UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended October 31, 1996 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 November 25, 1996, there were 43,559,623 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 $723,014,080. PART I FINANCIAL INFORMATION JLG INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) October 31, July 31, 1996 1996 (Unaudited) ASSETS Current assets Cash $29,605 $30,438 Accounts receivable 57,356 54,342 Inventories: Finished goods 23,627 12,925 Work in process 15,530 13,972 Raw materials 11,265 12,536 50,422 39,433 Future income tax benefits 3,965 3,908 Other current assets 2,741 741 Total Current Assets 144,089 128,862 Property, plant and equipment - net 35,554 34,094 Equipment held for rental - net 16,423 13,459 Other assets 7,288 6,213 $203,354 $182,628 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings, including current portion of long-term debt $210 $243 Accounts payable 37,388 34,535 Accrued expenses 26,808 22,277 Total Current Liabilities 64,406 57,055 Long-term debt, less current portion 1,931 1,951 Other liabilities and deferred credits 9,980 10,414 Shareholders' equity Capital stock: Authorized shares: 100,000 at $.20 par Outstanding shares: Fiscal 1997- 43,546 shares; Fiscal 1996- 43,382 shares 8,709 8,676 Additional paid-in capital 9,590 7,879 Equity adjustment from translation (2,100) (2,060) Retained earnings 110,838 98,713 Total Shareholders' Equity 127,037 113,208 $203,354 $182,628 The accompanying notes are an integral part of these financial statements. JLG INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF INCOME (in thousands, except per share data) (Unaudited) Three Months Ended October 31, 1996 1995 Net sales $120,205 $86,701 Cost of sales 87,503 65,207 Gross profit 32,702 21,494 Selling, general and administrative expenses 13,484 9,711 Income from operations 19,218 11,783 Other income (deductions): Interest expense (41) (45) Miscellaneous, net 413 231 Income before taxes 19,590 11,969 Income tax provision 7,248 4,189 Net income $12,342 $7,780 Net income per share $.28 $.18 Dividends per share $.005 $.0033 Weighted average shares outstanding 43,472 42,882 The accompanying notes are an integral part of these financial statements. JLG INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited) Three Months Ended October 31, 1996 1995 OPERATIONS: Net income $12,342 $7,780 Adjustments to reconcile net income to cash provided by (used for) operating activities: Depreciation and amortization 2,389 1,381 Provision for self-insured losses 900 600 Deferred income taxes (130) (4) 15,501 9,757 Changes in operating assets and liabilities (9,524) (2,293) Changes in equipment held for rental (3,655) (2,677) Changes in other assets and liabilities (1,408) (1,468) Cash provided by operations 914 3,319 INVESTMENTS: Purchases of property, plant and equipment (3,181) (2,201) FINANCING: Repayment of long-term debt (52) (63) Payment of dividends (217) (143) Proceeds from exercise of stock options 1,743 517 Cash provided by financing 1,474 311 CURRENCY ADJUSTMENTS: Effect of exchange rate changes on cash flows (40) (57) CASH: Net (decrease) increase (833) 1,372 Beginning balance 30,438 12,973 Ending balance $29,605 $14,345 The accompanying notes are an integral part of these financial statements. JLG INDUSTRIES, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS October 31, 1996 (unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated condensed 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, 1996 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, 1996. NOTE B - NET INCOME PER SHARE Net income per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. The incremental shares that would have been outstanding upon the assumed exercise of dilutive stock options were immaterial and therefore, not considered in the calculation. NOTE C - 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, 1996, must necessarily be based on management's estimate of expected fiscal year-end inventory levels and costs. NOTE D - 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 1997 is comprised of a self- insured retention of $5 million and catastrophic coverage of $25 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 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 were established at October 31, 1996 and July 31, 1996. 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, 1996 and July 31, 1996, 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 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. 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 for the First Quarters of Fiscal 1997 and 1996 Sales for the first fiscal quarter of 1997 reached $120.2 million, up 39% from the previous high of $86.7 million for fiscal 1996's first quarter, which included sales of $4.8 million from the Company's Material Handling Division that was divested in May 1996. Excluding these sales for comparative purposes, the increase was 47%. The growth in sales was generally across all product classes and geographic markets. Sales to customers outside the United States were 30% and 25% of net sales for the first quarter of 1997 and 1996, respectively. Gross profit, as a percent of sales, was 27% for the first fiscal quarter of 1997 and 25% for the comparable period of 1996. The impact of spreading fixed costs over a larger sales volume was the primary contributor to the improvement. Selling, general and administrative expenses were $3.8 million higher in the first fiscal quarter of 1997 compared to the same quarter last year, but were 11% of net sales for both periods. The dollar increase included increased personnel and related costs, as well as higher sales and marketing expenses associated with increased international business, consulting, and depreciation costs. These increases were partially offset by costs associated with the divested Material Handling Division in the first quarter of 1996 and lower bad debt expenses. The effective income tax rates for the first quarter of fiscal 1997 and 1996 were 37% and 35%, respectively. The lower effective rate for the 1996 first quarter was due to projected tax benefits related to export sales. Financial Condition The Company continues to maintain a strong financial position. Working capital increased to $79.7 million at October 31, 1996 from $71.8 million at July 31, 1996. Despite the increase in earnings, cash flow from operations was lower for the first fiscal quarter of 1997 compared to the prior year first quarter principally due to increased working capital requirements to support the growth in sales and additions to the JLG Equipment Services fleet of equipment held for rental. At October 31, 1996, the Company had unused credit lines totaling $20 million and cash balances of $29.6 million. The Company considers these resources, coupled with cash expected to be generated by operations, adequate to meet its planned funding needs, which includes approximately $55 million budgeted for capital-related projects in fiscal 1997. The major items planned are approximately $25 million to further expand the JLG Equipment Services fleet of rental machines, $7 million to complete the expansion of the Company's scissor lift plant and $13 million to complete phase I and start phase II of the Company's boom lift manufacturing capacity expansion. 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 Note D - -- 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 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 report. The outlook for the balance of fiscal year 1997 remains positive. Demand for the Company's products continues to be 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 Company's scissor lift and boom lift production facilities should improve its ability to satisfy customer demand and should improve product profit margins. Profit margins should also benefit from new and redesigned products and from leveraging fixed manufacturing costs over a higher sales volume. Product mix also affects gross margin and is difficult to forecast. Provided there is no softening in demand, these factors bode well for another strong year in fiscal 1997. Ernst & Young LLP Independent Accountants' 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, 1996, and the related condensed consolidated statements of income and cash flows for the three-month periods ended October 31, 1996 and 1995. 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, 1996, 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 3, 1996, 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, 1996, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Ernst & Young LLP Baltimore, Maryland November 11, 1996 PART II OTHER INFORMATION ITEM 1 None/not applicable. ITEM 2 Effective as of November 19, 1996, the Company's Articles of Incorporation were amended to increase the Company's authorized Capital Stock par value $.20 per share to 100,000,000 shares. The effect 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 11, 1996. ITEM 3 None/not applicable. ITEM 4 The Company held its Annual Meeting of Shareholders on November 18, 1996. 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 1997 fiscal year and ratification and approval of amendments to the Company's Articles of Incorporation. Of the 43,544,034 shares of capital stock outstanding on the record date, 38,929,301 were voted in person or by proxy at the meeting date. The tabulated results are set forth below: 1. Election of directors: FOR AGAINST L. D. Black 38,770,912 158,389 C. H. Diller 38,773,010 156,291 G. R. Kempton 38,672,697 256,604 J. A. Mezera 38,771,527 157,774 G. Palmer 38,770,422 158,879 S. Rabinowitz 38,758,397 170,904 T. C. Wajnert 38,769,247 160,054 C. O. Wood, III 38,770,892 158,409 2. Ratification of the appointment of Ernst & Young LLP as independent auditors for the ensuing year. FOR AGAINST ABSTAIN 38,613,142 84,878 231,281 3. Ratification and approval of amendments to the Company's Articles of Incorporation. FOR AGAINST ABSTAIN 36,921,049 1,636,911 371,341 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 19, 1996 15 Letter re: Unaudited Interim Financial Information 99 Cautionary Statements Pursuant to the Securities Litigation	Reform Act (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, 1996. 	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