SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the period ended January 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-8454
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)
1 JLG Drive, McConnellsburg, PA 17233
(Address of Principal Executive Offices) (Zip Code)
(7l7) 485-5161
Registrant's telephone number, including area code
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 _________
At March 12, 1995, there were 3,661,155 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 $144,226,778.
PART I FINANCIAL INFORMATION
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
January 31, July 31,
1995 1994
(Unaudited)
ASSETS
Current assets
Cash $4,264 $8,088
Accounts receivable 27,801 25,750
Inventories:
Finished goods 7,751 4,968
Work in process 10,276 9,242
Raw materials 11,584 9,012
29,611 23,222
Future income tax benefits 3,587 3,531
Other current assets 1,201 1,871
Total Current Assets 66,464 62,462
Property, plant and equipment - net 21,879 19,344
Equipment held for rental - net 4,233 4,190
Other assets 5,458 5,638
$98,034 $91,634
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $1,254 $1,301
Accounts payable 14,026 14,770
Accrued expenses 13,141 14,011
Total Current Liabilities 28,421 30,082
Long-term debt 5,631 6,277
Other deferred credits and liabilities 8,846 9,569
Shareholders' equity
Capital stock:
Authorized shares: 10,000 at $.20 par
Outstanding shares: 1995 - 7,114
shares, net of 300 treasury shares;
1994 - 6,984 shares 1,483 1,469
Additional paid-in capital 13,690 12,331
Equity adjustment from translation (1,807) (1,899)
Retained earnings 44,324 36,884
Treasury stock (2,554) (3,079)
Total Shareholders' Equity 55,136 45,706
$98,034 $91,634
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
(Unaudited)
Three Months Ended Six Months Ended
January 31, January 31,
1995 1994 1995 1994
Net sales $52,175 $34,172 $105,899 $70,929
Cost of sales 38,726 26,407 79,466 54,535
Gross profit 13,449 7,765 26,433 16,394
Selling, general and
administrative expenses 7,717 5,963 14,505 12,492
Income from operations 5,732 1,802 11,928 3,902
Other deductions:
Interest expense (125) (93) (237) (170)
Miscellaneous, net 137 (28) 26 (61)
Income before taxes 5,744 1,681 11,717 3,671
Income tax provision 1,992 586 4,102 1,325
Net income $3,752 $1,095 $7,615 $2,346
Net income per share $.53 $.16 $1.08 $.33
Dividends per share $.0125 $.0125 $.025 $.025
Weighted average
shares outstanding 7,074 6,922 7,044 7,018
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended
January 31,
1995 1994
OPERATIONS:
Net income $7,615 $2,346
Adjustments to reconcile net income to cash
(used for) provided by operating activities:
Depreciation and amortization 1,567 1,335
Provision for self-insured losses 43 897
Deferred income taxes 91 (320)
9,316 4,258
Changes in operating assets and
liabilities (9,577) (5,968)
Changes in other assets and liabilities (494) (813)
Cash used for operations (755) (2,523)
INVESTMENTS:
Purchases of property, plant and
equipment (3,183) (3,443)
FINANCING:
Issuance of short-term debt 1,711
Issuance of long-term debt 5,036
Repayment of long-term debt (701) (1,544)
Payment of dividends (176) (178)
Capital stock contributed to employee
stock ownership plan 1,159 625
Acquisition of treasury stock (3,500)
Cash provided by financing 282 2,150
CURRENCY ADJUSTMENTS - effect of exchange rate
changes on cash flows (168) (28)
CASH:
Net decrease (3,824) (3,844)
Beginning balance 8,088 4,848
Ending balance $4,264 $1,004
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
January 31 1995
(unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with instructions to Form 10-Q and therefore, do
not include all information and notes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, such financial statements
include all adjustments (consisting only of normal recurring accruals) which
management of the Company considers necessary for a fair presentation of the
results of operations.
Interim results for the six months ended January 31, 1995 are not necessarily
an indication of the results for the fiscal year as a whole. For further
information, refer to consolidated financial statements and notes included in
the Form 10-K filing for the fiscal year ended July 31, 1994.
NOTE B - INVENTORIES AND COST OF SALES
A precise inventory valuation under the LIFO (last-in, first-out) method can
only be made at the end of each fiscal year; therefore, interim LIFO inventory
valuation determinations, including the determination at January 31, 1995, must
necessarily be based on management's estimate of expected fiscal year-end
inventory levels and costs.
NOTE C - 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 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 1995 is comprised of a self-insurance retention of $5 million and
catastrophic coverage of $20 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 other deferred credits
and other liabilities, including $2.4 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 historic 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 five 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.
NOTE D - SUBSEQUENT EVENT
On February 23, 1995, the Company declared a two-for-one split of the Company's
outstanding common stock and adopted a resolution restoring 150,232 treasury
shares to the status of authorized but unissued shares. The two-for-one split
will be effected by a stock dividend to be distributed on April 3, 1995 to
shareholders of record at the close of business on March 15, 1995. Accordingly,
the number of shares outstanding and the per share amounts in the accompanying
financial statements have been restated to give effect to the stock split.
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
Condensed Consolidated Financial Statements (pages 3 through 7).
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 the business
cycles within these sectors.
LIQUIDITY AND SOURCES OF CAPITAL
Current assets as a percent of current liabilities were 234% at January 31,
1995, compared to 208% at July 31, 1994. Working capital was $38.0 million at
January 31, 1995, compared to $32.4 million at July 31, 1994. The improvement
in the percentage of current assets to current liabilities and the increased
working capital at January 31, 1995, were primarily due to higher inventory and
accounts receivable levels to support the increased growth in sales.
At January 31, 1995, the Company had unused credit lines totaling $11 million
and cash balances of $4.3 million. The Company considers these resources,
coupled with cash expected to be generated by operations, adequate to fund its
anticipated fiscal 1995 working capital and estimated capital expenditure
needs.
The Company's exposure to product liability claims is discussed in NOTE C -
COMMITMENTS AND CONTINGENCIES. 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.
RESULTS FOR THE SECOND QUARTERS OF FISCAL 1995 AND 1994
et sales for the second quarter of fiscal 1995 were $52.2 million, an increase
of $18.0 million, or 53% from the previous year. The growth in revenues was
due to increased demand across virtually all product classes.
Gross profit, as a percent of net sales, increased to 26% in the second quarter
of fiscal 1995 from 23% the previous year. Contributing to the increase were
continued improvements in manufacturing processes, lower product liability and
warranty costs and higher selling prices. These improvements were partially
offset by increased cost of materials, including subcontracting costs, and
training costs associated with an expanding workforce.
Selling, general and administrative expenses for the second quarter of fiscal
1995 increased 29% or $1.8 million compared to the same period of fiscal 1994,
but decreased as a percent of sales to 15% from 17%. The increase in spending
is primarily volume-related and includes higher payroll and related costs,
increased research and development expenses and consulting costs.
The effective tax rate was 35% for the second quarter of both fiscal 1995 and
1994.
RESULTS FOR THE FIRST SIX MONTHS OF FISCAL 1995 AND 1994
Net sales for the first six months of fiscal 1995 were $105.9 million, an
increase of $35.0 million, or 49% from the previous year. As noted in the
second quarter comparison, virtually all product lines contributed to the
increase.
Gross profit, as a percent of net sales, increased to 25% in the first six
months of fiscal 1995 from 23% the previous year. The increase was essentially
due to the same factors as discussed in the second quarter comparison.
Selling, general and administrative expenses for the first six months of fiscal
1995 increased 16% or $2.0 million compared to the same period of fiscal 1994,
but decreased as a percent of sales to 14% from 18%. The dollar increase over
last year was due to the factors discussed in the second quarter comparison,
with the exception that the prior year period had higher legal costs associated
with the settlement of litigation with the Company's then principal
shareholder.
The effective tax rate was 35% in the first six months of fiscal 1995, compared
to 36% in the fiscal 1994 period. The lower tax rate for the fiscal 1995
period was due to a revision in the estimate of future taxes payable
Ernst & Young LLP
Independent Auditors' Review Report
The Board of Directors
JLG Industries, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of JLG
Industries, Inc. and subsidiaries as of January 31, 1995, and the related
condensed consolidated statements of income for the three-month and six-month
periods ended January 31, 1995 and 1994, and the condensed consolidated
statements of cash flows for the six-month periods ended January 31, 1995 and
1994. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of JLG Industries, Inc. as of July
31, 1994, and the related consolidated statements of income, shareholders'
equity and cash flows for the year then ended, not presented herein, and in our
report dated September 8, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of July 31, 1994,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
February 15, 1995, except for Note D, Ernst & Young LLP
as to which the date is February 23, 1995
PART II OTHER INFORMATION
Items 1 - 5
None/not applicable.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
3 Amended and Restated By-Laws
15 Letter re: Unaudited Interim Financial Information
(b) The Company was not required to file Form 8-K pursuant to
requirements of such form for any of the three months ended January 31,
1995.
SIGNATURE
Pursuant to the requirements 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 who is also signing in his capacity as
principal financial officer.
JLG INDUSTRIES, INC.
(Registrant)
/s/ Charles H. Diller, Jr.
Charles H. Diller, Jr.
Executive Vice President and
Chief Financial Officer