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 October 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 December 8, 1995, there were 14,380,032 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 $406,235,904.
PART I FINANCIAL INFORMATION
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
October 31, July 31,
1995 1995
(Unaudited)
ASSETS
Current assets
Cash $14,345 $12,973
Accounts receivable 36,019 33,466
Inventories:
Finished goods 11,712 7,630
Work in process 17,188 13,357
Raw materials 12,015 12,459
40,915 33,446
Future income tax benefits 4,293 4,219
Other current assets 1,461 464
Total Current Assets 97,033 84,568
Property, plant and equipment - net 25,853 24,785
Equipment held for rental - net 7,461 5,052
Other assets 5,371 5,303
$135,718 $119,708
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $243 $243
Accounts payable 26,205 20,028
Accrued expenses 21,863 18,893
Total Current Liabilities 48,311 39,164
Long-Term debt 2,198 2,260
Other liabilities and deferred credits 8,681 9,854
Shareholders' equity
Capital stock:
Authorized shares: 35,000 at $.20 par
Outstanding shares: Fiscal 1996 - 14,295
shares; Fiscal 1995 - 14,275 shares 2,859 2,855
Additional paid-in capital 10,634 10,121
Equity adjustment from translation (1,856) (1,799)
Retained earnings 64,891 57,253
Total Shareholders' Equity 76,528 68,430
$135,718 $119,708
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
October 31,
1995 1994
Net sales $86,701 $53,724
Cost of sales 65,207 40,740
Gross profit 21,494 12,984
Selling, general and
administrative expenses 9,711 6,788
Income from operations 11,783 6,196
Other deductions:
Interest expense (45) (112)
Miscellaneous, net 231 (111)
Income before taxes 11,969 5,973
Income tax provision 4,189 2,110
Net income $7,780 $3,863
Net income per share $.54 $.27
Dividends per share $.01 $.0063
Weighted average
shares outstanding 14,294 14,028
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
October 31,
1995 1994
OPERATIONS:
Net income $7,780 $3,863
Adjustments to reconcile net income to cash
(used for) provided by operating activities:
Depreciation and amortization 1,381 732
Provision for self-insured losses (854) 647
Deferred income taxes (4) (53)
8,303 5,189
Changes in operating assets and
liabilities (2,293) (717)
Changes in other assets and liabilities (2,174) 705
Cash provided by operations 3,836 5,177
INVESTMENTS:
Purchases of property, plant and
equipment (2,201) (1,133)
FINANCING:
Repayment of long-term debt (63) (325)
Payment of dividends (143) (87)
Cash used for financing (206) (412)
CURRENCY ADJUSTMENTS - Effect of exchange rate
changes on cash flows (57) (141)
CASH:
Net increase 1,372 3,491
Beginning balance 12,973 8,088
$14,345 $11,579
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
October 31, 1995
(unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included.
Interim results for the three months ended October 31, 1995 are not necessarily
indicative of the results that may be expected for the fiscal year as a whole.
For further information, refer to consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the
fiscal year ended July 31, 1995.
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 October 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. The Company's
insurance program for fiscal year 1996 is comprised of a self-insured retention
of $5 million and catastrophic coverage of $20 million in excess of the
retention. The Company contracts with an independent insurance firm to provide
claims handling and adjustment services. The Company's estimates with respect
to claims are based on internal evaluations of the merits of individual claims
and the reserves assigned by the Company's independent insurance carrier. The
methods of making such estimates and establishing the resulting accrued
liability are reviewed continually, and any adjustments resulting therefrom are
reflected in current earnings. Claims are paid over varying periods, which
generally do not exceed five years. Accrued liabilities for future claims are
not discounted.
With respect to all claims of which the Company is aware, accrued liabilities
of $7.6 million and $8.4 million were established at October 31, 1995 and July
31, 1995, respectively. While the Company's ultimate liability may exceed or
be less than the amounts accrued, the Company believes that it is unlikely that
it would experience losses that are materially in excess of such reserve
amounts. As of October 31, 1995 and July 31, 1995, there were no insurance
recoverables or offset implications and there were no claims by the Company
being contested by insurers.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company is a leading manufacturer, distributor and international marketer
of mobile elevating work platforms and truck-mounted material handling
equipment used primarily in construction and industrial applications. Sales
are made principally to independent equipment distributors that rent 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
operating costs and increase manufacturing efficiencies. The Company also
considers the development and introduction of new and improved products and
expansion into underserved geographic markets to be important factors in
maintaining and strengthening its market position and reducing cyclical
fluctuations in financial performance and cash flows.
Results of Operations
Net sales for the first quarter of fiscal 1996 were $86.7 million, $33.0
million or 61% above the first quarter last year. The growth in revenues
included increased demand across virtually all product classes and markets. New
products introduced over the preceding two-year period contributed over 25% to
sales.
Gross profit, as a percent of net sales, was 25% for the first fiscal quarter
of 1996 and 24% for the same quarter of 1995. Lower manufacturing costs due
to continued improvements in manufacturing processes, lower warranty and
product liability costs, and higher selling prices contributed to the margin
improvement. Offsetting factors included increased materials costs, a less
profitable product mix and costs associated with outsourcing additional
production due to capacity limitations and the substantial increase in demand.
Selling, general and administrative expenses were $9.7 million, or 11.2%,
of net sales, for the first fiscal quarter of 1996 compared to $6.8 million,
or 12.6% of net sales for the 1995 comparable period. The dollar increase
included increased personnel and related expenses, higher consulting and
research and development costs.
The effective income tax rate was 35% for the first fiscal quarters of 1996 and
1995. The effective income tax rate for the 1996 quarter reflects an increased
tax benefit related to export sales. The rate for 1995 quarter reflects a
decrease in estimated taxes payable.
Financial Condition
The Company continues to maintain a strong financial position. Working capital
was $48.7 million at October 31, 1995 and $45.4 million at July 31, 1995.
Despite a doubling of earnings, cash flow from operating earnings was lower
for the fiscal 1996 quarter due to increased working capital requirements to
support the growth in sales and additions to the Company's fleet of equipment
held for rental.
At October 31, 1995, the Company had unused credit lines totaling $10 million
and cash balances of $14.3 million. The Company considers these resources,
coupled with cash expected to be generated by operations, adequate to meet its
foreseeable funding needs, including approximately $7 million budgeted for
capital expenditures in fiscal 1996. In addition, the Company intends to
relocate and expand its scissor lift manufacturing facility in 1996.
Acquisition, relocation and refitting costs are estimated to be $9 million
payable over twelve months. The Company intends to finance this project with
borrowed capital.
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.
Outlook
Management expects fiscal year 1996 to be another strong year.
Consensus economic forecasts predict no domestic recession in the near term,
and forecasts for Western Europe and the Pacific Rim nations, except Japan, are
generally optimistic. Demand for the Company's elevating work platforms
remains very strong, while demand for material handling products has softened
coinciding with reduced residential construction activity. Rental fleet
utilization remains strong throughout the United States and demand for used
equipment exceeds its supply. The Company's backlog is robust, and new
products to be introduced during the third fiscal quarter, together with
expanded international distribution, should spur demand. Management has
targeted additional manufacturing cost reductions and a slight improvement in
gross profit as a percentage of net sales. Capacity constraints and
outsourcing requirements, particularly for scissor lift production, will be
offsetting factors. This should be alleviated in fiscal 1997 once the new
scissor lift manufacturing facility is fully operational. Product mix also
affects gross margins and is difficult to forecast. The timing and terms of
the proposed divestiture of the Material Handling Division are uncertain, but
Management does not expect this transaction to have a material effect on the
Company's results of operations in fiscal 1996.
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 October 31, 1995, and the related
condensed consolidated statements of income and cash flows for the three-month
periods ended October 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, 1995, 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 7, 1995, 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, 1995,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
November 14, 1995 Ernst & Young LLP
Baltimore, Maryland
PART II OTHER INFORMATION
Item 1
None/not applicable.
Item 2
Effective as of November 22, 1995, the Company's Articles of
Incorporation were amended to increase the Company's authorized Capital
Stock par value $.20 per share to 35,000,000 shares. The effects of this
action on the rights of the Company's shareholders were previously
reported in the Company's proxy materials filed with the Commission on
October 16, 1995.
Item 3
None/not applicable.
Item 4
The Company held its Annual Meeting of Shareholders on November 20, 1995.
Management solicited proxies for the election of eight directors, for
ratification of the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1996 fiscal year and ratification and
approval of amendments to the Company's Articles of Incorporation. Of the
14,309,084 shares of capital stock outstanding on the record date,
11,440,447 were voted in person or by proxy at the meeting date. The
tabulated results are set forth below:
1. Election of directors:
FOR WITHHELD
L. D. Black 11,401,371 39,076
C. H. Diller, Jr. 11,402,233 39,214
G. R. Kempton 11,403,019 37,428
J. A. Mezera 11,388,669 51,778
G. Palmer 11,402,619 37,828
S. Rabinowitz 11,401,619 38,828
T. C. Wajnert 11,379,919 60,528
C. O. Wood, III 11,404,019 36,428
2. Ratification of the appointment of Ernst & Young LLP as independent
auditors for the ensuing year.
FOR AGAINST ABSTAIN
11,406,783 13,732 0
3. Ratification and approval of amendments to the Company's Articles of
Incorporation.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
9,328,122 1,892,578 87,090 132,657
Item 5
None/not applicable.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
3 Articles of Incorporation as amended through November 22, 1995
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 October 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