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