-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MMeEpYC2ukqrB74Lqgn6jQ9eu1kcoWQfFz0nj2U2F0v4oQz6WU+D/GFJUvVV+u2L Kc4axwWsn/r8tyxEXNj74A== 0001017136-97-000009.txt : 19971113 0001017136-97-000009.hdr.sgml : 19971113 ACCESSION NUMBER: 0001017136-97-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRADALL INDUSTRIES INC CENTRAL INDEX KEY: 0001017136 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 363381606 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-28736 FILM NUMBER: 97715473 BUSINESS ADDRESS: STREET 1: 406 MILL AVE SW CITY: NEW PHILADELPHIA STATE: OH ZIP: 44663 BUSINESS PHONE: 3303392211 MAIL ADDRESS: STREET 1: 406 MILL AVE SW CITY: NEW PHILADELPHIA STATE: OH ZIP: 44663 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 ------------------ [ ] 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 001-12049 --------- Gradall Industries, Inc. -------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-3381606 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 406 Mill Avenue S. W., New Philadelphia, OH 44663 ------------------------------------------------- (Address of principal executive offices) (330) 339-2211 --------------- (Registrant's telephone number, including area code) Not applicable ---------------- (Former name, former address and former fiscal year, if changed since last report) 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 ---- ---- Number of shares outstanding at September 30, 1997 Common Stock, $.001 par value: 8,940,194 GRADALL INDUSTRIES, INC. FORM 10-Q QUARTER ENDED SEPTEMBER 30, 1997 Index ----- Page ---- PART I FINANCIAL INFORMATION Item 1 -- Consolidated Financial Statements 1 Item 2 -- Management's Discussion and Analysis of Financial Conditionand Results of Operations 5 PART II OTHER INFORMATION Item 6 -- Exhibits and Reports on Form 8-K 10 Signatures 10 PART I - FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
GRADALL INDUSTRIES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in Thousands, Except Per Share Data) Three Months Ended Nine Months Ended ------------------------------- ------------------------------- September 30, September 30, September 30, September 30, 1997 1996 1997 1996 ------------- ------------- ------------- ------------- Net sales $ 40,310 $ 35,205 $ 114,576 $ 104,841 Cost of sales 30,496 26,941 86,877 80,594 ------------- ------------- ------------- ------------- Gross profit 9,814 8,264 27,699 24,247 Operating expenses: Engineering 904 727 2,769 2,286 Selling and marketing 1,965 1,494 5,480 4,853 Administrative 1,635 1,469 4,731 4,011 ------------- ------------- ------------- ------------- Operating income 5,310 4,574 14,719 13,097 Interest expense 132 755 546 2,805 Other, net (72) 373 329 1,048 ------------- ------------- ------------- ------------- Income before provision for taxes 5,250 3,446 13,844 9,244 Income tax provision 2,051 1,351 5,411 3,623 ------------- ------------- ------------- ------------- Income before extraordinary charge 3,199 2,095 8,433 5,621 Extraordinary charge 973 973 ------------- ------------- ------------- ------------- Net income $ 3,199 $ 1,122 $ 8,433 $ 4,648 ============= ============= ============== ============= Weighted average shares outstanding 8,939,627 6,887,120 8,939,406 6,290,754 Net income per share: Before extraordinary charge $ 0.36 $ 0.30 $ 0.94 $ 0.89 After extraordinary charge 0.36 0.16 0.94 0.74 Pro Forma(1) - --------------- Weighted average shares outstanding 8,939,294 8,939,294 Net income per share: $ 0.27 $ 0.77 (1) Presented as if the issuance of shares of common stock pursuant to the initial public offering and the application of the net proceeds thereof had occurred on January 1, 1996. The accompanying notes are an integral part of these consolidated financial statements.
GRADALL INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands) Sep. 30, 1997 Dec. 31, 1996 ------------- ------------- ASSETS (unaudited) -------- Current assets: Cash $ 1,252 $ 215 Accounts receivable - trade, net of allowance for doubtful accounts 22,114 16,846 Inventories 22,281 21,326 Prepaid expenses and deferred charges 722 495 Deferred income taxes 1,151 1,151 ------------ ----------- Total current assets 47,520 40,033 Deferred income taxes 5,524 5,257 Property, plant and equipment, net 12,358 11,535 Other assets 1,276 1,401 ------------ ----------- Total assets $ 66,678 $ 58,226 ============ =========== LIABILITIES & STOCKHOLDERS' EQUITY ----------------------------------- Current liabilities: Current portion long term debt $ 187 $ 174 Accounts payable - trade 14,891 13,405 Accrued other expenses 11,304 11,547 ----------- --------- Total current liabilities 26,382 25,126 ----------- --------- Long term obligations: Long-term debt, net of current portion 5,725 7,736 Accrued post-retirement benefit cost 15,391 14,604 Other long term liabilities 1,684 1,684 ----------- --------- Total long term obligations 22,800 24,024 ----------- --------- Total liabilities 49,182 49,150 ----------- --------- Stockholders' equity: Common shares, $.001 par value; 18,000,000 shares authorized; 8,940,194 issued and outstanding 9 9 Additional paid-in capital 38,894 38,907 Accumulated (deficit) surplus (21,407) (29,840) ----------- --------- Total stockholders' equity 17,496 9,076 ----------- --------- Total liabilities and stockholders' equity $ 66,678 $ 58,226 =========== ========= The accompanying notes are an integral part of these consolidated financial statements.
GRADALL INDUSTRIES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in Thousands) Nine Months Ended ------------------------------- Sep. 30, 1997 Sep. 30, 1996 ------------- ------------- Operating Activities: Net income $ 8,433 $ 4,648 Adjustments to reconcile net income to net cash provided by operating activities: Extraordinary charge, before tax benefit 1,595 Post-retirement benefit transition obligation 787 663 Depreciation and amortization 1,329 1,278 Deferred income taxes (267) (225) Gain on sale of property, plant and equipment (7) (85) Increase in accounts receivable (5,268) (6,391) (Increase)/decrease in inventory (955) 735 Increase in prepaid expenses (227) (111) Increase in other assets (1) (192) Increase/(decrease) in accounts payable and accrued expenses 1,243 (450) ------------ ------------- Net cash provided by operating activities 5,067 1,465 ----------- ------------- Investing Activities: Proceeds from sale of property, plant and equipment 12 98 Purchase of property, plant and equipment (2,031) (1,535) ----------- ------------- Net cash used in investing activities (2,019) (1,437) ----------- ------------- Financing Activities: Net proceeds from initial public offering 26,929 Payment of term debt (10,000) Payment of subordinated debt (10,000) Net reduction in revolver (5,303) Net advances (repayments) on revolving line of credit (1,868) Redemption of preferred stock (2,000) Repayments on capital leases (130) (134) Other (13) ----------- ------------- Net cash used in financing activities (2,011) (508) ----------- ------------- Net increase/(decrease) in cash 1,037 (480) ----------- ------------- Cash at beginning of year 215 1,537 ----------- ------------- Cash at end of period $ 1,252 $ 1,057 =========== ============ The accompanying notes are an integral part of these consolidated financial statements.
GRADALL INDUSTRIES, INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: The unaudited interim financial information as of September 30, 1997 and 1996, and for the nine months ended September 30, 1997 and 1996, has been prepared on the same basis as the audited financial statements. In the opinion of management, such unaudited information includes all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the interim information. Operating results for the nine months ended September 30, 1997, are not necessarily indicative of the results that may be expected for the entire year ending December 31, 1997. 2. INVENTORIES: Inventories were comprised of: September 30, December 31, 1997 1996 ------------- ------------ Raw materials $ 1,243 $ 1,167 Work in process 21,110 18,402 Finished goods 5,810 7,187 ------------- ----------- 28,163 26,756 LIFO reserve (5,882) (5,430) ------------- ----------- Total inventory $ 22,281 $ 21,326 ============= ============ 3. PUBLIC OFFERING: On September 3, 1996, the Company completed an initial public offering in which 2,950,000 shares of common stock were issued for a total sum of $29.5 million. Expenses incurred in connection with the issue approximated $2.6 million. The net proceeds of the offering were used as follows: Repay outstanding senior term debt $ 9,550 Repay subordinate debt 10,000 Redeem preferred stock 2,000 Reduce revolving credit liability 5,379 In connection with the offering, the Company increased the number of its authorized shares of common stock from 2,200 to 18,000,000 and effected a 5,540 to 1 stock split. All applicable share and per share data have been retroactively adjusted for the stock split. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 4. CONTINGENCIES: The Company is involved in certain claims and litigation related to its operations. Based upon the facts known at this time, management is of the opinion that the ultimate outcome of all such claims and litigation will not have a material adverse effect on the financial condition or results of operations of the Company. ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL Gradall Industries operates in two segments of the construction equipment market, hydraulic excavators and rough-terrain variable reach material handlers. As a result of the growth of Gradall's rough terrain variable reach material handler business and related parts, this segment accounted for the majority of the Company's revenues in 1996. During the first nine months of fiscal 1997 material handlers continue to lead the Company's net sales. In July 1997 the Company introduced the model 544D, which is one of the largest material handlers in the industry. Broad based acceptance of this product in conjunction with a supportive market for residential and non-residential construction established record material handler sales for the first nine months of 1997. Although there has been some downward pressure on rental rates, rental utilization as measured by the Company exceeds 85%, with a continuing strong demand from national rental companies. Since its introduction in May 1997, the XL2200 hydraulic excavator has been well received by distributors and contractors. During the third quarter Gradall introduced the XL2210 hydraulic excavator, which is targeted for the industrial markets. Total Gradall excavator shipments for the first nine months has remained even with the same time period in 1996. Gross profit and operating profit continue to increase as a percent of net sales. For the first nine months of 1997 gross profit as a percent of sales is up 1.1% from 23.1% to 24.2%. Production efficiencies resulting from increased volume and capital investments along with continued negotiation of favorable long term purchasing agreements have reduced product costs. Operating expenses for engineering, marketing and administration have increased to support the aggressive new product development plan and higher sales volume; however, operating profit continues to increase as a percent of sales. RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 1997, COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 1996. Net Sales. Net sales for the three months ended September 30, 1997, were $40.3 million, an increase of $5.1 million or 14.5% compared to $35.2 million for the three months ended September 30, 1996. The increase in net sales was attributable to significant increases in unit volume of both excavators and material handlers and a moderate increase in service parts sales. Gross Profit. Gross profit for the three months ended September 30, 1997, was $9.8 million, an increase of $1.6 million or 18.8%, compared to $8.3 million for the three months ended September 30, 1996. Gross profit as a percentage of net sales increased to 24.3% for the three months ended September 30, 1997, from 23.5% for the three months ended September 30, 1996, primarily due to improved production efficiencies and the economies of higher production volume. Engineering. Engineering expense for the three months ended September 30, 1997, was $0.9 million, an increase of $0.2 million or 24.3%, compared to $0.7 million for the three months ended September 30, 1996. This increase was due to the addition of engineering personnel to support new product development. Selling and Marketing. Selling and marketing expense for the three months ended September 30, 1997, was $2.0 million, an increase of $0.5 million or 31.5% compared to $1.5 million for the three months ended September 30, 1996. This increase is attributable to the addition of field sales and service representatives and interest subsidy for a higher number of dealer floor plan units. Administrative. Administrative expenses for the three months ended September 30, 1997, were $1.6 million, an increase of $0.2 million or 11.3%, compared to $1.5 million for the three months ended September 30, 1996. This increase was primarily attributable to wages and benefits, additional personnel to support new MIS projects and the higher business volume. Interest Expense. Interest expense for the three months ended September 30, 1997, was $0.1 million, a decrease of $0.6 million or 82.5%, compared to $0.8 million for the three months ended September 30, 1996. This decrease in interest expense was due to lower borrowings in connection with the debt reduction from the proceeds of the September 3, 1996, initial public offering. Income Tax Provision. Income tax expense for the three months ended September 30, 1997, was $2.1 million, an increase of $0.7 million or 51.8%, compared to $1.4 million for the three months ended September 30, 1996, and represented an effective tax rate of 39.1% and 39.2%, respectively. Income Before Extraordinary Charge. Income before extraordinary charge for the three months ended September 30, 1997, was $3.2 million, an increase of $1.1 million or 52.7%, compared to $2.1 million for the three months ended September 30, 1996. This increase was attributable to the increased sales volume, increased margins and lower interest expense. Extraordinary Charge. An extraordinary charge of $1.0 million, net of taxes, related to early extinguishment of debt which was incurred in September 1996 to write off unamortized deferred financing costs and the discount on subordinated debt which were paid off with the proceeds from the initial public offering which was completed on September 3, 1996. Net Income Per Share After Extraordinary Charge. Net income per share after extraordinary charge for the three months ended September 30, 1997, was $0.36, an increase of $0.20 per share or 125.0% compared to the $0.16 per share for the three months ended September 30, 1996. This increase was attributable to the increased sales volume, increased margins and lower interest expense. Pro Forma Net Income Per Share. Net income per share for the three months ended September 30, 1997, was $0.36, an increase of $0.09 per share or 33.3% compared to the pro forma net income per share of $0.27 for the three months ended September 30, 1996. The pro forma net income is presented as if the issuance of shares of common stock pursuant to the initial public offering and the application of the net proceeds thereof had occurred on January 1, 1996. NINE MONTHS ENDED SEPTEMBER 30, 1997, COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1996. Net Sales. Net sales for the nine months ended September 30, 1997, were $114.6 million, an increase of $9.7 million or 9.3% compared to $104.8 million for the nine months ended September 30, 1996. The increase in net sales was attributable to a significant increase in volume of material handlers and service parts sales. Gross Profit. Gross profit for the nine months ended September 30, 1997, was $27.7 million, an increase of $3.5 million or 14.2% compared to $24.2 million for the nine months ended September 30, 1996. Gross profit as a percentage of net sales increased to 24.2% for the nine months ended September 30, 1997, from 23.1% for the nine months ended September 30, 1996, primarily due to improved production efficiencies and a more profitable sales mix within the material handler product line. Engineering. Engineering expense for the nine months ended September 30, 1997, was $2.8 million, an increase of $0.5 million or 21.1% compared to $2.3 million for the nine months ended September 30, 1996. This increase was due to the addition of engineering personnel to support new product development. Selling and Marketing. Selling and marketing expenses for the nine months ended September 30, 1997, were $5.5 million, an increase of $0.6 million or 12.9% compared to $4.9 million for the nine months ended September 30, 1996. This increase was primarily attributable to the addition of marketing personnel to support the increased sales volume and interest subsidy for a higher number of dealer floor plan units. Administrative. Administrative expenses for the nine months ended September 30, 1997, were $4.7 million, an increase of $0.7 million or 18.0% compared to $4.0 million for the nine months ended September 30, 1996. This increase was primarily attributable to wage and benefits and extra security during the three-week work stoppage in March and April. Interest Expense. Interest expense for the nine months ended September 30, 1997, was $0.5 million, a decrease of $2.3 million or 80.5% compared to $2.8 million for the nine months ended September 30, 1996. This decrease in interest expense was due to lower borrowings in connection with the debt reduction from the proceeds of the September 3, 1996, initial public offering. Income Tax Provision. Income tax expense for the nine months ended September 30, 1997, was $5.4 million, an increase of $1.8 million or 49.4% compared to $3.6 million for the nine months ended September 30, 1996, and represented an effective tax rate of 39.1% and 39.2%, respectively. Income Before Extraordinary Charge. Income before extraordinary charge for the nine months ended September 30, 1997, was $8.4 million, an increase of $2.8 million or 50.0% compared to $5.6 million for the nine months ended September 30, 1996. This increase was attributed to the increased sales volume, increased margins and lower interest expense. Extraordinary Charge. An extraordinary charge of $1.0 million, net of taxes, related to early extinguishment of debt which was incurred in September 1996 to write off unamortized deferred financing costs and the discount on subordinated debt which were paid off with the proceeds from the initial public offering on September 3, 1996. Net Income Per Share After Extraordinary Charge. Net income per share after extraordinary charge for the nine months ended September 30, 1997, was $0.94, an increase of $0.20 or 27.0% compared to $0.74 for the nine months ended September 30, 1996. The higher sales, higher margins and lower interest expense in 1997 were offset by a lower number of shares outstanding in 1996. Pro Forma Net Income Per Share. Net income per share for the nine months ended September 30, 1997, was $0.94, an increase of $0.17 per share, or 22.1% compared to the pro forma net income per share of $0.77 for the nine months ended September 30, 1996. The pro forma income is presented as if the issuance of shares of common stock pursuant to the initial public offering and the application of the net proceeds thereof had occurred on January 1, 1996. LIQUIDITY AND CAPITAL RESOURCES The Company generated net cash from operating activities of $5.1 million during the first nine months of 1997. Net cash from operating activities resulted from $8.4 million of net income, $1.3 million of depreciation and $0.5 million from post retirement benefit net of deferred taxes reduced by $5.2 million of net cash used by changes in operating assets and liabilities, primarily due to an increase in accounts receivable to support the revenue growth and reduced by an increase in accounts payable primarily from the higher volume of purchases. For the first nine months of 1997, net cash invested in purchases of new equipment and permanent tooling was $2.0 million. Management expects to complete several large cap ex projects during the fourth quarter to bring 1997 total capital expenditures into the $4 to $5 million range. For the next several years Gradall plans to continue the Company's multi-year capital investment program to increase productivity and product output at the New Philadelphia facility. For the first nine months of 1997, net borrowings under the Company's lines of credit decreased as a result of strong net cash from operating activities. A substantial amount of the Company's working capital is invested in accounts receivable and inventories. The Company periodically reviews accounts receivable for noncollectibility and inventories for obsolescence and establishes allowances it believes are appropriate. As of September 30, 1997, the Company had borrowed $5.4 million of its $25 million bank revolving credit facility which is collateralized by most of the assets of the Company. Interest is calculated, at the Company's option, at LIBOR plus 1.0% or a commercial bank's base rate less 0.5% and requires a commitment fee of 0.25% per annum on the unused portion of the revolving credit commitment. At September 30, 1997, $19.6 million was available for future borrowings under the revolver and the Company was in compliance with all financial covenants. The Company believes that cash flows from operations and funds available under its revolving credit facility will be adequate to fund its working capital and capital expenditure requirements for the foreseeable future. NEW ACCOUNTING STANDARDS In February, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128, "Earnings per Share," which is effective for financial statements issued for periods after December 15, 1997. This Statement simplifies the standards for computing earnings per share ("EPS") and makes them comparable to international EPS standards. The Company will adopt the provisions of SFAS for its fiscal year ending December 31, 1997, but does not expect such adoption to have a material impact on EPS. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: None b) Reports on Form 8-K filed for the three months ended September 30, 1997: None SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Gradall Industries, Inc. Date: November 13, 1997 By: /s/ Barry L. Phillips ------------------------ Barry L. Phillips President and Chief Executive Officer Date: November 13, 1997 By: /s/ Bruce A. Jonker ---------------------- Bruce A. Jonker Chief Financial Officer EX-27 2
5 1000 3-MOS DEC-31-1997 SEP-30-1997 1252 0 22114 0 22281 47520 12358 0 66678 26382 0 0 0 9 17496 66678 40310 40310 30496 30496 0 0 132 5250 2051 3199 0 0 0 3199 .27 .00
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