JLG
Industries, Inc.
1994 Annual
Report
JLG Industries, Inc.
JLG Drive
McConnellsburg, PA 17233
(717) 485-5161
Profile
JLG Industries, Inc. is a leading manufacturer, distributor and international
marketer of mobile elevating work platforms and truck-mounted materials-
handling equipment. Sales are made principally to independent distributors,
who sell and rent the Company's products to a broad customer base, which
includes users in the industrial, commercial, institutional and construction
markets.
The Company is headquartered in McConnellsburg, Pennsylvania and has
additional manufacturing facilities in Fort Littleton, Bedford and York,
Pennsylvania, and sales and service facilities in Scotland and Australia.
Our Mission
JLG Industries, Inc. is committed to being the provider of choice worldwide for
access and materials-handling equipment.
Our Vision
Through leadership, teamwork and dedication, we will provide world-class
excellence in quality, service and delivery to our distributors and customers;
opportunity and enrichment for our employees; and superior performance for our
shareholders.
Financial Highlights
(in thousands of dollars except per share data) %
Year ended July 31 1994 Change 1993 1992
Operations
Net sales $176,443 43 $123,034 $110,479
Income (loss) from operations 15,007 205 4,917 (4,404)
Net income (loss) 9,536 195 3,229 (3,038)
Cash provided by operations 11,364 11,416 7,649
Per Share
Net income (loss) $2.73 207 $.89 ($.85)
Cash dividends .10 .06
Book value 13.09 23 10.65 10.31
Performance Measures
Return on sales 5.4% 2.6% (2.7%)
Return on assets 10.4% 4.5% (4.1%)
Return on shareholders equity 20.9% 8.3% (8.2%)
Financial Position
Cash $8,088 67 $4,848 $4,940
Working capital 32,380 21 26,689 33,304
Capital expenditures, including
equipment held for rental 9,177 139 3,843 4,834
Total debt 7,578 69 4,471 12,553
Shareholders' equity 45,706 17 38,939 37,186
Total debt as a percent of
total capitalization 14% 10% 25%
Other Data
Employees 1,620 22 1,324 1,014
Shareholders of record 1,000 (17) 1,200 1,300
Shares outstanding 3,492 (4) 3,656 3,608
Product Overview
Product Groups
Elevating work platforms
Designed to place workers and their tools and materials easily and quickly in
elevated work areas that otherwise might have to be reached by ladders,
scaffolding, or other devices. These machines have work platforms mounted
either at the end of a telescoping and/or articulating boom or on top of a
scissor-type lifting mechanism, which in turn, are mounted on mobile, four-
wheel chassis. They are powered by electric motors or gasoline, diesel, or
propane engines. All elevating work platforms are designed for stable operation
in elevated positions, and self-propelled models travel on grades of up to 24
degrees.
Materials-handling products
Consist of cranes mounted on various commercial truck chassis and trailers.
Typically, these products are used to provide general lifting and positioning
capabilities around the job site, or to load and off-load materials from the
truck or trailer on which they are mounted.
Product Classes and Characteristics
Boom lifts
Especially useful for reaching over machinery and equipment mounted on floors,
and for reaching other elevated positions not easily approached by a vertical
lifting device. Various models are available with maximum platform heights of
up to 150 feet. The machine's telescoping and/or articulating boom may be
rotated 360 degrees in either direction, raised or lowered from vertical to
below horizontal, and extended while the work platform remains horizontal and
stable. They may be maneuvered forward or backward and steered in any direction
by the operator from the work platform, even while the boom is extended.
Markets
Marketed worldwide to a broad customer base, including users in the
construction, commercial and institutional markets, as well as to an expanding
industrial user base where electrically-powered machines are becoming the
standard due to environmental considerations such as fumes and noise.
Applications
Construction, especially non- residential and infrastructure; mechanical,
electrical, utility and painting contractors; manufacturing and industrial
facilities, including automotive and aircraft plants; petroleum and chemical
refineries; textile, food processing and fabricating plants; and entertainment
facilities.
Product Classes and Characteristics
Scissor lifts
Designed to provide larger work areas and generally to allow for heavier loads
than boom lifts. They may be maneuvered in a manner similar to boom lifts,
but the platform may be extended only vertically, except for an available
option that extends the deck horizontally up to six feet. Scissor lifts are
available in various models with maximum platform heights of up to 50 feet.
Markets
Sold throughout the world to construction, industrial, maintenance,
distribution, entertainment and institutional users.
Applications
The same applications as those listed above for boom lifts, except scissor
lifts are used where less maneuverability and height, but more workspace and
lifting capacity, are required. Warehousing and distribution center
applications are prominent, as are hotel, recreation and educational facility
uses.
Product Classes and Characteristics
Push-around lifts
Consist of a work platform attached to an aluminum mast that extends
vertically, which in turn is mounted on a steel base. Available in various one
or two-man models, these machines can be rolled in their retracted position
through standard door openings, yet reach platform heights of up to 36 feet
when fully extended.
Markets
Low cost, entry level product sold worldwide to a broad customer base,
including industrial, maintenance, entertainment and institutional users.
Applications
General commercial and institutional maintenance applications in factories,
distribution and retail centers, theaters, airports, public buildings, places
of worship and entertainment facilities.
Product Classes and Characteristics
Boom truck cranes
Designed to provide the flexibility of both a heavy lifting capacity and a long
reach. These machines are available in various models to lift loads of up to 23
tons, and with boom extension capabilities of up to 141 feet.
Markets
Marketed predominately in North and South America to construction and
maintenance contractors, utilities, municipalities and the transportation
industry.
Applications
Various construction-related uses, including pipeline installation, roofing
repair and replacement, sign placement and landscaping; facilities maintenance
by utility companies, municipalities and railroads; and general use in mines
and oil fields.
Product Classes and Characteristics
Trolley and articulating unloaders
Primarily used for the loading, delivery and offloading of construction
materials. These machines come in various models with lifting capacities from
4,000 to 33,000 pounds.
Markets
Primarily serve the North American construction materials industry.
Applications
Delivery of various building materials, including brick and block, wallboard
and precast concrete products.
To Our Shareholders
Our efforts over the last several years to strengthen your Company through a
series of strategic initiatives -- called our Journey to Excellence -- have
paid off handsomely. Our Journey, which started in 1991, is aimed at building
shareholder value through an unrelenting commitment to customer satisfaction,
improved manufacturing efficiencies and cost reductions in all facets of our
business. The implementation of these initiatives in the midst of the last
recession positioned JLG to capitalize on the rebounding domestic economy.
As a result of these efforts, we reported record sales and earnings for fiscal
1994. Net income for the year of $9.5 million, or $2.73 per share, was triple
the $3.2 million, or $.89 per share, earned a year earlier. Sales increased
43%, registering $176.4 million compared to $123.0 million in 1993.
Our record showing in fiscal 1994 did not go unnoticed by the investment
community. JLG's share price hit a record high during the year and the total
return to shareholders in the form of market appreciation and dividends
increased 134%. This performance compares favorably with a 26% increase for
our peer group of machinery manufacturers compiled by Media General Financial
Services.
Journey To Excellence Advances
We are guided in our Journey to Excellence by the six fundamental tenets that
we described in last year's annual report. Significant progress was made in all
six during fiscal 1994, as summarized below and discussed in more detail in the
next section of this report.
We are customer-focused, customer-obsessed and customer-driven. At the
core of all of our strategic initiatives is the objective of delighting our
customers. The results are evident -- we have increased market share in our
major product classes three years in a row.
Our customer base continues to expand. Internationally, we service more
nations than ever before. Domestically, we have continued to expand the market
reach of our distribution network with new product offerings and customers in
new locales.
New products continue to roll out. We added models, as well as enhanced
features, to each of our five product classes in fiscal 1994. New and enhanced
products continue to add substantially to our sales and earnings growth, with
25% of fiscal 1994 machine sales coming from products introduced over the past
two years.
We continue to trim manufacturing costs and cycle times. We are
determined to remove costs from our manufacturing processes through such
initiatives as continuous flow manufacturing and just-in-time delivery of
materials and parts to the production lines. Our manufacturing facilities now
turn inventories at a rate of nearly six times a year, compared to under two
times three years ago. And over that same period, our production cycle times
have improved an average of nearly 40%.
We are creating a working environment that fosters and inspires change.
This new JLG culture includes cross-functional training, as well as a team
approach to continuous improvement in all facets of our business. We are also
encouraging teamwork through our pay programs, where all eligible employees are
paid an incentive bonus based on the performance of the Company.
Combined, these initiatives promote improved quality in our products,
services and everything that we do -- especially in our dealings with
customers, distributors and suppliers.
Not Resting on Our Laurels
We view our progress to date as just the starting point. Continuous improvement
in every aspect of our business is our over-riding goal and remains the focal
point of our plans for fiscal 1995. We intend to continue expanding our
domestic market position, while increasing our global customer base through
increased distribution and unparalleled customer service. We plan to maintain
our momentum in designing market-responsive products that set industry
standards in technology and reliability.
Cost reduction efforts will continue. Although many of the tasks we targeted
three years ago are essentially complete, much more can be done. For example,
in fiscal 1995 we will complete the installation of new paint facilities and
install additional machine tools to further improve production flow. In
addition to reducing costs, these improvements will provide increased
productive capacity without a significant investment in bricks and mortar.
Directors Appointed
In September, 1994, Stephen Rabinowitz and Gerald Palmer were appointed to the
Board of Directors. Mr. Rabinowitz is President and CEO of General Cable
Corporation, a leading manufacturer of insulated wire and cable products
serving the electrical, telecommunications, electronics and consumer products
industries. Mr. Palmer is Vice President, Technical Services Division of
Caterpillar, Inc., the world's largest manufacturer of earthmoving and
construction equipment.
In addition to these appointments, Thomas C. Wajnert, Chairman of the Board and
CEO of AT&T Capital Corporation has been nominated for election to the Board at
the annual shareholders' meeting in November. AT&T Capital is one of the
world's leading diversified equipment leasing and finance companies. We are
fortunate to have three gentlemen with such strong industrial backgrounds and
general management experience join JLG to help further the Company's growth.
Tribute to Retiring Directors
Four directors who have served the Company well for many years are retiring in
November. H. Lyle Duffey, J. Robert Fries, E. Mason Hendrickson and Lawrence
G. Wigbels have contributed a combined 76 years of service to the Company as
members of our Board. They each played a major role in the Company's growth
and success, and we thank each of them for their contributions and dedicated
service.
Positioned for the Future
We approach the future determined to take advantage of the opportunities we see
unfolding as the world's economies improve. We have worked hard the past
several years to position the Company to capitalize on that economic growth
through new product introductions, increased distribution, cost reductions,
improved quality and superior customer service.
Based on these efforts and our aggressive business plan for the coming year, we
expect fiscal 1995 to be another strong year. This expectation is supported by
the projected growth in the domestic economy, especially the commercial
construction and industrial sectors, which are significant users of our
products. The economies in Europe and the Pacific Rim are showing signs of
recovery, which should also contribute to sales and earnings in fiscal 1995.
We have made substantial progress in our Journey to Excellence, and we are
continuing onward. We encourage you to read the next section of the report
which discusses in more detail our progress, as well as addresses in a question
and answer format some of the issues the Company faces as it continues on its
Journey.
Finally, fiscal 1994's performance was a tribute to our employees. They
responded enthusiastically in support of JLG's goals and initiatives, and we
salute them for their tremendous efforts. We thank our Board of Directors for
their valuable counsel and contribution to our success this past year. We would
also like to express our appreciation to our investors, customers and suppliers
for their continued support.
Sincerely,
L. David Black
Chairman of the Board,
President and Chief Executive Officer
September 29, 1994
PICTURE
The Company's officers, left to right: Tom Singer, Ray Treml, Sam Swope, Mike
Swartz, Larry Weber, Craig Paylor, Ron Koontz, David Black, Rao Bollimpalli,
Ray Mitchell and Chuck Diller.
Our Ongoing Journey to Excellence
JLG began its Journey to Excellence three years ago and much has been
accomplished over that period. In this Journey, JLG has focused on delighting
its customers, expanding the markets for its products, reducing costs and
fostering a teamwork approach to achieve results.
This section of the report reviews our progress during fiscal 1994 and includes
management's responses to questions frequently asked by analysts and investors
concerning JLG s future plans and strategies.
Delighting Customers
At the center of all JLG initiatives and the first guiding tenet in our Journey
to Excellence is delighting our customers.
An essential element in focusing on our customers' needs is to receive and
evaluate feedback from them in order to coordinate our common goals. JLG's
Distributor Advisory Council, organized two years ago, serves as an excellent
resource for gathering and acting on information that can improve our mutual
effectiveness. During the year, our combined efforts resulted in improving the
Company's parts and service function, incorporating customer recommendations
in the product development process and enhancing marketing support programs.
JLG shows its concern for customers in other important ways as well. Ongoing
surveys are aimed at keeping the Company attuned to customer attitudes and
evolving trends in the marketplace.
Training is vital to better customer service. Cooperative programs have been
designed to assist distributors in selling and servicing JLG products. To
further promote this effort, a new sales and service training facility will
open in fiscal 1995 at the Company's McConnellsburg headquarters.
Fast delivery of service parts also enhances customer service. In fiscal 1994,
the Company opened a dedicated service parts warehouse to expedite the delivery
of service parts to customers. Additionally, in fiscal 1995 our distributors
will begin to be linked electronically to JLG, increasing the speed for
placing and filling parts orders.
JLG Equipment Services is also making an important contribution to customer
satisfaction, while at the same time providing a contribution to sales and
profits. This business unit operates a rental fleet of JLG equipment used to
support distributors with limited financial resources, or to help others
meet the demand of large one-time projects. This benefits both the distributor
and JLG by protecting and building market share. This operation also
refurbishes used JLG equipment for its own use or for customers as a lower
priced, entry-level product for highly competitive market areas.
Question
JLG's results have continually improved in recent years. How does management
plan to sustain the Company's growth in revenues and market share?
Response
JLG expects to continue capitalizing on the growth in the North American
economy, particularly the buoyant commercial construction and industrial
sectors. The Company also hopes to benefit from renewed economic strength in
Europe and Japan, which were growing markets for JLG prior to their economic
recessions. Additionally, the Company is creating a presence in the new
emerging markets of Latin America, and continues to expand distribution in the
Asia-Pacific countries. New products will also play a key role. As in the
past, JLG has many new products in the development pipeline and management
expects them to make a sizable contribution to sales growth and to help sustain
market share gains. Finally, JLG will continue striving to delight its
customers with both the quality and reliability of its products, as well as
with the level of service the Company provides. Management believes that
satisfying customers serves as the best formula for increasing sales and
gaining market share.
JLG's annual distributor conference provides an excellent forum for receiving
and evaluating feedback from customers. Shown at the controls of a new product
are Joe Schmelzer of Equipment, Inc. and John Hugg of Clarklift of Arkansas.
JLG employees Steve Seiders, far left, and Wayne MacDonald observe the
proceedings, while Bill Dovey conducts the demonstration.
Lower left, a 30-foot articulating boom lift.
PICTURE
Customer Base Expanding And Improving
Expanding and improving the customer base continues to be a major initiative in
JLG's strategic business plan and is the second guiding tenet in our Journey to
Excellence.
The Company is broadening its distribution in various industrial sectors, which
is led by new products that are specifically designed for a wide range of
customer applications. A prime example is our electric-powered, articulating
boom lift line. Consisting of six models with platform heights from 30 feet to
45 feet, they are used in many indoor industrial applications. Also, the
Company is continually strengthening its coverage in the growing regions of the
country where construction and industrial expansion is taking place.
JLG redirected its approach to global markets in 1992, moving to close
manufacturing plants in Europe and Australia and consolidating production in
more efficient U.S. operations. The timing for this action was appropriate, as
those economies subsequently went into a deep recession and are only now
showing signs of recovery.
Although JLG no longer manufactures overseas, the Company maintains a strong
sales and service presence there. Expanding international markets remains a
high priority, as evidenced by new distributor appointments during the year in
South America and several growing Asia-Pacific countries. In addition, JLG has
a strong distribution base in Japan through Kyokuto Kaihatsu Kogyo Co., Ltd.,
which complements our long-standing relationship with Toyoda Automatic Loom
Works, Ltd.
Through its efforts to expand and improve its global distribution base, JLG
continually builds on its position as a leading producer of construction and
industrial equipment. The Company's market share numbers bear this out, as JLG
has increased its market position in its major product classes for three years
in a row.
Question
JLG has been affected by economic cycles in the past. What is the Company doing
to mitigate the impact of a future downturn?
Response
Like most other capital goods manufacturers, JLG's performance has suffered in
past economic recessions. To help mitigate the effects of future down cycles,
management is focusing on counter-cyclical growth opportunities. For example,
domestic and international economies tend to not be on the same cycles;
therefore, penetration of global markets should help offset domestic declines.
The U.S. market itself has counter-cyclical elements. Certain regions of the
country can be growing while others are in recession. Construction and
industrial growth do not necessarily run parallel. That is why the Company
continues to expand distribution geographically and to place emphasis on
developing distribution and products aimed at the industrial customer.
Initiatives to remove costs and lower cycle times in our production processes
also serve as an important buffer to an economic downturn. These actions to
lower JLG's break-even point and to strengthen its balance sheet will be
important factors in weathering a future recession.
Delivering pre-painted parts to the final assembly line reduces product costs
and significantly lowers production cycle times, speeding delivery to the
customer. Danny Diehl, left, Brian Ramsey, top, Jeff Reed, center, and Larry
DeShong are shown assembling new electric boom machines at the Company's
McConnellsburg plant.
Below, a 5,000 pound capacity unloader; right, a 14-foot mini-scissor lift.
PICTURE
New and Innovative Products Fuel Sales Growth
In fiscal 1994, JLG continued to expand and strengthen the broadest product
offerings in the industry. Product innovation has always been one of JLG's
hallmarks and remains the third guiding tenet in our Journey to Excellence.
In developing new products, the focus is on improving the reliability and
performance of our machines. One of the objectives in meeting that goal is
developing families of products featuring common parts and a modular design.
This pays off in simplified manufacturing processes and reduced production
cycle times.
Additionally, it permits JLG to carry fewer parts in inventory, and benefits
our distributors because their after-sales service support is easier.
JLG's Integrated Product Development process also positions the Company to be
more responsive to the market by providing a systematic approach for gathering
input from marketing, engineering, manufacturing and our customers for use in
the design and development of products. The IPD team approach is helping the
Company to better match features and benefits precisely to the customer's
requirements, and then determine the best way to meet those requirements at the
front end of the product development process. This allows the Company to bring
a better machine to market, to improve the "manufacturability" and reliability
of its products and to eliminate costly delays in new product introductions.
A total of 18 new or improved products were introduced in fiscal 1994. They
include the new series of electric-powered boom lifts that reduce emissions and
provide low noise levels in indoor applications; rough terrain scissor lifts
with greater maneuverability and higher platform heights; new push-around lifts
with improved features and benefits; boom truck cranes with enhanced features
and greater lifting capacities; and new materials-handling unloaders that
operate faster, while accommodating larger payloads.
Rapid market acceptance of the new electric boom lifts and the continued
success of electric scissor products indicate that electricity is becoming a
more popular power source for elevating work platforms, making them ideal for
use indoors in shopping malls, warehouses, industrial plants and schools.
Extended battery life, optimizing working time and facilitating recharging
during off hours, Underwriters Laboratories certification and improved
ergonomics further enhance the value of JLG's electric boom lifts.
Question
JLG has launched a parade of new products in the past three years. How does the
Company intend to keep up that momentum?
Response
JLG consistently dedicates a significant amount of its resources to product
development, even during its lean years. New products are the Company's
lifeblood and have been a key contributor to JLG's market share gains and
revenue growth.
At present, in addition to its internal efforts, JLG is working with
Pennsylvania State University and West Virginia University on a number of
projects involving innovative technology aimed at improving product
performance, safety and reliability. JLG expects again to dedicate
significant resources to new product development in fiscal 1995. The Company
anticipates announcing several new products, encompassing each of its major
product classes. In fact, research and development expenditures are expected
to be at a record level in fiscal 1995.
Computer-aided design is used extensively to improve the speed and efficiency
of the product development process. At the Company's York facility, Tom Halsted
and Mike Hirschhorn review the proposed design of a part for the new 28-ton
boom truck crane.
Insert above, a 40-foot articulating boom lift; far left, a 20-foot electric
scissor lift.
PICTURE
Cost Reduction Efforts Bring Results
Reducing manufacturing cycle times and lowering production costs constitute the
fourth tenet in the Journey to Excellence. Three years of positive momentum in
implementing continuous flow manufacturing is bringing measureable results to
three critical improvement priorities cost savings, higher product throughput,
and better asset utilization.
Continuous flow manufacturing arranges production processes to facilitate a
steady flow of components to final assembly, inventory is stocked at point-of-
use and is ordered and replaced only as it is used, and customer orders are
filled in a smooth, timely basis. During fiscal 1994, JLG acquired key pieces
of manufacturing equipment to upgrade or automate various processes in that
flow. The major addition was a more efficient paint facility for the
McConnellsburg factory. When fully implemented in December, 1994, this facility
will increase manufacturing capacity significantly by eliminating an existing
production bottleneck, as well as improve paint finish quality.
JLG continues to expand the just-in-time delivery and point-of-use storage of
materials. Partnering with suppliers to achieve just-in-time arrival of
material and components is paying off in a lower product cost, improved quality
and reduced inventory levels. Supplier partners receive preferred status in
return for quality assurance, favorable pricing, and deliveries timed to meet
JLG's production schedules.
The net effect of these various steps is more efficient production, increased
manufacturing throughput, enhanced quality, improved product margins, and a
lower investment in inventories. Key improvement measurements indicate that
progress is being made. For example, cycle times for completing customer orders
were lowered by an average of 10 days during fiscal 1994, leading to higher
inventory turns and better asset utilization.
Two years ago, management set a target of reducing operating costs by $8
million on an annualized basis by the end of fiscal 1994. The Company is happy
to report that it significantly exceeded that target. Continuous improvement
initiatives over that two year period reduced our operating costs by $9.8
million on an annualized basis.
Combined, these savings are providing significant financial benefit to the
Company through improved cash flow and a stronger balance sheet. Over the past
two years, JLG generated nearly $23 million of cash from operations, which was
used to repay debt and fund capital expenditures of $13 million.
Other indicators of JLG's strong balance sheet at the end of fiscal 1994 were
working capital of $32 million, including $8 million in cash, and total debt of
less than $8 million. Our total debt as a percent of total capitalization was a
low 14% at the end of the fiscal year, affording the Company considerable
borrowing capacity.
Question
Strong economies and ambitious growth plans suggest the need for more capacity.
Can JLG satisfy its market growth targets without a major investment in bricks
and mortar?
Response
Over the past two years, the Company has increased plant capacity substantially
with the help of continuous flow manufacturing initiatives. That effort is
continuing in fiscal 1995 with the completion of new paint lines at
McConnellsburg and Bedford. Through this investment, the Company should add
substantial additional capacity to its McConnellsburg and Bedford factories.
Programs to increase productivity and free-up manufacturing space are a long
way from being finished. Continuous improvement is a never-ending process. JLG
is pursuing additional opportunities to free-up more factory space through the
automation of machining and welding operations, just-in-time delivery of
materials, and the removal of waste in other process steps.
At the Company's Bedford plant, Lenny Barefoot operates a robotic welder.
Taking the initiative, Lenny modified the programming for this machine's major
process, resulting in a 54% cycle time improvement. Lenny s action is just one
example of how employees are involved in continuous improvement.
Far left, a 66-foot telescoping boom lift; left, an AccessMaster push-around
lift.
PICTURE
Success in Teamwork and Quality
The past two years clearly show the benefits of bringing employees together to
tackle problems and to grow the business. Teamwork and quality combine to form
the last two tenets in the Journey to Excellence.
The benefits of teamwork are being experienced throughout the organization.
Strategic planning teams are setting the course for the Journey to Excellence
by identifying the primary initiatives and critical programs needed for
success. Cross-functional planning teams combine people from marketing,
manufacturing, engineering and finance in common objectives. Results from the
Integrated Product Development team demonstrate the value of experienced people
working together.
Continuous improvement teams are finding ways to remove constraints from the
continuous flow process by modifying and installing new systems, procedures and
equipment to improve operations. The Company is gaining the benefit of
involving the people who build the product every day in analyzing problems and
formulating solutions. Some 20 teams are now in action, identifying cost
reduction and productivity enhancement opportunities.
Two vital components in raising teamwork to higher levels of effectiveness are
communication and training. Both are being emphasized as team programs unfold.
Training activities cover new interacting skills necessary in a team
environment, instruction in operating new machine tools, and cross-training
employees to broaden their skills and enable them to perform more than one job.
Additionally, the Company's fitness-for-use philosophy states that every
employee is responsible for what he or she does on the job. As an integral part
of the teamwork concept, this says that each employee will contribute to the
success of his fellow employee.
Obtaining ISO 9000 certification is a major Company goal for fiscal 1995 and
further illustrates JLG's focus on quality. ISO 9000 is a set of rules that
establish good business practices in commercial enterprises around the world.
ISO teams currently are preparing each Company location for certification.
In meeting these standards, JLG is demonstrating its commitment to quality. ISO
standards require a high level of efficiency in every operation from processing
customer orders to filling them, and then to delivering superior service
throughout the product life cycle. In total, these key initiatives and the
various programs in place to accomplish them, constitute an integrated roadmap
for JLG's ongoing Journey to Excellence.
Question
The bottom line for shareholders is increased value from their investment. How
is the Company focusing on this objective?
Response
An integral part of the Company's vision is to provide superior performance for
shareholders. Through the Journey to Excellence, JLG is firmly committed to
building shareholder value by reducing costs, improving manufacturing
efficiencies and expanding its markets.
JLG's directors and employees have a sizable stake in the success of the
Company. As a group, they hold approximately 14 percent of the outstanding
shares, providing a strong incentive to grow the business and increase
shareholder value.
The Journey to Excellence is JLG's roadmap in the pursuit of ways to improve
every aspect of the Company's business. This applies to manufacturing, product
development, product quality, sales, finance, planning, and overall management.
Although well along our Journey, there is no end to opportunities for
improvement. With each improvement, comes value to the shareholders.
At JLG's Fort Littleton facility, Ron Whitsel, top, Steve Detwiler, right and
Kevin Seibert are readying a push-around lift for shipment. Through teamwork
and their improvement initiatives, they were able to reduce the time and effort
required to install decals oncompleted machines.
Above, three products in the new electric boom lift family; far left, a
22 1/2-ton boom truck crane.
PICTURE
Financial Review
17 Report of Management
18 Eleven-Year Financial Summary
20 Management's Discussion and Analysis
22 Consolidated Balance Sheets
23 Consolidated Statements of Operations and Shareholders' Equity
24 Consolidated Statements of Cash Flows
25 Notes to Consolidated Financial Statements
31 Report of Ernst & Young LLP, Independent Auditors
JLG Industries, Inc.
Report of Management
The consolidated financial statements of JLG Industries, Inc. in this report
were prepared by its management, which is responsible for their content. In
management's opinion, the financial statements reflect amounts based upon its
best estimates and informed judgements and present fairly the financial
position, results of operations and cash flows of the Company in conformity
with generally accepted accounting principles.
The Company maintains a system of internal accounting controls and procedures
which are intended, consistent with justifiable cost, to provide reasonable
assurance that transactions are executed as authorized, that they are properly
recorded to produce reliable financial records, and that accountability for
assets is maintained. The accounting controls and procedures are supported by
careful selection and training of personnel, examinations by an internal
auditor and a continuing management commitment to the integrity of the internal
control system.
The financial statements have been audited to the extent required by generally
accepted auditing standards by Ernst & Young LLP, independent auditors. The
independent auditors have evaluated the Company's internal control structure
and performed tests of procedures and accounting records in connection with the
issuance of their report on the fairness of the financial statements.
The Board of Directors has appointed an Audit Committee composed entirely of
directors who are not employees of the Company. The Audit Committee meets with
representatives of management, the internal auditor and the independent
auditors both separately and jointly. Its functions include recommending the
selection of independent auditors; conferring with the independent auditors and
reviewing the scope and fee of the prospective annual audit and the results of
their work; reviewing the adequacy of the Company's internal audit function, as
well as the accounting and financial controls and procedures; and approving the
nature and scope of nonaudit services performed by the independent auditors.
L. David Black
Chairman of the Board,
President and Chief Executive Officer
Charles H. Diller, Jr.
Executive Vice President
and Chief Financial Officer
September 29, 1994
Eleven-year Financial Summary (in thousands of dollars except per share data)
Year ended July 31
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
Results of Operations
Net sales $176,443 $123,034 $110,479 $94,439 $149,281 $121,330 $81,539 $59,827 $59,323 $49,696 $38,745
Gross profit 42,154 28,240 22,542 20,113 37,767 32,384 23,598 17,075 16,347 13,625 9,484
Selling, general
and administrative
expenses (27,147) (23,323) (22,024) (21,520) (21,834) (18,974) (14,117) (11,946) (12,910) (11,030) (10,694)
Restructuring costs (4,922) (2,781) (1,015)
Income (loss) from
operations 15,007 4,917 (4,404) (4,188) 14,918 13,410 9,481 5,129 3,437 2,595 (1,210)
Interest expense (380) (458) (1,218) (1,467) (2,344) (1,375) (925) (1,039) (1,750) (1,562) (1,741)
Gain (loss) from
discontinued or sold
operations 474 (3,500)
Other income
(expense), net (24) 180 (149) (707) 858 399 485 484 51 (15) 245
Income (loss) before
taxes and extraordinary
credit 14,603 4,639 (5,771) (6,362) 13,432 12,434 9,041 5,048 1,738 1,018 (6,206)
Extraordinary
credit 1,063 560
Income tax (provision)
benefit (5,067) (1,410) 2,733 3,122 (4,950) (4,882) (3,766) (3,008) (1,063) (55) 891
Net income
(loss) 9,536 3,229 (3,038) (3,240) 8,482 7,552 5,275 2,040 1,738 1,523 (5,315)
Per Share Data
Net income
(loss) 2.73 .89 (.85) (.91) 2.42 2.16 1.53 .60 .51 .45 (1.58)
Cash dividends .10 .06 .25 .20 .15 .10
Shares used in computation
(in thousands) 3,496 3,636 3,590 3,545 3,510 3,502 3,444 3,404 3,398 3,383 3,369
Performance Measures
Return on
sales 5.4% 2.6% (2.7%) (3.4%) 5.7% 6.2% 6.5% 3.4% 2.9% 3.1% (13.7%)
Return on
assets 10.4% 4.5% (4.1%) (4.3%) 9.8% 10.7% 9.1% 4.8% 4.1% 3.7% (13.8%)
Return on shareholders'
equity 20.9% 8.3% (8.2%) (8.4%) 19.2% 21.4% 18.5% 9.0% 8.5% 8.3% (31.8%)
Financial Position
Working
capital 32,380 26,689 33,304 36,468 47,289 34,745 27,378 16,895 20,070 15,525 12,605
Current assets as a
percent of current
liabilities 208% 217% 268% 266% 304% 254% 250% 216% 369% 226% 206%
Property, plant and equipment,
net 19,344 13,877 13,511 13,726 14,402 11,343 8,677 7,975 8,422 8,397 9,027
Total assets 91,634 72,518 73,785 74,861 86,741 70,570 57,692 42,431 42,478 40,775 38,385
Total debt 7,578 4,471 12,553 14,175 18,404 13,799 11,805 5,513 12,238 12,727 14,903
Total debt as a
percent of total
capitalization 14% 10% 25% 27% 29% 28% 29% 20% 37% 41% 47%
Shareholders'
equity 45,706 38,939 37,186 38,596 44,109 35,331 28,465 22,582 20,512 18,438 16,738
Book value per
share 13.09 10.65 10.31 10.83 12.53 10.07 8.16 6.63 6.02 5.41 4.90
Other Data
Product development
expenditures 4,373 3,385 3,628 3,430 3,520 2,904 2,910 2,010 2,313 1,646 1,670
Capital expenditures,
including equipment
held for
rental 9,177 3,843 4,834 2,171 4,615 2,617 1,138 2,109 3,975 1,721 2,026
Depreciation and
amortization 2,801 2,500 2,569 1,953 1,771 1,609 1,968 1,830 2,266 2,162 2,182
Employees 1,620 1,324 1,014 1,182 1,565 1,455 972 804 600 797 618
This summary should be read in conjunction with Management's Discussion and
Analysis.
JLG Industries, Inc.
Management's Discussion and Analysis
Results of Operations
The information given below is intended to assist in understanding the
Company's results of operations and financial condition, which are reflected in
the consolidated financial statements (pages 22 through 24) as of and for
fiscal years ended July 31. As a manufacturer of capital goods, the Company is
primarily dependent upon sales to the construction and industrial sectors of
the economy. Business in these sectors, particularly the construction sector,
tends to be cyclical; thus, demand for the Company's products, and ultimately
the Company's financial performance and cash flows, tends to fluctuate in
response to business cycles within these sectors.
Comparison of fiscal 1994 and 1993
Net sales for 1994 were $176.4 million, an increase of $53.4 million, or 43%
from the previous year. The growth in revenues was due to increased demand in
North American markets, where sales in all product groups significantly
exceeded 1993 levels. New and enhanced products also fueled the increased
demand, as products introduced during the last two years accounted for 25% of
1994 machine sales. Increased domestic unit sales more than offset weakness
in the Company's overseas markets and generally lower selling prices due to
continuing competitive pricing pressures. Management does not believe that any
single customer is material to the Company's business on an ongoing basis.
However, the level of sales to a particular customer may vary significantly
from year to year. In fiscal 1994, sales to one customer amounted to 12% of
revenues.
Net income for 1994 was $9.5 million, an increase of $6.3 million,
or 195% over 1993. The increase was principally the result of the higher sales
volume and cost reductions.
Gross profit, as a percent of net sales, increased to 24% in 1994 from 23% the
previous year, primarily as a result of cost reductions. The positive effects
of these improvements were partially offset by increases in certain overhead
expenses, higher personnel costs, and the impact of a shift in product mix and
competitive pricing pressures.
Selling, general and administrative expenses increased 16%, or $3.8 million
compared to 1993, but decreased as a percent of sales to 15% from 19%. Major
factors contributing to the expenditure increase were higher spending for
research and development, commissions and other personnel related expenses, and
an increase in the provision for doubtful accounts.
The effective tax rate was 35% in 1994. This compares to 30% in 1993, which
benefited from favorable tax adjustments.
Comparison of fiscal 1993 and 1992
Net sales for 1993 were $123.0 million, an increase of $12.6 million, or 11%
from the previous year. Increased unit sales in North America more than offset
decreased sales in Europe and Australia and generally lower selling prices due
to competitive pressures. New and redesigned products introduced in 1993 and
1992 provided 18% of the 1993 sales volume.
Net income for 1993 was $3.2 million, an improvement of $6.2 million from the
$3.0 million loss reported for 1992. The 1992 loss included restructuring costs
of $2 million, net of tax benefits and credits. The positive effects of the
sales volume increase, coupled with an improved gross profit percentage, were
the primary factors that led to the improvement.
Gross profit, as a percent of net sales, increased to 23% in 1993 from 20% the
previous year. The positive effects of cost improvements and a more favorable
geographic sales mix were partially offset by a less favorable product mix and
increased pricing pressures. In addition, gross profit was favorably affected
by decreases in inventory valuation provisions, product liability expenses and
warranty costs when comparing 1993 to 1992.
Selling, general and administrative expenses increased $1.3 million, or 6% from
1992, but decreased as a percent of sales to 19% from 20% the prior year.
Higher salaries and related costs in the U.S., costs related to implementing
the continuous flow manufacturing process and a full year s expenses for the
aluminum products operation were partially offset by lower expenses in the
foreign operations.
The Company incurred restructuring costs in 1992 of $4.9 million related to the
cessation of manufacturing overseas.
Interest expense decreased $760,000, or 62% in 1993 compared to the prior year
primarily due to the repayment of debt. Miscellaneous income was $180,000 in
1993, an improvement of $329,000 from the miscellaneous losses recorded in
1992. Currency gains in 1993, compared to losses in 1992, and increased
investment income in 1993 were the primary factors in the increase.
The effective tax rate was 30% in 1993, which was lower than the federal
statutory rate of 34% due to a decrease in estimated taxes payable. The
effective tax benefit rate was 47% in 1992 and was higher than the federal
statutory rate primarily due to realizing a tax benefit in 1992 related to
prior years' foreign losses.
Liquidity and Sources of Capital
Current assets as a percent of current liabilities were 208% at July 31, 1994,
compared to 217% and 268% on that date in 1993 and 1992, respectively. Working
capital was $32.4 million at July 31, 1994, compared to $26.7 million and $33.3
million at July 31, 1993 and 1992, respectively. The higher level of working
capital in 1994 compared to 1993 reflects an increase in receivables and
inventories to support the higher sales level. Decreases in the ratio of
current assets to current liabilities and the level of working capital in 1993
compared to 1992 were due to the conversion of current assets to cash in 1993,
which was largely used to repay debt and to fund capital expenditures.
The Company borrowed long-term funds in 1994 to purchase treasury shares and
to refinance existing long-term debt at a lower interest rate. As a result of
the additional borrowings, total debt as a percent of total capitalization
increased to 14% from 10% in 1993, which was in turn lower than the 25% in 1992
due to the repayments of debt out of cash generated by operations in 1993.
At July 31, 1994, the Company had unused lines of credit totalling $11 million
and cash balances of $8.1 million. The Company considers these resources,
coupled with cash expected to be generated by operations, adequate to fund its
anticipated fiscal 1995 working capital needs and estimated capital
expenditures of $12 million.
The Company's exposure to product liability claims and its contingent liability
relative to the support of equipment financing for its distributors are
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 those programs varies from current estimates.
Consolidated Balance Sheets
July 31
(in thousands except per share data) 1994 1993
Assets
Current Assets
Cash $8,088 $4,848
Accounts receivable,
less allowance for doubtful
accounts of $965 in 1994 and
$664 in 1993 25,750 20,869
Inventories:
Finished goods 4,968 4,166
Work in process 9,242 8,496
Raw materials 9,012 6,755
23,222 19,417
Future income tax benefits 3,531 2,422
Other current assets 1,871 1,873
Total Current Assets 62,462 49,429
Property, Plant and Equipment
Land and improvements 2,033 1,918
Buildings and improvements 12,750 12,050
Machinery and equipment 22,924 16,863
37,707 30,831
Less allowance for depreciation 18,363 16,954
19,344 13,877
Equipment Held for Rental, Net 4,190 3,292
Future Income Tax Benefits 2,894 3,047
Other Assets 2,744 2,873
$91,634 $72,518
Liabilities and Shareholders' Equity
Current Liabilities
Current portion of
long-term debt $ 1,301 $ 1,299
Accounts payable 14,770 11,030
Accrued expenses 14,011 10,411
Total Current Liabilities 30,082 22,740
Long-Term Debt 6,277 3,172
Accrued Contingent Liabilities 7,680 4,948
Other Deferred Credits and
Liabilities 1,889 2,719
Shareholders' Equity
Capital stock:
Authorized shares: 10,000
at $.20 par value
Issued and outstanding shares:
1994 -- 3,492, net of 181 treasury
shares; 1993 -- 3,656 735 731
Additional paid-in capital 13,065 12,542
Equity adjustment from translation (1,899) (2,034)
Retained earnings 36,884 27,700
Treasury stock (3,079)
Total Shareholders' Equity 45,706 38,939
$91,634 $72,518
The accompanying notes are an integral part of these statements.
Consolidated Statements of Operations
Year Ended July 31
(in thousands except per share data) 1994 1993 1992
Net Sales $176,443 $123,034 $110,479
Cost of sales 134,289 94,794 87,937
Gross Profit 42,154 28,240 22,542
Selling, general and
administrative expenses 27,147 23,323 22,024
Restructuring costs 4,922
Income (Loss) from Operations 15,007 4,917 (4,404)
Other income (deductions):
Interest expense (380) (458) (1,218)
Miscellaneous, net (24) 180 (149)
Income (Loss) before Taxes 14,603 4,639 (5,771)
Income tax (provision) benefit (5,067) (1,410) 2,733
Net Income (Loss) $9,536 $3,229 ($3,038)
Net Income (Loss) per Share $2.73 $.89 ($.85)
Consolidated Statements of Shareholders Equity
Equity
Additional Adjustment
Capital Stock Paid-in from Retained Treasury
(in thousands except per share data) Shares Par Value Capital Translation Earnings Stock
Balances at July 31, 1991 3,564 $713 $11,580 ($1,429) $27,732
Net loss for the year (3,038)
Dividends paid: $.06 per share (223)
Aggregate translation adjustment,
including $1,205 related to the
restructuring of foreign operations 1,388
Contribution to employee
stock ownership plan 44 9 454
Balances at July 31, 1992 3,608 722 12,034 (41) 24,471
Net income for the year 3,229
Aggregate translation adjustment,
net of deferred tax benefit of
$1,308 (1,993)
Contribution to employee
stock ownership plan 48 9 508
Balances at July 31, 1993 3,656 731 12,542 (2,034) 27,700
Net income for the year 9,536
Dividends paid: $.10 per share (352)
Aggregate translation adjustment,
net of deferred tax benefit of
$1,032 135
Stock option transactions 17 4 319
Purchase of treasury shares (206) (3,500)
Contribution to employee
stock ownership plan 25 204 421
Balances at July 31, 1994 3,492 $735 $13,065 ($1,899) $36,884 ($3,079)
The accompanying notes are an integral part of these statements.
Consolidated Statements of Cash Flows
Year Ended July 31
(in thousands) 1994 1993 1992
Operations Net income (loss) $9,536 $3,229 ($3,038)
Adjustments to reconcile
net income (loss)
to cash provided by
operating activities:
Depreciation 2,801 2,500 2,569
Provision for self-insured
losses 2,292 1,425 (55)
Deferred income taxes (1,233) 1,050 (1,128)
Changes in operating assets and liabilities:
Accounts receivable (4,686) (6,452) (1,633)
Inventories (3,682) 4,628 12,295
Other current assets 21 156 (1,034)
Accounts payable 3,728 4,899 (1,655)
Accrued expenses 2,659 1,285 (766)
Changes in other assets
and liabilities (72) (1,304) 2,094
Cash provided by operations 11,364 11,416 7,649
Investments Purchases of property, plant
and equipment (7,762) (3,570) (1,364)
Financing Net repayment of short-term
debt (4,389)
Issuance of long-term debt 5,000 3,980
Repayment of long-term debt (1,904) (7,980) (1,278)
Payment of dividends (352) (223)
Acquisition of treasury stock (3,500)
Stock issued for employee
benefit plans 625 513 462
Cash used for financing (131) (7,467) (1,448)
Currency Effect of exchange rate
Adjustments changes on cash (231) (471) (806)
Cash Net change in cash 3,240 (92) 4,031
Beginning balance 4,848 4,940 909
Ending balance $ 8,088 $ 4,848 $ 4,940
The accompanying notes are an integral part of these statements.
Notes to Consolidated Financial Statements (in thousands except per share data)
Summary of Significant Accounting Policies
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. Certain prior years' amounts in the consolidated
financial statements have been reclassified to conform to the presentation used
for 1994.
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 for substantially all inventories and the
FIFO (first-in, first-out) method for all other inventories. Inventories at
July 31, 1994 and 1993 would have been higher by $4,434 and $4,216
respectively, had the Company used FIFO cost, which approximates current cost,
rather than LIFO cost for valuation of its inventories. In 1993, the
liquidation of LIFO inventories decreased cost of sales, and therefore,
increased income before taxes by $294.
Property, Plant and Equipment and Equipment Held for Rental
Property, plant and equipment is stated at cost and equipment held for rental
is stated at cost, net of accumulated depreciation. Depreciation is computed
using the straight-line method.
Income Taxes
Deferred income tax assets and liabilities arise from differences between the
tax basis of an asset or liability and its reported amount 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.
Product Development
The Company incurred product development and other engineering expenses of
$4,373, $3,385 and $3,628 in 1994, 1993 and 1992, respectively, which were
charged to expense as incurred.
Translation of Foreign Currencies
The translation of foreign currencies into U.S. dollars is performed for
balance sheet accounts using current exchange rates in effect at the balance
sheet date and for revenue and expense accounts using an average exchange rate
for the period. The gains or losses resulting from translation are included in
shareholders' equity.
Net Income (Loss) per Share
Net income or loss per share is based on the average number of shares of
common stock outstanding during each year. The effect of common stock
equivalents is immaterial to earnings per share.
Notes to Consolidated Financial Statements (continued)
Income Taxes
The income tax provision (benefit) consisted of the following for the years
ended July 31:
1994 1993 1992
Current:
Federal $5,373 $ 360 ($1,605)
State 927
6,300 360 (1,605)
Deferred:
Federal (833) 954 (1,070)
State (91) 96 (58)
Change in valuation allowance (309)
(1,233) 1,050 (1,128)
$5,067 $1,410 ($2,733)
On a net basis, the Company made income tax payments of $5,700 in 1994 and
received income tax refunds of $1,195 in 1993 and $2,650 in 1992.
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:
1994 1993 1992
Statutory U.S. federal income tax rate 34% 34% (34%)
State tax provision, net of federal effect 4 6
Net tax effect of foreign operations (2) 3 (9)
Adjustments to reflect 1993 tax return as filed (9)
Other (1) (4) (4)
35% 30% (47%)
Components of deferred tax assets and liabilities were as follows at July 31:
1994 1993
Future income tax benefits:
Contingent liabilities provisions $3,932 $2,808
Translation adjustments 1,166 1,400
Employee benefits 970 609
Inventory valuation provisions 928 562
Other 563 776
7,559 6,155
Deferred tax liabilities:
Depreciation and asset basis differences 597 290
Other 154 13
751 303
Net deferred tax assets 6,808 5,852
Valuation allowance (383) (383)
Net deferred tax assets $6,425 $5,469
Notes to Consolidated Financial Statements (continued)
Bank Credit Lines and Long-Term Debt
The Company has available a $10 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, 1994 and 1993.
Long-term debt was as follows at July 31:
1994 1993
Bank installment loans due through 1999 with the
interest rate reset quarterly by the Company at
either the prime rate, a spread over LIBOR, or
at prevailing discount rates for bankers acceptances;
currently at bankers acceptances rate of 5.6% $4,750 $1,407
Industrial revenue bonds due in 1999 with interest at 7% 1,000 1,000
State agency mortgages due through 2004 with interest
averaging 3.6% 760 848
Industrial revenue mortgages due through 2004
with interest at 5.5% 754 831
Other 314 385
7,578 4,471
Less current portion (1,301) (1,299)
$6,277 $3,172
The bank revolving line of credit, as well as the bank installment loans,
require the maintenance of certain financial ratios. Borrowings aggregating
$2.4 million under certain long-term loans are secured by $4.4 million in
assets of the Company. Interest paid on all borrowings was $461, $511 and
$1,196 in 1994, 1993, and 1992, respectively.
The aggregate amounts of long-term debt outstanding at July 31, 1994 which will
become due in 1995 through 1999 are: $1,301, $1,262, $1,243, $1,188 and $1,892.
Notes to Consolidated Financial Statements (continued)
Employee Benefit Plans
The Company's stock incentive plan has reserved 39,000 common shares that may
be awarded to key employees in the form of options to purchase common shares,
restricted shares and limited appreciation rights. The option price is set by
the Company's Board of Directors. The price for all options currently
outstanding 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 2,000 shares of common stock, providing
the Company earned a net profit, before extraordinary items, for the prior
year. The option price shall be equal to the fair market value of a share on
its date of grant. An aggregate of 180,000 shares of common stock is
authorized to be issued under the plan.
Outstanding options and transactions involving the plans are summarized as
follows:
1994 1993
Outstanding options at the beginning of the year 124 60
Options granted ($13.50 to $35.25 per share) 68 78
Options cancelled ($5.25 to $13.50 per share) (2) (13)
Options exercised ($11.38 to $13.75 per share) (17) (1)
Outstanding options at the end of the year 173 124
Exercisable options at the end of the year
($5.25 to $13.75 per share) 45 42
The Company has two discretionary, defined-contribution retirement plans
covering all its eligible U.S. employees. The Company's policy is to fund these
pension costs as accrued. Plan assets are invested in money market funds,
government securities, mutual funds and the Company s common stock. The
aggregate expense relating to these plans was $1,888, $1,025 and $846 in 1994,
1993 and 1992, respectively.
Accrued Expenses
Components of accrued expenses were as follows at July 31:
1994 1993
Salaries, wages and commissions $ 4,337 $ 2,544
Income taxes 2,335 1,856
Contingent liabilities, current portion 2,166 1,619
Employee benefits 1,626 890
Restructuring costs 597 1,533
Other 2,950 1,969
$14,011 $10,411
Accrued restructuring costs include the unincurred portion of a provision of
$4,922 recorded in 1992 related to the realignment of the Company's operating
units, including costs associated with ceasing manufacturing overseas.
Industry Segment and Geographical Areas
The Company operates in one dominant industry segment the manufacturing and
selling of mobile, hydraulically-operated equipment. The Company sells
primarily to distributors that provide sales, rentals and service support to a
broad customer base throughout construction, industrial and specialized
markets. In 1994, sales to one customer amounted to 12% of consolidated
revenues. For the years 1993 and 1992, no single customer represented 10% or
more of consolidated revenues.
The following table presents certain information relating to the Company's
domestic and foreign operations and a reconciliation of such information to the
related consolidated amounts as of and for years ended July 31. Assets and
liabilities are those that are directly related to the Company s operations in
each geographic area. Transfers between geographic areas are based upon cost
plus mark-up.
Net Sales Income (Loss)
Unaffiliated before
Customers Intersegment Income Taxes Assets Liabilities
1994
United States $161,409 $593 $14,996 $78,163 $43,518
Europe 11,045 (873) 9,543 1,719
Other 3,989 480 3,928 691
Eliminations (593)
Consolidated $176,443 $14,603 $91,634 $45,928
1993
United States $100,953 $7,840 $4,886 $61,373 $30,660
Europe 18,468 (506) 8,057 1,893
Other 3,613 259 3,088 1,026
Eliminations (7,840)
Consolidated $123,034 $4,639 $72,518 $33,579
1992
United States $81,301 $12,749 $2,310 $47,596 $28,647
Europe 25,018 (4,223) 21,684 6,182
Other 4,160 (3,858) 4,505 1,770
Eliminations (12,749)
Consolidated $110,479 ($5,771) $73,785 $36,599
Notes to Consolidated Financial Statements (continued)
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. Annually the
Company sets its product liability litigation insurance program based on the
Company's current and historical claims experience and the availability and
cost of insurance. The combination of these annual programs constitutes the
Company's aggregate product liability insurance coverage. The Company's program
for fiscal year 1994 was comprised of a self-insurance retention of $5 million
and catastrophic coverage of $10 million in excess of the retention.
Cumulative amounts estimated to be payable by the Company with respect to
pending product liability claims for all years in which the Company is liable
under its self-insurance retention have been accrued as liabilities, including
$2.2 million for incidents the Company believes may result in claims. Estimates
of such accrued liabilities are based on an evaluation of the merits of
individual claims and historical claims experience; thus, the Company's
ultimate liability may exceed or be less than the amounts accrued. Amounts
accrued are paid over varying periods, which generally do not exceed 5 years.
The methods of making such estimates and establishing the resulting accrued
liability are reviewed continually, and any adjustments resulting therefrom are
reflected in current earnings.
As is customary in the heavy equipment industry, the Company has entered into
limited recourse agreements with various commercial finance companies to
provide equipment financing to its distributors. Under these arrangements, the
Company is required, in the event of a distributor's default, to purchase the
notes from the finance companies and liquidate the supporting collateral, or to
reimburse such institutions for certain deficiencies resulting from their
repossession and resale of the equipment. The Company was contingently liable
at July 31, 1994 for approximately $3.9 million of contingent losses under such
arrangements and has accrued as a liability estimated losses of $1.7 million
thereunder.
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: $793, $891, $89, $67 and $67 in 1995
through 1999, respectively and $5 thereafter. Rental expense for all operating
leases was $955, $763 and $1,011 in 1994, 1993 and 1992, respectively.
Unaudited Quarterly Financial Information
Unaudited financial information was as follows for the fiscal quarters within
the years ended July 31:
Net
Net Income
Net Sales Gross Profit Income per Share
1994
October 31 $36,757 $8,629 $1,252 $.35
January 31 34,172 7,765 1,095 .32
April 30 50,141 12,601 3,514 1.01
July 31 55,373 13,159 3,675 1.05
$176,443 $42,154 $9,536 $2.73
1993
October 31 $24,989 $5,883 $348 $.10
January 31 27,082 5,945 301 .08
April 30 32,975 7,610 1,099 .30
July 31 37,988 8,802 1,481 .41
$123,034 $28,240 $3,229 $.89
Gross profit for the first three quarters of fiscal 1994 has been restated from
amounts previously reported by the Company in its interim financial statements.
Restated amounts reflect the reclassification of certain costs between expense
categories.
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, 1994 and 1993, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three years in
the period ended July 31, 1994. 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 also 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, 1994 and 1993, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended July 31,
1994 in conformity with generally accepted accounting principles.
Ernst & Young LLP
Baltimore, Maryland
September 8, 1994
JLG Industries, Inc.
Officers and Directors
Officers
L. David Black
Chairman of the Board,President and Chief Executive Officer
57 years of age
4 years of service
Charles H. Diller, Jr.
Executive Vice President and Chief Financial Officer
49 years of age
17 years of service
Rao G. Bollimpalli
Senior Vice President -- Engineering
56 years of age
15 years of service
Michael Swartz
Senior Vice President -- Marketing
49 years of age
6 years of service
Raymond F. Treml
Senior Vice President -- Manufacturing
54 years of age
14 years of service
Ronald D. Koontz
Vice President -- Management Information Services
51 years of age
12 years of service
A. Raymond Mitchell
Vice President -- Customer Assurance
60 years of age
8 years of service
Craig E. Paylor
Vice President -- Sales
38 years of age
11 years of service
Thomas D. Singer
Vice President -- General Counsel
42 years of age
10 years of service
Samuel D. Swope
Vice President -- Human Resources
45 years of age
16 years of service
Lawrence J. Weber
Vice President and General Manager -- Materials-Handling Division
52 years of age
3 years of service
Directors
L. David Black 1
Chairman of the Board,
President and Chief
Executive Officer
57 years of age
4 years of service
Charles H. Diller, Jr. 1
Executive Vice President and Chief Financial Officer
49 years of age
10 years of service
H. Lyle Duffey 4,5
Chairman of the Board
The FNB Financial Corporation
71 years of age
22 years of service
J. Robert Fries 2,4
President
Penn Franklyn Associates, Inc. and Retired Senior Vice President
JLG Industries, Inc.
72 years of age
19 years of service
E. Mason Hendrickson 4,5
Commissioner
Public Service Commission
of Maryland
72 years of age
20 years of service
George R. Kempton 3,4
Chairman of the Board
and Chief Executive Officer
Kysor Industrial Corporation
60 years of age
1 year of service
James A. Mezera 1,3,5
Vice President
Komatsu Dresser Company
64 years of age
10 years of service
Gerald Palmer
Vice President, Technical Services Division
Caterpillar, Inc.
49 years of age
Appointed September, 1994
Stephen Rabinowitz
President andChief Executive Officer
General Cable Corporation
51 years of age
Appointed September, 1994
Paul K. Shockey 1,2
Secretary and Retired
Executive Vice President
JLG Industries, Inc.
71 years of age
25 years of service
Lawrence G. Wigbels 2,5
Retired President and
Chief Executive Officer
United Telephone System
Eastern Group
73 years of age
15 years of service
Charles O. Wood, III 1,3,5
President
Wood Holdings, Inc.
56 years of age
5 years of service
Committee Membership
1 Executive
2 Operations Review
3 Nominating
4 Audit
5 Compensation
Investor Information
Common Stock Data
The Company's stock is 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:
Average Shares
Price per Share Traded Daily
Quarter 1994 1993 1994 1993
Ended High Low High Low
October 31 $19 $15 1/4 $9 3/4 $7 3/4 7,918 5,891
January 31 $28 $17 1/4 $13 $7 3/4 23,574 5,806
April 30 $32 3/4 $24 1/4 $16 $11 1/2 19,548 8,025
July 31 $36 1/2 $24 1/2 $16 1/4 $13 28,936 5,211
The Company's quarterly cash dividend rate is currently $.025 per share, or
$.10 on an annual basis. The Board of Directors reinstated payment of the
quarterly cash dividend in fiscal 1994 after being suspended on November 18,
1991 due to the economic recession and its impact on the Company's results. The
Board continually reviews its dividend policy, but believes at this time that
it is in the best interests of the Company to continue to reinvest its earnings
into the growth of the business.
As of July 31, 1994, there were approximately 1,000 record holders of the
Company's shares, and 1,000 employee owners who participate in the Company's
employee stock ownership plan. Record holders exclude participants in security
position listings and other indirect shareholders.
Corporate Headquarters
JLG Industries, Inc.
JLG Drive
McConnellsburg, PA 17233
Telephone: (717) 485-5161
Fax: (717) 485-6417
Annual Meeting of Shareholders
The Annual Meeting will be held at the Company's headquarters in
McConnellsburg, PA at 4:30 p.m., Monday, November 21, 1994. All shareholders
are cordially invited to attend. Whether planning to attend or not,
shareholders are urged to mark, sign, date, and return their proxy card
promptly so their interests will be represented at the meeting.
Shareholder Services
For prompt assistance on address changes, consolidation of duplicate accounts,
lost certificates and related matters, please contact Mellon Securities
Transfer Services, 85 Challenger Road, Overpeck Centre, Ridgefield Park, NJ
07660. Telephone: (800) 756-3353.
Shareholders who add to their holdings of the Company's stock are advised to
have their broker or bank register the shares in exactly the same name and
account as those of present holdings. Whenever there is the slightest variation
in the name or address of a shareholder, a separate account must be
established. This leads to duplicate mailings and added expense to the Company.
Anyone presently having more than one account registered in his or her name can
assist the Company by consolidating their accounts. To combine such holdings,
shareholders should forward the names and numbers of the accounts involved
along with a signed request to the Company's transfer agent.
Form 10-K and Other Information
The Annual Report to the Securities and Exchange Commission on Form 10-K and
other financial information such as interim and annual reports to shareholders
are available without charge upon request to the Company's Investor Relations
Department.
An Equal Opportunity Employer
It has been and will continue to be the policy of JLG Industries, Inc., to
afford equal employment opportunities to all qualified individuals, without
regard to race, color, religion, national origin, age, sex, handicap, or
veteran status.