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 April 30, 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 June 9, 1995, there were 7,132,410 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 $172,069,391.
PART I FINANCIAL INFORMATION
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30, July 31,
1995 1994
(Unaudited)
ASSETS
Current assets
Cash $8,228 $8,088
Accounts receivable 36,698 25,750
Inventories:
Finished goods 7,745 4,968
Work in process 12,224 9,242
Raw materials 11,581 9,012
31,550 23,222
Future income tax benefits 3,586 3,531
Other current assets 922 1,871
Total Current Assets 80,984 62,462
Property, plant and equipment - net 20,908 19,344
Equipment held for rental - net 4,972 4,190
Other assets 5,497 5,638
$112,361 $91,634
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $245 $1,301
Accounts payable 23,884 14,770
Accrued expenses 15,629 14,011
Total Current Liabilities 39,758 30,082
Long-term debt 2,322 6,277
Other deferred credits and liabilities 9,065 9,569
Shareholders' equity
Capital stock:
Authorized shares: 10,000 at $.20 par
Outstanding shares: 1995 - 7,125
shares; 1994 - 6,984 shares 1,425 1,470
Additional paid-in capital 11,270 12,330
Equity adjustment from translation (1,785) (1,899)
Retained earnings 50,306 36,884
Treasury stock (3,079)
Total Shareholders' Equity 61,216 45,706
$112,361 $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 Nine Months Ended
April 30, April 30,
1995 1994 1995 1994
Net sales $75,809 $50,141 $181,708 $121,070
Cost of sales 57,727 37,539 137,193 92,075
Gross profit 18,082 12,602 44,515 28,995
Selling, general and
administrative expenses 8,745 7,175 23,249 19,667
Income from operations 9,337 5,427 21,266 9,328
Other deductions:
Interest expense (97) (144) (333) (314)
Miscellaneous, net 217 56 241 (4)
Income before taxes 9,457 5,339 21,174 9,010
Income tax provision 3,368 1,824 7,470 3,149
Net income $6,089 $3,515 $13,704 $5,861
Net income per share $.86 $.50 $1.94 $.84
Dividends per share $.015 $.0125 $.04 $.0375
Weighted average
shares outstanding 7,120 6,955 7,069 6,997
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
April 30,
1995 1994
OPERATIONS:
Net income $13,704 $5,861
Adjustments to reconcile net income to cash
(used for) provided by operating activities:
Depreciation and amortization 2,645 2,058
Provision for self-insured losses 84 1,467
Deferred income taxes (51) (724)
16,382 8,662
Changes in operating assets and
liabilities (8,080) (6,202)
Changes in other assets and liabilities (1,121) (1,345)
Cash provided by operations 7,181 1,115
INVESTMENTS:
Purchases of property, plant and
equipment (6,150) (5,595)
Proceeds from sale of property, plant
and equipment 2,531 208
Cash used for investments (3,619) (5,387)
FINANCING:
Issuance of short-term debt 716
Issuance of long-term debt 5,019
Repayment of long-term debt (5,022) (1,598)
Payment of dividends (282) (265)
Capital stock contributed to employee
stock ownership plan 1,159 625
Acquisition of treasury stock (3,500)
Proceeds from exercise of stock options 815 57
Cash (used for) provided by financing (3,330) 1,054
CURRENCY ADJUSTMENTS - effect of exchange rate
changes on cash flows (92) (130)
CASH:
Net increase (decrease) 140 (3,348)
Beginning balance 8,088 4,848
Ending balance $8,228 $1,500
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 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 nine months ended April 30, 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 April 30, 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. The Company's
insurance program for fiscal year July 31, 1995 is comprised of a self-
insurance retention of $5 million and catastrophic coverage of $20 million in
excess of the retention. The Company contracts with an independent insurance
carrier 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 continually and any
adjustments resulting therefrom are reflected in current earnings. Claims are
paid over varying periods, which generally do not exceed five years. Accruals
are not discounted.
With respect to all claims of which the Company is aware as of the reporting
date, the Company has accrued $8.1 million and $8.0 million at April 30, 1995
and July 31, 1994, 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 a loss that would be material and beyond
such reserve amounts. As of April 30, 1995 and July 31, 1994, there are no
insurance recoverables or offset implications and there were no claims being
contested by insurers.
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).
The Company is a leading manufacturer and marketer of elevating work platforms
and truck-mounted materials handling equipment used primarily in construction
and industrial applications. Sales are made principally to independent
equipment distributors that lease the Company's products and provide service
support to equipment users. Equipment purchases by end users, either directly
from the Company or through distributors, comprise a significant, but smaller,
portion of sales.
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 equipment held for rental 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
manufacturing costs and increase manufacturing efficiencies. The Company also
considers development and introduction of new and improved products to be an
important factor in maintaining and strengthening its market position.
RESULTS FOR THE THIRD QUARTERS OF FISCAL 1995 AND 1994
Net sales for the third quarter of fiscal 1995 were $75.8 million, an increase
of $25.7 million, or 51% from the previous year. The growth in revenues was
due to increased demand across virtually all product classes. In addition,
continued strong North American demand for the Company's products combined with
improvement in the European market generated record sales. Higher sales volume
was the primary reason for the significant improvement in profit.
Gross profit, as a percent of net sales, decreased to 24% in the third quarter
of fiscal 1995 from 25% the previous year. The lower gross profit percent in
the current year quarter is due principally to proportionately higher sales of
lower margin products, higher material costs and the cost of subcontracting
additional work to outside vendors as a result of the substantial increase in
demand. Partially offsetting these reductions were lower manufacturing costs
due to continued improvements in manufacturing processes, lower product
liability and warranty costs and higher selling prices.
Selling, general and administrative expenses for the third quarter of fiscal
1995 increased 22%, or $1.6 million, compared to the same period of fiscal
1994, but decreased as a percent of sales to 12% from 14%. The increase in
spending is primarily volume-related including higher payroll and related costs
and increased research and development expenses. Partially offsetting the
increase were lower European administrative and selling costs due to the
closing of a sales office during the prior year period.
The effective tax rate was 36% for the third quarter of fiscal 1995 and 34% for
the same period of fiscal 1994. The tax rate for the fiscal 1995 period
includes the benefit for a revision in the estimate of future taxes payable,
while the fiscal 1994 quarter reflects the benefit of closing an overseas
facility.
RESULTS FOR THE FIRST NINE MONTHS OF FISCAL 1995 AND 1994
Net sales for the first nine months of fiscal 1995 were $181.7 million, an
increase of $60.6 million, or 50% from the previous year. As noted in the third
quarter comparison, continued strong North American demand for virtually all
the Company's product lines combined with improvement in the European market
provided for the increase. In addition, products introduced over the past two
years contributed over 20% to sales for the current nine month period.
Gross profit, as a percent of net sales, increased to 25% in the first nine
months of fiscal 1995 from 24% the previous year. The increase is attributable
to lower manufacturing costs due to continued improvements in manufacturing
processes, lower product liability and warranty costs and higher selling
prices. Partially offsetting these improvements were increased material costs
and costs associated with subcontracting additional work to outside vendors as
a result of the substantial increase in demand.
Selling, general and administrative expenses for the first nine months of
fiscal 1995 increased 18% or $3.6 million compared to the same period of fiscal
1994, but decreased as a percent of sales to 13% from 16%. The dollar change
over the same period of the prior year was due to the factors discussed in the
third quarter comparison with the addition of increased consulting costs. The
prior year period also 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 nine months of both fiscal 1995 and
1994. As discussed in the third quarter comparison, the tax rate for the
fiscal 1995 period includes the benefit for a revision in the estimate of
future taxes payable, while fiscal 1994 reflects the benefit of closing an
overseas facility.
LIQUIDITY AND SOURCES OF CAPITAL
Current assets as a percent of current liabilities were 204% at April 30, 1995,
compared to 208% at July 31, 1994. Working capital was $41.2 million at April
30, 1995, compared to $32.4 million at July 31, 1994. The increased working
capital at April 30, 1995, was primarily due to higher inventory and accounts
receivable levels to support the increased growth in sales.
Total debt as a percent of total capitalization at April 30, 1995 decreased to
4% from 14% at July 31, 1994 due to the repayment of debt with cash generated
from operations.
At April 30, 1995, the Company had unused credit lines totaling $10 million and
cash balances of $8.2 million. The Company considers these resources, coupled
with cash expected to be generated by operations, adequate to meet its
foreseeable liquidity needs. In addition, the Company has reached an agreement
in principle to acquire an additional manufacturing facility in Bedford,
Pennsylvania to replace the existing facility there. Acquisition, relocation
and refitting costs are estimated to be $9 million payable over the next twelve
months. The Company is seeking third party financing for this project.
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.
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 April 30, 1995, and the related
condensed consolidated statements of income for the three-month and nine-month
periods ended April 30, 1995 and 1994, and the condensed consolidated
statements of cash flows for the nine-month periods ended April 30, 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.
May 16, 1995 Ernst & Young LLP
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:
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 April 30,
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