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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Commission file number 1-12557

CASCADE CORPORATION
(Exact name of registrant as specified in its charter)

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

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes ý    No o

        The number of shares outstanding of the registrant's common stock as of August 26, 2004 was 12,188,811.

Forward-Looking Statements

        This report contains forward-looking statements that involve risks and uncertainties, as well as assumptions which, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any projections of revenue, gross margin, expenses, earnings or losses from operations, synergies or other financial items; any statements of plans, strategies, and objectives of management for future operations; any statements regarding future economic conditions or performance; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. The risks, uncertainties, and assumptions referred to above include, but are not limited to, competitive factors in, and the cyclical nature of, the materials handling industry; fluctuations in lift truck orders or deliveries, availability and cost of raw materials; general business and economic conditions in North America, Europe, Australia and Asia; assumptions relating to pension and other post-retirement costs; foreign currency fluctuations; pending litigation; environmental matters; and the effectiveness of our capital expenditures and cost reduction initiatives. We undertake no obligation to publicly revise or update forward-looking statements to reflect events or circumstances that arise after the date of this report.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

CASCADE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited—in thousands, except per share amounts)

The accompanying notes are an integral part of the consolidated financial statements.

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CASCADE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited—in thousands, except per share amounts)

The accompanying notes are an integral part of the consolidated financial statements.

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CASCADE CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited—in thousands, except per share amounts)

The accompanying notes are an integral part of the consolidated financial statements.

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CASCADE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited—in thousands)

The accompanying notes are an integral part of the consolidated financial statements.

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CASCADE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Description of Business

        Cascade Corporation is an international company engaged in the design, manufacture and distribution of materials handling products that are widely used on industrial forklift trucks and, to a lesser extent, construction and agricultural vehicles. Accordingly, our sales are largely dependent on sales of lift trucks. Our products are produced at facilities located in three global regions: North America, Europe and Asia Pacific. Our products are sold to lift truck manufacturers and also distributed through retail lift truck dealers.

Note 2—Interim Financial Information

        The accompanying consolidated financial statements for the interim periods ended July 31, 2004 and 2003 are unaudited. In the opinion of management, the accompanying consolidated financial statements reflect normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for those interim periods. Results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year, and these financial statements do not contain the detail or footnote disclosures concerning accounting policies and other matters that would be included in full fiscal year financial statements. Therefore, these statements should be read in conjunction with our audited financial statements included on Form 10-K in our Annual Report for the fiscal year ended January 31, 2004.

Note 3—Segment Information

        All of our worldwide operating units have similar economic characteristics, attributes, products, distribution channels and customers. As a result, we aggregate our operating units into a single operating segment related to the manufacturing, distribution and servicing of material handling load engagement products primarily for the lift truck industry. Revenues and operating results are classified according to the region of origin. Identifiable assets are attributed to the geographic location in which they are located. Net sales, operating income and identifiable assets by geographic region were as follows (in thousands):

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        The breakdown of goodwill by geographic region at July 31, 2004 and January 31, 2004 is provided in the table below (in thousands). The change in balances between periods is entirely due to fluctuations in foreign currencies.

Note 4—Marketable Securities

        Marketable securities consist primarily of asset-backed notes issued by various state agencies throughout the United States and guaranteed by the United States or state governments or agencies. The specific identification method is used to determine the cost of securities sold. There are no realized or unrealized gains or losses related to these notes. The notes are long-term instruments maturing through 2031; however, the interest rates and maturities are reset approximately every month, at which time we can sell the notes. Accordingly, we have classified the notes as current assets in our consolidated balance sheet.

        Unrealized gain on investments recorded as accumulated comprehensive income relates to publicly traded common stock received in the demutualization of an insurance company. The shares were issued to a trust under a terminated benefit plan which had purchased annuities from the insurance company in 1997. The trust provides that remaining assets after satisfaction of all obligations are to be paid to the Company. The market value of the shares at July 31, 2004 was approximately $950,000.

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Note 5—Inventories

        Inventories stated at the lower of average cost or market are presented below by major class (in thousands).

Note 6—Stock Based Compensation

        We account for our stock-based employee compensation under Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees," which permits the use of intrinsic value accounting. No stock-based employee compensation expense related to stock options is reflected in net income, as all options granted had an exercise price equal to the market price of the underlying common stock on the date of grant.

        Our shareholders approved the Cascade Corporation Stock Appreciation Rights Plan (SARS Plan) in May 2004. The SARS Plan provides for the award of stock appreciation rights (SARS) to key executives and directors. The SARS provide the holder the right to receive an amount, payable in our common shares, equal to the excess of the market value of our common shares on the date of exercise over the base price established by our Board of Directors' Compensation Committee at the time the right was granted. The base price may not be less than the market price of our common shares on the date of grant.

        Under FIN 28, "Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans," SARS are accounted for under variable plan accounting. Accordingly, we record deferred compensation as a reduction of shareholders' equity, equal to the excess of the market value of our common shares on the balance sheet date or date of exercise over the base price at the date of grant. The deferred compensation is amortized to expense over the vesting period based on the periods in which the executives and directors perform services. On May 26, 2004, the Board of Directors awarded 453,000 SARS which vest over four years. Stock-based employee compensation of $340,000 was recognized as amortization expense related to the SARS for the quarter ended July 31, 2004. Unamortized deferred compensation recorded as a reduction of shareholders' equity at July 31, 2004 was $3.3 million.

        We have adopted disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation" and SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an Amendment of FASB Statement No. 123." The following table illustrates the effect on net income applicable to common shareholders and

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earnings per share if we had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation (in thousands, expect per share amounts):

Note 7—Contingencies

        We are subject to environmental laws and regulations, which include obligations to remove or mitigate environmental effects of past disposal and release of certain wastes and substances at various sites. We record liabilities for affected sites when environmental assessments indicate probable cleanup will be required and the costs can be reasonably estimated. Our liabilities for environmental costs, other than for costs of assessments themselves, are generally determined after the completion of investigations and studies or our commitment to a formal plan of action, such as an approved remediation plan, and are based on our best estimate of undiscounted future costs using currently available technology, applying current regulations, as well as our own historical experience regarding environmental cleanup costs. The reliability and precision of the loss estimates are affected by numerous factors, such as different stages of site evaluation and reevaluation of the degree of remediation required. We adjust our liabilities as new remediation requirements are defined, as information becomes available permitting reasonable estimates to be made and to reflect new and changing facts.

        It is reasonably possible that changes in estimates will occur in the near term and the related adjustments to environmental liabilities may have a material impact on our net income and operating cash flows. Unasserted claims are not currently reflected in our environmental liabilities. It is also reasonably possible that these changes or claims may also have a material impact on our net income and operating cash flows if asserted. We cannot estimate at this time the amount of any additional loss or range of loss that is reasonably possible.

        Our specific environmental matters consist of the following:

Fairview, Oregon

        In 1996, the Oregon Department of Environmental Quality issued two Records of Decision impacting our Fairview, Oregon manufacturing facility. The Records of Decision required us to initiate remedial activities related to the cleanup of groundwater contamination at and near the facility. Remediation activities have been conducted at or near the facility since 1996 and current estimates provide for some level of activity to continue through 2027. Costs of certain remediation activities at the facility are shared with The Boeing Company, with Cascade paying 70% of these costs. We have a

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liability for the ongoing remediation activities at our Fairview facility of $7.9 million and $8.3 million at July 31, 2004 and January 31, 2004, respectively.

Springfield, Ohio

        In 1994, we entered into a consent order with the Ohio Environmental Protection Agency, which required the installation of remediation systems for the cleanup of groundwater contamination at our Springfield, Ohio facility. The current estimate is that the remediation activities will continue through 2010. We have a liability for ongoing remediation activities at our Springfield facility of $1.0 and $1.1 million at July 31, 2004 and January 31, 2004, respectively.

Insurance Litigation

        On April 22, 2002, the Circuit Court of the State of Oregon for Multnomah County entered judgment in our favor for approximately $1.6 million in an action originally brought in 1992 against several insurers to recover various expenses incurred in connection with environmental litigation and related proceedings. The judgment is against two non-settling insurers. Additionally the judgment requires one of the insurers to defend us in suits alleging liability because of groundwater contamination emanating from our Fairview, Oregon plant and requires the two insurers to pay approximately 4% of any liability imposed against us by judgment or settlement on or after March 1, 1997 on account of such contamination. We and our insurers have appealed the judgment. We have not recorded any amounts that may be recovered from the two insurers in our consolidated financial statements.

Lease Guarantee

        We sold our hydraulic cylinder division to Precision Hydraulic Cylinders, Inc. (Precision) on January 15, 2002. Under the terms of the sale, we assigned to Precision an operating lease related to a manufacturing facility in Beulaville, North Carolina. We are a guarantor on the lease in the event Precision fails to comply with the lease terms. The lease requires payments by Precision of approximately $21,000 per month through November 2007. In the event Precision defaults under the lease, we can seek to recover losses related to the guarantee by pursuing our remedies under agreements securing payment of amounts receivable from Precision. The maximum potential amount of future payments that we could be required to make under the guarantee using undiscounted cash flows was approximately $840,000 at July 31, 2004.

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Note 8—Earnings Per Share

        The following table presents the calculation of basic and diluted earnings per share (in thousands, except per share amounts):

        Earnings per share is based on the weighted average number of common shares and potentially dilutive shares outstanding during the period, computed using the treasury stock method. Diluted weighted average common shares includes the incremental shares that would be issued upon the assumed exercise of stock options and stock appreciation rights, as well as the assumed conversion of exchangeable preferred stock. For the three month and six month periods ended July 31, 2003, 56 shares and 188 shares, respectively, of our unexercised stock options were excluded from the calculation of diluted earnings per share because they were antidilutive. No unexercised stock options were excluded from the calculation of diluted earnings per share for the three and six month periods ended July 31, 2004.

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Note 9—Benefit Plans

        The following represents the net periodic cost related to our benefit plans (in thousands):

Note 10—Recent Accounting Pronouncements

        In January 2004, FASB Staff Position No. 106-1 (FSP 106-1), "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003" was issued. FSP 106-1 permitted the deferral of recognizing the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) in the accounting for post retirement health care plans under Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefactors Other Than Pensions," and in providing disclosure related to the plans required by SFAS No. 132 (revised 2003), "Employers' Disclosures about Pensions and Other Postretirement Benefits." We elected the deferral provided by this FSP.

        In May 2004, the FASB issued Staff Position No. 106-2 (FSP 106-2), "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003." FSP No. 106-2 discusses further the effect of the Act and supersedes FSP 106-1. FSP 106-2 considers the effect of the two new features introduced in the Act in determining our accumulated postretirement benefit obligation ("APBO") and net periodic post retirement benefit cost. The effect on the APBO will be accounted for as an actuarial experience gain to be amortized into income over the average remaining service period of plan participants. Companies may elect to defer accounting for this benefit or may attempt to reflect the best estimate of the impact period beginning after June 15, 2004. As previously disclosed, we have chosen to defer accounting for the measures of APBO and net periodic postretirement benefit costs until the third quarter of fiscal 2005. Our measures of APBO and net periodic pension costs as of and for the six months ended July 31, 2004 do not reflect the effect of the Act. We do not expect the adoption of FSP 106-2 to have a material impact on the Company's results of operations and financial condition.

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        In March 2004, the FASB issued Emerging Issues Task Force Issue 03-6 (Issue 03-6), "Participating Securities and the Two-Class Method under FAS No. 128". Issue 03-6 provides guidance regarding the calculation of basic earnings per share by companies that have issued participating securities other than common stock. Issue 03-6 is effective for reporting periods beginning after March 31, 2004. The adoption of Issue 03-6 did not have an effect on the consolidated financial statements.

Note 11—Warranty Obligations

        We record a liability on our consolidated balance sheet for costs related to certain warranties with the sales of our products. This liability is estimated through historical customer claims, product failure rates, material usage and service delivery costs incurred in correcting a product failure. Our warranty obligations were as follows (in thousands):

Note 12—Accumulated Other Comprehensive Income (Loss)

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

        All references to fiscal periods are defined as periods ending in the year ended January 31, 2004 (fiscal 2004) and the year ending January 31, 2005 (fiscal 2005).

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

        Our discussion and analysis of financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. We evaluate our estimates and judgments on an on-going basis, including those related to uncollectible receivables, inventories, goodwill and long-lived assets, warranty obligations, environmental liabilities and deferred taxes. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. A description of our critical accounting policies and related judgments and estimates that affect the preparation of our consolidated financial statements is set forth on Form 10-K in our Annual Report for the year ended January 31, 2004.

COMPARISON OF SECOND QUARTER OF FISCAL 2005 AND FISCAL 2004

Consolidated Summary

        Net income for the second quarter of fiscal 2005 increased to $6.5 million ($0.51 per diluted share) from $5.7 million ($0.47 per diluted share) for the second quarter of fiscal 2004. Net sales for the second quarter of fiscal 2005 were $16.7 million or 22% greater than the second quarter of fiscal 2004. Excluding the effect of foreign currency fluctuations and acquisitions, net sales in North America, Europe and Asia Pacific grew 8%, 28% and 16%, respectively, in the second quarter of fiscal 2005 as compared to the same quarter of the prior year. The increased net sales largely reflected higher volumes of business in existing product lines in all geographic regions. The consolidated gross margin decreased from 33% in the second quarter of the prior year to 32% in the second quarter of the current year. The decrease was due primarily to higher steel prices, which were partially offset by price increases and better absorption of fixed costs due to the higher sales volumes. Selling and administrative costs increased by 17% in the second quarter of fiscal 2005 over the comparable quarter of the prior year. Excluding foreign currency changes and acquisitions, costs increased 9% over the second quarter of the prior year. The increase is primarily due to the implementation of Sarbanes-Oxley requirements, increased research and development expenses and costs for the continuing expansion of our marketing and customer service capabilities in China.

North America

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        North America net sales were up $3.7 million or 8% in the second quarter of fiscal 2005 over the same quarter of fiscal 2004. Higher volumes of shipments from North American plants accounted for virtually all of the increase. Shipments benefited from a strong lift truck market in the second quarter of fiscal 2005 in comparison with the prior year. Price increases to date have sufficiently covered increases in steel costs. As in the first quarter of fiscal 2005, the relation between the U.S. dollar and the Euro in the second quarter of fiscal 2005 continued to be unfavorable for European imports into the U.S. market when compared to the same quarter of fiscal 2004.

        Historically, we have found that changes in the level of our net sales do not correspond directly to the percentage changes in lift truck industry shipments, but industry statistics do provide an indication of the direction of business activity. North American lift truck industry shipments in the second quarter of fiscal 2005 were 14% higher than the second quarter of fiscal 2004.

        Gross margins for the second quarter of fiscal 2005 in North America benefited from the contribution of additional shipment volumes. This added absorption and sales price increases more than offset the impact of increases in the cost of steel.

        Selling and administrative costs for the second quarter of fiscal 2005 increased 10% or $965,000 over the same quarter of the prior year. Implementation costs related to compliance with the requirements of Sarbanes-Oxley increased by $349,000. Research and development costs were $207,000 greater than the prior year and executive incentive costs were $143,000 higher than the prior year second quarter. The remainder of the increase related to miscellaneous costs.

        In May 2004 our shareholders approved a stock appreciation rights plan (SARS Plan), which provides for the award of stock appreciation rights (SARS) to key executives and directors. Our Proxy Statement, dated April 13, 2004, contains a detailed description of the terms of the SARS Plan. Amortization expense for the second quarter of fiscal 2005 increased by $340,000 due to SARS granted on May 26, 2004. The SARS Plan was not in effect during the second quarter of fiscal 2004.

Europe

        Net sales in Europe for the second quarter of fiscal 2005 increased $10.6 million or 56% over the same quarter of fiscal 2004. Of the increase, $5.3 million or 28% was primarily the result of increased shipments out of our European plants. This increase is due to added demand resulting from a strong European lift truck market in fiscal 2005. The changes in foreign currency rates, primarily the Euro and the British Pound, accounted for $1.6 million or 8% of the increase. The remaining increase relates to our acquisition in Italy during the third quarter of fiscal 2004, which accounted for $3.7 million or about 20% of the increase.

        Our fiscal 2005 second quarter sales in Europe have also been positively impacted by the insolvency of Falkenroth Foerdertechnik, a major German competitor. We are currently negotiating to

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acquire the assets of Falkenroth Foerdertchnik. If we are successful, the acquisition will likely be completed in the third quarter.

        Gross margins in Europe declined from 22% for the second quarter of fiscal 2004 to 20% for the second quarter of fiscal 2005. The two primary factors in this decrease were increased shipments of certain lower margin OEM products relative to total shipments, as well as increases in steel costs that were not sufficiently offset by customer price increases.

        Selling and administrative costs in Europe increased by $1.2 million or 29% for the second quarter of fiscal 2005 as compared to the second quarter of fiscal 2004. The single largest contributor to this increase was selling and administrative costs of Roncari srl, which accounted for an increase of $686,000 or 16% in comparison with the second quarter of fiscal 2004. We acquired Roncari srl in October 2003. Changes in foreign currency rates accounted for $266,000 of additional selling and administrative costs or an increase of 6% over the prior year. Exclusive of acquisitions and foreign currency fluctuations, selling and administrative costs increased approximately $280,000 for the second quarter of fiscal 2005 as compared to the comparable period of fiscal 2004. The remainder of the increase was related to severance costs and other costs related to higher business levels during the second quarter of fiscal 2005 versus the same quarter of fiscal 2004. These increases were partially offset by a net reduction of lease expenses of $538,000. We reduced a lease loss accrual after the lease in question was resolved for a lower amount than had been anticipated.

Asia Pacific

        Asia Pacific net sales increased $2.4 million or 21% in the second quarter of fiscal 2005 over fiscal 2004. Excluding the effect of foreign currencies, net sales increased $1.8 million or 16%. Virtually all of the Asia Pacific markets experienced strong sales results during the second quarter, with China posting the strongest growth.

        Gross margins in the Asia Pacific region remained constant at 33% in the second quarter of fiscal 2005 when compared to the same quarter of the prior year.

        Selling and administrative costs in the Asia Pacific region increased $345,000 for the second quarter of fiscal 2005 as compared to fiscal 2004. Foreign currency fluctuations accounted for $133,000 of this change. The remainder of the increase was due to continued expansion of our marketing and engineering efforts in China.

Non-Operating Items

        Interest income decreased approximately $155,000 from the second quarter of fiscal 2004 to the second quarter of fiscal 2005. This was due primarily to payment in full of the Precision Hydraulic Cylinders, Inc. note receivable during the third quarter of fiscal 2004.

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        Interest expense was approximately $247,000 or 21% lower in the second quarter of fiscal 2005 as compared to the same quarter of fiscal 2004. Total borrowings at July 31, 2004 were $10.8 million lower than July 31, 2003 due to scheduled debt payments in the fourth quarter of fiscal 2004. See "Financial Condition and Liquidity" for additional discussion of debt levels and payments.

        Other expense related primarily to net losses on foreign currency translation in the second quarter of fiscal 2005 and fiscal 2004.

        The effective tax rate increased from 32% in the second quarter of fiscal 2004 to 36% in the current quarter. This was primarily due to a decrease in benefits of international financing activities and the recording of valuation allowances on certain deferred tax assets in Europe. The effective rate in the second quarter was up slightly from the 35% effective rate in the first quarter of fiscal 2005.

COMPARISON OF THE FIRST SIX MONTHS OF FISCAL 2005 AND FISCAL 2004

Consolidated Summary

        Net income for the first six months of fiscal 2005 increased to $14.7 million ($1.16 per diluted share) from $11.1 million ($0.91 per diluted share) for the first six months of fiscal 2004. The largest contributor to the increased net income was a higher volume of business in all geographic regions. Net sales for the first six months of fiscal 2005 increased by $41.3 million or 29% over the comparable period of fiscal 2004. Excluding the effect of foreign currency fluctuations and acquisitions, net sales in North America, Europe and Asia Pacific grew 15%, 17% and 30%, respectively, in the first six months of fiscal 2005 as compared to the same period of the prior year. Gross margin for the first six months of fiscal 2005 of 33% was unchanged from the prior year. Steel price increases and lower margin product mix in Europe reduced margins; but this was offset by improved margins in North America and Asia Pacific. Selling and administrative costs increased by 20% in the first six months of fiscal 2005 over the comparable period of the prior year. Excluding foreign currency changes and acquisitions, costs increased 10% over the comparable prior year period. The primary drivers of this increase were research and development and engineering costs, Sarbanes-Oxley implementation costs, executive incentive compensation, severance costs in Europe and Canada, costs related to expansion efforts in China and additional warranty costs related to new product introductions.

North America