   issue  preferred  stock,   make
distributions of capital in an amount not to exceed 50% of accumulated earnings,
dispose of  property,  incur liens on property  and merge with or acquire  other
companies.

At  December  31,  1996  and  1995,   the  fair  value  of  long-term  debt  was
approximately  $274,000 and $246,000,  respectively,  based on the quoted market
price of the senior  secured  notes and the book value of the  revolving  credit
facility, which is an adjustable rate note.

4. Obligations of Parent Company

On March 2, 1994,  Holdings  completed a private  placement of 21,250 securities
consisting of $21,250 principal amount of 11% Series A senior notes due March 1,
2004 and 173,648 shares of Holdings common stock.  The common stock was assigned
a value of $2,042 based on a per share price of $11.76.  The remaining  proceeds
of $19,208  were  assigned to the notes.  The discount on the notes of $2,042 is
being accreted over the maturity period. The proceeds of this offering were used
to retire  unsecured  convertible  notes payable to a stockholder of Holdings of
$20,000.  Interest on the 11% notes is payable semi-annually in additional notes
or cash through March 1, 1999, and payable in cash thereafter.  Holdings elected
to pay all interest  payments due under the notes in  additional  notes  payable
aggregating $6,514.  These notes bear interest at 11% and are due March 1, 2004.
On or after March 1, 1999, the notes are redeemable at the option of



                                       46
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



4. Obligations of Parent Company (continued)

Holdings at redemption  prices of 104.125%,  102.750% and  101.375%,  during the
twelve month periods  beginning March 1, 1999, 2000 and 2001  respectively,  and
100% thereafter.  Upon the occurrence of a change in control, the holders of the
notes have the right to require  Holdings to repurchase  the notes at a purchase
price of 101%.

Effective,  August 12, 1994, Holdings completed the registration of 11% Series B
notes.  Such notes have been exchanged for all of the  outstanding  11% Series A
senior notes. The form and terms of the Series B notes are identical to the form
and  terms  of the  Series A notes  except  that the  Series B notes  have  been
registered  under the  Securities  Act of 1933, as amended,  and do not bear any
legends restricting the transfer thereof.

The Holdings  notes are not secured by the Company's  assets or common stock and
the Company has no plans to assume or  otherwise  become  liable with respect to
the notes.

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
                                                      1996             1995
                                                -----------------------------
Deferred tax liabilities:
Cost basis in excess of tax basis of
  assets and accelerated tax depreciation:
<S>                                                <C>             <C>
     Rental equipment                              $ 94,050        $ 86,718
     Property, plant and equipment                      983             983
                                                -----------------------------
       Total deferred tax liabilities                95,033          87,701
                                                -----------------------------
Deferred tax assets:
Allowance for doubtful accounts                         100             177
Rents billed in advance                               3,317           2,759
Pre-acquisition separate company net
  operating loss carryovers                          25,816          26,273
Net operating loss carryovers                         3,547           2,728
Alternative minimum tax credit carryovers             1,465           1,296
Investment tax credit carryovers                        860             860
Other                                                 2,288           1,622
                                                -----------------------------
       Total deferred tax assets                     37,393          35,715
                                                =============================
Net deferred tax liabilities                       $ 57,640        $ 51,986
                                                =============================
</TABLE>



                                       47
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



5. Income Taxes (continued)

In December 1993, Holdings purchased all of the issued and outstanding shares of
common stock of the Company.  For financial statement purposes,  the acquisition
was accounted for under the purchase  method of accounting by Holdings,  and the
Company  restated  its balance  sheet to "push down" the effects of the purchase
accounting  adjustments.  In connection with the acquisition of the Company, the
tax bases of the assets and  liabilities of the Company prior to the acquisition
are carried over and continue as the tax bases of the Company.  As a result, the
Company recorded deferred income tax liabilities of $13,455 representing the tax
effect  of the  differences  between  such tax  bases  and the  related  amounts
recorded as the cost of the acquisition for financial reporting purposes.

At December 31, 1996,  the Company had net operating loss  carryovers  available
for  federal   income  tax   purposes  of   approximately   $76,120,   including
pre-acquisition  separate  company loss carryovers  available for federal income
tax purposes of  approximately  $67,315 and investment tax credit  carryovers of
approximately  $860. These carryovers expire at various dates from 2000 to 2009.
Also,  alternative  minimum tax credit  carryovers of  approximately  $1,465 are
available  without  expiration  limitations.   The  annual  utilization  of  the
preacquisition  net operating loss carryovers is subject to certain  limitations
under the Internal Revenue Code.

The income tax expense consists of the following:

<TABLE>
<CAPTION>
                                       Years ended December 31
                                  1996          1995           1994
                             -------------------------------------------

<S>                              <C>           <C>             <C>
Current                          $  326        $  100          $100
Deferred                          5,654         2,763           600
                             -------------------------------------------
                                 $5,980        $2,863          $700
                             ===========================================

Federal                          $5,145        $2,453          $600
State                               835           408           100
                             -------------------------------------------
                                 $5,980        $2,863          $700
                             ===========================================
</TABLE>




                                       48
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



5. Income Taxes (continued)

The provision for income taxes is reconciled to the amount  computed by applying
the Federal corporate tax rate of 34% to income before income taxes as follows:
<TABLE>
<CAPTION>

                                                    Years ended December 31
                                                   1996       1995      1994
                                                ------------------------------

<S>                                              <C>        <C>        <C>
Income tax at statutory rate                     $5,311     $2,524     $602
State income taxes, net of federal tax benefit      543        308       66
Other                                               126         31       32
                                                ------------------------------
                                                 $5,980     $2,863     $700
                                                ==============================
</TABLE>


6. Commitments

The  Company  is  obligated  under  noncancellable  operating  leases of certain
equipment, vehicles and parcels of land. At December 31, 1996 approximate future
minimum rental payments are as follows:

         1997                                          $ 1,525
         1998                                              883
         1999                                              758
         2000                                              495
         2001 and thereafter                               126
                                                     ------------
                                                        $ 3,787
                                                     ============

Rent expense was $2,875 in 1996, $2,605 in 1995 and $2,288 in 1994.

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 and (ii) the
dollar  limit  described  in Section  402(g) of the Code  ($9,500 in 1996).  All
amounts under this salary reduction feature are fully vested.



                                       49
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



7. Employee Benefit Plans (continued)

The 401(k) Plan has a "matching"  contribution  feature  under which the Company
may contribute a percentage of the amount deferred by each participant. 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 by the Company to the 401(k) Plan were approximately $243 in 1996,
$129 in 1995, and $54 in 1994.

The  Company  recorded  $1,800,   $1,775,  and  $925  of  management   incentive
compensation  in  1996,  1995,  and  1994   respectively,   including   deferred
compensation  of $1,400 in 1996,  $1,375 in 1995 and $525 in 1994, in connection
with the Incentive  Compensation Plan (the Plan). The Plan covers  approximately
40  management  members of the Company.  Under the terms of the Plan,  incentive
compensation is payable  annually to members of the Plan, based upon the Company
achieving certain earnings before interest, income taxes, provision for deferred
compensation,  depreciation and amortization  (EBITDA) targets. In addition,  if
certain  cumulative  EBITDA  targets  are met over the five year  period  ending
December 31, 1998, additional compensation will be payable in 1999.

In  March  1995,  the  Company  adopted  a stock  option  plan for  certain  key
employees.  Under the plan, employees may be granted options to purchase up to a
total of 7.5% of Holdings'  outstanding  common  stock.  The options are granted
with an  exercise  price equal to the fair value of the shares as of the date of
grant.  The options  vest ratably over 5 years and expire 10 years from the date
of the grant.  The Company  accounts for stock option grants in accordance  with
APB  Opinion  No.  25,   "Accounting  for  Stock  Issued  to  Employees",   and,
accordingly, recognizes no compensation expense for the stock option grants.

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





                                       50
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)


7. Employee Benefit Plans (continued)

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 1996 and
1995:  risk-free  interest  rate of 6%;  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:

                                              1996              1995
                                        ----------------------------------

Pro forma net income                        $ 9,076           $ 4,543
Pro forma earnings per share                $  2.73           $  1.37


A summary of stock option  activity and related  information for the years ended
December 31 follows:

<TABLE>
<CAPTION>
                                      1996                     1995
                              ---------------------- -----------------------
                                         Weighted                  Weighted
                                         Average                   Average
                                         Exercise                  Exercise
                               Options     Price      Options      Price
                              ---------------------- -----------------------

<S>                             <C>       <C>          <C>         <C>
Beginning balance               38,200    $13.78            -           -
Granted                        115,050     28.80       38,200      $13.78
Exercised                            -         -            -           -
Forfeited                      (2,200)     20.61            -           -
                              ---------------------- -----------------------
Ending balance                 151,050    $25.12       38,200      $13.78

Exercisable at end of year      37,610    $22.89        7,640      $13.78

Weighted  average  minimum
   value of options granted
   during year                            $ 7.28                   $ 3.48

</TABLE>



                                       51
<PAGE>


                             Williams Scotsman, Inc.
               (formerly The Scotsman Group, Inc.) and Subsidiary

             Notes to Consolidated Financial Statements (continued)



7. Employee Benefit Plans (continued)

Exercise  prices  for  options   outstanding  as  of  December  31,  1996  are
$13.78  and  $28.80.  The  weighted-average remaining contractual life of those
options is 8.75 years.

8. Related Party Transactions

In  connection  with the  acquisition  of the Company by  Holdings,  the Company
entered  into  a  management  agreement  with  a  subsidiary  of  the  principal
stockholder  of Holdings.  The  agreement  provides that the Company will pay an
annual fee of up to $250 in consideration for certain management, consulting and
financial  advisory  services.  The Company incurred  expenses of $250 for these
services in 1996, 1995 and 1994.

9. Other

Holdings is considering various strategic alternatives,  including a sale of the
Company. There can be no assurance that any transaction will be consummated.


                                       52
<PAGE>


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

     None.

































                                       53
<PAGE>


PART III

Item 10. Directors and Executive Officers of the Registrant

Directors and Officers of the Company

     The Company's directors and executive officers are as follows:

Name                      Age                  Position
----                      ---                  --------
Barry P.  Gossett.......  56  Chairman and Chief Executive Officer; Director
Gerard E. Holthaus......  47  President; Chief Operating Officer; Director
Muzzafar Mirza..........  39  Vice President; Director
Katherine K. Giannelli..  36  Controller
John B. Ross............  48  Secretary
Stephen Berger..........  57  Director
Brian Kwait.............  35  Director

Directors and Officers of Scotsman

     Scotsman's directors and executive officers are as follows:

Name                      Age                  Position
----                      ---                  --------
Barry P.  Gossett.......  56  Chairman and Chief Executive Officer; Director
Gerard E. Holthaus......  47  President and Chief Operating Officer; Director
Marietta F.  Adamo......  46  Executive Vice President-- Administration
Stephen Berger..........  57  Director
Muzzafar Mirza..........  39  Director
Brian Kwait.............  35  Director
--------

     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.

     In addition to the executive  officers of the Company identified above, the
following persons are instrumental to the management of the Company:

Name                    Age                       Position
----                    ---                       --------
J.  Collier Beall....... 49  Senior Vice President and Southern Division Manager
Joseph F. Donegan....... 46  Senior Vice President and Northern Division Manager
James D.  Funk.......... 52  Vice President - Midwestern Regional Manager
Katherine K.  Giannelli. 36  Vice President and Controller
Robert W. Hansen........ 40  Vice President - Western Regional Manager
Gerard E. Keefe......... 40  Vice President - Fleet and Finance
William C. LeBuhn....... 34  Vice President -  Human Resources
John B. Ross............ 48  Vice President and Corporate Counsel
William H. Ryan......... 51  Vice President -  Customer Development Services
William J. Wyatt........ 57  Vice President -  Marketing and Sales Support
---------



                                       54
<PAGE>



     Mr. Gossett was elected Chairman and Chief Executive Officer of the Company
and Scotsman in October  1995.  Prior to this,  he served as President and Chief
Executive  Officer of the  Company  from  February  1994 to October  1995 and of
Scotsman from 1990 to October 1995. Mr. Gossett has been a director and employee
of  Scotsman or its  predecessor  for over  twenty-five  years.  Before  joining
Scotsman, 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 160 member companies.

     Mr.  Holthaus was appointed  President and Chief  Operating  Officer of the
Company and Scotsman in October 1995.  Prior to this, he served as the Executive
Vice President,  Chief  Financial  Officer of the Company and Scotsman from June
1994 to October 1995.  He has been a director of the Company and Scotsman  since
June 1994. Before joining Scotsman, 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 and Young (Baltimore),
where he served as a partner from 1982 to 1988.

     Mr. Berger has been a director of Scotsman  since December 1993. Mr. Berger
has been a General  Partner of Odyssey  Partners,  a private New York investment
firm,  since July 1993.  From July 1990 to July 1993, he was employed by General
Electric Capital  Corporation,  most recently as Executive Vice President and as
Chairman of a subsidiary  of such  company.  From October 1985 to June 1990,  he
served as the Executive  Director of the New York and New Jersey Port Authority.
Mr.  Berger is also a director  of  Forstmann  & Co.  Inc.  and  Hugoton  Energy
Corporation.

     Mr. Mirza has been a director of Scotsman  since  December  1993. Mr. Mirza
has been a principal of Odyssey  Partners since July 1993. From May 1988 to June
1993,  he was  employed by General  Electric  Capital  Corporation,  as Managing
Director of Merchant Banking for the GE Capital  Corporate  Finance Group.  From
1983 to 1988, he was a Vice President of Marine Midland Bank,  N.A. Mr. Mirza is
also a director of JPS Textile Group, Inc.

     Mr. Kwait has been a director of Scotsman  since  December  1993. Mr. Kwait
has been a principal of Odyssey  Partners  since August 1989.  From July 1988 to
August 1989,  he was an  associate  with Bear,  Stearns & Company.  From 1986 to
1988, he attended the Wharton Business School at the University of Pennsylvania.
Mr. Kwait is also a director of CellNet Data Systems.

     Ms. Adamo has been the Executive Vice President--Administration of Scotsman
since 1990,  and was Vice President of  Administration  of Williams from 1988 to
1990.  Ms. Adamo is responsible  for corporate and branch office  administrative
services, as well as Scotsman's Productivity Improvement initiatives.




                                       55
<PAGE>


     Mr. Beall was appointed Senior Vice President and Southern Division Manager
in October 1996. In addition,  he serves as the Southeastern Regional Manager of
the  Company.  Mr.  Beall's   responsibilities  include  the  implementation  of
corporate  policies,  attainment  of  branch  profitability,  fleet  utilization
management and development of personnel.  Prior to joining Williams in 1977, Mr.
Beall was a Regional  Manager for Modular  Sales and  Leasing  Company  based in
Georgia.

     Mr.  Donegan was  appointed  Senior Vice  President  and Northern  Division
Manager in October 1996.  In addition,  he serves as the  Northeastern  Regional
Manager of the Company,  a position he has held since June 1994,  and also prior
to 1991. Mr. Donegan's  responsibilities include the implementation of corporate
policies,  attainment of branch profitability,  fleet utilization management and
development of personnel. 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.

     Mr.  Funk is the  Midwestern  Regional  Manager  of  Scotsman.  Mr.  Funk'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 1986,  Mr. Funk was a branch manager for IISCOM,
a distributor of computer products based in Florida.

     Ms.  Giannelli  has served as  Controller  of  Scotsman  since  1990,  with
responsibilities  for  Scotsman's  accounting  department  including  regulatory
reporting. Prior to joining Scotsman, Ms. Giannelli was a Senior Manager of KPMG
Peat Marwick in Baltimore,  Maryland where she had been employed since 1982. Ms.
Giannelli has been Controller of the Company since May 1994.

     Mr. Hansen is the Western  Regional  Manager of the Company.  Mr.  Hansen's
responsibilities include the implementation of corporate policies, attainment of
branch profitability, fleet utilization management and development of personnel.
Prior to joining  Scotsman in 1983,  Mr. Hansen was General  Manager of Duracite
Mfg., a cabinetwork and construction firm in the San Francisco Bay Area.

     Mr.  Keefe was  appointed  Vice  President,  Fleet and Finance in February,
1995, with  responsibilities  including overall fleet management and purchasing,
treasury functions, planning and budgeting. Prior to joining Scotsman, Mr. Keefe
was with The Ryland Group,  a national  homebuilder  headquartered  in Columbia,
Maryland,  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 in  Baltimore,  Maryland,  most
recently as a Senior Manager.

     Mr.  LeBuhn has served as Vice  President of Human  Resources  for Scotsman
since January 1994.  Mr.  LeBuhn's  responsibilities  include the  management of




                                       56
<PAGE>



human resources  related  programs.  Prior to joining  Scotsman,  Mr. LeBuhn was
Human  Resources  Manager for  Sherwin-Williams  Eastern  Division  from 1992 to
January  1994 and Director of Human  Resources  for  Consolidated  International
Insurance Group, Inc. from 1985 to 1992.

     Mr. Ross has been Corporate Counsel for Scotsman since February 1995. Prior
to joining Scotsman,  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.  He has engaged in the private  practice of law in both North  Carolina
and  Maryland.  Mr. Ross has been the Secretary of the Company since October 26,
1995.

     Mr. Ryan has served as Vice President of Customer  Development Services for
Scotsman  since  October 1994,  responsible  for the rental and sales of revenue
enhancement products to Scotsman's existing customer base and national accounts.
From  1990  to  1994,  Mr.  Ryan  was  Vice  President  of  Scotsman  Buildings,
responsible  for  Scotsman's  Modular  Structures  Division.  Prior  to  joining
Scotsman,  Mr.  Ryan  was  employed  as Vice  President  of Sales  for  Cardinal
Industries, Inc., a manufacturer and builder of modular buildings.

     Mr.  Wyatt has  served as  Director  of  Marketing  and Sales  Support  for
Scotsman since February 1994, was Director of Sales and Marketing for the Mobile
Offices  Division  from 1990 to 1994 and was National  Sales Manager of Williams
from 1988 to 1990.  Before joining  Scotsman,  Mr. Wyatt operated W.J. Wyatt and
Company,  Inc., a consulting firm providing sales development,  market planning,
convention and meeting management and publishing services.



                                       57
<PAGE>



Item 11.

Executive Compensation

                           Summary Compensation Table

     The officers and directors of the Company received no compensation from the
Company.

     The  following  table  sets  forth  certain   information   concerning  the
compensation  for the last three completed fiscal years of the five highest paid
officers of  Scotsman  who  received  total  compensation  in excess of $100,000
during  1996.

<TABLE>
<CAPTION>

                                                                                Long Term
                                                                              Compensation
                                                                                 Awards
                                                                                 ------
                                                                    Annual     Securities
                                                                 Compensation  Underlying
                                                                 ------------               All Other
                                                         Year  Salary    Bonus   Options  Compensation
                                                         ----  ------    -----   -------  ------------
<S>                                                     <C>    <C>       <C>     <C>      <C>

Barry P. Gossett
Chairman and Chief Executive Officer.................... 1996 $225,000  $51,000     ---    $20,374(2)
                                                         1995  205,770   51,000     ---     18,066(2)
                                                         1994  200,000   52,000     ---      3,287(2)

Gerard E. Holthaus
President and Chief Operating Officer................... 1996  200,000   50,500  27,000(1)  15,422(2)
                                                         1995  180,769   50,500   7,800(1)  12,968(2)
                                                         1994   78,327   50,000     ---      8,297(2)

J. Collier Beall
Senior Vice President and Southern Division Manager..... 1996  216,881   20,000  10,000(1)   9,825(2)
                                                         1995  171,390   28,000   2,300(1)   7,200(2)
                                                         1994  155,901   23,750     ---      7,200(2)

Joseph F. Donegan
Senior Vice President and Northern Division Manager..... 1996  200,557   20,000  10,000(1)   9,625(2)
                                                         1995  148,635   25,000   1,950(1)   8,138(2)
                                                         1994   54,609   15,000     ---      3,600(2)

James D. Funk
Vice President - Midwestern Regional Manager............ 1996  147,357   20,000   7,000(1)   9,144(2)
                                                         1995  158,338   20,000   1,950(1)   7,875(2)
                                                         1994  166,018   21,875     ---      7,450(2)
</TABLE>


(1)  Represents  options granted to purchase shares of Holdings  pursuant to the
     Scotsman Holdings, Inc. 1994 Employee Stock Option Plan.

(2)  Represents  disability  insurance premium,  key man life insurance premium,
     car allowance or lease amounts and employer match under the 401(k) Plan.




                                       58
<PAGE>




1994 Management Equity Offering


         In 1994,  certain  management  employees  of Scotsman  were offered the
opportunity  to purchase up to 1.6% of the Company's  common stock at a purchase
price of $11.76 per share, representing fair market value of the shares. A total
of 54,082 shares were offered and purchased  under this plan.  See a description
of the restriction on these shares in "Item 13 - Stockholders' Agreement".

Scotsman Holdings, Inc. 1994 Employee Stock Option Plan

         In  March  1995,  a stock  option  plan was  adopted  for  certain  key
employees  of  Scotsman.  In February  1997,  options for 107,530  shares of the
Company  were  granted at an offer  price of $55.18 per share.  Under this plan,
certain key employees  may be granted  options to purchase up to a total of 7.5%
of the Company's  outstanding  common stock.  The options are  exercisable for a
period of 10 years from date of grant and have a five year vesting schedule.

Long Term Incentive Plan

         Scotsman   adopted  a  long  term   incentive   plan  (the   "Incentive
Compensation Plan") under which certain management employees will be entitled to
receive,  for each of fiscal  years 1994 through  1998,  cash  compensation,  if
certain operating targets (EBITDA) are met. Each participant under the Incentive
Compensation  Plan may be entitled to an additional  lump sum payment  following
the end of  Scotsman's  1998  fiscal  year,  depending  on the  extent  to which
cumulative  EBITDA of Scotsman for the five year period beginning in fiscal 1994
and ending in fiscal 1998 exceeds the EBITDA  target amount for the same period.
In February 1997,  $400,000 was paid to  approximately  40 management  employees
based upon Scotsman's 1996 operating performance.

401(k)/Defined Contribution Plan

         On May 1,  1993  Scotsman  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  employee of Scotsman  who  completes  one hour of
service with Scotsman 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 Scotsman and (ii) the dollar
limit  described  in Section  402(g) of the Code  ($9,500 in 1996).  All amounts
deferred under the 401(k) Plan's salary  reduction  feature by a participant are
fully vested.



                                       59
<PAGE>


         The 401(k)  Plan has a  "matching"  contribution  feature  under  which
Scotsman may contribute a percentage of the amount deferred by each  participant
who makes salary  reduction  deferrals to the 401(k) Plan, has been employed for
12  consecutive  months by  Scotsman,  completes  1,000  hours of  service  with
Scotsman during the Plan year and is employed by Scotsman 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  Scotsman.  A
participant becomes 20%, 40%, 60%, and 100% vested in the matching contributions
made to the 401(k) Plan on his or her behalf after  completion  of 2, 3, 4 and 5
years of service with Scotsman, respectively.

         The  401(k)  Plan  also has a "profit  sharing"  feature,  under  which
Scotsman  may  contribute,  in its  discretion,  an  additional  amount which is
allocated to the accounts of active  participants  who have been employed for 12
consecutive months by Scotsman, 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.

         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 1996,  Scotsman  made  matching  contributions  to the  401(k)  Plan
participants in an aggregate amount of $242,913.

Compensation Committee Interlocks and Insider Participation

         No director or  executive  officer of Scotsman  was or is a director or
executive officer of any corporation,  other than Holdings,  that has a director
or  executive  officer  who is also a  director  of  Scotsman  or a member  of a
committee of the Board of  Directors.  During 1995,  no officers or employees of
Scotsman other than Messrs.  Gossett and Holthaus  participated in deliberations
of Scotsman's Board of Directors concerning executive officer compensation.




                                       60
<PAGE>



Item 12. Security Ownership of Certain Beneficial Owners and Management

         The  following  table  sets forth  certain  information  regarding  the
ownership of the Company's Common Stock as of the date of this Report by (i) all
persons owning of record or beneficially to the knowledge of the Company's 5% or
more of the  issued  and  outstanding  Common  Stock of the  Company,  (ii) each
director individually and (iii) all executive officers and directors as a group:

<TABLE>
<CAPTION>
                                                                      Percentage
         Name                                        Shares             Owned
         ----                                        ------             -----
<S>                                                 <C>                  <C>
   Odyssey Partners, L.P.
      Stephen Berger (1)
      Brian Wruble (1)
      Leon Levy (1)
      Jack Nash (1)                                 2,989,201 (2)        88.6%
      Joshua Nash (1)
   31 West 52nd Street
   New York, New York 10019 ...................
   Barry P. Gossett (3)........................       259,469             7.7%

   Gerard E. Holthaus (3)......................        12,700             0.4%

   All executive officers and directors as a group  3,285,020            97.3%
   ---------------------
</TABLE>

(1)  The shares of common stock  beneficially  owned by Odyssey  Partners may be
     deemed  to be  beneficially  owned  by  the  general  partners  of  Odyssey
     Partners:  Stephen  Berger,  Brian Wruble,  Leon Levy, Jack Nash and Joshua
     Nash  (collectively,  the  "General  Partners"),  who will share voting and
     investing  control over such shares.  The General  Partners  disclaim  such
     beneficial  ownership.  The address of each of the General  Partners is the
     address of Odyssey Partners.

(2)  Does not include  shares  beneficially  owned by Mr.  Gossett,  as to which
     Odyssey  Partners has an irrevocable  proxy.  See "Item 13 -- Stockholders'
     Agreement."

(3)  Mr.  Gossett's  and Mr.  Holthaus'  address is the  address  of  Scotsman's
     principal executive offices.




                                       61
<PAGE>


Item 13. Certain Relationships and Related Transactions

Odyssey Investors Management Agreement

         Scotsman and Odyssey Investors,  Inc. ("Odyssey  Investors"),  a wholly
owned subsidiary of Odyssey Partners,  entered into a management  agreement (the
"Management  Agreement"),  dated as of December 16, 1993,  which  provides  that
Scotsman  will  pay  Odyssey  Investors  an  annual  fee  of up to  $250,000  in
consideration of certain management, consulting, and financial advisory services
to be rendered by Odyssey  Investors,  until such time,  if any, as Scotsman has
outstanding  publicly-held  shares of Common Stock.  The terms of the Management
Agreement  were not the  result  of arms'  length  bargaining  and have not been
reviewed as to fairness by any independent  party and no determination  has been
made as to whether the terms of the  Management  Agreement  were as favorable as
those  which  might  have been  obtained  from  unaffiliated  parties.  Scotsman
incurred expense of $250,000 for these services in 1996.

Stockholders' Agreement

         Odyssey Partners, the Management  Stockholders and Scotsman are parties
to an Amended and Restated Management Stockholders' and Optionholders' Agreement
dated as of June 6, 1994  (the  "Stockholders'  Agreement"),  which  amends  and
restates the Management  Stockholders' and Optionholders'  Agreement dated as of
November  9, 1993,  and 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 each Management Stockholder (other than sales required in connection with the
disposition  of all shares of Common  Stock  owned by Odyssey  Partners  and its
affiliates) until the earlier of fifteen months after an initial public offering
of the equity of Scotsman or the day after Odyssey  Partners and its  affiliates
have  disposed  of more than  33-1/3% of the shares of Common  Stock  originally
acquired by Odyssey  Partners,  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  in  connection  with the  Acquisition  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 Odyssey  Partners and Scotsman,  respectively,  a right of first
refusal to purchase such shares.



                                       62
<PAGE>


         Each Management Stockholder has the right (and in limited circumstances
the  obligation) to sell his shares in connection  with certain  dispositions of
shares by Odyssey  Partners  and the right to cause his shares to be included in
certain  registrations  of  Common  Stock on behalf of  Odyssey  Partners.  Each
Management Stockholder has granted to Odyssey Partners an irrevocable proxy that
permits Odyssey  partners to vote his shares.  In addition,  upon termination of
any  Management  Stockholder's  employment,  Scotsman  may elect to require such
Management Stockholder to sell to Scotsman all of his shares.






                                       63
<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 1996.

               In a report on Form 8-K dated  November 27,  1996,  the Company
               reported  that its  subsidiary,  The  Scotsman group, Inc. had
               changed its name to Williams Scotsman, Inc., effective January 1,
               1997.

          (c)  Exhibits

            Exhibit Number

          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 March 2, 1994 between
                           Scotsman Holdings, Inc. and First Trust National
                           Association, as Trustee.  (Incorporated by reference
                           to Exhibit 4.1 of Registration Statement on Form S-4,
                           Commission File No. 33-68444.

          4.2  --          A/B Exchange Registration rights Agreement, dated
                           March 2, 1994 between BT Securities Corporation and
                           Scotsman Holdings, Inc.  (Incorporated by reference
                           to Exhibit 4.3 of Registration Statement on Form S-4,
                           Commission File No. 33-68444.

         10.1  --          Indenture dated as of December 16, 1993 between
                           The Scotsman Group, Inc. and Continental Bank
                           National Association, as trustee (Incorporated by
                           reference to Exhibit 10.1 to the annual report on
                           Form 10-K of The Scotsman Group, Inc. for the year
                           ended December 31, 1993 (the "Scotsman 1993 10-K")).




                                       64
<PAGE>




         10.2  --          Loan and Security Agreement dated December 16,
                           1993 between Congress Financial Corporation and
                           The Scotsman Group, Inc.  (Incorporated by reference
                           to Exhibit 10.2 to the Scotsman 1993 10-K).

         10.3  --          Amendment No. 1 to Loan and Security Agreement
                           dated June 15, 1994 between Congress Financial
                           Corporation and The Scotsman Group, Inc.
                           (Incorporated by reference to Exhibit 10.2 to the
                           annual report on Form 10-K of The Scotsman Group,
                           Inc. for the year ended December 31, 1994 (the
                           "Scotsman 1994 10-K")).

         10.4  --          Amendment No. 2 to Loan and Security Agreement
                           dated September 14, 1994 between Congress Financial
                           Corporation and The Scotsman Group, Inc.
                           (Incorporated by reference to Exhibit 10.3 to the
                           Scotsman 1994 10-K).

         10.5  --          Amendment No. 3 to Loan and Security Agreement
                           dated March 24, 1995 between Congress Financial
                           Corporation and The Scotsman Group, Inc.
                           (Incorporated by reference to Exhibit 10.4 to the
                           Scotsman 1994 10-K).

         10.6  --          Amendment No. 4 to Loan and Security Agreement
                           dated March 28, 1995 between Congress Financial
                           Corporation and The Scotsman Group, Inc.(Incorporated
                           by reference to Exhibit 10.5 to the annual report on
                           Form 10-K of The Scotsman Group, Inc. for the year
                           ended December 31, 1995 (the "Scotsman 1995 10-K")).

         10.7  --          Amendment  No.5 to Loan  and  Security  Agreement
                           dated  August  1,  1995  between  Congress  Financial
                           Corporation    and   The   Scotsman    Group,    Inc.
                           (Incorporated  by  reference  to Exhibit  10.6 to the
                           Scotsman 1995 10-K).

         10.8  --          Amendment  No.6 to Loan  and  Security  Agreement
                           dated  October 13, 1995  between  Congress  Financial
                           Corporation    and   The   Scotsman    Group,    Inc.
                           (Incorporated  by  reference  to Exhibit  10.7 to the
                           Scotsman 1995 10-K).



                                       65
<PAGE>


         10.9  --          Amendment No. 7 to Loan and Security Agreement
                           dated January 30, 1996 between Congress Financial
                           Corporation and The Scotsman Group, Inc.(Incorporated
                           by reference to Exhibit 10.8 to the Scotsman 1995
                           10-K).

         10.10 --          Amendment No. 8 to Loan and Security Agreement
                           dated September 30, 1996 between Congress Financial
                           Corporation and The Scotsman Group, Inc.
                           (Incorporated by reference to Exhibit 10.9 to the
                           annual report on Form 10-K of Williams Scotsman, Inc.
                           for the year ended December 31, 1996 (the "Scotsman
                           1996 10-K")).

         10.11 --          Amendment No. 9 to Loan and Security Agreement
                           dated January 31, 1997 between Congress Financial
                           Corporation and Williams Scotsman, Inc.
                           (Incorporated by reference to Exhibit 10.10 to the
                           Scotsman 1996 10-K).

         10.12 --          Intercreditor Agreement dated December 16, 1993
                           among The Scotsman Group, Inc., Congress Financial
                           Corporation and Continental Bank National
                           Association, as trustee (Incorporated by reference to
                           Exhibit 10.3 to the Scotsman 1993 10-K).

         10.13 --          Amended and Restated Management Stockholders'
                           and Optionholders'Agreement dated as of June 6, 1994,
                           amending and restating the Management Stockholders'
                           and Optionholders' Agreement dated as of November 9,
                           1993 by and among Scotsman Holdings, Inc., Odyssey
                           Partners, L.P. and the parties identified as
                           management stockholders on the signature pages
                           thereto. (Incorporated by reference to Exhibit 10.4
                           of Registration Statement on Form S-l of Scotsman
                           Holdings, Inc., Commission File No. 33-68444).

         10.14  --         Management Agreement, dated as of December 16, 1993
                           between The Scotsman Group, Inc. and Odyssey
                           Investors, Inc.  (Incorporated by reference to
                           Exhibit 10.5 of Registration Statement on Form S-l
                           of Scotsman Holdings, Inc., Commission File No.
                           33-68444).

         10.15  --         Agreement, dated as of June 30, 1993 by and among The
                           Scotsman Group, Inc., Simon E. Dragan and Whitley
                           Manufacturing Co., Inc. (Incorporated by reference to
                           Exhibit 10.6 of Registration Statement on Form S-l,
                           Commission File No. 33-68444).



                                       66
<PAGE>

         10.16  --         Supply Agreement, dated as of August 25, 1993, by and
                           between Whitley Manufacturing Co., Inc. and The
                           Scotsman Group, Inc. (Incorporated by reference to
                           Exhibit 10.7 of Registration Statement on Form S-l,
                           Commission File No.3-68444).

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

         10.18  --         Scotsman Holdings, Inc. 1994 Employee Stock Option
                           Plan. (Incorporated by reference to Exhibit 10.11 of
                           the Scotsman 1994 10-K).

         12.    --         Statement regarding computation of ratios.

         21.    --         Subsidiaries of Registrant: Williams Scotsman, Inc.
                           and its subsidiary Mobile Field Office Company.




                                       67
<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.

                                 SCOTSMAN HOLDINGS, INC.


                                 By: /s/ Gerard E. Holthaus
                                     --------------------------
                                     Gerard E. Holthaus
                                     President
Dated:  March 28, 1997

         KNOW  ALL MEN BY THESE  PRESENTS,  that  each  person  whose  signature
appears  below  constitutes  and  appoints  Gerard  E.  Holthaus,   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 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/ Barry P. Gossett             Chief Executive Officer        March 28, 1997
--------------------------       and Director
Barry P. Gossett


/s/ Gerard E. Holthaus           President, Chief Operating     March 28, 1997
--------------------------       Officer and Director
Gerard E. Holthaus


/s/ Katherine K. Giannelli       Controller                     March 28, 1997
--------------------------
Katherine K. Giannelli


/s/ Muzzafar Mirza               Vice President and Director    March 28, 1997
--------------------------
Muzzafar Mirza


/s/ Stephen Berger               Director                       March 28, 1997
--------------------------
Stephen Berger


/s/ Brian Kwait                  Director                       March 28, 1997
--------------------------
Brian Kwait







                                       68
<PAGE>

                    SCOTSMAN HOLDINGS, INC. AND SUBSIDIARIES

           Schedule I - Condensed Financial Information of Registrant
<TABLE>
<CAPTION>

Condensed Balance Sheets                                 December 31,
                                                      ------------------
                                                        (in thousands)
                                                1996                      1995
                                                ----                      ----
                  Assets

<S>                                          <C>                       <C>
      Cash                                   $    75                        55
      Investment in subsidiary                71,703                    62,508
      Deferred financing costs, net              774                       882
      Deferred income taxes                    3,068                     1,982
                                              ------                    ------
                                             $75,620                   $65,427
                                              ======                    ======

Liabilities and Stockholders' Equity
------------------------------------

      Accrued expenses                       $ 1,033                   $   964
      Long-term debt                          26,074                    23,117
                                              ------                    ------
                                              27,107                    24,081
                                              ------                    ------
      Stockholders' equity:
             Common stock                         35                        35
             Additional paid-in capital       39,064                    39,064
             Retained earnings                11,403                     2,247
                                              ------                    ------
                                              50,502                    41,346
      Treasury stock                          (1,989)                      ---
                                              ------                    ------
                                              48,513                    41,346
                                              ------                    ------
                                             $75,620                   $65,427
                                              ======                    ======
</TABLE>
<TABLE>
<CAPTION>

Condensed Statements of Operations                         December 31,
                                                   ---------------------------
                                                          (in thousands)
                                                    1996       1995       1994
                                                    ----       ----       ----

<S>                                                <C>       <C>       <C>
      Revenue                                      $2,074    $   ---   $   ---
                                                    -----      -----     -----

      Selling, general and administrative expenses     60         71        73
      Interest                                      3,139      2,821     2,401
                                                    3,199      2,892     2,474

             Loss before income taxes              (1,125)    (2,892)   (2,474)
      Income tax benefit                           (1,086)    (1,012)     (970)
                                                    -----      -----     -----

             Loss before equity in earnings
             of subsidiaries                         (39)     (1,880)   (1,504)

Equity in earnings of subsidiaries                 9,195       4,559     1,072
                                                   -----       -----     -----
             Net income (loss)                    $9,156      $2,679    $ (432)
                                                   =====       =====     ======
</TABLE>





                                       69
<PAGE>




                    SCOTSMAN HOLDINGS, INC. AND SUBSIDIARIES

      Schedule I - Condensed Financial Information of Registrant, Continued

<TABLE>
<CAPTION>

Statement of Cash Flows                                    December 31
                                                           -----------
                                                          (in thousands)
                                                   1996        1995       1994
                                                   ----        ----       ----

Cash flows from operating activities:
<S>                                              <C>        <C>        <C>
     Net income (loss)                           $ 9,156    $ 2,679    $ (432)
     Adjustments to reconcile net loss to net
       cash provided by operating activities:
            Amortization                             246        158        241
            Non-cash charges for interest          2,819      2,533      1,162
            Deferred income tax benefit           (1,086)    (1,012)      (970)
            Undistributed earnings of subsidiary  (9,195)    (4,559)    (1,072)
            Other                                     69         92        872
                                                   -----      -----      -----
               Net cash provided by (used in)
                      operating activities         2,009       (109)      (199)
                                                   -----        ---        ---

Cash flows from financing activities:
         Proceeds from long-term debt                ---        ---     19,208
         Repayments of long-term debt                ---        ---    (20,636)
         Increase in deferred financing costs        ---        ---     (1,067)
         Proceeds from issuance of common stock      ---        ---      2,678
         Payments to acquire treasury stock       (1,989)       ---        ---
                                                   -----      -----     ------
                  Net cash (used in) provided by
                           financing activities   (1,989)       ---        183
                                                   -----      -----     ------

                  Net increase (decrease) in cash     20       (109)       (16)
         Cash at beginning of period                  55        164        180
                                                   -----      -----     ------
         Cash at end of period                   $    75    $    55   $    164
                                                   =====      =====     ======

</TABLE>




                                       70
<PAGE>

                     WILLIAMS SCOTSMAN, INC. AND SUBSIDIARY

                 Schedule II - Valuation and Qualifying Accounts

                  Years ended December 31, 1996, 1995 and 1994

                                 (In thousands)

<TABLE>
<CAPTION>


                                                1996         1995        1994
                                                ----         ----        ----
Allowance for Doubtful Accounts:
<S>                                           <C>          <C>         <C>
     Balance at beginning of the period       $  447       $  444      $  416
     Provision charged to expense              2,209        1,509       1,207
     Purchase of Mobile Holdings, Inc.           ---          ---          65
     Accounts receivable written-off (net of
                           recoveries)        (2,398)      (1,468)      (1,282)
                                               -----        -----        -----

     Balance at end of the period             $  258       $  447      $   406
                                               =====        =====        =====


</TABLE>

























                                       71
<PAGE>


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


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

12.      --       Statement regarding computation of ratios            73



































                                       72