See accompanying notes which are an integral part of these statements.

See accompanying notes which are an integral part of these statements.

See accompanying notes which are an integral part of these statements.

See accompanying notes which are an integral part of these statements.

1.  Accounting Policies

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the results of operations, cash flows and comprehensive income for the three and nine months ended September 30, 2002 and 2001 and the financial position at September 30, 2002. The interim results are not necessarily indicative of results for a full year and do not contain all information included in the company's annual consolidated financial statements and notes for the year ended December 31, 2001. The consolidated balance sheet as of December 31, 2001 was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the company's latest annual report.

All dollar amounts, except per share amounts, are in thousands of dollars throughout these notes unless otherwise indicated.

Certain prior period amounts have been reclassified to conform to the current period presentation.


2. Acquisitions

2002

On August 8, 2002 the company acquired all of the outstanding common shares of Grove Investors, Inc (Grove). The results of Grove's operations have been included in the consolidated financial statements since that date. Grove is a leading provider of mobile hydraulic cranes, truck mounted cranes and aerial work platforms for the global market. Grove's products are used in a wide variety of applications by commercial and residential building contractors as well as by industrial, municipal and military end users. Grove's products are marketed to independent equipment rental companies and directly to end users under the brand names Grove Crane, Grove Manlift and National Crane.

The company views Grove as a good strategic fit with its crane business for a number of reasons. Grove is a global leader in the mobile hydraulic crane industry, specifically in all terrain and rough terrain mobile hydraulic cranes. The company did not offer these types of cranes, so Grove filled this void in the company's product offering. Coupled with the company's recent entrance into the tower crane product line with the acquisition of Potain, Grove enables the company to offer customers three major crane categories, namely crawler cranes, tower cranes and mobile hydraulic cranes. With the addition of Grove, the company will be able to offer customers equipment and lifting solutions for virtually every construction application. The company also believes that the combination of the two companies will provide opportunities to capitalize on their respective strengths in systems, technologies and manufacturing expertise, and that this combination will create natural synergies in its worldwide distrib ution and service network.

The aggregate purchase price paid for Grove was $72.6 million, including the company's common stock valued at $70.0 million and direct acquisition costs of $2.6 million. As defined in the merger agreement, in exchange for the outstanding shares of Grove common stock, the company issued approximately 2.2 million shares of the company's common stock out of treasury with an average market price of $32.34 per share. The number of shares issued at the close of the transaction was calculated based on the average closing price of the company's common stock for the ten consecutive trading days ending on and including the second day prior to the closing of the transaction. In addition, the company assumed all of Grove's outstanding liabilities (approximately $399.3 million), including approximately $202.8 million of debt outstanding as of August 8, 2002. Substantially all of this assumed debt was refinanced (See Note 11).

The following table summarizes the preliminary estimate of the fair value of the assets acquired and liabilities assumed at the date of acquisition.

Total current assets of $278.5 million includes cash acquired of $13.8 million. The purchase consideration paid in excess of the fair values of the assets acquired and liabilities assumed will be allocated first to the identifiable intangible assets with any remaining excess accounted for as goodwill. The third party valuations of identifiable tangible and intangible assets are not yet complete. Therefore, all of the excess of purchase consideration over the net assets acquired has preliminarily been recorded as goodwill. Based upon a preliminary appraisal report of identifiable intangible assets, the preliminary allocation is as follows: $26.0 million to trademarks and tradenames with an indefinite life; $12.0 million to an in-place distribution network with an indefinite life; $7.0 million to patents with a 10 to 15-year life; and the remaining $27.0 million to goodwill with an indefinite life. The final determination of goodwill will be dependent upon finalization of the third p arty appraisal of the tangible and other intangible assets to be completed in the fourth quarter of 2002. The result of these valuations could potentially change the purchase price allocation to include adjustments to, among others, property, plant and equipment and definite lived intangible assets, which would result in additional depreciation and amortization expense. The company has also developed and is finalizing certain restructuring and integration activities relating to this acquisition, which will result in further adjustments.

In connection with the acquisition, the company and Grove submitted pre-merger notification and report forms to the Federal Trade Commission and the Antitrust Division of the United States Department of Justice on March 27, 2002. In response to concerns raised by the Department of Justice regarding a potential reduction in competition in the United States boom truck market that could result from the acquisition, the company and Grove reached an agreement with the Department of Justice that, following the completion of the Grove acquisition, the company will divest of either Manitowoc Boom Trucks Inc. or National Crane Corporation (Grove's boom truck business). Based on a preliminary analysis, the company initially intends to pursue the disposition of Manitowoc Boom Trucks Inc. A final decision to dispose of the Manitowoc Boom Trucks operation is contingent on a number of factors including the level of interest expressed by potential buyers, an acceptable range of purchase price, and approval of the tra nsaction by the Department of Justice.  As a result of the remaining uncertainties surrounding the divestiture of Manitowoc Boom Trucks, the company has not reflected Manitowoc Boom Trucks as a discontinued operation in the condensed consolidated financial statements as it has not met all of the criteria in Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," to report this business as a discontinued operation. The company does not anticipate that the divestiture of either operation will have a material effect on its financial condition or the results of its continuing operations as the net sales, operating profits, total assets and net assets of Manitowoc Boom Trucks Inc. or National Crane Corporation is less than six-percent of the pro forma net sales, operating profit, total assets and net assets of the company and Grove as of and for the three and nine months ended September 30, 2002.

On May 7, 2001 SGPA, Inc. (the Predecessor), the predecessor of Grove, filed a pre-negotiated plan of reorganization under Chapter 11 of the U.S. Bankruptcy code that was confirmed by the court on September 14, 2001 and consummated on September 25, 2001. For financial accounting purposes, the inception date for the reorganized Grove (the Successor) was September 29, 2001. The Grove financial statements reflect accounting principles set forth by the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code." As such, Grove adopted fresh-start reporting as of September 29, 2001 resulting in a revaluation of its assets, liabilities and capital structure. The Predecessor incurred certain costs related to the reorganization plan, which are included in the 2001 pro forma information above. The three and nine months ended September 30, 2001, include $8.2 million and $14.5 million, respectively, of reo rganization costs.

3.  Inventory

The components of inventory at September 30, 2002 and December 31, 2001 are summarized as follows:

Inventory is carried at lower of cost or market using the first-in, first-out (FIFO) method for 88% and 79% of total inventory at September 30, 2002 and December 31, 2001, respectively. The remainder of the inventory is costed using the last-in, first-out (LIFO) method.


4.  Stockholders' Equity

Effective January 1, 2002, the company amended its deferred compensation plan to provide plan participants the ability to direct deferrals and company matching contributions into two separate investment programs, Program A and Program B. The investment assets in Programs A and B are held in two separate Rabbi Trusts. Program A invests solely in the company's stock; dividends paid on the company's stock are automatically reinvested; and all distributions must be made in company stock. Program B offers a variety of investment options but does not include company stock as an investment option. All distributions from Program B must be made in cash. Participants cannot transfer assets between programs. As a result of this amendment, the company reclassified approximately $7 million from other non-current liabilities to a contra equity account offsetting the balance of treasury stock.

As discussed in Note 2, "Acquisitions," the company issued approximately 2.2 million shares of the company's common stock with an average market price of $32.34 per share in connection with the Grove acquisition. The common stock was issued from treasury stock with a per share historical cost value of $10.21. The difference between the average market price of $32.34 per share and the treasury stock value of $10.21 per share was reflected in additional paid-in capital. In addition, the company exchanged outstanding Grove stock options with the company's stock options. The number of the company's stock options issued and the exercise price of those options was calculated based on the average closing price of the company's common stock for the ten consecutive trading days ending on and including the second day prior to the closing of the transaction as defined in the merger agreement. For the Grove acquisition, the company issued approximately 0.1 million stock options with an exercise price o f $18.30 per share to certain Grove employees.

In February 2001, the board of directors adopted a resolution to pay cash dividends annually rather than quarterly. In October 2002, the board of directors declared a cash dividend of $0.28 per share of common stock to shareholders of record on December 2, 2002, payable on December 9, 2002.


5.  Contingencies and Significant Estimates

The company has been identified as a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) in connection with the Lemberger Landfill Superfund Site near Manitowoc, Wisconsin. Approximately 150 potentially responsible parties have been identified as having shipped hazardous materials to this site. Eleven of those, including the company, have formed the Lemberger Site Remediation Group and have successfully negotiated with the United States Environmental Protection Agency and the Wisconsin Department of Natural Resources to fund the cleanup and settle their potential liability at this site. Recent estimates indicate that the total costs to clean up this site are approximately $30 million. However the ultimate allocations of cost for this site are not yet final. Although liability is joint and several, the company's share of liability is estimated to be 11% of the total costs. Prior to December 31, 1996, the company accrued $3.3 million in c onnection with this matter. The amounts the company has spent each year from 1999 through 2001 to comply with its portion of the cleanup costs have not been material. Remediation work at the site has been substantially completed, with only long-term pumping and treating of groundwater and site maintenance remaining. The company's remaining estimated liability for this matter, included in other current and non current liabilities at September 30, 2002, is $0.9 million. Based on the size of the company's current allocation of liability at this site, the existence of other viable potentially responsible parties and current reserves, the company does not believe that any liability imposed in connection with this site will have a material adverse effect on its financial condition, results of operations or cash flows.

At certain of the company's other facilities, the company has identified potential contaminants in soil and groundwater. The ultimate cost of any remediation required will depend upon the results of future investigation. Based upon available information, the company does not believe that these costs will be material. However, the company can give no assurance that this will be the case.

The company believes that it has obtained and is in substantial compliance with those material environmental permits and approvals necessary to conduct its various businesses. Based on the facts presently known, the company does not expect environmental compliance costs to have a material adverse effect on its financial condition, results of operations or cash flows.

As of September 30, 2002, various product-related lawsuits were pending. To the extent permitted under applicable law, all of these are insured with self-insurance retentions of $0.1 million for Potain crane accidents; $1.0 million for all other crane accidents (except for Grove); $1.0 million for Foodservice Equipment accidents occurring during 1990 to 1996; and $0.1 million for Foodservice Equipment accidents occurring during 1997 to present. Prior to the acquisition, Grove purchased an insurance policy, which effectively indemnified it against claims arising prior to October 1, 1997 up to an aggregate loss limit of $85.0 million. Beginning October 1, 1997 Grove's insurance included self-insured retention levels of $2.0 million per occurrence with an aggregate loss limit of $15.0 million per year for 1997 through 2000 and self-insurance retention levels of$3.0 million per occurrence with an aggregate loss limit of $15 million per year for 2000 through 2002. Effective October 1, 2002 the company adjus ted its self-insurance retention limit for all United States crane product liability claims, including Grove, to $2.0 million per occurrence with an aggregate loss limit of $15.0 million per year. All non-United States crane product liability claims (other than Potain) are fully insured with a small deductible payable by the company. As of September 30, 2002, the insurer's annual contribution is limited to $25 million for Marine businesses, $25 million (1997 - 1998) and $50 million (1998-2002) for Foodservice Equipment and Crane (other than Grove) businesses, and $100 million for Grove. Effective October 1, 2002 the company adjusted the insurer's annual contribution limit to $100 million for all Foodservice and Crane businesses, whereas the insurer's annual contribution limit for Marine cases remained at $25 million.

Product liability reserves included in accounts payable and accrued expenses at September 30, 2002 were $35.0 million: $6.6 million reserved specifically for the cases referenced above, and $28.4 million was reserved for claims incurred but not reported which were estimated using actuarial methods. Based on the company's experience in defending itself against product liability claims, management believes the current reserves are adequate for estimated settlements on aggregate self-insured claims and insured claims. Any recoveries from insurance carriers are dependent upon the legal sufficiency of claims and the solvency of insurance carriers.

At September 30, 2002 and December 31, 2001, the company had reserved $36.9 million and $24.8 million, respectively, for warranty claims included in product warranties and other non-current liabilities in the consolidated balance sheet. Certain of these warranties and other related claims involve matters in dispute that ultimately are resolved by negotiation, arbitration or litigation. Infrequently, a material warranty issue can arise which is beyond the scope of the company's historical experience.

It is reasonably possible that the estimates for environmental remediation, product liability and warranty costs may change in the near future based upon new information that may arise or matters that are beyond the scope of the company's historical experience. Presently, there are no reliable methods to estimate the amount of any such potential changes.

The company is also involved in various other legal actions arising in the normal course of business, including numerous lawsuits involving asbestos-related claims in which the company is one of numerous defendants. After taking into consideration legal counsel's evaluation of such actions, and the liabilities accrued with respect to such matters, in the opinion of management, ultimate resolution is not expected to have a material adverse effect on the consolidated financial statements of the company.

6.  Earnings Per Share

The following is a reconciliation of the earnings and average shares outstanding used to compute basic and diluted earnings per share.

The following sets forth a reconciliation of net income and earnings per share information for the three and nine months ended September 30, 2002 and 2001 adjusted for the non-amortization provisions of SFAS No. 142.

The changes in the carrying amount of goodwill by reportable segment for the year ended December 31, 2001 and the nine months ended September 30, 2002, were as follows:

During the first quarter of 2002 a portion of the excess of the cost over fair value of the net assets acquired in the Potain acquisition was allocated to specific other intangible assets. Based upon a third party appraisal report, the allocation was as follows: $53.0 million to trademarks and tradenames with an indefinite life; $17.5 million to patents with a 15-year life; $8.8 million to engineering drawings with a 15-year life; and $5.0 million to an in-place distribution network with an indefinite life. The remainder of the excess of the cost over fair value for this acquisition was allocated to goodwill. The company is in the process of obtaining a third party valuation of identifiable intangible assets related to the Grove acquisition. This valuation could change the purchase price allocation to include adjustments to definite lived intangible assets and therefore result in additional amortization expense. The gross carrying amount and accumulated amortization of the company's intangible asset s other than goodwill, all as a result of the Potain acquisition, were as follows as of September 30, 2002:

In April 2002, the FASB issued SFAS No. 145, "Rescission of FAS Nos. 4, 44, and 64, Amendment of FAS 13 and Technical Corrections as of April 2002," which mainly addresses the accounting and disclosure related to early extinguishment of debt transactions as well as several other technical corrections. SFAS No. 145 is effective for the company beginning January 1, 2003, with early application encouraged. The adoption of SFAS No. 145 will result in the company not classifying its loss on early extinguishment of debt, which occurred in 2001, as an extraordinary item.

10.  Plant Consolidation Costs

During the first quarter of 2002, the company recorded a pre-tax restructuring charge of $3.9 million in connection with the consolidation of its Multiplex operations into other of its Foodservice operations. These actions were taken in an effort to streamline the company's cost structure and utilize available capacity. The charge included $2.8 million to write-down the building and land, which are available for sale, to estimated fair market value, $0.7 million related to the write-down of certain fixed assets, and $0.4 million related to severance and other employee related costs. All of the charge was paid or utilized by September 30, 2002. The company has a pending offer from a third party to buy the Multiplex building and land contingent on satisfaction of certain conditions. It is anticipated this sale will close during the fourth quarter of 2002.

11. Senior Subordinated Notes Due 2012

On August 8, 2002 the company completed the sale in a private offering of $175 million of 10 1/2% senior subordinated notes due 2012. The senior subordinated notes are unsecured obligations of the company ranking subordinate in right of payment to all senior debt of the company, are equal to the company's senior subordinated euro notes and are fully and unconditionally, jointly and severally guaranteed by substantially all of the company's domestic subsidiaries. Interest on the new senior subordinated notes is payable semiannually in February and August each year, commencing February 1, 2003. These notes can be redeemed by the company in whole or in part for a premium on or after August 1, 2007. In addition, the company may redeem for a premium, at any time prior to August 1, 2005, up to 35% of the face amount of these senior subordinated notes with the proceeds of one or more equity offerings. The company used the net proceeds from the sale of these notes to refinance outstanding indebtedness of Gro ve, the acquisition of which the company also completed on August 8, 2002 (see Note 2).

The company is in the process of registering securities having substantially identical terms as these senior subordinated notes due 2012 with the United States Securities and Exchange Commission, as part of an offer to exchange freely tradeable notes for the privately placed notes.

On September 6, 2002 the company entered into an interest rate swap contract, which effectively converted $115 million of its fixed-rate senior subordinated notes due 2012 to variable rate debt. This contract is considered to be a hedge against changes in the fair value of the fixed-rate debt obligation. Accordingly, the interest rate swap contract is reflected at fair value in the company's consolidated balance sheet, an asset of $0.6 million as of September 30, 2002, and the related portion of fixed-rate debt being hedged is reflected at an amount equal to the sum of its carrying value plus an adjustment representing the change in fair value of the debt obligation attributable to the interest rate risk being hedged. In addition, changes during any accounting period in the fair value of the interest rate swap contract, as well as offsetting changes in the adjusted carrying value of the related portion of fixed-rate debt being hedged, are recognized as an adjustment to interest expense in the conso lidated statement of operations. The net effect of this accounting on the company's operating results is that interest expense on the portion of fixed-rate debt being hedged is recorded based on variable interest rates. The effect of this interest rate swap since September 6, 2002 reduced the interest rate on $115 million of the company's senior subordinated notes due 2012 from 10 1/2 % to 7 3/4 %, a reduction of interest expense of approximately $0.2 million through September 30, 2002.

13.  Subsidiary Guarantors

The following tables present condensed consolidating financial information for (a) the parent company, The Manitowoc Company, Inc. (Parent); (b) on a combined basis, the guarantors of the senior subordinated notes due 2011, which include substantially all of the domestic wholly owned subsidiaries of the company (Subsidiary Guarantors); and (c) on a combined basis, the wholly and partially owned foreign subsidiaries of the company and National Crane Corporation which do not guarantee the senior subordinated notes due 2011 (Non-Guarantor Subsidiaries). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are fully and unconditionally, jointly and severally liable under the guarantees, and the company believes such separate statements or disclosures would not be useful to investors. Comparable information regarding guarantor and non-guarantor subsidiaries of the company's senior subordinated notes due 2012 is not presented because the registration stateme nt with respect to those notes is not yet effective, but it would differ from the following information because Manitowoc Boom Trucks, Inc. is a guarantor of the senior subordinated notes due 2011 but currently is not a guarantor of the senior subordinated notes due 2012.