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