SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2000 Commission Registrant; State of Incorporation; IRS EMPLOYER File Number Address; and Telephone Number Identification No. 333-52529 MMH HOLDINGS, INC. 39-1716155 (a Delaware Corporation 315 W. Forest Hill Avenue Oak Creek, Wisconsin 53154 (414) 764-6200 333-52527 MORRIS MATERIAL HANDLING, INC. 39-1924039 (a Delaware Corporation) 315 W. Forest Hill Avenue Oak Creek, Wisconsin 53154 (414) 764-6200 Indicate by check mark whether the registrants (1) have 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 registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of the latest practicable date (October 31, 2000): MMH Holdings, Inc. Nonvoting common stock, $.01 Par Value, 4,350 shares outstanding. Voting common stock, $.01 Par Value, 10,169 shares outstanding. Morris Material Handling, Inc. Common stock, $.01 Par Value, 100 shares outstanding. MMH Holdings, Inc. holds all of the outstanding common stock of Morris Material Handling, Inc. MMH HOLDINGS, INC. MORRIS MATERIAL HANDLING, INC. INDEX Introduction 3 Part I -Financial Information: Item 1. Financial Statements MMH Holdings, Inc. Condensed Balance Sheets 4 Condensed Statements of Operations and Comprehensive Income (Loss) 5 Condensed Statements of Cash Flows 6 Statements of Preferred Stock and Shareholders'Equity 7 Morris Material Handling, Inc. Condensed Balance Sheets 8 Condensed Statements of Operations and Comprehensive Income (Loss) 9 Condensed Statements of Cash Flows 10 Statements of Shareholder's Equity 11 Notes to Financial Statements of MMH Holdings, Inc. and Morris MaterialHandling, Inc. 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations of MMH Holdings, Inc. and Morris Material Handling, Inc. 34 Item 3. Quantitative and Qualitative Disclosures about Market Risk 46 Part II - Other Information: Item 1. Legal Proceedings 47 Item 2. Changes in Securities 47 Item 3. Defaults upon Senior Securities 47 Item 4. Submission of Matters to a Vote of Security Holders 47 Item 5. Other Information 47 Item 6. Exhibits and Reports on Form 8-K 47 2 Introduction MMH Holdings, Inc. ("Holdings") is a holding company whose sole direct subsidiary is Morris Material Handling, Inc. ("MMH"), which, together with its operating subsidiaries, is a manufacturer, distributor and service provider of "through-the-air" material handling equipment with operations in the United States, United Kingdom, South Africa, Singapore, Canada, Australia, Thailand, Chile and Mexico. Unless the context requires otherwise, references to the "Company" in this combined 10-Q are to Holdings, MMH, its subsidiaries and their predecessors. This combined Form 10-Q is separately filed by MMH Holdings, Inc. and by Morris Material Handling, Inc. The unaudited interim financial statements presented in this combined report (collectively, the "Financial Statements") include the financial statements of Holdings, as well as separate financial statements for MMH. Information contained herein relating only to Holdings or MMH is filed by Holdings or MMH as the case may be, on its own behalf. Certain sections of this Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations," contain various forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, which represent management's expectations or beliefs concerning future events. Holdings and MMH caution that those statements are further qualified by important factors that could cause actual results to differ from those in the forward looking statements. Factors that might cause such a difference include, without limitation, general economic conditions and competition in the markets in which the Registrants' operations are located and are detailed herein under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Cautionary Factors." Consequently, all forward-looking statements made herein are qualified by these cautionary statements. There can be no assurance that the actual results, events or developments referenced herein will occur or be realized. 3 MMH HOLDINGS, INC. (Debtors - in Possession as of May 17, 2000) CONDENSED BALANCE SHEETS (Dollars in Thousands) ASSETS LIABILITIES AND SHAREHOLDERS' EQUITY

~~For~~July ~~the~~31, ~~Three~~October ~~Months~~31, ~~For~~July ~~the Six Months ENDED APRIL 30~~31, ~~ENDED~~October ~~APRIL 30~~31, ~~--------------------------------- ---------------------------------~~ 2000 1999 2000 1999 --------~~-----~~ ------------- --------~~-----~~ ------------- ~~Revenues~~(Unaudited) ~~Equipment~~(Unaudited) Current Assets Liabilities Not Subject to Compromise Cash and ~~Part~~cash ~~Sales~~equivalents $ 512,~~435~~785 $ 543,~~430~~929 $Current ~~103,600~~Liabilities $Accounts ~~107~~receivable-net 57,~~495~~196 ~~Service~~64,481 ~~Sales~~Short-term 14notes payable and current Inventories 35,~~770~~901 1739,~~419~~994 29portion of long-term obligations (Note 9) $ 116 $ 383 Other current assets 7,~~324~~566 327,~~274~~842 ~~-------------~~Junior DIP Facility (Note 9) 31,252 -~~------------~~ --------~~-----~~ --------~~-----~~ ~~Net~~Revolving ~~Sales~~Credit ~~66,205~~Facility 71Borrowings (Note 9) - 27,~~849~~925 ~~132~~103,~~924~~448 ~~139~~116,~~769~~246 ~~Other~~Term ~~Income~~Loans -(Note ~~Net~~9) - 4552,225 - ~~147~~ -------~~------~~ --------~~-----~~ ~~-------------~~Acquisition Facility Line Borrowings (Note 9) -~~------------~~ 6612,~~205~~430 71Senior Notes (Note 9) - 200,~~894~~000 ~~132~~Property,~~924~~ ~~139~~Plant and Bank overdrafts 998 1,~~916~~367 ~~Cost~~Equipment ofTrade ~~Sales~~accounts 50payable 13,~~683~~110 5426,~~442~~757 ~~101~~Employee compensation and benefits 6,~~555~~990 ~~105~~8,~~056~~020 ~~Selling~~Land and improvements 3,300 ~~General~~3,349 Advance payments and ~~Administrative~~progress ~~Expenses~~billings 2111,~~291~~592 198,~~354~~336 38Buildings 22,~~151~~572 3523,~~287~~235 ~~-------------~~Accrued ~~-------------~~warranties 1,865 1,821 Machinery and equipment 43,427 45,219 Accrued interest 762 1,804 -------~~------~~ -------~~------~~ ~~Operating~~Income ~~Loss~~taxes ~~(5,769)~~payable (1,~~902)~~561 (62,~~782)~~205 ~~(427)~~69,299 ~~Gain~~71,803 onOther ~~Sale~~current ofliabilities a5,354 ~~Business~~9,791 - - ~~6,380~~ ------ ~~Interest Expense~~ -------- ~~Net~~Less (7accumulated 73,~~616)~~600 (7353,~~523)~~064 depreciation (1533,~~366~~370) (1430,~~431~~829) -------~~------~~ ------- Other Long-Term Obligations 624 2,784 35,929 40,974 Other Long-~~----~~Term Liabilities 239 1,307 -------~~------~~ -------~~------~~ ~~Loss~~Liabilities ~~Before~~Subject ~~Income~~to ~~Taxes~~Compromise ~~and Minority Interest~~ (~~13,385)~~Note ~~(9,425~~5) ~~(15~~295,~~768)~~483 ~~(14,858)~~- ~~Provision~~Minority ~~for~~Interest ~~Income~~71 ~~Taxes~~504 ~~(247)~~Commitments ~~(3,518)~~and ~~(2,035)~~Contingencies (~~1,065~~Note 10) ~~Minority~~Other ~~Interest~~Assets 11Goodwill 2122,500 2742,844 27Manditorily ~~-------------~~Redeemable ~~-------------~~Preferred ~~-------------~~Stock ~~-------------~~118,642 ~~Net~~108,245 ~~Loss~~Debt ~~(13,621)~~financing ~~(12,922)~~costs ~~(17~~14,~~776)~~781 ~~(15~~16,~~896)~~398 ~~Foreign~~Shareholders' ~~Currency~~Equity ~~Translation Adjustments~~ (2302,~~521~~433) (~~407~~239,068) (2Other 9,~~278)~~568 (110,~~377)~~374 --------~~-----~~ ---------~~----~~ -------~~------~~ -------~~------~~ ~~Comprehensive Loss~~ $ ~~(16~~186,~~142)~~226 $ ~~(13~~226,~~329)~~836 ~~$ (20~~46,~~054)~~849 ~~$ (17~~69,~~273)~~616 ========~~======~~ =========~~=====~~ ------- ------- $186,226 $ 226,836 ========~~======~~ =========~~====~~

The accompanying notes are an integral part of the financial statements. 4 MMH HOLDINGS, INC. (Debtors - in - Possesion as of May 17, 2000) CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (Dollars in Thousands) For the Three Months For the Nine Months Ended July 31, Ended July 31, 2000 1999 2000 1999 -------- -------- -------- -------- Revenues Equipment and Part Sales $ 50,420 $ 59,490 $154,020 $166,985 Service Sales 15,045 13,219 44,369 45,493 -------- -------- -------- -------- Net Sales 65,465 72,709 198,389 212,478 Other Income - Net - 453 - 600 -------- -------- -------- -------- 65,465 73,162 198,389 213,078 Cost of Sales 54,084 52,210 155,639 157,266 Selling, General and Administrative Expenses 17,982 18,298 53,943 53,585 Impairment Loss on Long - Lived Assets 16,009 - 16,009 - Reorganization Items 3,008 - 5,198 - -------- -------- -------- -------- Operating Income (Loss) (25,618) 2,654 (32,400) 2,227 Gain on Sale of a Business - - 6,380 - Loss on Disposal of Fixed Assets (830) - (830) - Interest Expense - Net (3,888) (7,521) (19,254) (21,952) -------- -------- -------- -------- Loss Before Income Taxes and Minority Interest (30,336) (4,867) (46,104) (19,725) Provision for Income Taxes (226) (576) (2,261) (1,641) Minority Interest 215 13 242 40 -------- -------- -------- -------- Net Loss (30,347) (5,430) (48,123) (21,326) Foreign Currency Translation Adjustments (1,667) (869) (3,945) (2,246) -------- -------- -------- -------- Comprehensive Loss $(32,014) $ (6,299) $(52,068) $(23,572) ======== ======== ======== ======== The accompanying notes are an integral part of the financial statements. 5 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in Thousands)

For the ~~Six~~Nine Months ~~ENDED~~Ended ~~APRIL~~July 3031, ------------------------~~------------~~ 2000 1999 ----------- ----------- Operating Activities Net ~~income~~Loss ~~(loss)~~ $ (1748,~~776~~123) $ (1521,~~896~~326) Add (deduct) - items not affecting cash provided by operating activities: DIP financing fees 950 - Depreciation and amortization 47,~~563~~004 36,~~853~~057 Amortization of debt financing costs 1,~~174~~761 1,~~048~~603 Deferred income taxes - net - 3141 Gain on sale of business (6,380) - Impairment loss on long-lived assets 16,009 - Loss on disposal of fixed assets 830 - Other (27242) (2740) Changes in working capital, excluding the effects of acquisition opening balance sheets: Accounts receivable 85,~~312~~183 1918,~~285~~212 Inventories (12,~~498)~~122 ~~1,262~~34 Other current assets ~~(2,008)~~28 (43,~~063~~762) Trade accounts payable and bank overdrafts (61,~~357~~369) (810,~~125~~512) Advance payments and progress billings 23,~~492~~134 ~~1,016~~366 Accrued interest 911,~~734~~359 ~~(400)~~4,243 Other current liabilities ~~966~~747 (57,~~389~~103) Net cash used for operating activities, including --------~~---~~ --------~~---~~ ~~Net~~reorganization ~~cash~~items ~~used for operating activities~~ (6,~~805~~987) (712,~~405~~187) --------~~---~~ --------~~---~~ Investment and Other Transactions Fixed asset additions - net (~~474~~1,033) (4,~~744~~012) Capitalized software (~~997~~890) -(2,196) Acquisition of businesses - net of cash acquired - - (5,070) Net proceeds on divestiture of business 9,115 - ~~Repayments~~Net Issuance of loans ~~from~~to senior management - 70(80) Other - net 30 (~~196~~570) Net cash provided by (~~245~~used for) investment and --------~~---~~ --------~~---~~ ~~Net cash provided by (used for) investment and~~ other transactions 7,~~448~~222 (911,~~989~~928) --------~~---~~ --------~~---~~ Financing Activities Changes in short-term debt and notes payable ~~6,840~~(9) 8(22) Proceeds from DIP and Junior DIP borrowings 31,~~267~~352 - Repayment of DIP borrowings (100) - Net (repayments of)/proceeds from Revolving Credit Facility borrowings (47,~~775~~279) 824,~~784~~058 Repayment of Term Loans (321,~~812~~079) -(1,388) Proceeds from/(repayments of) Acquisition Facility Line borrowings (~~336~~2,867) 1,235 Repayments of long-term debt (87117) (~~675~~120) Payment of DIP financing fees (950) - Payment of fees for amendment of Credit Facility (226) - --------~~---~~ --------~~---~~ Net cash provided by (used for) financing activities (21,~~396~~275) 1723,~~611~~763 --------~~---~~ --------~~---~~ Effect of Exchange Rate Changes on Cash and Cash Equivalents (75104) 39(29) --------~~---~~ --------~~---~~ Increase (decrease) in Cash and Cash Equivalents (1,~~828~~144) ~~256~~(381) Cash and Cash Equivalents Beginning of Period 3,929 2,534 --------~~---~~ --------~~---~~ End of Period $ 2,~~101~~785 $ 2,~~790~~153 ======== ======== The accompanying notes are an integral part of the financial statements.

6 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) STATEMENTS OF PREFERRED STOCK AND SHAREHOLDERS' EQUITY FOR THE NINE MONTHS ENDED JULY 31, 2000 (UNAUDITED) (Dollars in Thousands)

~~PREFERRED~~Preferred ~~STOCK~~Stock ----------------------------------------------------------------- Series A Series B Series C Common Stock --------------------~~---~~ ~~SERIES A SERIES B SERIES C~~ --------------------~~----~~ ---------------------~~---~~ -------------------~~----~~ Shares Carrying Shares Carrying Shares Carrying ~~OUTSTANDING~~Shares ~~VALUE~~Par ~~OUTSTANDING~~Outstanding ~~VALUE~~Value ~~OUTSTANDING~~Outstanding ~~VALUE~~Value ~~TOTAL~~Outstanding Value Total Outstanding Value ----------- -------- ----------- --------- ----------- -------- ----- ----------- ~~BALANCE~~----- ATBalance ~~OCTOBER~~at October 31, 1999 68,741 $ 67,443 $ 5,750 $ 5,808 $ 34,633 $ 34,994 $ 108,245 12,099 $ - Net loss Change in foreign currency translation Preferred stock dividends 46,~~124~~187 46,~~165~~187 ~~352~~528 ~~356~~528 23,~~165~~247 23,~~187~~247 69,~~708~~962 Issuance of non-voting common 2,420 shares Amortization of preferred 435 435 stock discount ~~291 291~~ Other ~~(5) (5)~~ ------- ------- -- ---- ------ ------~~---~~ --------- -------- ------ --- ~~BALANCE~~Balance ATat ~~APRIL~~July 3031, 2000 7274,~~865~~928 $ 7174,~~894~~065 6,~~102~~278 $ 6,~~164~~336 3637,~~798~~880 $ 3738,~~181~~241 $118,642 ~~115~~14,~~239~~519 $ - ======= ========= ======== ======~~===~~ ======~~===~~ ========= ========= ~~COMMON STOCK Parent Accumulated~~ ------~~-----------------~~ Investment/ Other Total Shares Par Additional Comprehensive Retained Shareholders' OUTSTANDING VALUE PAID-IN-CAPITAL LOSS EARNINGS EQUITY ------------ -------- --------------- ------------ ---------- -------------- BALANCE AT OCTOBER 31, 1999 12,099 $ - $(121,860) $ (3,428) $(113,780) $(239,068) Net loss (17,776) (17,776) Change in foreign currency translation (2,278) (2,278) Preferred stock dividends (6,708) (6,708) Issuance of non-voting common shares 2,420 Amortization of preferred stock discount (291) (291) Other ------ ------ --------- --------- --------- --------- BALANCE AT APRIL 30, 2000 14,519 $ - $(121,860) $ (5,706) $(138,555) $(266,121) ===~~=== ====== ========= ========= ========= =========~~

~~For~~Parent ~~the~~Accumulated ~~Three~~Investment/ ~~Months~~Other ~~For~~Total ~~the~~Additional ~~Six~~Comprehensive ~~Months~~Retained ~~ENDED~~Shareholders' ~~APRIL 30, ENDED APRIL 30,~~ Paid-in-~~-------------------------~~Capital ~~---------------------------~~Loss ~~2000~~Earnings ~~1999~~Equity ~~2000 1999~~ ----------- ----~~-------~~ ----------- --~~---------~~ ~~Revenues Equipment and Part Sales $ 51,435 $ 54,430 $ 103,600 $ 107,495 Service Sales 14,770 17,419 29,324 32,274~~ --------~~---~~ ----------- --~~---------~~ ~~-----------~~Balance ~~Net~~at ~~Sales~~October 6631,~~205~~ ~~71,849~~1999 132,924 139,769 Other Income - Net - 45 - 147 ----------- ----------- ----------- ----------- 66,205 71,894 132,924 139,916 Cost of Sales 50,683 54,442 101,555 105,056 Selling, General and Administrative Expenses 21,291 19,354 38,151 35,287 ----------- ----------- ----------- ----------- Operating Loss $(5121,~~769~~860) $(13,~~902~~428) $(6113,~~782~~780) $(~~427~~239,068) ~~Gain on Sale of a Business - - 6,380 - Interest Expense -~~ Net ~~(7,616)~~loss (748,~~523~~123) (1548,~~366~~123) ~~(14,431)~~Change ~~----------~~in ~~----------~~foreign ~~-----------~~currency ~~-----------~~translation ~~Loss Before Income Taxes and Minority Interest~~ (133,~~385~~945) (93,~~425~~945) ~~(15,768)~~Preferred ~~(14,858)~~stock ~~Provision~~dividends ~~for Income Taxes~~ (~~247) (3~~9,~~518~~962) (29,~~035~~962) ~~(1,065)~~Issuance ~~Minority~~of ~~Interest 11 21 27 27~~ non-~~----------~~voting ~~-----------~~common ~~-----------~~shares ~~-----------~~Amortization ~~Net~~of ~~Loss~~preferred ~~(13,621)~~stock ~~(12,922)~~discount (~~17,776~~435) (~~15,896~~435) ~~Foreign~~Other ~~Currency Translation Adjustments~~ (~~2,521~~900) (~~407~~900) ~~(2,278) (1,377)~~ ----------- -------~~----~~ ----------- ----------- ~~Comprehensive~~Balance ~~Loss~~at $July 31, 2000 $(16122,~~142~~760) $ (137,~~329~~373) $ (20172,~~054~~300) $ (17302,~~273~~433) =========== =======~~====~~ =========== ===========

The accompanying notes are an integral part of the financial statements. 7 MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED BALANCE SHEETS (Dollars in Thousands)

~~For~~ASSETS ~~the~~LIABILITIES ~~Six~~AND ~~Months~~SHAREHOLDER'S ~~ENDED~~EQUITY ~~APRIL~~------ ~~30,~~ ------------------------------------ July 31, October 31, July 31, October 31, 2000 1999 2000 1999 --------- ----------- --------- ----------- ~~Operating~~(Unaudited) ~~Activities~~(Unaudited) ~~Net~~Current ~~income~~Assets ~~(loss)~~Liabilities Not Subject to Compromise Cash and cash equivalents $ ~~(17~~2,~~776)~~785 $ ~~(15~~3,~~896)~~929 ~~Add~~Current ~~(deduct)~~Liabilities Accounts receivable-net ~~items~~57,196 ~~not~~64,481 ~~affecting~~Short-term ~~cash~~notes ~~provided~~payable ~~by operating activities: Depreciation~~ and ~~amortization~~current 4Inventories 35,~~563~~901 339,~~853~~994 ~~Amortization~~portion of ~~debt~~long-term ~~financing~~obligations ~~costs~~(Note 19) $ 116 $ 383 Other current assets 7,~~174~~566 17,~~048~~842 ~~Deferred~~Junior ~~income~~DIP ~~taxes~~Facility -(Note ~~net~~9) 31,252 - 31-------- ~~Gain~~-------- onRevolving ~~sale~~Credit ofFacility ~~business~~Borrowings (~~6,380~~Note 9) - ~~Other (~~27),925 103,448 116,246 Term Loans (27Note 9) ~~Changes~~- in52,225 ~~working~~-------- ~~capital,~~-------- ~~excluding~~Acquisition ~~the~~Facility ~~effects~~Line ofBorrowings ~~acquisition~~(Note ~~opening~~9) ~~balance~~12,430 ~~sheets:~~Senior ~~Accounts~~Notes ~~receivable~~(Note 89) - 200,~~312~~000 19Property,~~285~~ ~~Inventories~~Plant ~~(1,498)~~and Equipment Bank overdrafts 998 1,~~262~~367 ~~Other~~Land ~~current~~and ~~assets~~improvements (23,~~008)~~300 (43,~~063)~~349 Trade accounts payable ~~and~~13,110 ~~bank~~26,757 ~~overdrafts~~Buildings (622,~~357)~~572 (823,~~125)~~235 ~~Advance~~Employee ~~payments~~compensation and ~~progress~~benefits ~~billings 2~~6,~~492~~990 18,~~016~~020 ~~Accrued~~Machinery ~~interest~~and 9equipment 43,~~734~~427 ~~(400)~~45,219 ~~Other~~Advance ~~current~~payments ~~liabilities~~and ~~966~~progress (5billings 11,~~389)~~592 8,336 --------~~---~~ --------~~---~~ ~~Net~~Accrued ~~cash~~warranties ~~used~~1,865 ~~for~~1,821 ~~operating~~69,299 ~~activities (6~~71,~~805)~~803 (7Accrued interest 762 1,~~405)~~804 --------~~---~~ --------~~---~~ ~~Investment~~Income ~~and~~taxes ~~Other~~payable ~~Transactions~~1,561 ~~Fixed~~2,205 ~~asset~~Less ~~additions~~accumulated -depreciation ~~net~~ (~~474~~33,370) (430,~~744~~829) ~~Capitalized~~Other ~~software~~current ~~(997)~~liabilities ~~- Acquisition of businesses - net of cash acquired - (~~5,~~070)~~354 ~~Net proceeds on divestiture of business~~ 9,~~115~~791 - ~~Repayments of loans from senior management~~ - ~~70 Other~~ - ~~net (196) (245)~~ ----- -------- -------- -------- ~~Net~~35,929 ~~cash~~40,974 ~~provided by (used for) investment and other transactions 7~~73,~~448~~600 (9353,~~989)~~064 --------~~---~~ --------~~---~~ ~~Financing~~Other ~~Activities~~Assets ~~Changes~~Goodwill ~~in short-term debt and notes payable 6~~22,~~840~~500 842,~~267~~844 ~~Net~~Other ~~(repayments~~Long-Term ~~of)/proceeds~~Obligations ~~from~~624 ~~Revolving~~2,784 ~~Credit~~Debt ~~Facility~~financing ~~borrowings~~costs (414,~~775)~~781 816,~~784~~398 ~~Repayment~~Other of Long-Term ~~Loans~~Liabilities (3239 1,~~812)~~307 -Other ~~Proceeds~~9,568 ~~from/(repayments of) Acquisition Facility Line borrowings (336) 1~~10,~~235~~374 ~~Repayments~~Liabilities ofSubject ~~long-term~~to ~~debt~~Compromise (~~87)~~Note ~~(675~~5) ~~Payment~~295,483 of0 ~~fees for amendment of Credit Facility (226)~~ - -------~~----~~ --------~~---~~ ~~Net~~Minority ~~cash~~Interest ~~provided~~71 by504 ~~(used~~46,849 ~~for)~~69,616 ~~financing~~Commitments ~~activities~~and Contingencies (~~2,396~~Note 10) ~~17,611~~ --------~~---~~ --------~~---~~ ~~Effect~~Shareholders' ofEquity ~~Exchange~~(183,791) ~~Rate Changes on Cash and Cash Equivalents~~ (75130,823) 39 --------~~---~~ --------~~---~~ ~~Increase~~$186,226 ~~(decrease)~~$226,836 in$186,226 ~~Cash and Cash Equivalents (1~~$226,~~828)~~836 ~~256~~======== ~~Cash~~======== ~~and~~======== ~~Cash~~======== ~~Equivalents~~The ~~Beginning~~accompanying ofnotes ~~Period~~are ~~3,929~~an ~~2,534~~integral ~~-----------~~part ~~----------- End~~ of ~~Period~~the $financial ~~2,101 $ 2,790~~statements.

8 MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (Dollars in Thousands)

~~COMMON~~For ~~STOCK~~the ~~Parent~~Three ~~Accumulated~~Months For the Nine Months Ended July 31, Ended July 31, 2000 1999 2000 1999 ------- -------- -------- ~~Investment/~~-------- ~~Other~~Revenues ~~Total~~Equipment ~~Shares~~and ~~Par~~Part ~~Additional~~Sales ~~Comprehensive~~$ ~~Retained~~50,420 ~~Shareholder's~~$ ~~Outstanding~~59,490 ~~Value~~$154,020 ~~Paid~~$166,985 Service Sales 15,045 13,219 44,369 45,493 -in-~~Capital~~------ ~~Loss~~-------- ~~Earnings~~-------- ~~Equity~~-------- Net Sales 65,465 72,709 198,389 212,478 Other Income - Net - 453 - 600 -------- -------- -------- -------- 65,465 73,162 198,389 213,078 Cost of Sales 54,084 52,210 155,639 157,266 Selling, General and Administrative Expenses 17,982 18,298 53,943 53,585 Impairment Loss on Long - Lived Assets 16,009 - 16,009 - Reorganization Items 3,008 - 5,198 - -------- -------- -------- -------- >Operating ~~BALANCE~~Income AT(loss) ~~OCTOBER~~(25,618) 312,654 ~~1999~~(32,400) ~~100~~2,227 $Gain on Sale of a Business - $- ~~(33~~6,~~392~~380 - Loss on Disposal of Fixed Assets (830) $- (830) - Interest Expense - Net (3,~~428~~888) $(7,521) (9419,~~003~~254) $(~~130~~21,~~823~~952) ~~Net~~-------- ~~loss~~-------- -------- -------- Loss Before Income Taxes and Minority Interest (1730,~~776~~336) (174,~~776~~867) ~~Change~~(46,104) in(19,725) ~~foreign~~Provision ~~currency~~for ~~translation~~Income Taxes (226) (576) (2,~~278~~261) (21,~~278~~641) ~~Other~~Minority Interest 215 13 242 40 -------- -------- -------- -------- Net Loss (530,347) (5,430) ~~BALANCE~~(48,123) AT(21,326) ~~APRIL~~Foreign 30Currency Translation Adjustments (1,667) ~~2000~~(869) ~~100~~(3,945) $(2,246) -------- $-------- -------- -------- Comprehensive Loss $(3332,~~392~~014) $ (56,~~706~~299) $(~~111~~52,~~784~~068) $(~~150~~23,~~882~~572) ===== ===== ========== ========== ========~~== ========== The accompanying notes are an integral part of the financial statements.~~

The accompanying notes are an integral part of the financial statements. 9 MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in Thousands)

For the Nine Months Ended July 31, -----------------------~~-------------------~~ ~~SALES~~2000 1999 --------~~----------------------------------~~ --------~~--------~~ Operating ~~Income~~Activities (Net Loss $(48,123) ~~External~~$(21,326) ~~Intercompany~~Add ~~Total~~(deduct) -~~----------~~ ~~------------~~items ~~----------~~not ~~----------------~~affecting ~~Equipment~~cash &provided ~~Aftermarket~~by operating activities: DIP financing fees 950 - ~~Americas~~Depreciation ~~$17~~and amortization 7,~~317~~004 ~~$24~~6,~~324~~057 ~~$41~~Amortization of debt financing costs 1,~~641~~761 ~~$493~~1,603 ~~Equipment~~Deferred &income ~~Aftermarket~~taxes - ~~Other~~net ~~423~~- ~~111~~41 ~~534~~Gain on sale of business (46,380) -~~----------~~ Impairment loss on long-~~-----------~~lived assets 16,009 -~~---------~~ Loss on disposal of fixed assets 830 -~~---------------~~ ~~Total~~Other ~~Equipment~~(242) &(40) ~~Aftermarket~~Changes ~~17,740~~in ~~24,435~~working 42capital,~~175~~ ~~489~~excluding ~~Distribution~~the &effects ~~Service~~of -acquisition ~~North~~opening ~~America~~balance ~~84,885~~sheets: ~~333~~Accounts 85receivable 5,~~218~~183 418,~~799~~212 ~~Eliminations~~Inventories &2,122 34 Other 0current assets 28 (243,~~768~~762) Trade accounts payable and bank overdrafts (241,~~768~~369) ~~105~~(10,512) ~~-----------~~Advance ~~------------~~payments and progress billings 3,134 366 Accrued interest 11,359 4,243 Other current liabilities 747 (7,103) ---------- --------~~--------~~ ~~Total~~Net ~~Americas~~cash ~~102~~used for operating activities,~~625~~ 0including ~~102~~reorganization items (6,~~625~~987) 5(12,~~393~~187) --------~~---~~ --------~~----~~ ~~----------~~Investment ~~----------------~~and ~~Engineered~~Other ~~Products~~Transactions &Fixed ~~Automation~~asset additions - ~~Europe~~net 4(1,~~067~~033) 5 (4,~~072~~012) Capitalized software (1890) (2,~~488~~196) ~~Equipment~~Acquisition &of ~~Aftermarket~~businesses - ~~Europe~~net ~~14,914~~of ~~2,825~~cash ~~17,739~~acquired - (~~425~~5,070) ~~Eliminations~~Net &proceeds ~~Other~~on 0divestiture ~~(439)~~of business 9,115 - Net Issuance of loans to senior management - (~~439~~80) Other - net 30 (~~1,064~~570) --------~~---~~ --------~~----~~ Net cash provided by (used for) investment and other transactions 7,222 (11,928) ---------- -------- Financing Activities Changes in short-~~-------~~term ~~Total~~debt ~~Europe~~and ~~18,981~~notes ~~2,391~~payable ~~21,372~~(9) (~~2,977~~22) ~~Equipment~~Proceeds &from ~~Aftermarket~~DIP -and ~~South~~Junior ~~Africa~~DIP 4borrowings 31,~~652~~352 0- ~~4,652~~Repayments of DIP borrowings (~~334~~100) ~~Equipment~~- &Net ~~Aftermarket~~(repayments -of)/proceeds ~~Asia~~from ~~Pacific~~Revolving 6Credit Facility borrowings (7,~~666~~279) 024,058 6Repayment of Term Loans (21,~~666~~079) (~~452~~1,388) ~~Eliminations~~Proceeds &from/(repayments ~~Other~~of) 0Acquisition Facility Line borrowings (~~527~~2,867) 1,235 Repayments of long-term debt (~~527~~117) (~~929~~120) Payment of DIP financing fees (950) -~~----------~~ Payment of fees for amendment of Credit Facility (226) -~~-----------~~ ---------- --------~~--------~~ ~~Total~~Net ~~International~~cash ~~30,299~~provided ~~1,864~~by ~~32,163~~(used for) financing activities (41,~~692~~275) 23,763 --------~~---~~ --------~~----~~ Effect of Exchange Rate Changes on Cash and Cash Equivalents (104) (29) ---------- --------~~--------~~ ~~Corporate~~Increase (decrease) in Cash and ~~Eliminations~~Cash 0Equivalents (1,~~864~~144) (~~1,864~~381) (7Cash and Cash Equivalents Beginning of Period 3,~~483)~~929 ~~-----------~~2,534 --------~~----~~ ---------- ~~----------------~~End ~~Consolidated~~of ~~$132,924~~Period $ ~~- $132~~2,~~924~~785 $(6 2,~~782)~~153 ========~~===~~ ========~~====~~ ~~==========~~The ~~================~~accompanying notes are an integral part of the financial statements.

10 MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) STATEMENTS OF SHAREHOLDER'S EQUITY FOR THE NINE MONTHS ENDED JULY 31, 2000 (UNAUDITED) (Dollars in Thousands)

~~------------------------------------------~~Common ~~SALES~~Stock ~~------------------------------------------~~Parent ~~--------------~~Accumulated ~~Operating Income (Loss) External Intercompany Total~~ ----------- ------------ ~~----------~~Investment/ ~~--------------~~Other ~~Equipment~~Total &Shares ~~Aftermarket~~Par -Additional ~~$6,121~~Comprehensive ~~$13,816~~Retained ~~$19,937~~Shareholders' ~~$(507)~~Outstanding ~~Equipment~~Value ~~& Aftermarket~~ Paid- in-Capital -Loss -Earnings -Equity ~~Other~~ ---------- -~~-----------~~ -----~~-----~~ -------------- ~~Total Equipment & 6,121 13,816 19,937 (507) Aftermarket Distribution & Service~~ - ~~Europe 44,461 176 44,637 2,916 Eliminations & Other 0 (13,992) (13,992) 222~~ ---------- ---~~---------~~ ---------- -------------- ~~Total~~Balance ~~Americas~~at ~~50,582~~October ~~0 50~~31,~~582~~ ~~2,631~~1999 ~~----------~~100 ~~------------ ---------- -------------- Engineered Products & 1,997~~ $(1233,392) ~~1,985~~ $(13,~~665~~428) ~~Automation~~$ ~~- Europe Equipment & Aftermarket - Europe 7,977 1,537 9,514 362 Eliminations & Other 0~~ (~~233~~94,003) $(~~233~~130,823) ~~(867)~~Net ~~----------~~loss ~~------------ ---------- -------------- Total Europe 9,974 1,292 11,266~~ (248,~~170~~123) ~~Equipment & Aftermarket - South Africa 2,409 0 2,409~~ (~~243~~48,123) ~~Equipment~~Change &in ~~Aftermarket~~foreign -currency ~~Asia Pacific~~ (3,~~240~~945) 0 (3,~~240 (116~~945) ~~Eliminations~~translation & Other 0 (~~336~~900) (~~336~~900) ~~(458)~~ ---~~-------~~ ---~~---------~~ ---------- ---------~~-----~~ ~~Total International 15,623 956 16,579 (2,987)~~ ---------- ---------~~---~~ ~~----------~~Balance ~~--------------~~at ~~Corporate~~July ~~and Eliminations 0 (956) (956) (5~~31,~~413)~~ ~~----------~~2000 ~~------------~~100 $--~~--------~~ ~~-------------- Consolidated~~ $66(34,~~205~~292) $ -(7,373) $66(142,~~205~~126) $(5183,~~769~~791) === === ==== ==== ========= ========== =========~~=====~~

The accompanying notes are an integral part of the financial statements. 11 MMH HOLDINGS, INC. ------------------ MORRIS MATERIAL HANDLING, INC. ------------------------------ (Debtors- in - Possession as of May 17, 2000) --------------------------------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- UNAUDITED --------- (DOLLAR AMOUNTS IN THOUSANDS UNLESS INDICATED) Note 1 - Reorganization under Chapter 11 ---------------------------------------- On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc. and their domestic operating subsidiaries (collectively, the "Debtors") filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11 cases have been consolidated for the purpose of joint administration under case number 00-2027(SLR). The Debtors are currently operating their businesses as debtors-in-possession pursuant to the Bankruptcy Code. No trustee has been appointed. An official committee of unsecured creditors (the "Creditors' Committee") was appointed by the office of the United States Trustee on May 30, 2000. Pursuant to the Bankruptcy Code, actions to collect certain prepetition indebtedness of the Debtors and other obligations against the Debtors may not be enforced. These claims are reflected in the balance sheet as "liabilities subject to compromise". In addition, under the Bankruptcy Code, the Debtors may assume or reject executory contracts and unexpired leases. Additional claims may arise from such rejection, and from the determination by the court (or agreed by the parties in interest) to allow claims for contingencies and other disputed amounts. However, the Debtors have not yet completed their review of all their prepetition executory contracts and leases for assumption or rejection. See also Note 5, Liabilities Subject to Compromise, and Note 9, Indebtedness. The Debtors received approval from the Bankruptcy Court to pay or otherwise honor certain of their prepetition obligations, including the authority to pay employee wages and maintain their employee benefit programs. The Debtors have the exclusive right, pursuant to an order of the Bankruptcy Court, until December 15, 2000, to file a plan or plans of reorganization. Such period can be extended from time to time during the pendancy of the Debtors' bankruptcy cases at the discretion of the Bankruptcy Court. Subject to certain exceptions set forth in the Bankruptcy Code, acceptance of a plan of reorganization requires approval of the Bankruptcy Court and the affirmative vote (i.e., more than 50% of the number and at least 66-2/3% of the dollar amount, both based on claims actually voted) of each class of creditors whose claims are impaired by the plan. Alternatively, absent the requisite approvals, a debtor may seek Bankruptcy Court approval of its reorganization plan under "cramdown" provisions of the Bankruptcy Code, assuming certain tests are met. If a debtor fails to submit a plan of reorganization within the exclusivity period prescribed or any extensions thereof, any creditor or equity holder will be free to file a plan of reorganization with the Bankruptcy Court and solicit acceptances thereof. The Bankruptcy Court set September 20, 2000 as the last date creditors could file proof of claims against the Debtors. There may be differences between the amounts recorded in the Debtors' schedules and financial statements and the amounts claimed by their respective creditors. Litigation may be required to resolve such disputes. The Debtors will continue to incur significant costs associated with the reorganization. The amount of these expenses, which are being expensed as incurred, is expected to significantly affect results while the Debtors operate under Chapter 11. See Note 4, Reorganization Items. Currently, it is not possible to predict the length of time the Debtors will operate under the protection of Chapter 11, the outcome of the Chapter 11 proceedings in general, or the effect of the proceedings on the business of the Company or on the interests of the various creditors and security holders. Under the Bankruptcy Code, postpetition liabilities and prepetition liabilities (i.e., liabilities subject to compromise) of the Debtors must be satisfied before shareholders of the Debtors can receive any distribution. The ultimate recovery to the Debtors' shareholders, if any, will not be determined until the end of the case when the fair value of the Debtors' assets is 12 compared to the liabilities and claims against the Debtors. The Debtors and their professional advisors are in the process of analyzing strategic alternatives and developing a plan of reorganization for the Debtors. Based on the Debtors' analysis of scheduled and filed claims and the valuation of the Company, a determination will be made as to the payment of claims and the distribution of value, if any, to the Debtors' shareholders. Note 2 - Basis of Presentation ------------------------------ General. These consolidated interim financial statements should be read in conjunction with the combined 1999 Annual Report on Form 10-K of Holdings and the Company. In the opinion of management, all adjustments, normal and recurring in nature, necessary for a fair presentation of results of operations and financial position have been included in the accompanying balance sheets and statements of operations. The results of operations for the three and nine months ended July 31, 2000 are not, however, necessarily indicative of the results which may be expected for fiscal 2000. Recapitalization. On January 28, 1998, Harnischfeger Industries, Inc. ("HII") reached an agreement with MHE Investments, Inc. ("MHE Investments"), an affiliate of Chartwell Investments Inc. ("Chartwell"), for the sale of an approximately 80 percent common ownership interest in HII's Material Handling Equipment Business (the "MHE Business"). As more fully described in Note 3, the resulting transactions (the "Recapitalization"), which closed on March 30, 1998 (the "Recapitalization Closing"), led to a significant change in the capital structure and a reorganization of the underlying legal entities of the MHE Business. As a result of the Recapitalization, Holdings, a pre-existing company engaged in the MHE Business, became an indirect holding company for the operating entities engaged in the MHE Business. Specifically, MMH, a newly formed wholly-owned direct subsidiary of Holdings, directly or indirectly acquired the various operating entities engaged in the MHE Business. Holdings was recapitalized in order to effect the redemption of certain shares of common stock of Holdings held by Harnischfeger Corporation ("HarnCo"). As a result of the reorganization of the legal entities of the MHE Business, Holdings and MMH became the successor companies to the MHE Business. The transactions have been accounted for as a recapitalization and accordingly, the financial statements presented herewith reflect the underlying historical accounting basis of the MHE Business. Chapter 11 Filing. The accompanying consolidated interim financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business and do not reflect any adjustments that might result if the Debtors are unable to continue as a going concern. As a result of the Debtors' Chapter 11 filings, however, such matters are subject to significant uncertainty, although the Debtors intend to file a plan of reorganization with the Bankruptcy Court. Continuing on a going concern basis is dependent upon, among other things, the Debtors' formulation of an acceptable plan of reorganization, the success of future business operations, and the generation of sufficient cash from operations and financing sources to meet the Debtors' obligations. The accompanying consolidated interim financial statements do not reflect: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities, (ii) aggregate prepetition liability amounts that may be allowed for claims or contingencies, or their status or priority, (iii) the effect of any changes to the Debtors' capital structure or in the Debtors' business operations as the result of an approved plan of reorganization; or (iv) adjustments to the carrying value of assets or liability amounts that may be necessary as the result of actions by the Bankruptcy Court. The Company's consolidated financial statements have been presented in conformity with the AlCPA's Statement of Position 90-7, "Financial Reporting By Entities In Reorganization Under the Bankruptcy Code" ("SOP 90-7"). SOP 90-7 requires a segregation of liabilities subject to compromise by the Bankruptcy Court as of the bankruptcy filing date and identification of all transactions and events that are directly associated with the reorganization of the Debtors. Impairment Loss on Long-Lived Assets. The Company assesses the carrying value of goodwill at each balance sheet date. Consistent with Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," such assessments include, as appropriate, a comparison of (a) the estimated future nondiscounted cash flows, excluding interest, anticipated to be generated during the remaining amortization period of the goodwill to (b) the net carrying value of goodwill. Based upon the continued negative trends in the operating results of non-North American businesses and shortfalls in actual third quarter operating results compared with estimates developed during the second quarter, management concluded that future operating cash flows, excluding interest, did not support the recoverability of recorded goodwill over the remaining amortization period. Accordingly, the Company assessed the fair value of the related businesses and wrote-off the remaining unamortized goodwill balances related to its non-North American operations of approximately $16.0 million in the third quarter. 13 Note 3 - Recapitalization Transaction ------------------------------------- The Recapitalization was effectuated pursuant to the January 28, 1998 Recapitalization Agreement among MHE Investments, HarnCo and certain of HII's affiliates. Pursuant to this agreement, HarnCo and other HII affiliates effected a number of transactions which resulted in Holdings owning, directly or indirectly, the equity interests of all of the operating entities engaged in the MHE Business. Holdings, in turn, formed MMH as a wholly owned subsidiary to directly or indirectly hold the various operating entities engaged in the MHE Business. The principal transactions effected as part of the Recapitalization were the following: (i) MHE Investments acquired (x) 7,907 shares of Holdings' common stock for $25.1 million and (y) $28.9 million liquidation preference of Holdings' 12 1/2% Series C Junior Voting Exchangeable Preferred Stock (the "Series C Junior Voting Preferred Stock") from HarnCo; (ii) Holdings redeemed certain shares of its common stock and Series C Junior Voting Preferred Stock held by HarnCo for $287 million in cash (including a $5 million prepayment of a potential post-closing redemption price adjustment) and approximately $4.8 million liquidation preference of Holdings' 12 1/4% Series B Junior Exchangeable Preferred Stock (the "Series B Junior Preferred Stock"); and (iii) HarnCo retained 2,261 shares of Holdings' common stock. To finance the Recapitalization, Holdings sold $60 million of Series A Units, consisting of $57.7 million liquidation preference of Holdings' 12% Series A Senior Exchangeable Preferred Stock (the "Series A Senior Preferred Stock") and $2.3 million of Holdings' non-voting common stock, to institutional investors. In addition, MMH issued (the "Note Offering") $200 million of aggregate principal amount of its 9 1/2% senior notes due 2008 (the "Senior Notes") and entered into a senior secured credit facility (the "Prepetition Credit Facility") (see Note 9). The Prepetition Credit Facility consisted of a $70 million Revolving Credit Facility (the "Revolving Credit Facility"), a $30 million acquisition facility (the "Acquisition Facility") and $55 million in term loans. MMH used a portion of the $200 million aggregate proceeds from the Note Offering and $55 million aggregate borrowings under the New Credit Facility to redeem certain of its common shares from Holdings and pay Holdings a dividend which redemption and dividend totaled $233.8 million. Holdings, in turn, used the proceeds from this redemption, together with the proceeds of the sale of the Series A Units, to finance the cash portion of the redemption price for HarnCo's shares. The remainder of the proceeds was used by Holdings and MMH (i) to make loans to senior management to acquire indirect equity interests in Holdings, (ii) to fund certain transaction fees and expenses and (iii) for general corporate purposes. At July 31, 2000, MHE Investments owned approximately 54.5% of the common stock of Holdings and $37.9 million liquidation preference of the Series C Junior Voting Preferred Stock and HarnCo owned approximately 15.6% of the common stock of Holdings and $6.3 million liquidation preference of the Series B Junior Preferred Stock. Certain indirect equity holders in MHE Investments own, through Martin Crane L.L.C., approximately 25.0% of the common stock of Holdings. The remaining equity interests are held by institutional investors and consist of non-voting stock representing approximately 4.9% of the outstanding common stock of Holdings and $74.9 million liquidation preference of the Series A Senior Preferred Stock. Note 4 - Reorganization Items ----------------------------- Reorganization expenses are comprised of items of income, expense, gain or loss that were realized or incurred by the Debtors as a result of their decision to reorganize under Chapter 11 of the Bankruptcy Code. During the three and nine months ended July 31, 2000, reorganization expenses, including certain costs incurred by the Company prior to May 17, 2000 related to its restructuring efforts, were as follows: Three months Nine Months ended ended July 31, 2000 July 31, 2000 ------------- ------------- Professional fees $1,858 $4,048 DIP financing costs 950 950 Accrued retention plan costs 200 200 ------ ------ $3,008 $5,198 ====== ====== 14 Note 5 - Liabilities Subject to Compromise ------------------------------------------ The principal categories of claims classified as liabilities subject to compromise under reorganization proceedings are identified below. All amounts below may be subject to future adjustment depending on Bankruptcy Court action, further developments with respect to disputed claims, or other events. Additional prepetition claims may arise from rejection of additional executory contracts or unexpired leases by the Debtors. Under a confirmed plan of reorganization, prepetition claims may be paid and discharged at amounts substantially less than their allowed amounts. Unless the Debtors are substantively consolidated under a confirmed plan or plans of reorganization, payment of prepetition claims of each Debtor may substantially differ from payment of prepetition claims of other Debtors. On a consolidated basis, recorded liabilities subject to compromise under Chapter 11 proceedings consisted of the following: July 31, 2000 ------------- Trade accounts payable $ 11,572 Accrued interest expense, as of May 16, 2000 12,419 Senior notes, at 9.5% due April 1, 2008 200,000 Bank term loan (Term Loan A) at LIBOR plus 3.5% (10.22% at July 31, 2000) due in quarterly installments through March 2003 10,154 Bank term loan (Term Loan B) at LIBOR plus 3.5% (10.22% at July 31, 2000) due in quarterly installments through March 2005 20,973 Bank acquisition loan (in combined draws), at LIBOR plus 3.5% (10.22% at July 31, 2000) due in eight quarterly installments beginning June 2003 through March 2005 4,563 Acquistions term loan (Sponsor Loan), at Eurodollar plus 6.0% (12.72% at July 31, 2000) due in eight quarterly installments beginning June 2003 through March 2005 5,000 Bank revolving credit loan, at LIBOR plus 3.5% (10.22% at July 31, 2000) due March 2003 20,647 Deferred payments for purchases of companies, due in annual installments through 2006 1,910 Long-term capital leases with various expiration dates 20 Industrial revenue bonds, at 6.2% due in annual installments through June 2007 319 Income taxes payable 2,035 Royalty fee and credit support fee payable to HII 3,246 Other 2,625 -------- $295,483 ======== Pursuant to SOP 90-7, certain of the amounts included above represent secured claims about which there is uncertainty as to whether the liability is undersecured, or will be impaired under a reorganization plan or plans. As a result of the bankruptcy filings, principal and interest payments may not be made on prepetition debt without Bankruptcy Court approval or until a reorganization plan or plans defining the repayment terms have been confirmed. Interest due under the Prepetition Credit Facility is being paid by the Debtors as "adequate protection" pursuant to an order of the Bankruptcy Court. The total interest on unsecured prepetition debt that was not paid or charged to earnings for the period from May 17, 2000 to July 31, 2000 was $4.1 million. Such interest is not being accrued since it is not probable that it will be treated as an allowed claim. The Bankruptcy Code generally disallows the payment of interest that accrues postpetition with respect to unsecured claims. Note 6 - Liquidity and Capital Resources ---------------------------------------- On May 17, 2000, Holdings, MMH and their domestic operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. See Note 1, Reorganization under Chapter 11. On May 18, 2000, the Bankruptcy Court entered an order approving $10.0 million in interim debtor-in-possession financing to the Debtors and authorizing the Debtors to utilize their collections in the operation of their business. This $10 million amount represented the initial portion under a commitment by the lenders to provide $35 million in financing (including a letter of credit facility) in connection with the Debtors' Chapter 11 cases. The complete $35 million facility (which was subsequently reduced by agreement of the 15 parties to $25 million) was approved by the Bankruptcy Court on June 15, 2000 (see Note 9). This facility has an initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000. The Company believes that the filing provides the Debtors with the opportunity to restructure its indebtedness. The Company plans to continue to implement its cost savings initiatives to bring costs in line with market requirements. Although management believes that no material adverse effects have occurred to date, disruption of operations relating to the Chapter 11 reorganization could adversely affect the Debtors' relationships with their creditors, customers, suppliers or employees. Note 7 - Acquisitions --------------------- During the nine months ended July 31, 2000, the Company did not make any acquisitions. During the nine months ended July 31, 1999, the Company completed one acquisition with an aggregate purchase price of $3.1 million, net of cash acquired, including approximately $1.0 million financed by the seller. This acquisition was related to the Company's aftermarket business and was accounted for as a purchase transaction with the purchase price allocated to the fair value of specific assets acquired and liabilities assumed. Resultant goodwill of $1.8 million is being amortized over 40 years. This acquisition was partially financed by the seller, resulting in a deferred purchase price which will be paid in 2004 and 2005. During the nine months ended July 31, 1999, the Company made final payments of $1.5 million related to two 1998 acquisitions. In addition, with respect to a 1995 acquisition, the Company was required to make a contingent consideration payment of $1.4 million in the nine months ended July 31, 1999. Additionally, a payment of $100 was made in each of the nine month periods ended July 31, 2000 and 1999 toward a fiscal 1998 purchase which was partially financed by the seller. On a pro forma basis, the fiscal 1999 acquisition was not material to results of operations reported for the nine months ended July 31, 1999 and accordingly, such information is not presented. Note 8 - Inventories -------------------- Inventories consisted of the following: July 31, October 31, 2000 1999 --------- ----------- Raw material $ 3,740 $ 8,771 Work-in-process 13,846 20,166 Finished parts 24,374 18,116 --------- --------- 41,960 47,053 Less excess of current cost over stated LIFO value (6,059) (7,059) --------- --------- $ 35,901 $ 39,994 ========= ========= Note 9 - Indebtedness --------------------- On June 15, 2000, the Bankruptcy Court approved a $35 million Debtor-in-Possession Facility ("DIP Facility") (which was subsequently reduced by agreement of the parties to $25 million) and authorized the Debtors to use their collections in the operations of their business. The DIP and Junior DIP Facilities contain a number of covenants that, among other things, limit the Debtors' ability to create or assume liens, consolidate or merge with other entities, create, incur, or assume additional indebtedness, dispose of certain assets and make capital expenditures. The DIP and Junior DIP Facilities also require the Debtors to comply with certain financial ratios and borrowing condition tests based on monthly measurements of the latest twelve months results of operations. The first measurement date is December 31, 2000. Cash collected by the Company is used to repay the Term Loans, the Revolving Credit Facility Borrowings and the Acquisition Facility Line Borrowings on a pro-rata basis and these amounts are re-loaned to the Company under a Junior DIP Facility up to $38 million. The Junior DIP Facility is junior to the DIP Facility. At July 31, 2000, $31.3 million in borrowings are outstanding under the Junior DIP Facility and are classified as current obligations in the July 31, 2000 balance sheet. 16 The DIP and Junior DIP Facilities benefit from superpriority administrative claim status and senior and junior liens as provided for under the Bankruptcy Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured prepetition claims and all other administrative expenses incurred in the Chapter 11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors' option, LIBOR plus 3 1/2%. This DIP Facility has an initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000. Borrowings under the Junior DIP Facility are priced at the Alternate Base Rate of the Post-Petition Agent under the DIP Facility plus 2.0% or, at the Debtors' option, LIBOR plus 3 1/2%. This Junior DIP Facility matures on the earlier of the initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000, or upon confirmation of a plan of reorganization. The principal sources of liquidity for the Company's operating requirements have been cash flows from operations and borrowings under the DIP Facility and Junior DIP Facility. While the Company expects that such sources will provide sufficient working capital to operate its businesses, there can be no assurances that such sources will prove to be sufficient. Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a short-term bank credit line with an outstanding balance of $1.9 million. This credit line was converted to the Revolving Credit Facility borrowing in conjunction with the bankruptcy. Note 10 - Commitments and Contingencies --------------------------------------- To secure the performance of sales contracts related to MMH operations, MMH was contingently liable to financial institutions and others for the following at July 31, 2000: (i) $8.1 million of outstanding letters of credit and surety bonds under the Prepetition Credit Facility, (ii) $3.3 million under a surety arrangement for outstanding surety bonds and (iii) $4.1 million of surety bonds with other institutions. Prior to the Recapitalization Closing, HII and its affiliates ("HII Group") provided credit support for the MHE Business. As part of the Recapitalization, HII agreed to maintain in place credit support (including letters of credit and surety bonds) in existence at the Recapitalization Closing and the Company agreed to reimburse HII for any payments made by the HII Group with respect to such credit support. At July 31, 2000, approximately $11.2 million of HII Group letters of credit and surety bonds remained outstanding. As of the Recapitalization Closing, HarnCo retained certain income and other tax liabilities relating to the MHE Business, all environmental liabilities relating to previously shared facilities, any liabilities for which HarnCo or its affiliates have been named as potentially responsible parties with respect to Superfund sites, and any liabilities arising in connection with claims alleging exposure to asbestos (to the extent there is insurance coverage therefor) in connection with the MHE Business prior to the Recapitalization Closing. Additionally, HarnCo retained all liability for medical and disability benefit claims for then current United States employees made prior to the Recapitalization Closing and all claims with respect to any of the HII benefit plans for former United States employees. HarnCo has been and is currently a defendant to a number of asbestos related lawsuits and will likely be named in future such actions. Most suits involve multiple defendants including asbestos manufacturers. MMH has agreed to indemnify HarnCo and its affiliates with respect to any liabilities in excess of insurance arising in connection with past and future asbestos litigation relating to the MHE Business. HII's insurance program included coverage for asbestos related claim activity through 1986, when coverage for asbestos related claims ceased to be available. HII's insurer has provided first dollar coverage for policy periods through 1976. During the 1977 to 1985 policy periods, HII had a variety of policies, with retention levels ranging from $100,000 to $15.0 million and total coverage limits ranging from $12.5 million to $50.0 million. To date, HII's insurer has paid all indemnification liabilities relating to asbestos claims (which amounts have not been material to the MHE Business) but there can be no assurance such insurers will continue to do so in the future or that there will be insurance coverage for such claims. In addition, policy primary aggregate levels were exhausted in certain years, which would require the participation of excess insurers for future claim activity. Given its experience to date with such claims, the Company believes that its exposure to asbestos related claims is not material, but there can be no assurance that such liability will not in fact be material. All of the Company's agreements and arrangements with HII and its affiliates (including those referred to above and those relating to the provision of services and materials by HII and its affiliates to the Company) could be materially adversely affected by the fact that on June 7, 1999 (the "HII Petition Date"), HII and certain of its United States affiliates (including HarnCo) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "HII Bankruptcy"). Certain provisions of the Bankruptcy Code allow a debtor to avoid, delay and/or reduce its contractual and other obligations to third parties. There can be no assurance that HII and its affiliates will not 17 attempt to utilize such provisions to cease performance under their agreements with the Company. The inability of the Company to receive the benefits of one or more of these agreements or the termination of ongoing arrangements between the Company and affiliates of HII could materially adversely affect the Company's operations and financial performance. In the event that any of the liabilities retained by HII and its affiliates remain unsatisfied as of the HII Petition Date, the Company's right to indemnification for any such amounts it has paid on behalf of HII and its affiliates may also be avoided, delayed or reduced. Each of HII and certain of its affiliates on the one hand, and the Company and certain of its affiliates, on the other hand, have receivables and payables to the other which may be affected by the HII Bankruptcy. On October 28, 1996, a strong windstorm caused significant damage to the Belview container-handling terminal at the Port of Waterford in Ireland. One container-handling crane sold by the Company's United Kingdom subsidiary was destroyed and another was seriously damaged. The two cranes were sold to the Waterford Harbour Commissioners in 1992 and commissioned for use in 1993. On October 19, 1998, the Waterford Harbour Commissioners wrote to the Company and provided a notice of arbitration, asserting breach of contract, negligence and breach of duty against the Company's United Kingdom subsidiary in connection with the destroyed and damaged cranes. The Waterford Harbour Commissioners claimed direct damages of IR(pound)8.5 million ($10.1 million based on exchange rates at July 31, 2000) and unspecified consequential damages. The port operator, Bell Lines, Limited, filed a similar claim against the Company's United Kingdom subsidiary in October 1999, asserting unspecified damages. Management intends to vigorously defend both matters. One of the Company's insurance carriers has agreed to provide defense coverage for one of the two cranes involved in the accident and limited indemnification if the Company is unsuccessful in defending the claims. The Company and its United Kingdom subsidiary have initiated litigation in the Milwaukee County Circuit Court against Ace American Insurance Company, AON Risk Services, Inc. of Illinois, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, seeking additional insurance coverage for defense and indemnification obligations. While the Company believes that it will obtain a favorable resolution (either by successfully defending the claim or by obtaining insurance coverage thereon), no assurances can be made as to the final outcome of the claims. If the Company's United Kingdom subsidiary is found liable for the claims and is unable to obtain insurance coverage therefore, there could be a material adverse effect on the Company's operations and financial performance. Based upon the current status of this matter, no related liability has been accrued at July 31, 2000. The Company is a party to various other litigation matters, including product liability and other claims, which are normal in the course of its operations. Also, as a normal part of its operations, the Company undertakes certain contractual obligations and warranties in connection with the sale of products or services. Although the outcome of these matters cannot be predicted with certainty, management believes that the resolution of such matters will not have a material adverse effect on the consolidated results of operations, financial position or cash flows of the Company. Under the terms of the Recapitalization Agreement, HarnCo retained all liability for the only two open environmental clean-up claims brought against HarnCo in the Milwaukee, Wisconsin area. The Company and its management are not aware of any other material environmental clean-up claim which is pending or is threatened against the Company, but there can be no assurance that any such claim will not be asserted against the Company in the future. In addition, as noted above, the Company's right to indemnification against HarnCo for such liabilities may be avoided, delayed or reduced as a result of HarnCo's filing for bankruptcy protection. As a result of the Company's bankruptcy filing described in Note 1, Reorganization under Chapter 11, litigation against the Company and its subsidiaries which filed bankruptcy is stayed. Note 11 - Segment Information ----------------------------- The Company adopted SFAS No. 131, " Disclosures about Segments of an Enterprise and Related Information" during the fiscal year ended October 31, 1999. The prior year's third quarter segment information has been restated to conform to the current year presentation. Pursuant to SFAS No. 131, the Company has identified its reportable segments based on the Company's method of internal reporting which is utilized by its chief operating decision-maker, the Chief Executive Officer. The reportable operating segments are as follows: o Equipment and Aftermarket - Americas o Equipment and Aftermarket - Other o Distribution and Service - North America o Engineered Products and Automation - Europe 18 o Equipment and Aftermarket - Europe o Equipment and Aftermarket - Asia Pacific o Equipment and Aftermarket - South Africa Each segment has a manager who is directly accountable to and maintains regular contact with the Chief Executive Officer. The Company evaluates performance of its segments based on operating income, determined on a basis consistent with amounts reported in the consolidated financial statements. The Equipment and Aftermarket - Americas segment designs and manufactures a comprehensive line of engineered and standard overhead cranes, hoists and other component products and repair parts at the Company's facilities located in Oak Creek and Windsor, Wisconsin. This segment also modernizes products manufactured by both the Company and its competitors. This segment is the main manufacturer of the replacement parts sold by the Company's Distribution and Service - North America segment as well as the manufacturer of component products used in that segment's standard cranes. Repair parts and component products are purchased by the Distribution and Service - North America segment at list price less standard intercompany discounts. The Equipment and Aftermarket - Other segment is the Company's brake manufacturing operation in Canada. Approximately 35% of this segment's sales are to other Company segments. The Company sold this operation in December 1999. The Distribution and Service - North America segment is the network of Company-owned locations in key industrial markets in North America. The network is the platform for the Company's sales activities, serving as distribution centers for its original equipment and replacement parts as well as the focal point for service activities. Some of the distribution centers also fabricate and assemble standard cranes using components manufactured by the Equipment and Aftermarket - Americas and the Equipment and Aftermarket - Europe segments. The Engineered Products and Automation - Europe segment focuses on the manufacture of highly engineered ship-to-shore and gantry cranes for use in container handling and automated warehouse units at the Company's facility located in Loughborough, England, and provides software support for the automated warehouse units installed at customer locations. The Equipment and Aftermarket - Europe segment consists of standard crane and hoist manufacturing in the Loughborough, England facility as well as the network of Company-owned distribution centers in key industrial markets in the United Kingdom. The Equipment and Aftermarket - Europe segment provides services for the Engineered Products and Automation segment at prices consistent with those charged to external customers. In addition, this segment distributes hoists through Distribution and Service - North America and Equipment and Aftermarket - Asia Pacific and South Africa at prices consistent with those charged to external customers. The Equipment and Aftermarket - Asia Pacific and South Africa segments operate in a manner similar to the Distribution and Service North America segment. The Asia Pacific segment includes operations in Australia, Singapore, Thailand and Saudi Arabia. Within North America, certain centrally incurred costs such as insurance costs and computer charges are allocated to operating segments based upon various methods of allocation. In the United Kingdom, utilities, property taxes and insurance costs are allocated to the segments based upon varying allocation methods. Domestically, costs related to centralized accounting, marketing, human resources, and IT functions are not allocated. Internationally, these costs, as well as amortization of goodwill, are allocated amongst individual segments in the nine months ended July 31, 2000, however, in the same period in fiscal year 1999, no allocation was done. As discussed above, the Company assessed the fair value of its non-North American businesses and, as a result, wrote-off the remaining unamortized goodwill balances related to these operations in the third quarter. The total write-off of approximately $16.0 million was allocated to the applicable segments as follows: $10.0 million to Eliminations and Other - Europe, $0.8 million to Equipment & Aftermarket - South Africa and $5.2 million to Equipment & Aftermarket - Asia Pacific. 19 MMH HOLDINGS, INC. MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) Operating Segments For the Nine Months Ended July 31, 2000

~~------------------------------------------~~ SALES ------------------------------------------ -----~~---------~~ Operating Income ~~(Loss)~~ External Intercompany Total (Loss) --------~~---~~ ------------ ----- ----- -------------- Equipment & Aftermarket - Americas $25 22,~~655~~512 $2537,~~065~~817 $50 60,~~720~~329 $~~2,030~~ (132) Equipment & Aftermarket - Other ~~2,117~~423 ~~709~~111 ~~2,826~~534 ~~778~~(4) ---------- -------~~-----~~ ---------- --------~~------~~ Total Equipment & Aftermarket 2722,~~772~~935 2537,~~774~~928 5360,~~546~~863 ~~2,808~~(136) Distribution & Service - North America 76130,~~158~~363 ~~2,290~~645 78131,~~448~~008 46,~~257~~050 Eliminations & Other 0- (2838,~~064~~573) (2838,~~064~~573) ~~117~~161 ---------- -------~~-----~~ ---------- --------~~------~~ Total ~~Americ~~Americas ~~103~~153,~~930~~298 0- ~~103~~153,~~930~~298 76,~~182~~075 ---------- -------~~-----~~ ---------- --------~~------~~ Engineered Products & Automation - Europe 46,~~986~~005 ~~407~~32 56,~~393~~037 (1,~~255~~697) ~~Automation - Europe~~ Equipment & Aftermarket - Europe 1723,~~335~~021 34,~~158~~119 2027,~~493~~140 ~~361~~(1,638) Eliminations & Other 0- (~~939~~652) (~~939~~652) (113,~~615~~569) ---------- -------~~-----~~ ---------- --------~~------~~ Total Europe 2229,~~321~~026 23,~~626~~499 2432,~~947~~525 (216,~~509~~904) Equipment & Aftermarket - South Africa 76,~~178~~801 0- 76,~~178~~801 ~~224~~(1,334) Equipment & Aftermarket - Asia & Pacific 69,~~340~~264 0- 69,~~340~~264 (~~221~~6,024) Eliminations & Other 0- (~~713~~961) (~~713~~961) ~~(236)~~- ---------- -------~~-----~~ ---------- --------~~------~~ Total International 3545,~~839~~091 12,~~913~~538 3747,~~752~~629 (224,~~742~~262) ---------- -------~~-----~~ ---------- --------~~------~~ Corporate and Eliminations 0- (12,~~913~~538) (12,~~913~~538) (414,~~867~~213) ---------- -------~~-----~~ ---------- --------~~------~~ Consolidated $~~139~~198,~~769~~389 $ - $~~139~~198,~~769~~389 $(~~427~~32,400) ========== =======~~=====~~ ========== ========~~======~~

20 MMH HOLDINGS, INC. MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) Operating Segments For the Three Months Ended July 31, 2000

~~------------------------------------------~~ SALES ------------------------------------------ -----~~---------~~ Operating Income ~~(Loss)~~ External Intercompany Total (Loss) --------~~---~~ ------------ ----- ----- -------------- Equipment & Aftermarket - Americas $13 5,~~013~~195 $1413,~~495~~493 $2718,~~508~~688 $~~1,050~~ (625) Equipment & Aftermarket - Other ~~1,159~~- ~~464~~- ~~1,623~~- ~~387~~- -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Total Equipment & Aftermarket 145,~~172~~195 1413,~~959~~493 2918,~~131~~688 ~~1,437~~(625) Distribution & Service - North America 4045,~~532~~478 ~~1,114~~312 4145,~~646~~790 1,~~971~~251 Eliminations & Other 0 (1613,~~073~~805) (1613,~~073~~805) 1956 -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Total Americas 5450,~~704~~673 0 5450,~~704~~673 ~~3,427~~682 -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Engineered Products & Automation - Europe 1,~~021~~938 ~~285~~27 1,~~306~~965 (~~1,251~~209) Equipment & Aftermarket - Europe 98,~~074~~107 21,~~021~~294 119,~~095~~401 (481,213) Eliminations & Other 0- (~~732~~213) (~~732~~213) (~~975~~11,576) -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Total Europe 10,~~095~~045 1,~~574~~108 11,~~669~~153 (212,~~274~~998) Equipment & Aftermarket - South Africa 32,~~770~~149 0 32,~~770~~149 ~~121~~(1,000) Equipment & Aftermarket - Asia Pacific 32,~~280~~598 0 32,~~280~~598 (~~230~~5,572) Eliminations & Other 0 (~~428~~434) (~~428~~434) ~~(121)~~- -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Total International 1714,~~145~~792 ~~1,146~~674 1815,~~291~~466 (219,~~504~~570) -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Corporate and Eliminations 0 (~~1,146~~674) (~~1,146~~674) (26,~~825~~730) -------~~----~~ -------~~-----~~ -------~~---~~ --------~~------~~ Consolidated $7165,~~849~~465 $ - $7165,~~849~~465 $(125,~~902~~618) =======~~====~~ =======~~=====~~ =======~~===~~ ========~~======~~

21 MMH HOLDINGS, INC. MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) Operating Segments For the Nine Months Ended July 31, 1999

~~Consolidated~~SALES ~~Non Morris Morris MMH Guarantor Guarantor Material Material Holdings. Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. Inc. Eliminations~~ ------------ ------------ -------------- ---------~~---~~ ~~---------------~~Operating ~~---------~~Income ~~------------~~External ~~ASSETS Current Assets Cash and cash equivalents $ 1,699 402 $ - $ - $ 2,101 $ - $ - Accounts receivable - net 51,121 3,528 - - 54,649 - -~~ Intercompany ~~accounts~~Total ~~receivable 26,070~~ (20Loss) ~~18,738 (44,788)~~ - - - ~~Inventories 37,648 2,036~~ - - ~~39,684~~ - - ~~Other current assets 8,731 503 550~~ - ~~9,784~~ - - --------- -~~-------~~ -----~~---~~ --------- -------- ~~--------~~Equipment & Aftermarket -~~---------~~ ~~125,269~~Americas ~~6,449~~$ 1938,~~288~~402 ~~(44~~$39,~~788)~~057 ~~106~~$ 77,~~218~~459 -$ -4,733 ~~---------~~Equipment ~~--------~~& ~~--------~~Aftermarket -~~--------~~ ~~--------~~Other ~~-------- ---------- Property~~2,759 ~~Plant and Equipment - net 35~~1,~~665~~510 24,~~500~~269 ~~- - 38~~1,~~165~~045 - - ------~~---~~ -------- -------- --------- ~~--------~~Total ~~--------~~Equipment ~~----------~~& ~~Other~~Aftermarket ~~Assets~~41,161 ~~Goodwill 37~~40,~~169~~567 281,~~703~~728 ~~- - 39~~5,~~872~~778 -Distribution -& ~~Debt~~Service ~~financing costs~~ - -North ~~15,320~~America ~~- 15~~118,~~320~~219 ~~- - Noncurrent intercompany receivable 4~~3,~~904~~558 ~~- 80~~121,~~118~~777 ~~(85~~7,~~022)~~620 -Eliminations -& -Other ~~Investment~~0 ~~in affiliates~~ (144,~~900~~125) ~~- 55,310~~ (5344,~~410~~125) - (~~150,882~~176) ~~150,882 Deferred income taxes~~ - - - - - - - ~~Other 9,415~~ - ~~726~~ - ~~10,141~~ - - ----~~-----~~ --------- --------- ~~-----------~~Total ~~---------~~Americas ~~---------- ---------- 49~~159,~~588~~380 ~~2,703~~0 ~~151~~159,~~474~~380 ~~(138~~13,~~432)~~222 ~~65,333 (150,882) 150,882~~ --------- --------- --------- -------~~----~~ ~~---------~~Engineered ~~----------~~Products ~~---------~~& ~~$210,522~~Automation ~~$11,652~~- ~~$170,762~~Europe ~~$(183~~8,~~220)~~323 ~~$209,716~~97 ~~$(150~~8,~~882)~~420 ~~$150~~1,~~882~~262 ~~=========~~Equipment ~~=========~~& ~~=========~~Aftermarket ~~=========== ========= ========== ========== LIABILITIES AND SHAREHOLDERS EQUITY Current Liabilities Current portion of long~~- ~~term~~Europe ~~obligations 343 39 $ - $ - $ 382 $ - $ - New Credit Facility borrowings 7~~24,~~265~~420 ~~- 22~~5,~~725~~202 - 29,~~990~~622 ~~Term~~994 ~~loans~~Eliminations -& -Other ~~48,395~~ - ~~48,395 Aquisition Facility - 12,094 - 12,094 Senior Notes - - 200,000 - 200,000 Bank overdrafts 412~~ (1,~~281~~153) ~~- -~~ (1,~~693~~153) ~~- - Trade accounts payable 17,852 1,456 - - 19,308 - - Intercompany accounts payable 18,718 3,966 22,104~~ (442,~~788~~923) - - - ~~Advance payments and progress billings 10,800~~ - - - ~~10,800~~ - - ~~Accrued warranties 1,767~~ - - - ~~1,767~~ - - ~~Accrued interest 26~~ - ~~11,530~~ - ~~11,556~~ - - ~~Other current liabilities 14,994 1,051 4,594~~ - ~~20,639~~ - - ---~~-----~~ -------- ~~---------~~Total ~~-----------~~Europe ~~-------- ---------- ---------- 72~~32,~~177~~743 74,~~793~~146 ~~321~~36,~~442~~889 (443,~~788~~191) ~~356,624~~Equipment -& -Aftermarket -~~-------~~ ~~--------~~South ~~---------~~Africa ~~-----------~~10,510 ~~--------~~0 ~~---------- ---------- Other Term Debt 2~~10,~~075~~510 ~~563~~231 -Equipment -& ~~2,638~~Aftermarket - -Asia ~~Noncurrent~~Pacific ~~Intercompany~~9,845 ~~Payable~~0 809,~~118~~845 ~~4,904 -~~ (~~85,022~~212) -Eliminations -& ~~- Deferred Income Taxes - - - - - - -~~ Other ~~Long~~0 ~~Term~~(1,088) ~~Liabilities 842 - 202 -~~ (1,~~044~~088) -(351) - -------- -------- --------- -------~~----~~ Total International 53,098 3,058 56,156 (3,523) -------- -------~~---~~ ---------- ~~155,212 13,260 321,644 (129,810) 360,306~~ - - ~~Minority Interest (206)~~ - - ~~498 292~~ - - ~~Manditorily Redeemable Preferred Stock~~ - -Corporate -and -Eliminations -0 ~~115,239 Shareholders' Equity 55,516~~ (13,~~608~~058) (~~150~~3,~~882~~058) (537,~~908~~472) ~~(150,882) (266,121) 150,882~~ -------- -------- --------- -------~~----~~ ~~---------~~Consolidated ~~---------- ----------~~ $~~210~~212,~~522~~478 $~~11,652~~ ~~$170,762~~- $~~(183~~212,~~220)~~478 $~~209,716~~ ~~$(150~~2,~~882)~~227 ~~$150,882~~ ======== ======== ========= =======~~==== ========= ========== ==========~~

22 MMH HOLDINGS, INC. MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000) Operating Segments For the Three Months Ended July 31, 1999

~~Non~~SALES ~~Morris Consolidated Guarantor Guarantor Material Morris Material MMH Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. Holdings, Inc.~~ ------------ ------------ -------------- ---------~~---~~ ~~--------------~~Operating ~~--------------~~Income ~~ASSETS~~External ~~Current Assets Cash and cash equivalents $ 2,325 $ 104 $ 1,500 $ -- $ 3,929 $ -- Accounts receivable - net 60,163 4,318 -- -- 64,481 --~~ Intercompany ~~accounts~~Total ~~receivable 20,057 -- 13,204~~ (~~33,261~~Loss) -- -- ~~Inventories 37,892 2,102~~ -- -- ~~39,994~~ -- ~~Other current assets 6,509 533 800~~ -- ~~7,842~~ -- ------~~---~~ -----~~----~~ --------- --------- ~~---------~~Equipment & Aftermarket -~~--------~~ ~~126,946~~Americas 7$12,~~057~~747 15$13,~~504~~992 ~~(33~~$26,~~261)~~739 ~~116~~$2,~~246~~703 --Equipment ~~---------~~& ~~---------~~Aftermarket -~~--------~~ ~~---------~~Other ~~---------~~642 ~~---------~~801 ~~Property~~1,443 ~~Plant~~267 ~~and Equipment 38,294 2,680~~ -- -- ~~40,974~~ -- -~~--------~~ --------- --------- ------~~---~~ ~~---------~~Total ~~---------~~Equipment ~~Other~~& ~~Assets~~Aftermarket ~~Goodwill~~13,389 4014,~~010~~793 228,~~834~~182 ~~-- -- 42~~2,~~844~~970 --Distribution ~~Debt~~& ~~financing~~Service ~~costs~~ -- --North ~~16,398~~America ~~-- 16~~42,~~398~~061 ~~-- Noncurrent intercompany receivable 5~~1,~~161~~268 ~~-- 83~~43,~~891~~329 ~~(89~~3,~~052)~~363 --Eliminations --& ~~Investment~~Other in0 ~~affiliates~~ (116,~~527~~061) ~~-- 64,899~~ (6316,~~372~~061) -- (~~130,823~~293) ~~Deferred income taxes~~ -- -- -- -- -- -- ~~Other 9,758~~ -- ~~616~~ -- ~~10,374~~ -- -----~~----~~ ------~~---~~ ~~---------~~Total ~~---------~~Americas ~~--------- --------- 53~~55,~~402~~450 ~~2,834~~0 ~~165~~55,~~804~~450 ~~(152~~6,~~424)~~040 ~~69,616 (130,823)~~ --------- --------- --------- ------~~---~~ ~~---------~~Engineered ~~---------~~Products $& ~~218,642~~Automation $- ~~12,571~~Europe ~~$ 181~~3,~~308~~337 $(~~185,685~~310) ~~$ 226~~3,~~836~~027 $(~~130,823~~7) ~~=========~~Equipment ~~=========~~& ~~=========~~Aftermarket ~~========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long~~-~~term~~ ~~oligations~~Europe $7,085 ~~342 $ 41 $ -- $ -- $ 383 $ -- New Credit Facility borrowings 425 -- 27~~2,~~500~~044 ~~-- 27~~9,~~925~~129 --633 ~~Term~~Eliminations ~~loans~~& --Other -- ~~52,225~~(214) --(214) 52(1,~~225~~308) -- ~~Acquisition Facility Line borrowings~~ -- -- ~~12,430~~ -- ~~12,430~~ -- ~~Senior notes~~ -- -- ~~200,000~~ -- ~~200,000~~ -- ~~Bank overdrafts 139 1,228~~ -- -- ~~1,367~~ -- ~~Trade accounts payable 25,562 1,195~~ -- -- ~~26,757~~ -- ~~Intercompany~~Total ~~accounts~~Europe ~~payable 13~~10,~~204~~422 41,~~153~~520 1511,~~904~~942 (~~33,261~~682) --Equipment --& ~~Advance~~Aftermarket ~~payments and progress billings 8,336~~ -- --South --Africa 83,~~336~~332 --0 ~~Accrued warranties 1~~3,~~748~~332 737 --Equipment --& ~~1,821~~Aftermarket -- ~~Accrued~~Asia ~~interest~~Pacific 183,505 --0 13,~~786~~505 --9 ~~1,804~~Eliminations --& Other ~~current~~0 ~~liabilities~~(375) ~~16,854~~(375) ~~1,148 2,014 -- 20,016 -- --------- --------- --------- --------- --------- ---------- 66,628 7,838 311,859~~ (~~33,261~~115) ~~353,064~~ -- -----~~----~~ --------- --------- ------~~---~~ ~~---------~~Total ~~----------~~International ~~Other Long-Term Debt 2~~17,~~189~~259 ~~595 -- -- 2~~1,~~784~~145 ~~-- Noncurrent intercompany payable 83~~18,~~891~~404 ~~5,161 --~~ (~~89,052~~781) -- -- ~~Other Long~~-~~Term Liabilities 1,035~~ -- ~~272~~ -- ~~1,307~~ -- ~~Minority Interest~~ -- -- -- ~~504 504~~ -- ~~Manditorily Redeemable Preferred Stock~~ -- -- -- -- -- --Corporate ~~Stockholders'~~and ~~Equity~~Eliminations ~~64,899~~0 (1,~~023~~145) (~~130~~1,~~823~~145) (632,~~876~~605) ~~(130,823) (239,068)~~ --------- --------- --------- ------~~---~~ ~~---------~~Consolidated ~~----------~~ $ ~~218~~72,~~642~~709 $ ~~12,571~~- $ ~~181~~72,~~308~~709 $~~(185~~2,~~685)~~654 ~~$ 226,836 $(130,823)~~ ========= ========= ========= ======~~==== ========= ===========~~

23 Note 12 - Divestiture --------------------- On December 16, 1999, the Company completed the sale of the Company's brake manufacturing operation (the "Brake Business") located in Mississauga, Ontario, Canada, for a net sale price of $6.8 million after deduction of certain transaction-related items, including taxes. During the first quarter of fiscal year 2000, the Brake Business contributed $0.5 million in sales and no operating income to the Company's results. In accordance with the Prepetition Credit Facility, the Company was permitted to apply half of the net proceeds of the sale of the Brake Business (which amounted to $3.4 million) to general corporate purposes, which the Company would otherwise have been required to use to prepay indebtedness under the Prepetition Credit Facility. After consummation of the sale, the Company repaid $3.1 million of the outstanding term loans ($2.4 million of which was applied to the final scheduled principal payment obligation with respect to the term loans) and repaid $0.3 million on the Acquisition Facility. A pre-tax gain of $6.4 million was recognized on this transaction. Note 13 - Workforce Reductions ------------------------------ During the third quarter ended July 31, 2000, the Company announced a workforce reduction program of approximately 84 hourly and salary positions at its United States and United Kingdom operations. The program was primarily aimed at streamlining its production base, improving efficiency and enhancing its competitiveness. Termination benefits accrued and charged to expense in the third quarter totaled $1.5 million. Termination benefits paid and charged against the liability as of July 31, 2000, were $0.6 million. The remaining severance benefits are anticipated to be paid primarily during the fourth quarter of 2000 and the first quarter of 2001. The Company also recorded $0.4 million and $0.9 million of expense during the third and fourth quarters of 1999 as a result of restructuring of the Company's operations. Note 14 - Supplemental Condensed Financial Information ------------------------------------------------------ In connection with the Recapitalization, MMH, a direct wholly-owned subsidiary of Holdings, issued Senior Notes that are guaranteed by certain of MMH's subsidiaries (the "Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries is a wholly-owned subsidiary, directly or indirectly, of MMH and the guarantees are full, unconditional and joint and several. Both Holdings and MMH are holding companies with no material operating assets. All of the Company's business operations are conducted through subsidiaries of MMH and accordingly, both Holdings and MMH are dependent on the operating subsidiaries of MMH to fund their cash needs, including debt service and tax obligations. The Guarantor Subsidiaries include the domestic operating subsidiaries which filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (See Note 1). Separate financial statements of the Guarantor Subsidiaries are not presented because management has determined that they would not be material to investors. The following supplemental financial information sets forth the balance sheet, statement of operations and cash flow information for the Guarantor Subsidiaries and for MMH's other subsidiaries (the "Non-Guarantor Subsidiaries"). The supplemental financial information reflects the investments of the Guarantor Subsidiaries in the Non-Guarantor Subsidiaries using the equity method of accounting. For purposes of this presentation, it is assumed that, historically, all of the assets of the MHE Business were wholly-owned by subsidiaries of MMH, which is an entity that was formed by Holdings in connection with the Recapitalization and accordingly, the historical financial statements of MMH and Holdings are identical following completion of the Recapitalization. 24 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET JULY 31, 2000 (UNAUDITED) (Dollars in Thousands)

~~Consolidated~~ Non- ~~Morris~~Consolidated ~~Morris~~ Guarantor Guarantor ~~Material~~Morris Material ~~MMH~~Morris Material Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ~~Holdings, Inc.~~ ------------ ------------ --------------- ------------ --------------- ASSETS Current Assets Cash and cash equivalents $ 586 $ 274 $ 1,925 $ - $ 2,785 Accounts receivable - net 54,190 3,006 - - 57,196 Intercompany accounts receivable 21,180 119 20,234 (41,533) - Inventories 34,222 1,679 - - 35,901 Other current assets 7,081 185 300 - 7,566 ----------- ~~Revenues~~----------- ~~Net~~---------- ~~Sale~~----------- ~~127~~----------- 117,~~152~~259 65,~~297~~263 -22,459 (~~525~~41,533) ~~132~~103,~~924~~448 - ~~Other Income~~ - ~~net~~ - - - ------ ----------- ---------- ----------- ----------- Property, Plant and Equipment - net 33,583 2,346 - - 35,929 ----------- ----------- ---------- ----------- ----------- ~~127,152~~Other 6Assets Goodwill 22,~~297~~500 - ~~(525)~~- ~~132~~- 22,~~924~~500 Debt financing costs - ~~Cost~~- of14,781 ~~Sales~~- 9714,~~261~~781 4Noncurrent intercompany receivable 5,~~819~~064 - 77,281 (~~525~~82,345) ~~101,555~~ - ~~Selling,~~Investment ~~General~~in ~~and~~affiliates ~~Administrative~~(5,049) ~~expenses~~- 3429,~~761~~205 1(24,~~817~~156) 1- Other 8,~~573~~890 - 38678 - 9,~~151~~568 ----------- ----------- ---------- ----------- ----------- 31,405 - 121,945 (106,501) 46,849 ----------- ----------- ~~Operating~~---------- ~~Income~~----------- (4----------- $ 182,~~870)~~247 ~~(339)~~$ (17,~~573)~~609 -$ 144,404 $ (6148,~~782~~034) -$ ~~Gain~~186,226 on=========== ~~sale~~=========== ========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Not Subject to Compromise Current Liabilities Current portion of ~~business~~long-term obligations 78 38 - - 6$ 116 Junior DIP Facility - - 31,~~380~~252 - 631,~~380~~252 New Credit Facility borrowings - ~~Interest~~- ~~Expense~~- - ~~Net~~- ~~Affiliates~~Term (2loans - - - - - Acquisition Facility borrowings - - - - Senior Notes - - - - - Bank overdrafts 177 821 - - 998 Trade accounts payable 12,~~978)~~139 971 - - 13,110 Intercompany accounts payable 20,353 4,082 17,098 (~~177~~41,533) 3- Advance payments and progress billings 11,~~155~~592 - - - ~~Third~~11,592 ~~party~~Accrued ~~(270)~~interest ~~(135)~~9 ~~(14~~- 753 - 762 Other current liabilities 12,~~961)~~797 1,069 1,904 - (15,~~366)~~770 ----------- ----------- ---------- ----------- ----------- 57,145 6,981 51,007 (41,533) 73,600 ----------- ----------- ~~Loss~~---------- ~~Before~~----------- ~~Income~~----------- ~~Taxes,~~Other ~~Equity~~Long-Term inDebt ~~Earnings~~82 ~~(Loss~~542 of- ~~Subsidiaries~~- ~~and~~624 ~~Minority~~Noncurrent ~~Interest~~Intercompany (8Payable 77,~~118)~~281 ~~(651)~~5,064 - (682,~~999~~345) - Other Long Term Liabilities 36 - 203 - 239 ----------- ----------- ---------- ----------- ----------- 134,544 12,587 51,210 (15123,~~768~~878) 74,463 Liabilities Subject to Compromise 18,498 - ~~Benefit~~276,985 ~~(Provision)~~- ~~for~~295,463 ~~Income~~Minority ~~Taxes~~Interest - - - 71 71 Manditorily Redeemable Preferred Stock - - - - - Shareholders' Equity 29,205 (~~552~~4,978) (83183,791) (124,~~400~~227) - (2183,~~035~~791) ----------- ~~Equity~~----------- in---------- ~~Earnings~~----------- ~~(Loss)~~----------- of$ ~~Subsidiaries~~182,247 $ 7,609 $ 144,404 $ (~~707~~148,034) $ 186,226 =========== =========== ========== =========== =========== Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- (9------------ ------------- ASSETS Current Assets Cash and cash equivalents $ - $ - $ 2,~~377)~~785 10Accounts receivable - net - - 57,~~084~~196 Intercompany accounts receivable - ~~(17~~- - Inventories - - 35,~~776)~~901 ~~Minority~~Other ~~Interest~~current assets - - 7,566 ----------- 27----------- 27---------- - - 103,448 ----------- ----------- ---------- Property, Plant and Equipment - net - - 35,929 ----------- ----------- ---------- Other Assets Goodwill - ~~Net~~- ~~Income~~22,500 Debt financing costs - - 14,781 Noncurrent intercompany receivable - - - Investment in affiliates (~~Loss~~183,791) $183,791 (- Other - - 9,~~377)~~568 $----------- ~~(734)~~----------- $---------- (17183,~~776~~791) $183,791 1046,~~111~~849 ----------- ----------- ---------- $ (17183,~~776~~791) ~~(17~~$ 183,~~776)~~791 $ 186,226 =========== =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Not Subject to Compromise Current Liabilities Current portion of long-term obligations $ - $ - $ 116 Junior DIP Facility - - 31,252 New Credit Facility borrowings - - - Term loans - - - Acquisition Facility borrowings - - - Senior Notes - - - Bank overdrafts - - 998 Trade accounts payable - - 13,110 Intercompany accounts payable - - - Advance payments and progress billings - - 11,592 Accrued interest - - 762 Other current liabilities - - 15,770 ---------- ----------- ---------- - - 73,600 ---------- ----------- ---------- Other Long-Term Debt 624 Noncurrent Intercompany Payable - Other Long Term Liabilities 239 ---------- ----------- ---------- - - 74,463 Liabilities Subject to Compromise - - 295,483 Minority Interest - - 71 Manditorily Redeemable Preferred Stock 118,642 - 118,642 Shareholders' Equity (302,433) 183,791 (302,433) ---------- ----------- ---------- $ (183,791) $ 183,791 $ 186,226 =========== =========== ===========

25 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET OCTOBER 31, 1999 (Dollars in Thousands)

Non ~~Morris~~ Consolidated Guarantor Guarantor Morris Material Morris Material ~~MMH~~ Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ~~Holdings, Inc.~~ ------------ ------------ --------------- ------------ --------------- ASSETS Current Assets Cash and cash equivalents $ 2,325 104 $ 1,500 $ - $ 3,929 Accounts receivable - net 60,163 4,318 - - 64,481 Intercompany accounts receivable 20,057 - 13,204 (33,261) - Inventories 37,892 2,102 - - 39,994 Other current assets 6,509 533 800 - 7,842 ----------- ~~Revenues~~----------- ~~Net~~----------- ~~Sales~~----------- 63----------- 126,~~298~~946 37,~~240~~057 -15,504 (~~333~~33,261) 66116,~~205~~246 - ~~Other Income~~ - ~~net~~ - - ------- ----------- ----------- ----------- ----------- Property, Plant and Equipment 38,294 2,680 - - 40,974 ----------- ----------- ----------- ----------- ----------- 63Other Assets Goodwill 40,~~298~~010 32,~~240~~834 - ~~(333)~~- 6642,~~205~~844 Debt financing costs - ~~Cost~~- of16,398 ~~Sales~~- 4216,~~421~~398 2Noncurrent intercompany receivable 5,~~595~~161 - 83,891 (~~333~~89,052) 50- Investment in affiliates (1,~~683~~527) - ~~Selling~~64,899 ~~General~~(63,372) ~~and~~- ~~Administrative~~Other ~~expenses 19~~9,~~603~~758 ~~912~~- ~~776~~616 - 2110,~~291~~374 ----------- ----------- ----------- ----------- ----------- 53,402 2,834 165,804 (152,424) 69,616 ----------- ----------- ~~Operating~~----------- ~~Income~~----------- (4----------- $ 218,~~726)~~642 ~~(267)~~$ 12,571 $ 181,308 $ (~~776~~185,685) $ 226,836 =========== =========== =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long-term (5$ 342 $ 41 $ - $ - $ 383 obligations New Credit Facility borrowings 425 - 27,~~769)~~500 - ~~Gain~~27,925 onTerm ~~sale~~loans of- ~~business~~- 52,225 - 52,225 Acquisition Facility borrowings - - 12,430 - 12,430 Senior Notes - - ~~Interest~~200,000 ~~Expense~~- 200,000 Bank overdrafts 139 1,228 - ~~Net~~- ~~Affiliates~~1,367 (Trade accounts payable 25,562 1,~~343)~~195 - - 26,757 Intercompany accounts payable 13,204 4,153 15,904 (8733,261) 1- Advance payments and progress 8,~~430~~336 - - - ~~Third~~8,336 ~~party~~Accrued ~~(208)~~interest ~~(61)~~18 (7- 1,~~347)~~786 - (71,~~616)~~804 Other current liabilities 18,602 1,221 2,014 - 21,837 ----------- ----------- ----------- ----------- ----------- 66,628 7,838 311,859 (33,261) 353,064 ----------- ~~Loss~~----------- ~~Before~~----------- ~~Income~~----------- ~~Taxes~~----------- Other Long-Term Debt 2,189 ~~Equity~~595 in- ~~Earnings~~- ~~(Loss~~2,784 ofNoncurrent ~~Subsidiaries~~Intercompany ~~and~~Payable ~~Minority~~83,891 ~~Interest~~5,161 - (689,~~277~~052) ~~(415)~~- (6Other Long-Term Liabilities 1,~~693)~~035 - ~~(13~~272 - 1,~~385)~~307 Minority Interest - ~~Benefit~~- ~~(Provision)~~- ~~for~~504 ~~Income~~504 ~~Taxes~~Manditorily ~~(247)~~Redeemable Preferred Stock - - - ~~(247)~~- - Shareholders' Equity in64,899 ~~Earnings~~ (~~Loss~~1,023) ~~of Subsidiaries~~ (~~404~~130,823) - (663,~~928~~876) ~~7,332 -~~ (13130,~~621~~823) ~~Minority Interest~~ - - - ~~11 11~~ - -------- --------- --~~-------~~ ----------- ----------- ----------- ~~Net Income (Loss)~~ $ (6218,~~928)~~642 $ ~~(415) $ (13~~12,~~621)~~571 $ 7181,~~343~~308 $ (13185,~~621~~685) $ ~~(13~~226,~~621)~~836 ======== === ====== =====~~====~~ =========== =========== =========== Consolidated MMH ~~Eliminations~~Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- ~~Revenues~~ASSETS ~~Net~~Current ~~Sales~~Assets Cash and cash equivalents $ - 66$ - $ 3,~~205~~929 ~~Other~~Accounts ~~Income~~receivable - net - - 64,481 Intercompany accounts receivable - - - Inventories - - 39,994 Other current assets - - 7,842 ----------- ----------- ~~Cost~~----------- of- ~~Sales~~- 116,246 ----------- 66----------- ----------- Property,~~205~~ ~~Selling~~Plant and Equipment - - 40,974 ~~General~~----------- ----------- 50----------- Other Assets Goodwill - - 42,~~683~~844 ~~and~~Debt ~~Administrative~~financing ~~expenses~~costs ~~Operating~~- ~~Income~~- 16,398 Noncurrent intercompany receivable - 21- - Investment in affiliates (130,~~291~~823) ~~Gain~~130,823 on- ~~sale~~Other of- ~~business~~- 10,374 ----------- ----------- ~~Interest~~----------- ~~Expense~~(130,823) 130,823 69,616 ----------- ~~Net~~----------- ----------- $ (5130,~~769~~823) ~~Affiliates~~$ 130,823 $ 226,836 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current portion of long-term obligations $ - ~~Third~~- ~~party~~$ 383 New Credit Facility borrowings - - ~~Loss~~27,925 ~~Before~~Term ~~Income~~loans ~~Taxes~~- - 52,225 ~~Equity~~Acquisition Facility borrowings - (7- 12,~~616)~~430 inSenior ~~Earnings~~Notes ~~(Loss~~- of- ~~Subsidiaries~~200,000 Bank overdrafts - - 1,367 Trade accounts payable - - 26,757 Intercompany accounts payable - - - Advance payments and progress - - 8,336 Accrued interest - - 1,804 Other current liabilities - - 21,837 ----------- ----------- ~~Minority~~----------- ~~Interest~~- ~~Benefit~~- ~~(Provision)~~353,064 ~~for~~----------- ~~Income~~----------- ~~Taxes~~----------- ~~Equity~~Other inLong-Term ~~Earnings~~Debt ~~(Loss)~~- of- ~~Subsidiaries~~2,784 Noncurrent Intercompany Payable - - - Other Long-Term Liabilities - - 1,307 Minority Interest - ~~(13,385)~~- ~~Net~~504 ~~Income~~Manditorily ~~(Loss)~~Redeemable Preferred Stock 108,245 - 108,245 Shareholders' Equity (~~247~~239,068) 13130,~~621~~823 -(239,068) ----------- 11 ----------- ----------- ~~13,621~~ $ (13130,~~621~~823) $ 130,823 $ 226,836 =========== =========== ===========

26 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED) (Dollars in Thousands)

~~Non~~FOR ~~Morris~~THE NINE MONTHS ENDED JULY 31, 2000 --------------------------------------------------------------------------------------- Non- Consolidated Guarantor Guarantor Morris Material Morris Material ~~MMH~~ Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ~~Holdings,~~------------ ~~Inc.~~------------ --------------- ------------ -------------- Revenues Equipment and Parts $ 148,515 $ 6,210 $ - $ (705) $ 154,020 Service 41,038 3,331 - 44,369 ----------- ----------- ----------- ----------- ----------- ~~Revenues~~ Net ~~Sale~~Sales ~~$131~~189,~~714~~553 ~~$ 8~~9,~~407~~541 $ - $ (~~352~~705) ~~$ 139~~198,~~769~~389 ~~$ -~~ Other Income - net ~~147~~- - - - ~~147~~ - -------- --- ------ -----~~----~~ ----------- ----------- ----------- ~~131~~189,~~861~~553 89,~~407~~541 - (~~352~~705) ~~139~~198,~~916~~389 - Cost of Sales 99148,~~002~~948 67,~~406~~396 - (~~352~~705) ~~105~~155,~~056~~639 - Selling, General and Administrative ~~Expenses~~expenses 3248,~~786~~591 13,~~826~~028 ~~675~~2,324 - 3553,~~287~~943 Imparirment Loss on Long-Lived Assets 13,392 2,617 - - 16,009 Reorganization Items 4,248 - 950 - 5,198 ---- ------- -- --------- ----------- ----------- ----------- Operating Income (Loss) 73(25,626) ~~175~~(3,500) (~~675~~3,274) - (~~427~~32,400) Gain on sale of business - ~~Interest~~- 6,380 - 6,380 Loss on disposal of fixed assets (~~Expense~~830) ~~Income~~- - ~~net~~- (830) Interest Expense - Net Affiliates (34,~~174~~230) (~~192~~258) 34,~~366~~488 - - - Third party (~~350~~347) (~~240~~183) (1318,~~886~~724) - (1419,~~431~~254) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Income (Loss) Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest (331,~~406~~033) (~~257~~3,941) (11,~~195~~130) - (1446,~~858~~104) -Benefit (Provision) for Income Taxes (~~1,065~~778) - (83) ~~- -~~ (1,~~065~~400) - (2,261) Equity in Earnings (Loss) of Subsidiaries (~~230~~3,782) - (435,~~701~~593) 439,~~931~~375 - ~~(15,896)~~ Minority Interest - - - 27242 27242 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net Income (Loss) $ (435,~~701~~593) $ (~~257~~4,024) $ (1548,~~896~~123) $ 439,~~958~~617 $ (1548,~~896~~123) ~~(15,896)~~=========== =========== =========== =========== =========== Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- Revenues Equipment and Parts $ 154,020 Service 44,369 ----------- ----------- ----------- Net Sales - - 198,389 Other Income - net - - - ----------- ----------- ----------- - - 198,389 Cost of Sales - - 155,639 Selling, General and Administrative expenses - - 53,943 Imparirment Loss on Long-Lived Assets - - 16,009 Reorganization Items - - 5,198 ----------- ----------- ----------- Operating Income (Loss) - - (32,400) Gain on sale of business - - 6,380 Loss on disposal of fixed assets - - (830) Interest Expense - Net Affiliates - - - Third party - - (19,254) ----------- ----------- ----------- Income (Loss) Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest - - (46,104) Benefit (Provision) for Income Taxes - - (2,261) Equity in Earnings (Loss) of Subsidiaries (48,123) 48,123 - Minority Interest - - 242 ----------- ----------- ----------- Net Income (Loss) $ (48,123) $ 48,123 $ (48,123) =========== =========== ===========

FOR THE THREE MONTHS ENDED JULY 31, 2000 --------------------------------------------------------------------------------------- Non- Consolidated Guarantor Guarantor Morris Material Morris Material Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ------------ ------------ --------------- ------------ --------------- Revenues Equipment and Parts $ 48,232 $ 2,368 $ (180) $ 50,420 Service 14,169 876 15,045 ----------- ----------- ----------- ----------- ----------- Net Sales 62,401 3,244 - (180) 65,465 Other Income - net - - - - - ----------- ----------- ----------- ----------- ----------- 62,401 3,244 - (180) 65,465 Cost of Sales 51,687 2,577 - (180) 54,084 Selling, General and Administrative expenses 16,020 1,211 751 - 17,982 Imparirment Loss on Long-Lived Assets 13,392 2,617 - - 16,009 Reorganization Items 2,058 - 950 - 3,008 ----------- ----------- ----------- ----------- ----------- Operating Income (Loss) (20,756) (3,161) (1,701) - (25,618) Gain on sale of business - - - - - Loss on disposal of fixed assets (830) - - - (830) Interest Expense - Net Affiliates (1,252) (81) 1,333 - - Third party (77) (48) (3,763) - (3,888) ----------- ----------- ----------- ----------- ----------- Income (Loss) Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest (22,915) (3,290) (4,131) - (30,336) Benefit (Provision) for Income Taxes (226) - - - (226) Equity in Earnings (Loss) of Subsidiaries (3,075) - (26,216) 29,291 - Minority Interest - - - 215 215 ----------- ----------- ----------- ----------- ----------- Net Income (Loss) $ (26,216) $ (3,290) $ (30,347) $ 29,506 $ (30,347) =========== =========== =========== =========== =========== Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- Revenues Equipment and Parts $ 50,420 Service 15,045 ----------- ----------- ----------- Net Sales - - 65,465 Other Income - net - - - ----------- ----------- ----------- - - 65,465 Cost of Sales - - 54,084 Selling, General and Administrative expenses - - 17,982 Imparirment Loss on Long-Lived Assets - - 16,009 Reorganization Items - - 3,008 ----------- ----------- ----------- Operating Income (Loss) - - (25,618) Gain on sale of business - - - Loss on disposal of fixed assets - - (830) Interest Expense - Net Affiliates - - - Third party - - (3,888) ----------- ----------- ----------- Income (Loss) Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest - - (30,336) Benefit (Provision) for Income Taxes - - (226) Equity in Earnings (Loss) of Subsidiaries (30,347) 30,347 - Minority Interest - - 215 ----------- ----------- ----------- Net Income (Loss) $ (30,347) $ 30,347 $ (30,347) =========== =========== ===========

27 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED) (Dollars in Thousands)

~~Non~~FOR ~~Morris~~THE NINE MONTHS ENDED JULY 31, 1999 --------------------------------------------------------------------------------------- Non- Consolidated Guarantor Guarantor Morris Material Morris Material ~~MMH~~ Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ~~Holdings, Inc.~~ ------------ ------------ -------------- -~~-----------~~ -------------- --------------- Revenues Net Sales $ 67200,~~575~~730 $ 412,~~310~~347 $ - $ (36599) $ 71212,~~849~~478 ~~$ -~~ Other Income - net 70600 ~~(25)~~- - - 45600 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- 67201,~~645~~330 412,~~285~~347 - (36599) 71213,~~894~~078 - Cost of Sales 51148,~~170~~388 39,~~308~~477 - (36599) 54157,~~442~~266 - Selling, General and Administrative expenses 1749,~~963~~340 ~~939~~2,743 ~~452~~1,502 - 1953,~~354~~585 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Operating Income (~~1,488~~Loss) 383,602 ~~(452)~~127 - (1,~~902~~502) - 2,227 Interest (Expense) Income - net Affiliates (14,~~564~~719) (97281) 15,~~661~~000 - - - Third ~~Party~~party (~~174~~542) (~~102~~342) (721,~~247~~068) - (721,~~523~~952) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Loss Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest (31,~~226~~659) (~~161~~496) (617,~~038~~570) - (919,~~425~~725) - Provision for Income Taxes (1,~~271~~641) - ~~(2,247)~~- - (31,~~518~~641) - Equity in Earnings (Loss) of Subsidiaries (~~140~~456) - (43,~~637~~756) 4,~~777~~212 - ~~(12,922)~~ Minority Interest - - - 2140 2140 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net Income (Loss) $ (43,~~637~~756) $ (~~161~~496) $ (1221,~~922~~326) $ 4,~~798~~252 $ (1221,~~922~~326) $=========== ~~(12,922)~~=========== =========== =========== =========== Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- Revenues Net Sales $ - $ - $ 212,478 Other Income - net - - 600 ----------- ----------- ----------- - - 213,078 Cost of Sales - - 157,266 Selling, General and Administrative expenses - - 53,585 ----------- ----------- ----------- Operating Income (Loss) - - 2,227 Interest (Expense) Income - net Affiliates - - - Third party - - (21,952) ----------- ----------- ----------- Loss Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest - - (19,725) Provision for Income Taxes - - (1,641) Equity in Earnings (Loss) of Subsidiaries (21,326) 21,326 - Minority Interest - - 40 ----------- ----------- ----------- Net Income (Loss) $ (21,326) $ 21,326 $ (21,326) =========== =========== ===========

FOR THE THREE MONTHS ENDED JULY 31, 1999 --------------------------------------------------------------------------------------- Non- Consolidated Guarantor Guarantor Morris Material Morris Material Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ------------ ------------ --------------- ------------ --------------- Revenues Net Sales $ 69,016 $ 3,940 $ - $ (247) $ 72,709 Other Income - net 453 - - - 453 ----------- ----------- ---------- ----------- ----------- 69,469 3,940 - (247) 73,162 Cost of Sales 49,386 3,071 - (247) 52,210 Selling, General and Administrative expenses 16,554 917 827 - 18,298 ----------- ----------- ---------- ----------- ----------- Operating Income (Loss) 3,529 (48) (827) - 2,654 Interest (Expense) Income - net Affiliates (1,545) (89) 1,634 - - Third party (237) (102) (7,182) - (7,521) ----------- ----------- ---------- ----------- ----------- Loss Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest 1,747 (239) (6,375) - (4,867) Provision for Income Taxes (576) - - - (576) Equity in Earnings (Loss) of Subsidiaries (226) - 945 (719) - Minority Interest - - - 13 13 ----------- ----------- ---------- ----------- ----------- Net Income (Loss) $ 945 $ (239) $ (5,430) $ (706) $ (5,430) =========== =========== ========== =========== =========== FOR THE THREE MONTHS ENDED JULY 31, 1999 --------------------------------------------------------------------------------------- Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- Revenues Net Sales $ - $ - $ 72,709 Other Income - net - - 453 ----------- ----------- ----------- - - 73,162 Cost of Sales - - 52,210 Selling, General and Administrative expenses - - 18,298 ----------- ----------- ----------- Operating Income (Loss) - - 2,654 Interest (Expense) Income - net Affiliates - - - Third party - - (7,521) ----------- ----------- ----------- Loss Before Income Taxes, Equity in Earnings (Loss) of Subsidiaries and Minority Interest - - (4,867) Provision for Income Taxes - - (576) Equity in Earnings (Loss) of Subsidiaries (5,430) 5,430 - Minority Interest - - 13 ----------- ----------- ----------- Net Income (Loss) $ (5,430) $ 5,430 $ (5,430) =========== =========== ===========

28 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 2000 (UNAUDITED) (Dollars in Thousands)

Non- ~~Morris~~ Consolidated Guarantor Guarantor Morris Material Morris Material ~~MMH~~ Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ~~Holdings, Inc.~~ ------------ ------------ -------------- -~~-----------~~ -------------- --------------- Operating Activities Net income (Loss) $ (935,~~377~~593) $ (~~734~~4,024) $ (1748,~~776~~123) $ 1039,~~111~~617 $ (1748,~~776~~123) ~~$ (17,776)~~ Add (deduct) - items not affecting cash provided by operating ~~activities~~acitvities: DIP financing fees - - 950 - 950 Depreciation and amortization 46,~~468~~757 74226 21 - 47,~~563~~004 - Amortization of debt ~~financing~~finacing ~~cost~~costs - - 1,~~174~~761 - 1,~~174~~761 - Equity in loss of subsidiaries ~~707~~3,782 - 935,~~377~~593 (1039,~~084~~375) - ~~17,776~~ Gain on sale of business - - (6,380) - ~~Deferred~~(6,380) ~~income~~Impairment ~~taxes~~loss on long-lived ~~net~~assets 13,392 2,617 - - 16,009 Loss on disposal of fixed assets 830 - - - 830 Other - - - (27242) (27242) - Changes in working capital, excluding ~~the~~ effects of acquisition opening balance sheets: Accounts receivable 74,~~886~~205 ~~426~~978 - - 85,~~312~~183 - Inventories (1,~~419)~~850 ~~(79)~~272 - - (12,~~498)~~122 - Other current assets (~~2,265~~831) 7359 ~~250~~500 - ~~(2,008)~~28 - Trade accounts payable and bank overdrafts (61,~~965~~000) ~~608~~(369) - - (61,~~357~~369) - Accrued interest 8 - 911,~~726~~351 - 911,~~734~~359 - Other current liabilities ~~943~~1,670 (6525) 2,~~580~~236 - 3,~~458~~881 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net cash provided by (used for) operating activities (64,~~014~~930) ~~237~~34 (12,~~028~~091) - (6,~~805~~987) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Investment and Other Transactions Fixed asset additions - net (~~495~~1,021) 21(12) - - (~~474~~1,033) - Capitalized software (~~997~~890) - - - (~~997~~890) - Net proceeds on divestiture of business 9,115 - - - 9,115 - Other - net ~~(115)~~328 (11191) (70107) - ~~(196)~~30 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net cash used for investment and other transactions 7,~~508~~532 10(203) (70107) - 7,~~448~~222 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Financing ~~Activities~~Activites Changes in short-term debt and notes payable ~~6,868~~34 (2843) - - 6(9) Proceeds from DIP and Junior DIP borrowings - - 31,~~840~~352 - 31,352 Repayment of DIP borrowings - - (100) - (100) Proceeds from/(Repayments of) Revolving Credit Facility borrowings -(425) - (46,~~775~~854) - (47,~~775~~279) - Repayments of Term Loans - - (321,~~812~~079) - (321,~~812~~079) - Repayments of Acquisition Facility Line borrowings - - (~~336~~2,867) - (~~336~~2,867) - Distribution to parent (83,~~846~~752) 99405 83,~~747~~347 - - - Repayments of long-term debt (87117) - - - (87117) Payment of DIP financing fees - (950) - (950) Payment of fees for amendment of ~~New~~ Credit Facility - - (226) - (226) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net cash provided by (used for) financing activities (24,~~065~~260) 71362 ~~(402)~~2,623 - (21,~~396~~275) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Effect of Exchange Rate Changes on Cash and Cash Equivalents (5581) (2023) - - (75104) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents (~~626) 298 (~~1,~~500~~739) 170 425 - (1,~~828~~144) - Cash and Cash Equivalents Beginning of Period 2,325 104 1,500 - 3,929 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- End of Period $ ~~1,699~~586 $ ~~402~~274 0$ 1,925 $ - $ 2,~~101~~785 -=========== =========== ========== =========== =========== Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- Operating Activities Net Income (Loss) $ (48,123) $ 48,123 $ (48,123) Add (deduct)-items not affecting cash provided by operating activities: DIP financing fees 950 Depreciation and amortization - - 7,004 Amortization of debt financing costs - - 1,761 Equity in loss of subsidiaries 48,123 (48,123) - Gain on sale of business - - (6,380) Impairment loss on long-lived assets - - 16,009 Loss on disposal of fixed assets - - 830 Other - - (242) Changes in working capital, excluding effects of acquisition opening balance sheets: Accounts receivable - - 5,183 Inventories - - 2,122 Other current assets - - 28 Trade accounts payable and bank overdrafts - - (1,369) Accrued interest - - 11,359 Other current liabilities - - 3,881 ----------- ----------- ----------- Net cash provided by (used for) operating activities - - (6,987) ----------- ----------- ----------- Investment and Other Transactions Fixed asset additions - net - - (1,033) Capitalized software - - (890) Net proceeds on divestiture of busines - - 9,115 Other - net - - 30 ----------- ----------- ----------- Net cash used for investment and other transactions - - 7,222 ----------- ----------- ----------- Financing Activites Changes in short-term debt and notes payable - - (9) Proceeds from DIP and Junior DIP borrowings - - 31,352 Repayment of DIP borrowings - - (100) Proceeds from/(Repayments of) Revolving Credit Facility borrowings - - (7,279) Repayments of Term Loans - - (21,079) Repayments of Acquisition Facility Line borrowings - - (2,867) Distribution to parent - - - Repayments of long-term debt - - (117) Payment of DIP financing fees - - (950) Payment of fees for amendment of Credit Facility - - (226) ----------- ----------- ----------- Net cash provided by (used for) financing activities - - (1,275) ----------- ----------- ----------- Effect of Exchange Rate Changes on Cash and Cash Equivalents - - (104) ----------- ----------- ----------- Increase(Decrease) in Cash and Cash Equivalents - - (1,144) Cash and Cash Equivalents Beginning of Period - - 3,929 ----------- ----------- ----------- End of Period - - 2,785 =========== =========== ===========

29 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) SUPPLEMENTAL CONDENSED COMBINING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED JULY 31, 1999 (UNAUDITED) (Dollars in Thousands)

Non- ~~Morris~~ Consolidated Guarantor Guarantor Morris Material Morris Material ~~MMH~~ Subsidiaries Subsidiaries Handling, Inc. Eliminations Handling, Inc. ~~Holdings, Inc.~~ ------------ ------------ -------------- -~~-----------~~ -------------- --------------- Operating Activities Net income (Loss) $ (43,~~701~~756) $ (~~257~~496) $ (1521,~~896~~326) $ 4,~~958~~252 $ (1521,~~896~~326) ~~$ (15,896)~~ Add (deduct) - items not affecting cash ~~provided~~used byfor operating ~~activities~~acitvities: Depreciation and amortization 35,~~707~~837 ~~146~~220 - - 36,~~853~~057 - Amortization of debt financing ~~cost~~costs - - 1,~~048~~603 - 1,~~048~~603 - Equity in loss of subsidiaries ~~230~~456 - 43,~~701~~756 (4,~~931~~212) - ~~15,896~~ Deferred income taxes - net - - 3141 - 3141 - Other - - - (2740) (2740) - Changes in working capital, excluding the effects of acquisition opening balance sheets: Accounts receivable 17,~~901~~410 ~~1,384~~802 - - 1918,~~285~~212 - Inventories ~~1,846~~404 (~~584~~370) - - ~~1,262~~34 - Other current assets (65,~~201~~528) (~~1,269~~367) 32,~~407~~133 - (43,~~063~~762) - Trade accounts payable and bank overdrafts (810,~~197~~075) 72(437) - - (810,~~125~~512) - Accrued interest ~~144~~ - ~~(544)~~ - ~~(400)~~4,243 - 4,243 Other current liabilities (1210,~~581~~358) ~~128~~302 83,~~080~~319 - (46,~~373~~737) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net cash provided by (used for) operating activities (75,~~852~~610) (~~380~~346) ~~827~~(6,231) - (712,~~405~~187) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Investment and Other Transactions Fixed asset additions - net (43,~~585~~921) (~~159~~91) - - (4,~~744~~012) - Capitalized software -(2,196) - - - -(2,196) - Acquisition of businesses - net of cash acquired (5,070) - ~~- -~~ (5,070) - Repayment of loans by senior management - - 70(80) - 70(80) - Other - net (~~421~~841) ~~176~~271 - - (~~245~~570) -------- --- ------ -----~~----~~ ----------- ----------- ----------- Net cash (used for) provided by investment and other transactions (1012,~~076~~028) 17180 70(80) - (911,~~989~~928) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Financing ~~Activities~~Activites Changes in short-term debt and notes payable ~~8,147~~(22) ~~120~~ - - ~~8,267~~ - (22) (Repayments of)/Proceeds ~~from~~for Revolving Credit Facility borrowings -7,171 - 816,~~784~~887 - 824,~~784~~058 Repayments of Term Loans - - (1,388) (1,388) Proceeds from ~~Aquisitions~~Acquisition Facility Line borrowings - - 1,235 - 1,235 - Distribution to parent 10,~~241~~334 - (10,~~241~~334) - - - Repayments of long-term debt - -(31) (~~675~~89) - (~~675~~120) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Net cash provided by (used for) financing activities 1817,~~388~~483 ~~120~~ (~~897~~31) 6,311 - 1723,~~611~~763 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Effect of Exchange Rate Changes on Cash and Cash Equivalents 45(13) (616) - - 39(29) - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- Increase (Decrease) in Cash and Cash Equivalents ~~505~~(168) (~~249~~213) - - ~~256~~(381) - Cash and Cash Equivalents Beginning of Period 2,214 320 - - 2,534 - -------- -- ------- ----~~-----~~ ----------- ----------- ----------- End of Period $ 2,~~719~~046 71$ 107 $ - $ - $ 2,~~790~~153 -=========== =========== ========== =========== =========== Consolidated MMH Holdings, MMH Holdings, Inc. Eliminations Inc. ------------- ------------ ------------- Operating Activities Net Income (Loss) $ (21,326) $ 21,326 $ (21,326) Add (deduct)-items not affecting cash used for operating activities: Depreciation and amortization - - 6,057 Amortization of debt financing costs - - 1,603 Equity in loss of subsidiaries 21,326 (21,326) - Deferred income taxes - net - - 41 Other - - (40) Changes in working capital, excluding the effects of acquisition opening balance sheets: Accounts receivable - - 18,212 Inventories - - 34 Other current assets - - (3,762) Trade accounts payable and bank overdrafts - - (10,512) Accrued interest - - 4,243 Other current liabilities - - (6,737) ----------- ----------- ----------- Net cash provided by (used for) operating activities - - (12,187) ----------- ----------- ----------- Investment and Other Transactions Fixed asset additions - net - - (4,012) Capitalized software - - (2,196) Acquisition of businesses - net of cash acquired - - (5,070) Repayment of loans by senior management - - (80) Other - net - - (570) ----------- ----------- ----------- Net cash used for investment and other transactions - - (11,928) ----------- ----------- ----------- Financing Activites Changes in short-term debt and notes payable - - (22) (Repayments of)/Proceeds for Revolving Credit Facility borrowings 24,058 Repayments of Term Loans - - (1,388) Proceeds from Acquisition Facility Line borrowings - - 1,235 Distribution to parent - Repayments of long-term debt - - (120) ----------- ----------- ----------- Net cash provided by (used for) financing activities - - 23,763 ----------- ----------- ----------- Effect of Exchange Rate Changes on Cash and Cash Equivalents - - (29) ----------- ----------- ----------- Increase(Decrease) in Cash and Cash Equivalents - - (381) Cash and Cash Equivalents Beginning of Period - - 2,534 ----------- ----------- ----------- End of Period $ - - 2,153 =========== =========== ===========

30 Note 15 - Condensed Combined Financial Statements ------------------------------------------------- The following condensed combined/consolidating financial statements are presented in accordance with SOP 90-7: MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED COMBINED/CONSOLIDATING STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED JULY 31, 2000

~~THREE~~Combined ~~MONTHS~~Combined ~~ENDED~~Entities ~~THREE~~in ~~MONTHS~~Entities ~~ENDED~~not ~~SIX~~in ~~MONTHS~~Reorganization ~~ENDED~~Reorganization ~~SIX~~Proceedings ~~MONTHS~~Proceedings ~~ENDED~~Eliminations Consolidated --------------~~------~~ ---------------~~-------~~ ------------~~----------~~ ------------~~---------~~ ~~APRIL~~Revenues ~~30,~~Equipment ~~2000~~and ~~APRIL~~Part 30Sales $ 103,201 ~~1999~~$ ~~APRIL~~56,218 30$ (5,399) ~~2000~~$ ~~APRIL~~154,020 30Service Sales 27,634 ~~1999~~16,751 (16) 44,369 --------- ----------- --------- ---------- Net sales 130,835 72,969 (5,415) 198,389 Other income - net - - - - --------- ----------- --------- ------------ ~~Percent~~130,835 of72,969 ~~Percent~~(5,415) of198,389 ~~Percent~~Cost of ~~Percent~~Sales of101,339 $59,715 ~~NET~~(5,415) ~~SALES~~155,639 $Selling, ~~NET~~General ~~SALES~~and $Administrative ~~NET~~Expenses ~~SALES~~32,620 $21,323 ~~NET~~- ~~SALES~~53,943 Impairment Loss on Long-Lived Assets - 16,009 -~~-----~~ 16,009 Reorganization Items 5,198 -~~---------~~ -~~-------~~ 5,198 ---------- --------- ---------- -------- --~~--------~~ ~~Net~~Operating ~~Sales~~Income $(Loss) ~~66.2 100.0% $71.9 100.0% $ 132.9 100.0% $139.~~(8,322) ~~100.0%~~(24,078) ~~Other income~~ - ~~net~~(32,400) -Gain -on -sale ~~- - - .1 .1% Cost~~ of ~~sales~~business ~~50.7 76.~~6%,380 ~~54.4~~- ~~75.7%~~- ~~101.~~6 ~~76.4% 105.1 75.2% Selling~~,380 ~~general~~Loss ~~and~~on ~~Administrative~~disposal ~~expenses~~of ~~21.3~~fixed ~~32.2%~~assets ~~19.4~~(830) ~~27.0%~~- ~~38.1~~- ~~28.7%~~(830) ~~35.3~~Interest ~~25.3%~~Expense ~~Operating~~- ~~income~~net (~~loss~~14,347) (~~5.8~~4,907) -~~8.8%~~ (~~1.9~~19,254) -~~2.7% (6.8)~~ -~~5.1% (.5)~~ -~~.4% Gain on sale of business~~ ------ --------- --------- ---------- ~~6.4~~Loss ~~4.8%~~before -Income -Taxes ~~Interest~~and ~~expense~~Minority Interest (~~7.6~~17,119) ~~-11.5%~~ (~~7.5~~28,985) -~~10.4%~~ (~~15.4~~46,104) ~~-11.6%~~Benefit (~~14.4~~Provision) ~~-10.3%~~for ~~Tax~~Income ~~benefit~~Taxes (~~expense~~66) (.2,195) -~~.3%~~ (~~3.5~~2,261) Minority Interest -~~4.9%~~ - 242 242 Equity in Income (~~2.0~~Loss) ~~-1.5%~~of Subsidiaries (~~1.0~~31,180) -~~.7%~~ 31,180 - --------- --------- --------- ---------- Net loss (~~13.6~~48,365) ~~-20.6%~~ (~~12.9~~31,180) ~~-18.0%~~31,422 (~~17.8~~48,123) ~~-13.4%~~========= ~~(15.9)~~========= ~~-11.4%~~========= ==========

31 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED COMBINED/CONSOLIDATING BALANCE SHEET AS OF JULY 31, 2000

32 MMH HOLDINGS, INC. (Debtors - in - Possession as of May 17, 2000) CONDENSED COMBINED/CONSOLIDATING STAEMENTS OF CASH FLOW AS OF JULY 31, 2000

33 MMH HOLDINGS, INC. MORRIS MATERIAL HANDLING, INC. (Debtors - in - Possession as of May 17, 2000 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE RELATED NOTES THERETO INCLUDED PREVIOUSLY IN THIS DOCUMENT. THE COMPANY'S FISCAL YEAR ENDS OCTOBER 31. CONSEQUENTLY, ANY REFERENCE TO ANY PARTICULAR FISCAL YEAR MEANS THE FISCAL YEAR ENDED OCTOBER 31 OF SUCH YEAR. AS USED HEREIN, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM "COMPANY" REFERS TO HOLDINGS, MMH AND ITS SUBSIDIARIES. GENERAL On May 17, 2000, MMH Holdings, Inc. ("Holdings"), Morris Material Handling, Inc. and their domestic operating subsidiaries (collectively, the "Debtors") filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Debtors' Chapter 11 cases have been consolidated for the purpose of joint administration under case number 00-2027(SLR). The Debtors are currently operating their businesses as debtors-in-possession pursuant to the Bankruptcy Code. No trustee has been appointed. An official committee of unsecured creditors (the "Creditors' Committee") was appointed by the office of the United States Trustee on May 30, 2000. Pursuant to the Bankruptcy Code, actions to collect certain prepetition indebtedness of the Debtors and other obligations against the Debtors may not be enforced. These claims are reflected in the balance sheet as "liabilities subject to compromise". In addition, under the Bankruptcy Code, the Debtors may assume or reject executory contracts and unexpired leases. Additional claims may arise from such rejection, and from the determination by the court (or agreed by the parties in interest) to allow claims for contingencies and other disputed amounts. However, the Debtors have not yet completed their review of all their prepetition executory contracts and leases for assumption or rejection. See also Note 5, Liabilities Subject to Compromise, and Note 9, Indebtedness. The Debtors received approval from the Bankruptcy Court to pay or otherwise honor certain of their prepetition obligations, including the authority to pay employee wages and maintain their employee benefit programs. The Debtors have the exclusive right, pursuant to an order of the Bankruptcy Court, until December 15, 2000, to file a plan or plans of reorganization. Such period can be extended from time to time during the pendancy of the Debtors' bankruptcy cases at the discretion of the Bankruptcy Court. Subject to certain exceptions set forth in the Bankruptcy Code, acceptance of a plan of reorganization requires approval of the Bankruptcy Court and the affirmative vote (i.e., more than 50% of the number and at least 66-2/3% of the dollar amount, both based on claims actually voted) of each class of creditors whose claims are impaired by the plan. Alternatively, absent the requisite approvals, a debtor may seek Bankruptcy Court approval of its reorganization plan under "cramdown" provisions of the Bankruptcy Code, assuming certain tests are met. If a debtor fails to submit a plan of reorganization within the exclusivity period prescribed or any extensions thereof, any creditor or equity holder will be free to file a plan of reorganization with the Bankruptcy Court and solicit acceptances thereof. The Bankruptcy Court set September 20, 2000 as the last date creditors could file proof of claims against the Debtors. There may be differences between the amounts recorded in the Debtors' schedules and financial statements and the amounts claimed by their respective creditors. Litigation may be required to resolve such disputes. The Debtors will continue to incur significant costs associated with the reorganization. The amount of these expenses, which are being expensed as incurred, is expected to significantly affect results while the Debtors operate under Chapter 11. See Note 4, Reorganization Items. Currently, it is not possible to predict the length of time the Debtors will operate under the protection of Chapter 11, the outcome of the Chapter 11 proceedings in general, or the effect of the proceedings on the business of the Company or on the interests of the various creditors and security holders. 34 Under the Bankruptcy Code, postpetition liabilities and prepetition liabilities (i.e., liabilities subject to compromise) of the Debtors must be satisfied before shareholders of the Debtors can receive any distribution. The ultimate recovery to the Debtors' shareholders, if any, will not be determined until the end of the case when the fair value of the Debtors' assets is compared to the liabilities and claims against the Debtors. The Debtors and their professional advisors are in the process of analyzing strategic alternatives and developing a plan of reorganization for the Debtors. Based on the Debtors' analysis of scheduled and filed claims and the valuation of the Company, a determination will be made as to the payment of claims and the distribution of value, if any, to the Debtors' shareholders. The accompanying consolidated interim financial statements have been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business and do not reflect any adjustments that might result if the Debtors are unable to continue as a going concern. As a result of the Debtors' Chapter 11 filings, however, such matters are subject to significant uncertainty, although the Debtors intend to file a plan of reorganization with the Bankruptcy Court. Continuing on a going concern basis is dependent upon, among other things, the Debtors' formulation of an acceptable plan of reorganization, the success of future business operations, and the generation of sufficient cash from operations and financing sources to meet the Debtors' obligations. The accompanying consolidated interim financial statements do not reflect: (i) the realizable value of assets on a liquidation basis or their availability to satisfy liabilities, (ii) aggregate prepetition liability amounts that may be allowed for claims or contingencies, or their status or priority, (iii) the effect of any changes to the Debtors' capital structure or in the Debtors' business operations as the result of an approved plan of reorganization; or (iv) adjustments to the carrying value of assets or liability amounts that may be necessary as the result of actions by the Bankruptcy Court. The Company's consolidated financial statements have been presented in conformity with the AlCPA's Statement of Position 90-7, "Financial Reporting By Entities In Reorganization Under the Bankruptcy Code", issued November 19, 1990 ("SOP 90-7"). SOP 90-7 requires a segregation of liabilities subject to compromise by the Bankruptcy Court as of the bankruptcy filing date and identification of all transactions and events that are directly associated with the reorganization of the Debtors. The Company is an international provider of "through-the-air" material handling products and services used in most manufacturing industries. The Company's original equipment operations design and manufacture a comprehensive line of industrial cranes, hoists and component products. Through its aftermarket operations, the Company provides a variety of related products and services, including replacement parts, repair and maintenance services and product modernizations. In recent years, the Company has shifted its orientation from an original equipment-focused United States manufacturer to an international full service provider with a significant emphasis on the higher margin aftermarket business. The Company's revenues are derived principally from the sale of industrial overhead cranes, component products and aftermarket products and services. RECAPITALIZATION. Historically, the Company conducted its business as one of several operating units of Harnischfeger Industries, Inc. ("HII"). Prior to March 30, 1998, the core United States operations of the Company were conducted directly by HarnCo, while the remainder of the Company's operations throughout the world were conducted through a number of entities owned, directly or indirectly, by HII and its affiliates. On January 28, 1998, HII reached an agreement with MHE Investments, Inc. ("MHE Investments"), a newly formed affiliate of Chartwell Investments Inc., for the sale of an approximately 80 percent common ownership interest in the MHE Business. Pursuant to this agreement, HarnCo and other HII affiliates effected a number of transactions (the "Transactions" or the "Recapitalization") that resulted in Holdings, a preexisting company engaged in the MHE Business, acquiring, through MMH, its newly formed wholly-owned subsidiary, the equity interests of all of the operating entities engaged in the MHE Business. As a result of the reorganization of the MHE Business' legal entities, Holdings and the Company became the successor companies to the MHE Business. The Transactions are accounted for as a recapitalization for financial reporting purposes. Accordingly, the historical basis of the Company's assets and liabilities was not impacted by the Transactions. In conjunction with the Recapitalization, which closed on March 30, 1998 (the "Recapitalization Closing"), Holdings sold $60.0 million of Series A Units, consisting of $57.7 million liquidation preference of Holdings' 12% Series A Senior Exchangeable Preferred Stock (the "Holdings Series A Senior Preferred Stock") and 720 shares of non-voting common stock, to institutional investors. In addition, MMH sold $200.0 million aggregate principal amount of its 9 1/2% Senior Notes due 2008 (the "Senior Notes") and entered into a senior secured credit facility (the "Prepetition Credit Facility"). The 35 Prepetition Credit Facility includes $55.0 million of term loans (the "Term Loans"), a revolving credit facility (the "Revolving Credit Facility") and an acquisition facility (the "Acquisition Facility"). The Revolving Credit Facility initially provided the Company with up to $70.0 million of available borrowings for working capital, acquisitions and other corporate purposes, subject to compliance with certain conditions. The Acquisition Facility initially permitted the Company to borrow up to $30.0 million until the third anniversary of the Recapitalization Closing to finance acquisitions, subject to compliance with certain conditions. The Prepetition Credit Facility was amended on August 2, 1999. As amended, the Revolving Credit Facility provided $50.7 million of available borrowings ($10.0 million of which was required to be reserved for issuance of letters of credit), and the Acquisition Facility provided for $12.4 million of borrowings ($7.4 million of which was previously funded by the lenders under the Prepetition Credit Facility and $5.0 million of which was funded by indirect equity holders in Holdings) for acquisitions and general corporate purposes. No additional borrowings under the Acquisition Facility are available from lenders under the Prepetition Credit Facility. In connection with, and as a condition to, the lenders under the Prepetition Credit Facility entering into the August 2, 1999 Amendment to the Prepetition Credit Facility, certain of the current indirect equity holders in Holdings purchased, through Martin Crane L.L.C. ("Martin Crane"), a newly formed limited liability company, a $5.0 million participation in the Prepetition Credit Facility and received shares of non-voting common stock of Holdings, in consideration therefor. As a result, at July 31 2000, MHE Investments owned approximately 54.5% of the Holdings Common Stock, HarnCo owned approximately 15.6% of the Holdings Common Stock, institutional investors own approximately 4.9% of the Holdings Common Stock and Martin Crane owns approximately 25.0% of the Holdings Common Stock. At the Recapitalization Closing, (i) MHE Investments paid HarnCo $54.0 million for 72.6% of Holdings' common stock (the "Holdings Common Stock") (after giving effect to the Transactions) and approximately $28.9 million liquidation preference of Holdings' 12 1/2% Series C Junior Voting Exchangeable Preferred Stock (the "Holdings Series C Junior Voting Preferred Stock"), (ii) Holdings redeemed certain shares of Holdings Common Stock and Holdings Series C Junior Voting Preferred Stock from HarnCo for $282.0 million in cash (subject to potential post-Recapitalization adjustments as to which an additional $5.0 million was provided to HarnCo) and approximately $4.8 million liquidation preference of Holdings' 12 1/4% Series B Junior Exchangeable Preferred Stock (the "Holdings Series B Junior Preferred Stock"), and (iii) HarnCo retained approximately 20.8% of the Holdings Common Stock (after giving effect to the Transactions). At the Recapitalization Closing, MMH entered into a number of agreements pursuant to which HII and its affiliates continued to provide to MMH and to its subsidiaries located in the United States, on an interim basis and under substantially the same terms and conditions as before the closing, certain products and services. In addition, HII and MMH entered into a credit indemnification agreement (the "Credit Indemnification Agreement") pursuant to which HII will maintain in place the credit support obligations in existence at the Recapitalization Closing but have no further duty to extend, renew or enter into any new credit support obligations (except as to the MHE Business obligations existing at the Recapitalization Closing). Under the Credit Indemnification Agreement, MMH is required to pay HII, in advance, an annual fee equal to 1% of the amounts outstanding under each letter of credit and bond provided by HII and its affiliates (approximately $11.2 million as of July 31, 2000). MMH accrued a fee of $167,260 for the first three quarters of 2000. HII is required to refund the Company on a quarterly basis a pro-rata portion of the annual fee for any reductions in the outstanding amount of credit that occurred during such quarter. In addition, the Company will reimburse HII for certain future fees and expenses. The Company also entered into a surety arrangement (the "Surety Arrangement") to provide credit support for its post-Recapitalization Closing operations. In connection with the Recapitalization, the Company also entered into a trademark license agreement (the "Trademark License Agreement") with an affiliate of HarnCo, pursuant to which the Company has the right to use the P&H trademark with respect to all MHE Business products on a worldwide exclusive basis from the date of the Recapitalization Closing until 15 years after the earlier to occur of a sale of Holdings to a third party or a public offering of the common stock of Holdings, the Company or their parents or successors (and for an additional seven years thereafter for aftermarket products and services). The royalty fee for use of the trademark is 0.75% of the aggregate net sales of the MHE Business for the ten year period commencing March 30, 1999. The Company accrued $2,856,000 of expenses for royalty fees in the period from March 30, 1999 to July 31, 2000, including $1,503,000 for the nine months ended July 31, 2000. The Company elected to defer the payment of the royalty fee for the period ended October 31, 1999 ($1,353,000), which was payable January 30, 2000, pursuant to the terms of the Trademark License Agreement. The Trademark License Agreement provides that the annual royalty fee may be deferred for up to two years if the Company does not meet certain financial criteria. The Company can only defer up to two payments during the term of the agreement. In addition, interest accrues at 12% per year on the deferred fee payments. 36 As discussed below, the Company could be materially adversely affected by the fact that HII and certain of its United States affiliates filed for bankruptcy protection. For income tax purposes, Holdings and MMH were deemed to acquire the assets of the MHE Business pursuant to Code Section 338(h)(10) in connection with the Transactions. Accordingly, the Recapitalization increased the tax basis of certain assets and created tax-deductible goodwill. CHAPTER 11 FILING. As discussed above, on May 17, 2000, Holdings, MMH and their domestic operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. On June 15, 2000, the Bankruptcy Court approved a $35 million Debtor-in-Possession Facility (which was subsequently reduced by agreement of the parties to $25 million) ("DIP Facility") and authorized the Debtors to use their collections in the operations of their business. The DIP and Junior DIP Facilities contain a number of covenants that, among other things, limit the Debtors' ability to create or assume liens, consolidate or merge with other entities, create, incur, or assume additional indebtedness, dispose of certain assets and make capital expenditures. The DIP and Junior DIP Facilities also require the Debtors to comply with certain financial ratios and borrowing condition tests based on monthly measurements of the latest twelve months results of operations. The first measurement date is December 31, 2000. Cash collected by the Company is used to repay the Term Loans, the Revolving Credit Facility Borrowings and the Acquisition Facility Line Borrowings on a pro-rata basis and these amounts are re-loaned to the Company under a Junior DIP Facility up to $38 million. The Junior DIP Facility is junior to the DIP Facility. At July 31, 2000, $31.3 million in borrowings are outstanding under the Junior DIP Facility and are classified as current obligations in the balance sheet. The DIP and Junior DIP Facilities benefit from superpriority administrative claim status and senior and senior liens as provided for under the Bankruptcy Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured prepetition claims and all other administrative expenses incurred in the Chapter 11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors' option, LIBOR plus 3 1/2%. The DIP Facility has an initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000. The principal sources of liquidity for the Company's operating requirements have been cash flows from operations and borrowings under the DIP Facility and the Junior DIP Facility. While the Company expects that such sources will provide sufficient working capital to operate its businesses, there can be no assurances that such sources will prove to be sufficient. Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a short-term bank credit line with an outstanding balance of $1.9 million. This credit line was converted to the Revolving Credit Facility borrowing in conjunction with the bankruptcy. The Company believes that the filing provides the Debtors with the opportunity to restructure its indebtedness. The Company plans to continue with implementation of its cost savings initiatives to bring costs in line with market requirements. Although no material adverse effects have occurred to date, disruption of operations relating to the Chapter 11 reorganization could adversely affect the Debtors' relationships with their creditors, customers, suppliers or employees. HII BANKRUPTCY PETITION. On June 7, 1999, (the "HII Petition Date") HII and certain of its United States affiliates (including HarnCo) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Certain provisions of the Bankruptcy Code allow a debtor to avoid, delay and/or reduce its contractual and other obligations to third parties. There can be no assurance that HII and its affiliates will not attempt to utilize such provisions to cease performance under their agreements and arrangements with the Company. The inability of the Company to receive the benefits of one or more of these agreements or the termination of ongoing arrangements between the Company and affiliates of HII (including those relating to the provision of services and materials by HII and its affiliates to the Company) could materially adversely affect the Company's operations and financial performance. In the event that any of the liabilities retained by HII and its affiliates in connection with the Recapitalization remain unsatisfied as of the HII Petition Date, the Company's right to indemnification for any such amounts it has paid on behalf of HII and its affiliates may also be avoided, delayed or reduced. Each of HII and certain of its affiliates on the one hand, and the Company and certain of its affiliates, on the other hand, have receivables and payables to the other that may be affected by the HII Bankruptcy. 37 ACQUISITIONS AND DIVESTITURES ACQUISITIONS - During the nine months ended July 31, 2000, the Company did not make any acquisitions. During the nine months ended July 31, 1999, the Company completed one acquisition with an aggregate purchase price of $3.1 million, net of cash acquired, including approximately $1.0 million financed by the seller. This acquisition was related to the Company's aftermarket business and was accounted for as a purchase transaction with the purchase price allocated to the fair value of specific assets acquired and liabilities assumed. Resultant goodwill of $1.8 million is being amortized over 40 years. This acquisition was partially financed by the seller, resulting in a deferred purchase price which will be paid in 2004 and 2005. During the nine months ended July 31, 1999, the Company made final consideration payments of $1.5 million related to two 1998 acquisitions. In addition, with respect to a 1995 acquisition, the Company was required to make a contingent consideration payment of $1.4 million in the nine months ended July 31, 1999. Additionally, a payment of $100 was made in each of the nine month periods ended July 31, 2000 and 1999 toward a fiscal 1998 purchase which was partially financed by the seller. On a pro forma basis, the fiscal 1999 acquisition was not material to results of operations reported for the nine months ended July 31, 1999 and accordingly, such information is not presented. DIVESTITURES-On December 16, 1999, the Company completed the sale of the Brake Business located in Mississauga, Ontario, Canada, for a net sale price of $6.8 million after deduction of certain transaction-related items, including taxes. During the first quarter of fiscal year 2000, the Brake Business contributed $0.5 million in sales and no operating income to the Company's results. A pre-tax gain of $6.4 million was recognized on this transaction. RESULTS OF OPERATIONS The following table sets forth certain financial data for the periods indicated.

NINE MONTHS ENDED JULY 31, 2000 COMPARED TO NINE MONTHS ENDED JULY 31, 1999 Net sales for the nine months ended July 31, 2000 decreased $14.1 million or 6.6% to $198.4 million from $212.5 million for the nine months ended July 31, 1999. The decrease in net sales was primarily caused by the following: (i) $4.5 million decrease in U.S. engineered crane sales due to a slowdown in new orders during the first three quarters of 2000; (ii) $1.2 million lower service sales in Australia; (iii) $4.9 million decrease in hoist sales in the United States and the United Kingdom and (iv) $2.4 million decrease in South African engineered crane sales where a large project was being performed during the same period in the prior year. In general, sales in the U.S. reflect the lower level of orders in recent months due to customers' apprehension regarding the financial stability of the Company. These decreases were partially offset by a $1.7 million increase in hoists for southeast Asia as that market begins to show renewed activity. 38 Cost of sales decreased to $155.6 million for the nine months ended July 31, 2000 compared to $157.3 million for the same period in fiscal 1999. Cost of sales increased as a percentage of net sales from 74.0% for the first three quarters of 1999 to 78.4% for the first three quarters of 2000 primarily due to lower selling prices in the engineered crane, hoist and service markets as a result of competitive pressures, as well as lower production volumes. Selling, general and administrative expenses remained relatively stable from 1999 to 2000, increasing by $0.4 million or 0.1% to $54.0 million for the nine months ended July 31, 2000 from $53.6 million for the nine months ended July 31, 1999. The selling, general and adminstrative expenses for the nine months ended July 31, 2000 included (i) increased goodwill amortization due to the fiscal 1999 fourth quarter change in the amortization period for the goodwill related to the Company's international operations; (ii) additional expenses due to a fiscal 1999 acquisition in the second quarter of 1999; (iii) additional contract related costs associated with the port crane business in the United Kingdom; and (iv) the write-off of accounts receivable due from a Malaysian joint venture. The nine month period ending July 31, 1999 also included $3.3 million of charges related to provisions for certain delinquent accounts receivable and changes in management (severance and recruiting costs). Professional fees related to the restructuring of the Company's operations and capital structure for the nine months ended July 31, 2000 are included as a separate line item in the Condensed Statements of Operations and Comprehensive Loss entitled "Reorganization Items". It also includes fees paid relative to the DIP Facility financing and accrued retention plan costs. There are no similar expenses in the nine months ended July 31, 1999. Operating results for the nine months ended July 31, 2000 also included an impairment loss on long-lived assets. Consistent with prior periods, the Company assessed the carrying value of goodwill at July 31, 2000. Such assessment included, as appropriate, a comparison of (a) the estimated future nondiscounted cash flows, excluding interest, anticipated to be generated during the remaining amortization period of the goodwill to (b) the net carrying value of goodwill. Based upon the continued negative trends in the operating results of non-North American businesses and shortfalls in actual third quarter operating results compared with estimates developed during the second quarter, management concluded that future operating cash flows, excluding interest, did not support the recoverability of recorded goodwill over the remaining amortization period. Accordingly, the Company assessed the fair value of the related businesses and wrote-off the remaining unamortized goodwill balances related to its non-North American operations of approximately $16.0 million in the third quarter. During the third quarter of 2000, the Company also recorded a loss of $0.8 million on the disposal of fixed assets. This loss relates to fixed assets of a distribution and service business that were written-off during the quarter. Approximately $19.2 million in interest expense, including $1.8 million in amortization of related financing costs, was recorded in the first three quarters of 2000 compared to $21.9 million, including $1.6 million in amortization of related financing costs, in the first three quarters of 1999. As a result of the bankruptcy filings, principal and interest payments may not be made on prepetition debt without Bankruptcy Court approval or until a reorganization plan or plans defining the repayment terms have been confirmed. Interest due under the Prepetition Credit Facility is being paid by the Debtors as "adequate protection" pursuant to an order of the Bankruptcy Court. The total interest on prepetition debt that was not paid or charged to earnings for the period from May 17, 2000 to July 31, 2000 was $4.1 million. Such interest is not being accrued since it is not probable that it will be treated as an allowed claim. The Bankruptcy Code generally disallows the payment of interest that accrues postpetition with respect to unsecured claims. The Company paid $6.9 million and $16.0 million of interest and commitment fees during the nine months ended July 31, 2000 and 1999, respectively. Tax expense of $2.3 million recorded during the first nine months ended July 31, 2000 related primarily to the estimated tax recorded on the sale of the Brake Business in December 1999 and profitable operations in Canada. The Company's backlog of orders at July 31, 2000 was approximately $78.5 million compared to $94.2 million at July 31, 1999. Bookings for the nine months ended July 31, 2000 were $199.5 million compared to $209.3 million during the nine months ended July 31, 1999. The overall backlog is lower primarily due to the completion of several large orders that were in backlog a year ago and the normal variability in booking patterns for highly engineered cranes. Bookings have also been negatively impacted by the Company's filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. 39 THREE MONTHS ENDED JULY 31, 2000 COMPARED TO THREE MONTHS ENDED JULY 31, 1999 Net sales for the three months ended July 31, 2000 ("Third Quarter 2000") decreased $7.2 million or 9.9% to $65.5 million from $72.7 million for the three months ended July 31, 1999 ("Third Quarter 1999"). The decrease in net sales was primarily caused by the following: (i) a decrease of $4.0 million in the sale of standard cranes in the U.S. reflecting the lower level of orders in recent months due to customers' apprehension regarding the financial stability of the Company; (ii) a decrease in service sales of $2.2 million in North America due to competitive pressures and turnover in service technicians; and (iii) a $1.4 million decrease in the sale of engineered cranes in the Company's international market. These decreases were partially offset by a $1.6 million increase in service sales in the U.S. Cost of sales increased to $54.1 million in Third Quarter 2000 compared to $52.2 million for the Third Quarter 1999. Cost of sales increased as a percentage of net sales from 71.8% in Third Quarter 1999 to 82.6% in Third Quarter 2000 primarily due to lower selling prices in the engineered crane, hoist and service markets as a result of competitive pressures, lower production volumes, inventory adjustments related to the Company's Mexican operation, and increases in certain cost estimates related to orders in process at the Company's operation in the United Kingdom. Selling, general and administrative expenses decreased $0.3 million or 1.6% to $18.0 million in Third Quarter 2000 from $18.3 million in Third Quarter 1999. The decrease is due mainly to savings that are being realized as a result of workforce reductions in the United States and the United Kingdom and other cost savings iniatives that have been implemented thoughout the Company. These savings were in part offset by $1.0 million in severance costs related to the workforce reductions and additional provisions for certain delinquent accounts receivable. The third quarter of 1999 included $0.4 million of special severance charges related to Company restructuring. Professional fees related to the restructuring of the Company's operations and capital structure for the three months ended July 31, 2000 are included as a separate line item in the Condensed Statements of Operations and Comprehensive Loss entitled "Reorganization Items". It also includes fees paid relative to the DIP Facility financing and accrued retention plan costs. There are no similar expenses in the three months ended July 31, 1999. Operating results for the three months ended July 31, 2000 also include the impairment loss on long-lived assets and the loss on disposal of fixed assets as previously discussed. Approximately $3.9 million in interest expense, including $0.6 million in amortization of related financing costs, was recorded in Third Quarter 2000 compared to $7.5 million, including $0.6 million in amortization of related financing costs, in the Third Quarter 1999. As a result of the bankruptcy filings, as previously discussed, principal and interest payments may not be made on prepetition debt without Bankruptcy Court approval or until a reorganization plan or plans defining the repayment terms have been confirmed. Interest due under the Prepetition Credit Facility is being paid by the Debtors as "adequate protection" pursuant to an order of the Bankruptcy Court. The total interest on prepetition debt that was not paid or charged to earnings for the period from May 17, 2000 to July 31, 2000 was $4.1 million. Such interest is not being accrued since it is not probable that it will be treated as an allowed claim. The Bankruptcy Code generally disallows the payment of interest that accrues postpetition with respect to unsecured claims. The Company paid $2.5 million and $2.2 million of interest and commitment fees during the Third Quarter 2000 and Third Quarter 1999, respectively. Tax expense of $0.2 million recorded in the Third Quarter 2000 was the result of profitable operations in Canada. The Company's backlog of orders at July 31, 2000 was approximately $78.5 million compared to $94.2 million at July 31, 1999. Bookings in Third Quarter 2000 were $65.8 million compared to $69.7 million in Third Quarter 1999. The overall backlog is lower primarily due to the completion of several large orders that were in backlog a year ago and the normal variability in booking patterns for highly engineered cranes. Bookings have also been negatively impacted by the Company's filing voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. LIQUIDITY AND CAPITAL RESOURCES 40 The majority of the Company's sales of products and services are recorded as products are shipped or services are rendered. Revenue on certain long-term contracts is recorded using the percentage-of-completion method. Net cash flow from operations is affected by the volume of, and timing of the payments under, percentage-of-completion long-term contracts, and more recently, also by the Company's financial condition, as vendors have shortened payment terms and, in some cases, required advance payments. Net cash flow used for operating activities for the first three quarters of fiscal year 2000 and 1999, respectively, was $7.0 million and $12.2 million, respectively. Net cash provided by investment and other transactions for the nine months ended July 31, 2000 was $7.2 million compared to net cash used for investment and other transactions of $11.9 million for the same period in 1999. During the first three quarters of 2000, $9.1 million of cash, net of transaction costs, was provided by the sale of the Canadian brake business. This was partially offset by $0.1 million of cash used for deferred payments on previous acquisitions. During the nine months ended July 31, 1999, $5.1 million was used for an acquisition related to the Company's distribution and service center network and payments made with respect to three earlier acquisitions. Additionally, capital expenditures decreased to $1.9 million during the nine months ended July 31, 2000 from $6.2 million during the nine months ended July 31, 1999. The fiscal year 2000 expenditures included computers and manufacturing equipment. The fiscal year 1999 expenditures included computers and upgrades, new operating system software, office and warehouse consolidations and manufacturing equipment. Net cash used for financing activities was $1.3 million in the first three quarters of 2000 compared to net cash provided by financing activities of $23.8 million in the first three quarters of 1999. Net repayments, excluding amounts re-loaned under the Junior DIP Facility, during the nine months ended July 31, 2000 included $6.7 million under the Revolving Credit Facility in the United States and United Kingdom and $4.1 million of principal on the Term Loan A, Term Loan B, and Acquisition Facility, mainly from the net proceeds from the sale of the Canadian brake business. The Company entered into several Amendments and Waivers under the Prepetition Credit Facility, dated as of January 31, 2000 through April 28, 2000, whereby, among other matters, the lenders waived compliance by the Company with such financial covenants, for the period from January 31, 2000 until 5:00 p.m. May 26, 2000 (the "Waivers"). The Waivers permitted the Company, subject to certain conditions, to make additional borrowings under the Revolving Credit Facility and issue additional letters of credit, above levels in existence on January 28, 2000, in an aggregate amount of up to $12.4 million, during the period to which the Waivers apply. On June 15, 2000, the Bankruptcy Court approved a $35 million Debtor-in-Possession Facility ("DIP Facility") (which was subsequently reduced by agreement of the parties to $25 million) and authorized the Debtors to use their collections in the operations of their business. The DIP and Junior DIP Facilities contain a number of covenants that, among other things, limit the Debtors' ability to create or assume liens, consolidate or merge with other entities, create, incur, or assume additional indebtedness, dispose of certain assets and make capital expenditures. The DIP and Junior DIP Facilities also require the Debtors to comply with certain financial ratios and borrowing condition tests based on monthly measurements of the latest twelve months results of operations. The first measurement date is December 31, 2000. Cash collected by the Company is used to repay the Term Loans, the Revolving Credit Facility Borrowings and the Acquisition Facility Line Borrowings on a pro-rata basis and these amounts are re-loaned to the Company under a Junior DIP Facility up to $38 million. The Junior DIP Facility is junior to the DIP Facility. At July 31, 2000, $31.3 million in borrowings are outstanding under the Junior DIP Facility and are classified as current obligations in the July 31, 2000 balance sheet. The DIP and Junior DIP Facilities benefit from superpriority administrative claim status and senior and junior liens as provided for under the Bankruptcy Code. Under the Bankruptcy Code, a superpriority claim is senior to unsecured prepetition claims and all other administrative expenses incurred in the Chapter 11 case. Borrowings under the DIP Facility are priced at the Alternate Base Rate of the Post-Petition Agent under the DIP Facility plus 1.5% or, at the Debtors' option, LIBOR plus 3 1/2%. This DIP Facility has an initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000. Borrowings under the Junior DIP Facility are priced at the Alternate Base Rate of the Post-Petition Agent under the DIP Facility plus 2.0% or, at the Debtors' option, LIBOR plus 3 1/2%. This Junior DIP Facility matures on the earlier of the initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000, or upon confirmation of a plan of reorganization. 41 The principal sources of liquidity for the Company's operating requirements have been cash flows from operations and borrowings under the DIP Facility and Junior DIP Facility. While the Company expects that such sources will provide sufficient working capital to operate its businesses, there can be no assurances that such sources will prove to be sufficient. Immediately prior to the bankruptcy filings, the Company's UK subsidiary had a short-term bank credit line with an outstanding balance of $1.9 million. This credit line was converted to the Revolving Credit Facility borrowing in conjunction with the bankruptcy. The matters described under this caption "Liquidity and Capital Resources", to the extent that they relate to future events or expectations, may be significantly affected by the Chapter 11 proceedings. Those proceedings will involve, or result in, various restrictions on the Debtors' activities, limitations on financing, the need to obtain Bankruptcy Court approval for various matters and uncertainty as to relationships with vendors, suppliers, customers and others with whom the Debtors may conduct or seek to conduct business. Under the Bankruptcy Code, postpetition liabilities and prepetition liabilities (i.e., liabilities subject to compromise) of the Debtors must be satisfied before shareholders of the Debtors can receive any distribution. The ultimate recovery to the Debtor's shareholders, if any, will not be determined until the end of the case when the fair value of the Debtor's assets is compared to the liabilities and claims against the Debtors. The Debtors and their professional advisors are in the process of analyzing strategic alternatives and developing a plan of reorganization for the Debtors. Based on the Debtor's analysis of scheduled and filed claims and the valuation of the Debtor, a determination will be made as to the payment of claims and the distribution of value, if any, to the Debtor's shareholders. The Company believes that the filing provides the Debtors with the opportunity to restructure its indebtedness. The Company plans to continue to implement its cost savings initiatives to bring costs in line with market requirements. Although management believes that no material adverse effects have occurred to date, disruption of operations relating to the Chapter 11 reorganization could adversely affect the Debtors' relationships with their creditors, customers, suppliers or employees. The Company is currently seeking, and is engaged in discussions regarding, its strategic alternatives. The Company has engaged in discussions with its bank lenders and representatives of the Creditors Committee concerning the possible restructuring of the Company's capital structure pursuant to a plan of reorganization, including a possible sale of the Company to a third party in connection therewith. There can be no assurance that the Company will be able to successfully pursue strategic alternatives or that the results of its discussions with its creditors will be successful. EURO CONVERSION On January 1, 1999, eleven of the fifteen member countries of the European Monetary Union (the "participating countries") began a three-year transition from their national currencies to a new common currency, the "euro". As of that date, the participating countries no longer control their own monetary policies by directing independent interest rates for their national currency. The national currencies will remain legal tender and can be used in commercial transactions until January 1, 2002. Beginning January 1, 2002, the participating countries will issue new euro currency and withdraw their respective national currencies which will no longer be used as legal tender. The Company's only significant operations in member countries of the European Monetary Union are in the United Kindgom, which is not a participating country. As such, management does not believe that the euro conversion will have a significant impact on the operations, cash flows or financial position of the Company, unless and until the United Kingdom adopts the euro. CAUTIONARY FACTORS This report contains or may contain forward looking statements by or on behalf of Holdings and the Company. Such statements are based upon management's current expectations and are subject to risks and uncertainties that could cause the Company's actual results to differ materially from those contemplated in the statements. Readers are cautioned not to place undue reliance on these forward looking statements. In addition to the assumptions and other factors referred to specifically in connection with such statements, factors that could cause the Company's actual results to differ materially from those contemplated include, among others, the following: 42 o Liquidity Status and Chapter 11 Filing - The Company did not meet certain of the financial covenants under the Prepetition Credit Facility for the period ended January 31, 1999 and did not meet such financial covenants and certain additional financial covenants for the period ended April 30, 1999. The Company obtained a waiver of such financial covenants through August 2, 1999. On August 2, 1999, the Company entered into the Amendment which cured past financial covenant violations and reset financial covenants until April 2001. The Amendment increased the cash availability under the Revolving Credit Facility from $35.7 million under the previous waiver agreement to $40.7 million. In addition, the Amendment permitted the Company to obtain letters of credit, bid bonds and performance bonds in an amount not to exceed $10.0 million in the aggregate of which $5.3 million have been issued. The Company entered into several Amendments and Waivers under the Prepetition Credit Facility, dated as of January 31, 2000 through April 28, 2000, whereby, among other matters, the lenders waived compliance by the Company with such financial covenants, for the period from January 31, 2000 until 5:00 p.m. May 26, 2000 (the "Waivers"). The Waivers permitted the Company, subject to certain conditions, to make additional borrowings under the Revolving Credit Facility and issue additional letters of credit, above levels in existence on January 28, 2000, in an aggregate amount of up to $12.4 million, during the period as to which the Waivers apply. On May 17, 2000, Holdings, MMH and their domestic operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. See Note 1, Reorganization under Chapter 11. On May 18, 2000, the Bankruptcy Court entered an order approving $10.0 million in interim debtor-in-possession financing to the Debtors and authorizing the Debtors to utilize their collections in the operation of their business. This $10 million amount represented the initial portion under a commitment by the lenders to provide $35 million in financing (including a letter of credit facility) in connection with the Debtors' Chapter 11 cases. The full $35 million facility (which was reduced by agreement of the parties to $25 million) was approved by the Bankruptcy Court on June 15, 2000. This facility has an initial maturity date of December 1, 2000, which date, absent a default, shall be automatically extendable to June 1, 2001 if a sale of the Debtors shall not have been consummated prior to December 1, 2000. The Company believes that the filing provides the Debtors with the opportunity to restructure its indebtedness. The Company plans to continue to implement its cost savings initiatives to bring costs in line with market requirements. Although management believes that no material adverse effects have occurred to date, disruption of operations relating to the Chapter 11 reorganization could adversely affect the Debtors' relationships with their creditors, customers, suppliers or employees. As of the end of the third quarter of 2000, the Company had $309.7 million of indebtedness outstanding, including $93.8 million under the Prepetition Credit Facility, the DIP Facility and the Junior DIP Facility (including accrued interest) and $211.9 million evidenced by the Senior Notes (including accrued interest). The Company is currently seeking, and is engaged in discussions regarding, its strategic alternatives. The Company has engaged in discussions with its bank lenders and representatives of the Creditors Committee concerning the possible restructuring of the Company's capital structure pursuant to a plan of reorganization, including a possible sale of the Company to a third party in connection therewith. There can be no assurance that the Company will be able to successfully pursue strategic alternatives or that the results of its discussions with its creditors will be successful. POTENTIAL MATERIAL ADVSERSE EFFECT OF HII BANKRUPTCY - On June 7, 1999, HII and certain of its United States affiliates (including HarnCo) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Certain provisions of the Bankruptcy Code allow a debtor to avoid, delay and/or reduce its contractual and other obligations to third parties. There can be no assurance that HII and its affiliates will not attempt to utilize such provisions to cease performance under their agreements and arrangements with the Company. The inability of the Company to receive the benefits of one or more of these agreements or the termination of ongoing arrangements between the Company and affiliates of HII (including those relating to the provision of services and materials by HII and its affiliates to the Company) could materially adversely affect the Company's operations and financial performance. In the event that any of the liabilities retained by HII and its affiliates in connection with the Recapitalization remain 43 unsatisfied as of the HII Petition Date, the Company's right to indemnification for any such amounts it has paid on behalf of HII and its affiliates may also be avoided, delayed or reduced. Each of HII and certain of its affiliates on one hand, and the Company and certain affiliates on the other hand, have receivables and payables to the other which may be affected by the HII Bankruptcy. o RISKS ASSOCIATED WITH LARGE CRANE PROJECTS - The Company's principal business includes designing, manufacturing, marketing and servicing large cranes for the capital goods industries. Long periods of time are often necessary to plan, design and build these machines. With respect to these machines, there are risks of customer acceptance and start-up or performance problems. Large amounts of capital are required to be devoted by some of the Company's customers to purchase these machines and to finance the steel mills, paper mills and other facilities that use these machines. The Company's success in obtaining and managing sales opportunities can affect the Company's financial performance. In addition, some projects are located in undeveloped or developing economies where business conditions are less predictable. Finally, the market for large cranes is down substantially and the outlook is not expected to improve for the foreseeable future. o RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS - The Company has operations and assets located in Canada, Mexico, Chile, the United Kingdom, South Africa, Thailand, Australia and Singapore and is establishing joint ventures in Malaysia and Saudi Arabia. The Company also sells its products through distributors and agents in over 50 countries, some of which are merely ad hoc arrangements and may be terminated at any time. The Company's international operations (including Canada, Mexico, Chile, South Africa, Singapore, Thailand, Australia and the United Kingdom) accounted for 37.1% and 39.8% of the Company's aggregate net sales for the six months ended July 31, 2000 and 1999, respectively. Although historically, exchange rate fluctuations and other international factors have not had a material impact on the Company's business, financial condition or results of operations, international operations expose the Company to a number of risks, including currency exchange rate fluctuations, trade barriers, exchange controls, risk of governmental expropriation, political and legal risks and restrictions, foreign ownership restrictions and risks of increases in taxes. The inability of the Company, or limitations on its ability, to conduct its foreign operations or distribute its products internationally could adversely affect the Company's operations and financial performance. o COMPETITION - The markets in which the Company operates are highly competitive. Both domestically and internationally, the Company faces competition from a number of different manufacturers in each of its product lines, some of which have greater financial and other resources than the Company. The principal competitive factors affecting the Company include performance, functionality, price, brand recognition, customer service and support, financial strength and stability, and product availability. The current depressed level of new equipment orders has increased the intensity of competition and has reduced selling prices and margins on new equipment bookings. There can be no assurance that the Company will be able to compete successfully with its existing competitors or with new competitors. Failure to compete successfully could have a material adverse effect on the Company's financial condition, liquidity and results of operations. In addition, the Company's ability to compete successfully will likely be adversely affected by the Company's liquidity crisis. o MARKET RISKS - The Company's business is affected by the state of the United States and global economy in general, and by the varying economic cycles of the industries in which its products are used. There can be no assurance that any future condition of the United States economy or the economies of the other countries in which the Company does business will not have an adverse effect on the Company's business, operations or financial performance. YEAR 2000 COMPLIANCE The Company has not experienced any significant disruption in operations as a result of the Year 2000 issue, although there remains a potential for Year 2000 problems to occur after January 1, 2000. Management, however, believes that any potential problems would not have a significant impact on operations of the Company. All material information technology ("IT") and non-IT equipment, processes and software were compliant and resulted in no material Year 2000 issues through November 17, 2000. 44 The Company also assessed and addressed Year 2000 issues with significant vendors. The Company sought assurances from all of its vendors with respect to Year 2000 issues. The Company does not, however, control the systems of other companies, and cannot assure that these systems were timely converted and, if not converted, would not have an adverse effect on the Company's business operations. In the event that the Company's significant vendors or suppliers did not complete their Year 2000 compliance efforts, the Company could have experienced disruptions in its operations. Disruptions in the economy generally resulting from Year 2000 issues also could have affected the Company. With respect to products sold by the Company, management continues to believe that any liability for Year 2000 compliance will not be material. FUTURE ACCOUNTING CHANGES In June 1998, the Financial Accounting Standards Board (FASB) has issued Statement of Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities." It requires all derivative instruments to be recorded in the statements of financial position at fair value. In June 1999, the statement's effective date was delayed by one year, and it will be effective for the year ending October 31, 2001. Interim reporting for this standard will be required. Due to the Company's current limited use of derivative instruments, the adoption of this statement is not expected to have a material effect on the Company's financial condition or results of operations. 45 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is potentially exposed to market risk asssociated with changes in foreign exchange and interest rates. From time to time the Company will enter into derivative financial instruments to hedge these exposures. An instrument will be treated as a hedge if it is effective in offsetting the impact of volatility in the Company's underlying interest rate and foreign exchange rate exposures. The Company does not enter into derivatives for speculative purposes. There have been no material changes in the Company's market risk exposures as compared to those discussed in the Company's 1999 Annual Report on Form 10-K, except for the termination of the Company's interest rate swap during the quarter ended April 30, 2000. 46 PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- On October 28, 1996, a strong windstorm caused significant damage to the Belview container-handling terminal at the Port of Waterford in Ireland. One container-handling crane sold by the Company's United Kingdom subsidiary was destroyed and another was seriously damaged. The two cranes were sold to the Waterford Harbour Commissioners in 1992 and commissioned for use in 1993. On October 19, 1998, the Waterford Harbour Commissioners wrote to the Company and provided a notice of arbitration, asserting breach of contract, negligence and breach of duty against the Company's United Kingdom subsidiary in connection with the destroyed and damaged cranes. The Waterford Harbour Commissioners claimed direct damages of IR(pound)8.5 million ($10.1 million based on exchange rates at July 31, 2000) and unspecified consequential damages. The port operator, Bell Lines, Limited, filed a similar claim against the Company's United Kingdom subsidiary in October 1999, asserting unspecified damages. Management intends to vigorously defend both matters. One of the Company's insurance carriers has agreed to provide defense coverage for one of the two cranes involved in the accident and limited indemnification if the Company is unsuccessful in defending the claims. The Company and its United Kingdom subsidiary have initiated litigation in the Milwaukee County Circuit Court against Ace American Insurance Company, AON Risk Services, Inc. of Illinois, and National Union Fire Insurance Company of Pittsburgh, Pennsylvania, seeking additional insurance coverage for defense and indemnification obligations. While the Company believes that it will obtain a favorable resolution (either by successfully defending the claim or by obtaining insurance coverage thereon), no assurances can be made as to the final outcome of the claims. If the Company's United Kingdom subsidiary is found liable for the claims and is unable to obtain insurance coverage therefor, there could be a material adverse effect on the Company's operations and financial performance. Based upon the current status of this matter, no related liability has been accrued at July 31, 2000. The Company is also involved from time to time in various other routine litigation incident to its operations. Although the outcome of those matters cannot be predicted with certainty, management believes that any such pending or threatened litigation will not have a material adverse effect on its consolidated results of operations and financial condition. Item 2. Changes in Securities --------------------- Not applicable. Item 3. Defaults upon Senior Securities ---------------------------------- In advance of the Chapter 11 bankruptcy filings described in Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of Part I, the Debtors were unable to pay the interest on the Senior Notes. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- Not applicable. Item 5. Other Information ----------------- Not applicable. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K The Registrants filed no reports on Form 8-K during the quarter ended July 31, 2000. 47 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned thereunto duly authorized. MMH HOLDINGS, INC. Date: December 15, 2000 /s/ David D. Smith ------------------- David D. Smith Vice President - Finance (Principal Financial Officer) MORRIS MATERIAL HANDLING, INC. Date: December 15, 2000 /s/ David D. Smith ------------------- David D. Smith Vice President - Finance (Principal Financial Officer) 48 EXHIBIT NUMBER 27.1 Financial Data Schedule 27.2 Financial Data Schedule 49

Filing Compare · MORRIS MATERIAL HANDLING INC