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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 1996 Commission file number 0-8454
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
JLG INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1199382
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
JLG Drive, McConnellsburg, PA 17233
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (7l7) 485-5161
Securities registered pursuant to Section 12(b) of the Act:
Capital Stock ($.20 par value) New York Stock Exchange
(Title of class) (Name of Exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No _________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
At October 1, 1996, there were 43,544,034 shares of capital stock of the
Registrant outstanding, and the aggregate market value of the voting stock held
by nonaffiliates of the Registrant at that date was $800,121,625.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1996 annual meeting of shareholders are
incorporated by reference into Part III.
PART I
ITEM 1. BUSINESS
General
The Company, organized in 1969, is the leading manufacturer,
distributor and international marketer of aerial work platforms. Sales
are made principally to independent distributors who rent and sell the
Company's products to a broad customer base, which includes users in
the industrial, commercial, institutional and construction markets.
Products
Aerial Work Platforms. Aerial work platforms are designed to
permit workers to position themselves and their tools and materials
easily and quickly in elevated work areas that otherwise might have to
be reached by the erection of scaffolding, by the use of ladders, or
through some other device. Elevating work platforms consist of self-
propelled boom-type, scissor-type and vertical-type lifts. These work
platforms are mounted either at the end of a telescoping and/or articulating
lifting mechanism, which in turn are mounted on mobile,
four-wheel chassis. The Company offers elevating work platforms
powered by electric motors or gasoline, diesel, or propane engines.
All of the Company's elevating work platforms are designed for stable
operation in elevated positions and self-propelled models travel on
grades of up to twenty-four degrees.
Boom-type self-propelled aerial work platforms are especially
useful for reaching over machinery and equipment that is mounted on
floors and for reaching other elevated positions not easily approached
by a vertical lifting device. The Company produces boom-type self-
propelled aerial work platform models of various sizes with
platform heights ranging up to 150 feet. The boom may be rotated up
to 360 degrees in either direction, raised or lowered from vertical to
below horizontal, and extended while the work platform remains
horizontal and stable. Vehicles on which the booms are mounted may be
maneuvered forward or backward and steered in any direction by the
operator from the work platform. Boom-type models have standard-sized
work platforms, which vary in size up to 3 by 8 feet, and the rated
lift capacities range from 500 to 2,000 pounds. The distributor net
price of the Company's standard models at July 31, 1996 ranged from
approximately $18,735 to $325,000.
Scissor-type self-propelled aerial work platforms are designed to
provide larger work areas, and generally to allow for heavier loads
than boom-type lifts. Scissor-type lift vehicles may be maneuvered in
a manner similar to boom-type models, but the platforms may be
extended only vertically, except for an available option that extends
the deck horizontally up to 6 feet. The scissor-type models have
maximum elevation capabilities of up to 50 feet and various platform
sizes up to 6 by 14 feet. The rated lift capacities range from 500 to
2,500 pounds. The distributor net price of the Company's standard
models at July 31, 1996 ranged from approximately $9,476 to $49,091.
Self-propelled and push-around vertical lifts consist of a work
platform attached to an aluminum mast that extends vertically, which
in turn, is mounted on either a push-around or self-propelled base.
Available in various models, these machines can be rolled in their
retracted position through standard door openings. They have maximum
elevation capabilities of up to 36 feet and rated lift capacities from
300 to 750 pounds. The distributor net price of the Company's
standard models at July 31, 1996 ranged from approximately $3,397 to
$8,619.
The Company has eleven registered trademarks and nineteen patents and
considers them to be beneficial in its business.
Marketing
The Company's products are marketed internationally primarily through
a network of independent distributors. The North American distributor
network approximates 100 companies operating through nearly 300
branches. In Europe, the Company's distribution base includes
approximately 60 locations. The Company also has established a
presence in eight countries in the Asia/Pacific region as well as
Australia and Japan and has distributor locations in the major
countries of Latin America. The Company's distributors sell and rent
the Company's products and provide service support. The Company also
sells directly through its own marketing organizations to certain
major accounts as well as to customers in parts of the world where
independent distribution is either not available or not commercially
feasible.
The Company supports the sales, service, and rental programs of its
distributors with product advertising, cooperative promotional
programs, major trade show participation, and distributor personnel
training in both service and product attributes. The Company
supplements domestic sales and service support to its international
customers through its overseas facilities in the United Kingdom and
Australia.
The Company maintains a national rental fleet of elevating work
platforms. The purpose of this fleet is to assist the Company's
distributors in servicing large, one-time projects and in meeting
periods of unanticipated rental demand, and to make available more
equipment to distributors with growing markets, but limited financial
resources. It also repairs and refurbishes equipment for its own use or for
sale to its distributors.
Product Development
The Company invests significantly in product development and
diversification, including improvement of existing products and
modification of existing products for special applications. Product
development expenditures totaled $6,925,000, $5,542,000, and
$4,373,000 for the fiscal years 1996, 1995 and 1994, respectively.
New products introduced in the past two years accounted for
approximately 27% percent of fiscal 1996 sales.
Competition
In selling its major products, the Company experiences two types of
competition. The Company competes with more traditional means of
accomplishing the tasks performed by elevating work platforms, such as
ladders, scaffolding and other devices.
The Company believes that its elevating work platforms in many
applications are safer, more versatile and more efficient, taking into
account labor costs, than those traditional methods and that its
elevating work platforms enjoy competitive advantages when the job
calls for frequent movement from one location to another at the same
site or when there is a need to return to the ground frequently for
tools and materials.
The Company competes principally with nine elevating work platform
manufacturers. Some of the Company's competitors are part of, or are
affiliated with, companies which are larger and have greater financial
resources than the Company. The Company believes that its product
quality, customer service, experienced distribution network, national
rental fleet and reputation for leadership in product improvement and
development provide the Company with significant competitive
advantages.
The Company believes it commands the largest share of the market for
boom and scissor lift products and is one of the three largest
producers of vertical lifts.
Executive Officers of the Registrant
Positions with the Company
Name Age (date of initial election)
L. David Black 59 Chairman of the Board,
President and Chief Executive
(1993); prior to 1993,
President and Chief Executive
Officer (1991).
Charles H. Diller, Jr. 51 Executive Vice President and
Chief Financial Officer (1990).
Michael Swartz 51 Senior Vice President -
Marketing (1990).
Rao Bollimpalli 58 Senior Vice President -
Engineering (1990).
Raymond F. Treml 56 Senior Vice President -
Manufacturing (1990).
All executive officers listed above are elected to hold office for one
year or until their successors are elected and qualified, and have been
employed in the capacities noted for more than five years, except as
indicated. No family relationship exists among the above named executive
officers.
Product Liability
Because the Company's products are used to elevate and move personnel and
materials above the ground, use of the Company's products involves
exposure to personal injury as well as property damage, particularly if
operated carelessly or without proper maintenance.
The Company is a party to personal injury and property damage litigation
arising out of incidents involving the use of its products. The
Company's program for fiscal 1996 to insure against exposure to such
litigation is comprised of a self-insurance retention of $5 million and
catastrophic coverage of $20 million in excess of the retention. The
Company has accrued as a reserve $8.9 million with respect to pending and
potential claims for all years in which the Company is liable under its
self-insurance retention. The number of product liability claims filed
each year fluctuates significantly. The number of potential claims has
been affected by the substantial growth in sales over the past several years
which has dramatically increased machine population and number of users.
This has exerted upward pressure on the number of claims, which the
Company has countered through product design safety innovations. Product
liability costs, based upon the Company's best estimate of anticipated
losses, for years ended July 31, 1996, 1995 and 1994, approximated 0.9%,
1.4% and 2.6% of net sales, respectively.
For additional information relative to product liability insurance
coverage and cost, see Item 3 Legal Proceedings.
Employees
The Company had 2,705 and 2,222 persons employed as of July 31, 1996 and
1995, respectively. The Company believes its employee relations are
good, and it has experienced no work stoppages as a result of labor
problems.
Foreign Operations
The Company manufactures its products in the U.S. for sales throughout
the world. Sales to customers outside the U.S. were 24%, 18% and 16% of
net sales for 1996, 1995 and 1994, respectively. Export sales were up
substantially in dollar terms, but the percentage gain was only modest
due to the continued strong growth of domestic sales.
ITEM 2. PROPERTIES
The Company has manufacturing plants and office space at five sites in
Pennsylvania totaling 571,000 square feet and situated on 108 acres of
land. Of this, 497,000 square feet are owned, with the remainder under
long-term lease. The Company has several international sales offices
under short-term operating leases.
The Company's McConnellsburg and Bedford, Pennsylvania facilities with
a book value of $9.4 million have been encumbered as security for
Company long-term borrowings aggregating $1.9 million.
The Company's properties used in its operations are considered to be in
good operating condition, well-maintained and suitable for their present
purposes.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to personal injury and property damage litigation
arising out of incidents involving the use of its products. The
Company's program for fiscal 1996 to insure against exposure to such
litigation is comprised of a self-insurance retention of $5 million and
catastrophic coverage of $20 million in excess of the retention.
Catastrophic coverage for fiscal year 1997 was increased to $25 million.
The Company contracts with an independent insurance firm to provide
claims handling and adjustment services. The Company's estimates with
respect to claims are based on internal evaluations of the merits of
individual claims and the reserves assigned by the Company's independent
insurance carrier. The methods of making such estimates and establishing
the resulting accrued liability are reviewed frequently, and any
adjustments resulting therefrom are reflected in current earnings.
Claims are paid over varying periods, which generally do not exceed five
years. Accrued liabilities for future claims are not discounted.
With respect to all claims of which the Company is aware, accrued
liabilities of $8.9 million and $8.4 million were established at July 31,
1996 and 1995, respectively. While the Company's ultimate liability may
exceed or be less than the amounts accrued, the Company believes that it
is unlikely that it would experience losses that are materially in excess
of such reserve amounts. As of July 31, 1996 and 1995, there were no
insurance recoverables or offset implications and there were no claims by
the Company being contested by insurers.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
The Company's capital stock is traded on the New York Stock Exchange
under the symbol JLG. Prior to September 18, 1996, the Company's shares
were traded on the NASDAQ National Market under the symbol JLGI. The
table below sets forth the market prices and average shares traded daily
for the past two fiscal years.
Price per Share Average Shares
1996 1995 1996 1995
Quarter Ended High Low High Low
October 31, $8.33 $5.67 $3.48 $2.83 261,809 164,289
January 31 $10.17 $7.67 $3.48 $2.83 219,170 248,763
April 30 $19.08 $8.83 $3.58 $2.83 397,375 270,300
July 31 $29.50 $12.00 $6.04 $3.21 916,362 321,744
All share and per share data in the table above has been adjusted for the
two-for-one stock splits distributed in April and October 1995, and the
three-for-one split distributed in July 1996. The cash dividend was also
increased on the same dates on a pre-split basis by 20%, 33% and 50%,
respectively. Combined, the three splits increased the number of shares
outstanding twelve-fold and the cash dividend 140%. The Company's three
consecutive years of record performance have contributed to a significant
increase in its share price. When combined, the share price and dividend
increases have provided shareholders a total return of 207% in 1996 and
in excess of 100% for each of the prior two fiscal years. The Company's
quarterly cash dividend rate is currently $.005 per share, or $.02 on an
annual basis.
The Company believes approximately 56% of the stock is held by about 140
institutions, mutual funds, banks, insurance and investment companies and
pension funds. In addition, there are about 3,400 shareholders of
record, including 1,800 employees.
ITEM 6. SELECTED FINANCIAL DATA
ELEVEN YEAR FINANCIAL SUMMARY
(in thousands of dollars,
except per share data)
Year ended July 31 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
RESULTS OF OPERATIONS
Net sales $413,407 $269,211 $176,443 $123,034 $110,479 $94,439 $149,281 $121,330 $81,539 $59,827 $59,323
Gross profit 108,716 65,953 42,154 28,240 22,542 20,113 37,767 32,384 23,598 17,075 16,347
Selling, general
and administrative
expenses (44,038) (33,254) (27,147) (23,323) (22,024) (21,520) (21,834) (18,974) (14,117) (11,946) (12,910)
Restructuring charges (4,922) (2,781) (1,015)
Income (loss) from
operations 64,678 32,699 15,007 4,917 (4,404) (4,188) 14,918 13,410 9,481 5,129 3,437
Interest expense (293) (376) (380) (458) (1,218) (1,467) (2,344) (1,375) (925) (1,039) (1,750)
Other income
(expense), net 1,281 376 (24) 180 (149) (707) 858 399 485 958 51
Income (loss) before
taxes and
extraordinary
credit 65,666 32,699 14,603 4,639 (5,771) (6,362) 13,432 12,434 9,041 5,048 1,738
Extraordinary credit 1,063
Income tax
(provision) benefit (23,558) (11,941) (5,067) (1,410) 2,733 3,122 (4,950) (4,882) (3,766) (3,008) (1,063)
Net income (loss) 42,108 20,758 9,536 3,229 (3,038) (3,240) 8,482 7,552 5,275 2,040 1,738
PER SHARE DATA
Net income (loss) 0.95 0.49 0.23 0.07 (0.07) (0.08) 0.20 0.18 0.13 0.05 0.04
Cash dividends 0.015 0.0092 0.0083 0.005 0.0208 0.0167 0.0125 0.0083
Shares used in
computation (in
thousands) 44,392 42,508 41,950 43,634 43,077 42,542 42,121 42,019 41,331 40,854 40,772
PERFORMANCE MEASURES
Return on sales 10.2% 7.7% 5.4% 2.6% (2.8%) (3.4%) 5.7% 6.2% 6.5% 3.4% 2.9%
Return on assets 28.5% 20.2% 12.1% 4.6% (4.0%) (4.2%) 10.4% 11.9% 10.8% 4.9% 4.1%
Return on
shareholders' equity 47.9% 37.1% 23.8% 8.5% (7.9%) (7.7%) 21.8% 23.5% 21.2% 9.8% 9.0%
FINANCIAL POSITION
Working capital 71,807 45,404 32,380 26,689 33,304 36,468 47,289 34,745 27,378 16,895 20,070
Current assets as a
percent of current
liabilities 226% 216% 208% 217% 268% 266% 304% 254% 250% 216% 369%
Property, plant and
equipment, net 34,094 24,785 19,344 13,877 13,511 13,726 14,402 11,343 8,677 7,975 8,422
Total assets 182,628 119,708 91,634 72,518 73,785 74,861 86,741 70,570 57,692 42,431 42,478
Total debt 2,194 2,503 7,578 4,471 12,553 14,175 18,404 13,799 11,805 5,513 12,238
Total debt as a
percent of total
capitalization 2% 4% 14% 10% 25% 27% 29% 28% 29% 20% 37%
Shareholders' equity 113,208 68,430 45,706 38,939 37,186 38,596 44,109 35,331 28,465 22,582 20,512
Book value per share 2.61 1.60 1.09 0.89 0.86 0.90 1.05 0.84 0.68 0.55 0.50
OTHER DATA
Product development
expenditures 6,925 5,542 4,373 3,385 3,628 3,430 3,520 2,904 2,910 2,010 2,313
Capital expenditures,
net of retirements 16,668 8,618 7,762 3,570 1,364 1,637 4,615 4,054 1,619 1,197 1,605
Depreciation and
amortization 6,505 3,875 2,801 2,500 2,569 1,953 1,771 1,609 1,968 1,830 2,266
Employees 2,705 2,222 1,620 1,324 1,014 1,182 1,565 1,455 972 804 600
This summary should be read in conjunction with Management's Discussion and
Analysis. All share and per share data have been adjusted for the two-for-one
stock splits distributedin April and October, 1995 and the three-for-one stock
split distributed in July, 1996.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information given below is intended to assist in understanding the
Company's financial condition and results of operations as reflected in
the Consolidated Financial Statements.
The Company is the world's leading manufacturer, distributor and
international marketer of mobile elevating work platforms used primarily
in industrial, commercial, institutional and construction applications.
Sales are made principally to independent equipment distributors that
rent the Company's products and provide service support to equipment
users. The Company also sells its products to large independent rental
companies. Equipment purchases by end-users, either directly from the
Company or through distributors, comprise a significant, but smaller
portion of sales. The Company also generates a small, but growing amount
of revenue from sales of used equipment and from equipment rentals and
services provided by JLG's Equipment Services operations.
Demand for the Company's products tends to be cyclical, responding
historically to varying levels of construction and industrial activity,
principally in the United States and, to a lesser extent, in other
industrialized nations. During recessionary conditions, demand for
rental equipment typically declines more sharply than demand for
equipment purchased by end-users. Other factors affecting demand include
the availability and cost of financing for equipment purchases and the
market availability of used equipment.
Due to the cyclical demand, the Company's financial performance and cash
flows tend to fluctuate. However, the Company continually strives to
reduce operating costs and increase manufacturing efficiencies. The
Company also considers the development and introduction of new and
improved products and expansion into underserved geographic markets to be
important factors in maintaining and strengthening its market position
and reducing cyclical fluctuations in its financial performance and cash
flows.
RESULTS OF OPERATIONS
Net sales reached a new high in 1996, rising by 54% over 1995 and by 53%
from 1994 to 1995. The growth in revenues for both years included
increased demand across virtually all product classes. Strong U.S. and
European demand for both 1996 and 1995 was the primary contributor to the
record sales. Sales outside the U.S., as a percent of total sales, were
24%, 18% and 16% in 1996, 1995 and 1994, respectively. New and
redesigned products introduced over a two-year period contributed 27%,
24% and 25% to sales in 1996, 1995 and 1994, respectively. Though the
Company has a broad base of customers, each of whose purchases may vary
significantly from year to year, the Company has recently experienced
some consolidation among its largest customers, and sales to these
customers are increasing in significance.
Gross profit, as a percent of sales, increased to 26% in 1996 from 24% in
1995, primarily due to the effects of spreading fixed overhead expenses
over a higher production base, lower product liability costs and higher
selling prices. This improvement was partially offset by changes in
product mix. Gross profit, as a percent of sales, was 24% for both 1995
and 1994. Lower manufacturing costs due to continued improvements in
manufacturing processes, lower warranty and product liability costs, and
higher selling prices offset increased material costs, a less profitable
product mix and costs associated with outsourcing additional production
as a result of the substantial increase in demand and capacity
limitations.
Selling, general and administrative expenses increased $10.8 million and
$6.1 million for 1996 and 1995,respectively, but as a percent of sales
decreased to 11% in 1996 from 12% in 1995 and 15% in 1994. The dollar
increase for both years included higher personnel and related costs,
increased consulting and advertising expenses and increased expenses from
foreign operations, all of which primarily related to increased business
levels. The increase in expenditures between 1996 and 1995 were
partially offset by a reduction in bad debt expenses. The increase
between 1995 and 1994 also included higher research and development
spending.
The effective income tax rate was 36% in 1996 compared to 37% and 35% in
1995 and 1994, respectively. The effective income tax rate for 1996 was
lower than the rate in 1995, primarily due to a larger tax benefit
associated with export sales in 1996, while the rate for 1995 was higher
than the rate for 1994 due to the tax benefit from closing an overseas
facility in 1994.
FINANCIAL CONDITION
The Company strengthened its financial position during 1996 through
increased cash from operations and the sale of its Material Handling
Division. Cash generated from operating activities improved by $3.8
million in 1996 and $6.0 million in 1995, principally due to the
increased profitability of the Company. Working capital increased by
$26.4 million in 1996 and $13.0 million in 1995 primarily due to higher
business levels. The Company also invested an additional $9.9 million in
1996 and $1.5 million in 1995 to expand its JLG Equipment Services
operation. Capital expenditures were $16.7 and $8.6 million in 1996 and
1995, respectively.
At July 31, 1996, the Company had unused credit lines totaling $20
million and cash balances of $30.4 million. The Company considers these
resources, coupled with cash expected to be generated by operations,
adequate to meet its foreseeable funding needs, including about $55
million budgeted for capital-related projects in 1997. The major items
budgeted are approximately $25 million to further expand the JLG
Equipment Services fleet of rental machines, $7 million to complete the
scissor lift plant expansion and $13 million to increase boom lift
manufacturing capacity. The Company intends to finance about $3 million
of these projects with borrowed capital.
The Company's exposure to product liability claims is discussed in the
Commitments and Contingencies note to the Consolidated Financial
Statements. Future results of operations, financial condition and
liquidity may be affected to the extent that the Company's ultimate
liability with respect to product liability varies from current
estimates.
OUTLOOK
This Outlook section and other parts of this Management's Discussion and
Analysis contain forward-looking information and involve risks and
uncertainties. Certain factors that could significantly impact expected
results are described in "Cautionary Statements Pursuant to the
Securities Litigation Reform Act" which is an exhibit to this Form 10-K.
Demand for the Company's products continues strong and the level of
unfilled orders remains high. Demand for the Company's new products and
from increased distribution globally should contribute to additional sales
growth. Rental fleet utilization also remains strong throughout the
United States and used equipment available for resale is scarce.
Additional manufacturing throughput, capacity and efficiency gains in
both the McConnellsburg plant and the new Bedford facility should improve
the Company's ability to satisfy customer demand and should improve
product profit margins. Product mix also affects gross margins and is
difficult to forecast. All of these factors bode well for another strong
year in fiscal 1997, provided there is no unanticipated softening in
customer demand.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of JLG Industries, Inc.
and its subsidiaries, are included herein as indicated below:
Consolidated Balance Sheets - July 31, 1996 and 1995
Consolidated Statements of Income - Years Ended July 31,
1996, 1995 and 1994
Consolidated Statements of Shareholders' Equity - Years Ended
July 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years Ended July 31,
1996, 1995 and 1994
Notes to the Consolidated Financial Statements - July 31,
1996
Report of Independent Auditors
JLG INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
July 31
1996 1995
ASSETS
Current Assets
Cash $30,438 $12,973
Accounts receivable, less allowance for
doubtful accounts of $1,215 in 1996 and
$1,325 in 1995 54,342 33,466
Inventories:
Finished goods 12,925 7,630
Work in process 13,972 13,357
Raw materials 12,536 12,459
39,433 33,446
Other current assets 4,649 4,683
Total Current Assets 128,862 84,568
Property, Plant and Equipment
Land and improvements 3,443 3,038
Buildings and improvements 14,119 11,524
Machinery and equipment 37,960 29,290
55,522 43,852
Less allowance for depreciation 21,428 19,067
34,094 24,785
Equipment Held for Rental 13,459 5,052
Other Assets 6,213 5,303
$182,628 $119,708
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $243 $243
Accounts payable 34,535 20,028
Accrued expenses 22,277 18,893
Total Current Liabilities 57,055 39,164
Long-Term Debt 1,951 2,260
Other Liabilities and Deferred Credits 10,414 9,854
Shareholders' Equity
Capital stock:
Authorized shares: 50,967 at $.20 par value
Issued and outstanding shares: 1996 -
43,382 shares; 1995 - 42,825 shares 8,676 8,565
Additional paid-in capital 7,879 4,411
Equity adjustment from translation (2,060) (1,799)
Retained earnings 98,713 57,253
Total Shareholders' Equity 113,208 68,430
$182,628 $119,708
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Fiscal Years Ended July 31
1996 1995 1994
Net Sales $413,407 $269,211 $176,443
Cost of sales 304,691 203,258 134,289
Gross Profit 108,716 65,953 42,154
Selling, general and
administrative expenses 44,038 33,254 27,147
Income from Operations 64,678 32,699 15,007
Other income (deductions):
Interest expense (293) (376) (380)
Miscellaneous, net 1,281 376 (24)
Income before Taxes 65,666 32,699 14,603
Income tax provision 23,558 11,941 5,067
Net Income $42,108 $20,758 $9,536
Net Income per Share $.95 $.49 $.23
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands except share data)
Equity
Additional Adjustment
Capital Stock Paid-in from Retained Treasury
Shares Par Value Capital Translation Earnings Stock
Balances at July 31, 1993 43,877 $8,775 $4,498 ($2,034) $27,700
Net income for the year 9,536
Dividends paid: $.0083 per share (352)
Aggregate translation adjustment, net
of deferred tax benefit of $1,032 135
Stock option transactions 203 41 282
Purchase of treasury stock (2,471) (3,500)
Contribution to employee benefit plan 297 204 421
Balances at July 31, 1994 41,906 8,816 4,984 (1,899) 36,884 (3,079)
Net income for the year 20,758
Dividends paid: $.0092 per share (389)
Aggregate translation adjustment, net
of deferred tax benefit of $837 100
Stock option transactions 553 111 985
Contribution to employee benefit plan 366 640 519
Retirement of treasury stock (362) (2,198) 2,560
Balances at July 31, 1995 42,825 8,565 4,411 (1,799) 57,253
Net income for the year 42,108
Dividends paid: $.015 per
share (648)
Aggregate translation adjustment, net
of deferred tax benefit of $737 (261)
Stock option transactions 557 111 3,468
Balances at July 31, 1996 43,382 $8,676 $7,879 ($2,060) $98,713
The accompanying notes are an integral part of these statements
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended July 31
1996 1995 1994
Operations
Net income $42,108 $20,758 $9,536
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 6,505 3,875 2,801
Provision for self-insured losses 2,938 2,800 3,950
Deferred income taxes 502 (596) (1,233)
Changes in operating assets and liabilities:
Accounts receivable (23,748) (7,522) (4,686)
Inventories (13,686) (9,867) (3,682)
Other current assets (278) 1,412 21
Accounts payable 16,680 5,251 3,728
Accrued expenses 3,076 4,328 2,659
Changes in equipment held for rental (9,873) (1,548) (1,455)
Changes in other assets and liabilities (3,406) (1,857) (601)
Cash provided by operations 20,818 17,034 11,038
Investments
Purchases of property, plant
and equipment (16,690) (11,035) (7,963)
Proceeds from sale of property, plant
and equipment 22 2,417 201
Proceeds from sale of Material Handling
Division 10,954
Cash used for investments (5,714) (8,618) (7,762)
Financing
Repayment of long-term debt (309) (5,081) (1,904)
Issuance of long-term debt 5,000
Payment of dividends (648) (389) (352)
Purchase of treasury stock (3,500)
Exercise of stock options 3,579 915 326
Stock issued for employee benefit plans 1,159 625
Cash provided by (used for) financing 2,622 (3,396) 195
Currency Adjustments
Effect of exchange rate changes on cash (261) (135) (231)
Cash
Net change in cash 17,465 4,885 3,240
Beginning balance 12,973 8,088 4,848
Ending balance $30,438 $12,973 $8,088
The accompanying notes are an integral part of these statements.
JLG INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except per share data)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
Principles of Consolidation and Statement Presentation
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Significant intercompany accounts and transactions
have been eliminated in consolidation. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying
notes. Actual results may differ from those estimates. Certain prior
year amounts in the consolidated financial statements have been
reclassified to conform to the presentation used for 1996.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents and classifies
such amounts as cash.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined using the LIFO (last-in, first-out) method. Inventories at
July 31, 1996 and 1995 would have been higher by $4,307 and $4,528,
respectively, had the Company used FIFO cost, which approximates current
cost, rather than LIFO cost for valuation of its inventories.
Property, Plant and Equipment and Equipment Held for Rental
Property, plant and equipment and equipment held for rental are stated at
cost, net of accumulated depreciation. Depreciation is computed using
the straight-line method, based on useful lives of 15 years for land
improvements, 10 to 20 years for buildings and improvements, three to 10
years for machinery and equipment and three to seven years for equipment
held for rental.
Income Taxes
Deferred income tax assets and liabilities arise from differences between
the tax basis of assets or liabilities and their reported amounts in the
financial statements. Deferred tax balances are determined by using the
tax rate expected to be in effect when the taxes are paid or refunds
received.
Capital Stock
In July 1996, the Company distributed a three-for-one stock split and in
April 1995 and October 1995, the Company distributed two-for-one stock
splits of the Company's then outstanding common stock. The splits were
effected by stock dividends. All share and per share data included in
this Annual Report have been restated to reflect the stock splits.
Product Development
The Company incurred product development and other engineering expenses
of $6,925, $5,542 and $4,373 in 1996, 1995 and 1994, respectively, which
were charged to expense as incurred.
Fair Value of Financial Instruments
The carrying values reported in the consolidated balance sheet for cash,
accounts receivable, accounts payable, other assets and accrued expenses
approximate their fair values. The fair value of the Company's long-term
debt is estimated to approximate the carrying amount reported in the
consolidated balance sheet based on current interest rates for similar
types of borrowing arrangements.
Stock-Based Compensation
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." This new standard encourages, but does not require,
companies to recognize compensation expense for grants of stock, stock
options and other equity instruments based on the fair-value method of
accounting. The Company is required to adopt SFAS No. 123 for its fiscal
year 1997. The Company expects to continue to follow the accounting
provisions of APB No. 25 for stock based compensation and to furnish the
pro-forma disclosure required under SFAS No. 123, if material.
Translation of Foreign Currencies
The financial statements of the Company's Australian operation are
measured in its local currency and then translated into U.S. dollars.
All balance sheet accounts have been translated using the current rate of
exchange at the balance sheet date. Results of operations have been
translated using the average rates prevailing throughout the year.
Translation gains or losses resulting from the changes in the exchange
rates from year to year are accumulated in a separate component of
shareholders' equity.
The financial statements of the Company's European operation are prepared
using the U.S. dollar as its functional currency. The transactions of
this operation that are denominated in foreign currencies have been
remeasured in U.S. dollars, and any resulting gain or loss is reported in
income.
Net Income per Share
Net income per share for 1996 is computed by dividing net income by the
weighted average number of common shares outstanding plus the incremental
shares that would have been outstanding upon the assumed exercise of
dilutive stock options. In 1995 and 1994, the dilutive effect of stock
option shares was immaterial, and therefore, not considered in the
calculation of net income per share.
INCOME TAXES
The income tax provision consisted of the following for the years ended
July 31:
1996 1995 1994
Current:
Federal $20,476 $10,641 $5,373
State 2,580 1,896 927
23,056 12,537 6,300
Deferred:
Federal 435 (483) (833)
State 67 (113) (400)
502 (596) (1,233)
$23,558 $11,941 $5,067
The Company made income tax payments of $24,435, $11,858, and $5,700 in
1996, 1995, and 1994, respectively.
The difference between the U.S. federal statutory income tax rate and the
Company's effective tax rate is as follows for the years ended July 31:
1996 1995 1994
Statutory U.S. federal income
tax rate 35% 35% 35%
State tax provision, net of
federal effect 3 4 4
Net tax effect of foreign
operations (2)
Other (2) (2) (2)
36% 37% 35%
Components of deferred tax assets and liabilities were as follows at July 31:
1996 1995
Future income tax benefits:
Contingent liabilities provisions $4,065 $3,811
Employee benefits 1,331 1,154
Translation adjustments 1,193 918
Inventory valuation provisions 649 887
Other 966 1,360
8,204 8,130
Deferred tax liabilities:
Depreciation and asset basis differences 1,165 925
Other 153 145
1,318 1,070
6,886 7,060
Less valuation allowance (222) (234)
Net deferred tax assets $6,664 $6,826
The current and long-term deferred tax asset amounts are included in
other current and other asset amounts on the consolidated balance sheets.
BANK CREDIT LINES AND LONG-TERM DEBT
The Company has available a $20 million unsecured bank revolving line of
credit with a term of two years, renewable annually, and at an interest
rate of prime or a spread over LIBOR. The facility further provides for
borrowings using bankers acceptances at prevailing discount rates. The
Company also has the option to convert outstanding borrowings under the
facility to an amortizing term loan with a repayment period of up to five
years, and at an interest rate based on the yield of U.S. Treasury
securities with the same maturity. There were no amounts outstanding
under this facility at July 31, 1996 and 1995.
Long-term debt was as follows at July 31:
1996 1995
Industrial revenue bonds due in 1999
with interest at 7% $1,000 $1,000
Industrial revenue mortgages due through
2004 with interest at 5.5% 601 677
State agency mortgages due through 2004
with interest averaging 3% 506 662
Other 87 164
2,194 2,503
Less current portion (243) (243)
$1,951 $2,260
The bank revolving line of credit requires the maintenance of certain
financial ratios. Borrowings aggregating $1.9 million under certain
long-term loans are secured by $9.4 million in assets of the Company.
Interest paid on all borrowings was $293, $378 and $461 in 1996 1995, and
1994, respectively.
The aggregate amounts of long-term debt outstanding at July 31, 1996
which will become due in 1997 through 2001 are: $243, $159, $1,142, $143
and $144, respectively.
EMPLOYEE BENEFIT PLANS
The Company's stock incentive plan has reserved 5,617 common shares that
may be awarded to key employees in the form of options to purchase
capital stock, or restricted shares. The option price is set by the
Company's Board of Directors. For all options currently outstanding, the
option price is the fair market value of the shares on their date of
grant.
The directors stock option plan provides for annual grants to each
outside director of a single option to purchase six thousand shares of
capital stock, providing the Company earned a net profit, before
extraordinary items, for the prior fiscal year. The option price shall
be equal to the shares' fair market value on their date of grant. An
aggregate of 1,968 shares of Common stock is authorized to be issued
under the plan.
Outstanding options and transactions involving the plans are summarized
as follows:
1996 1995
Outstanding options at the beginning of the year 1,911 2,077
Options granted ($3.30 to $14.75 per share) 275 455
Options cancelled ($1.12 to 2.93 per share) (8) (44)
Options exercised ($.43 to $5.64 per share) (473) (577)
Outstanding options at the end of the year 1,705 1,911
Exercisable options at the end of the year
($.43 to $5.64 per share) 728 526
The Company has a discretionary, defined-contribution retirement plan
covering all its eligible U.S. employees. The Company's policy is to
fund the pension cost as accrued. Plan assets are invested in money
market funds, government securities, mutual funds and the Company's
capital stock. The aggregate expense relating to these plans was $4,355,
$2,298 and $1,888 in 1996, 1995 and 1994, respectively.
ACCRUED EXPENSES
Components of accrued expenses were as follows at July 31:
1996 1995
Salaries, wages and related taxes $8,904 $6,609
Income taxes 2,111 2,718
Contingent liabilities, current portion 2,231 2,378
Employee benefits 1,491 1,563
Sales rebates 3,409 884
Other 4,131 4,741
$22,277 $18,893
INDUSTRY AND EXPORT DATA
The Company operates in one dominant industry segment - the manufacturing
and selling of mobile, hydraulically-operated equipment. The Company
manufactures its products in the U.S. and its customers are principally
U.S. based equipment rental firms. Additionally, its receivables from
these customers are generally not collateralized. Sales to one customer,
as a percent of total sales, were 13% for 1996 and 1995 and 12% for 1994.
Export sales, as a percent of total sales, were 24%, 18% and 16% of net
sales for 1996, 1995 and 1994, respectively.
COMMITMENTS AND CONTINGENCIES
The Company is a party to personal injury and property damage litigation
arising out of incidents involving the use of its products. The
Company's insurance program for fiscal year 1996 was comprised of a self-
insured retention of $5 million and catastrophic coverage of $20 million
in excess of the retention. Catastrophic coverage for fiscal year 1997
was increased to $25 million. The Company contracts with an independent
insurance firm to provide claims handling and adjustment services. The
Company's estimates with respect to claims are based on internal
evaluations of the merits of individual claims and the reserves assigned
by the Company's independent insurance carrier. The methods of making
such estimates and establishing the resulting accrued liability are
reviewed frequently, and any adjustments resulting therefrom are
reflected in current earnings. Claims are paid over varying periods,
which generally do not exceed five years. Accrued liabilities for future
claims are not discounted.
With respect to all outstanding claims of which the Company is aware,
accrued liabilities of $8.9 million and $8.4 million were established at
July 31, 1996 and 1995, respectively. While the Company's ultimate
liability may exceed or be less than the amounts accrued, the Company
believes that it is unlikely that it would experience losses that are
materially in excess of such estimated amounts. As of July 31, 1996 and
1995, there were no insurance recoverables or offset implications and
there were no claims by the Company being contested by insurers.
The Company leases equipment under operating leases expiring in various
years. These leases require the Company to pay all maintenance and
general operating costs. Future minimum lease payments are: $1,387,
$1,367, $143, $85 and $85 in 1997 through 2001, respectively. Rental
expense for all operating leases was $1,408, $906, and $955 in 1996, 1995
and 1994, respectively.
UNAUDITED QUARTERLY FINANCIAL INFORMATION
Unaudited financial information was as follows for the fiscal quarters
within the years ended July 31:
Gross Net Net Income
Net Sales Profit Income Per Share
1996
October 31 $86,701 $21,494 $7,780 $.18
January 31 87,558 22,458 8,268 .19
April 30 113,217 31,296 12,461 .28
July 31 125,931 33,468 13,599 .30
$413,407 $108,716 $42,108 $.95
1995
October 31 $53,724 $12,984 $3,863 $.09
January 31 52,175 13,449 3,752 .09
April 30 75,809 18,082 6,089 .14
July 31 87,503 21,438 7,054 .17
$269,211 $65,953 $20,758 $.49
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To The Board of Directors and Shareholders
JLG Industries, Inc.
McConnellsburg, Pennsylvania
We have audited the accompanying consolidated balance sheets of JLG
Industries, Inc. as of July 31, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended July 31, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
JLG Industries, Inc. at July 31, 1996 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years
in the period ended July 31, 1996 in conformity with generally accepted
accounting principles.
Baltimore, Maryland
September 3, 1996
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 relating to identification of
directors is incorporated herein by reference from pages 2 through 4 of
the Company's Proxy Statement under the caption "Election of Directors."
Identification of officers is presented in Item 1 of this report under
the caption "Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 relating to executive
compensation is hereby incorporated by reference from pages 3 through 4,
under the caption "Board of Directors," and pages 5 through 11, under the
caption "Executive Compensation," of the Company's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 relating to security ownership
of certain beneficial owners and management is hereby incorporated by
reference from pages 4 and 5 of the Company's Proxy Statement under the
caption "Voting Securities and Principal Holders." There is no required
disclosure regarding change in control.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13 relating to certain
relationships and related transactions is hereby incorporated by
reference from page 12 of the Company's Proxy Statement under the caption
"Certain Transactions."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) The following consolidated financial statements of the
registrant and its subsidiaries are included in Item 8.
Consolidated Balance Sheets - July 31, 1996 and 1995
Consolidated Statements of Income - Years ended July 31, 1996, 1995
and 1994
Consolidated Statements of Shareholders' Equity - Years ended
July 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years ended July 31, 1996,
1995 and 1994
Notes to Consolidated Financial Statements - July 31, 1996
The following consolidated financial schedule of the registrant and its
subsidiaries is included in Item 14(d):
Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and,
therefore, have been omitted.
(a) (3) Listing of Exhibits
Exhibit
Number Exhibit
3.1 Certificate of incorporation of JLG Industries, Inc., which
appears as Exhibit 1 (a) to the Company's Form 10
Registration Statement (File No. 0-8454 -- filed April 22,
1977), is hereby incorporated by reference.
3.2 Amendment to Section 5 of the Company's Articles of
Incorporation effective as of June 14, 1966.
3.3 Amendment to Section 5 of the Company's Articles of
Incorporation effective as of June 14, 1996.
3.4 Revised By-Laws of JLG Industries, Inc.
4.1 Trust Indenture between the Bedford County, Pennsylvania
Industrial Development Authority and the Fulton County
National Bank and Trust Company, as Trustee, which appears
as Exhibit B5 to the Company's Form 10-K (File No. 0-8454 --
filed October 24, 1979), is hereby incorporated by reference.
4.2 Installment Sale Agreement between Bedford County,
Pennsylvania Industrial Development Authority and JLG
Industries, Inc. which appears as Exhibit B6 to the
Company's Form 10-K (File No. 0-8454 -- filed October 24,
1979), is hereby incorporate by reference.
4.3 Agreement to disclose upon request.
10.1 Stock Redemption Agreement dated August 27, 1980, between
JLG Industries, Inc. and Paul K. Shockey, which appears as
Exhibit 25 to the Company's Form S-7 (Registration No. 2-
69194 -- filed September 18, 1980), is hereby incorporated
by reference.
10.2 Directors' Deferred Compensation Plan dated July 29, 1986,
which appears as Exhibit 10.5 to the Company's Form 10-K
(File No. 0-8454 -- filed October 28, 1986), is hereby
incorporated by reference.
10.3 JLG Industries, Inc. Stock Incentive Plan dated May 23, 1991
which appears as Exhibit 10.10 to the Company's Form 10-K
(File No. 0-8454 -- filed October 27, 1992), is hereby
incorporated by reference.
10.4 Credit Agreement dated December 21, 1989 among JLG
Industries, Inc., the First National Bank of Maryland, and
Philadelphia National Bank, which appears as Exhibit 4.1 to
the Company's 10-Q (File No. 0-8454 -- filed March 12,
1990), is hereby incorporated by reference.
10.5 First Modification Agreement, dated January 29, 1990 to the
Credit Agreement dated December 21, 1989 among JLG
Industries, Inc., the First National Bank of Maryland, and
Philadelphia National Bank, which appears as Exhibit 4.3 to
the Company's 10-Q (File No. 0-8454 -- filed March 12,
1990), is hereby incorporated by reference.
10.6 Second Modification Agreement, dated September 17, 1993 to
the Credit Agreement dated December 21, 1989 among JLG
Industries, Inc., the First National Bank of Maryland, and
Philadelphia National Bank, which appears as Exhibit 10.12
to the Company's 10-K (File No. 0-8454 -- filed October 20,
1993), is hereby incorporated by reference.
10.7 JLG Industries, Inc. Directors Stock Option Plan amended and
restated as of September 7, 1995 which appears as Exhibit
10.12 to the Company's 10- K (File No. 0-8454 -- filed
October 20, 1993), is hereby incorporated by reference.
10.8 JLG Industries, Inc. Supplemental Executive Retirement Plan
effective June 1, 1995
10.9 JLG Industries, Inc. Executive Retiree Medical Benefits Plan
effective June 1, 1995
10.10 JLG Industries, Inc. Executive Severance Plan effective June
1, 1995
22 Listing of subsidiaries.
23 Consent of independent auditors.
27 Financial Data Schedule
(b) The Company was not required to file Form 8-K pursuant to
requirements of such form in the fourth quarter of fiscal 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
JLG INDUSTRIES, INC.
(Registrant)
By: /s/ L. David Black Date: October 10, 1996
L. David Black, Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated.
By: /s/ Charles H. Diller, Jr. Date: October 10, 1996
Charles H. Diller, Jr., Executive Vice President,
Chief Financial Officer, Secretary and
Director
By: /s/ George R. Kempton Date: October 10, 1996
George R. Kempton, Director
By: /s/ Gerald Palmer Date: October 10, 1996
Gerald Palmer, Director
By: /s/ Stephen Rabinowitz Date: October 10, 1996
Stephen Rabinowitz, Director
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
JLG INDUSTRIES, INC. AND SUBSIDIARIES
(thousands of dollars)
Col. A Col. B Col. C Col. D Col. E
Additions
Balance at Charged to Charged to Balance at
Beginning of Costs and Other Accounts Deductions- End of
Classification Period Expenses Describe Describe(1)(2) Period
Year ended July 31, 1996:
Allowance for Doubtful
Accounts $1,325 107 (217) $1,215
Year ended July 31, 1995:
Allowance for Doubtful
Accounts $965 360 $1,325
Year ended July 31, 1994:
Allowance for Doubtful
Accounts $664 644 (343) $965
Note:
(1)Amounts written off and transferred to other accounts in the current year.
(2)Adjustment resulting from conversion of foreign currencies.