-----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, TrsiSSqP6NUtODMSQfOU+H2bXlDdu8oNEzyOVChADecKi7CKlTb8rdbQlZ6HU2v0 f0VvEM8CNm7oXoibg2YxOA== 0000216275-96-000003.txt : 19960314 0000216275-96-000003.hdr.sgml : 19960314 ACCESSION NUMBER: 0000216275-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960313 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: JLG INDUSTRIES INC CENTRAL INDEX KEY: 0000216275 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION, MINING & MATERIALS HANDLING MACHINERY & EQUIP [3530] IRS NUMBER: 251199382 STATE OF INCORPORATION: PA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08454 FILM NUMBER: 96534309 BUSINESS ADDRESS: STREET 1: JLG DR CITY: MCCONNELLSBURG STATE: PA ZIP: 17233 BUSINESS PHONE: 7174855161 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended January 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 February 23, 1996, there were 14,383,098 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 $474,642,234. PART I FINANCIAL INFORMATION JLG INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) January 31, July 31, 1996 1995 (Unaudited) ASSETS Current assets Cash $2,817 $12,973 Accounts receivable 49,303 33,466 Inventories: Finished goods 13,136 7,630 Work in process 15,757 13,357 Raw materials 14,322 12,459 43,215 33,446 Future income tax benefits 4,117 4,219 Other current assets 1,583 464 Total Current Assets 101,035 84,568 Property, plant and equipment - net 28,322 24,785 Equipment held for rental - net 9,197 5,052 Other assets 5,296 5,303 $143,850 $119,708 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings, including current portion of long-term debt $8,591 $243 Accounts payable 22,837 20,028 Accrued expenses 16,198 18,893 Total Current Liabilities 47,626 39,164 Long-term debt, less current portion 2,135 2,260 Other liabilities and deferred credits 9,330 9,854 Shareholders' equity Capital stock: Authorized shares: 35,000 at $.20 par Outstanding shares: Fiscal 1996 - 14,383 shares; Fiscal 1995 - 14,275 shares 2,877 2,855 Additional paid-in capital 11,071 10,121 Equity adjustment from translation (2,204) (1,799) Retained earnings 73,015 57,253 Total Shareholders' Equity 84,759 68,430 $143,850 $119,708 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 Six Months Ended January 31, January 31, 1996 1995 1996 1995 Net sales $87,558 $52,175 $174,259 $105,899 Cost of sales 65,100 38,726 130,307 79,466 Gross profit 22,458 13,449 43,952 26,433 Selling, general and administrative expenses 9,847 7,717 19,557 14,505 Income from operations 12,611 5,732 24,395 11,928 Other deductions: Interest expense (58) (125) (103) (237) Miscellaneous, net 168 137 399 26 Income before taxes 12,721 5,744 24,691 11,717 Income tax provision 4,453 1,992 8,642 4,102 Net income $8,268 $3,752 $16,049 $7,615 Net income per share $.58 $.27 $1.12 $.54 Dividends per share $.01 $.0063 $.02 $.0125 Weighted average shares outstanding 14,356 14,149 14,325 14,088 The accompanying notes are an integral part of these financial statements. JLG INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Six Months Ended January 31, 1996 1995 OPERATIONS: Net income $16,049 $7,615 Adjustments to reconcile net income to cash provided by (used for) operating activities: Depreciation and amortization 2,883 1,567 Provision for self-insured losses 1,480 1,380 Deferred income taxes 498 91 20,910 10,653 Changes in operating assets and liabilities (26,911) (9,577) Changes in other assets and liabilities (6,783) (2,266) Cash used for operations (12,784) (1,190) INVESTMENTS: Purchases of property, plant and equipment (5,875) (3,183) FINANCING: Net issuance of short-term debt 8,350 Repayment of long-term debt (127) (701) Payment of dividends (287) (176) Proceeds from exercise of stock options 972 435 Capital stock contributed to retirement plan 1,159 Cash provided by financing 8,908 717 CURRENCY ADJUSTMENTS: Effect of exchange rate changes on cash flows (405) (168) CASH: Net decrease (10,156) (3,824) Beginning balance 12,973 8,088 $2,817 $4,264 The accompanying notes are an integral part of these financial statements. JLG INDUSTRIES, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS January 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 and six months ended January 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, 1995. NOTE B - INVENTORIES AND COST OF SALES A precise inventory valuation under the LIFO (last-in, first-out) method can only be made at the end of each fiscal year; therefore, interim LIFO inventory valuation determinations, including the determination at January 31, 1996, must necessarily be based on management's estimate of expected fiscal year-end inventory levels and costs. NOTE C - COMMITMENTS AND CONTINGENCIES The Company is a party to personal injury and property damage litigation arising out of incidents involving the use of its products. The Company's insurance program for fiscal year 1996 is comprised of a self-insured retention of $5 million and catastrophic coverage of $20 million in excess of the retention. The Company contracts with an independent insurance firm to provide claims handling and adjustment services. The Company's estimates with respect to claims are based on internal evaluations of the merits of individual claims and the reserves assigned by the Company's independent insurance carrier. The methods of making such estimates and establishing the resulting accrued liability are reviewed continually, and any adjustments resulting therefrom are reflected in current earnings. Claims are paid over varying periods, which generally do not exceed five years. Accrued liabilities for future claims are not discounted. With respect to all claims of which the Company is aware, accrued liabilities of $8.0 million and $8.4 million were established at January 31, 1996 and July 31, 1995, respectively. While the Company's ultimate liability may exceed or be less than the amounts accrued, the Company believes that it is unlikely that it would experience losses that are materially in excess of such reserve amounts. As of January 31, 1996 and July 31, 1995, there were no insurance recoverables or offset implications and there were no claims by the Company being contested by insurers. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is a leading manufacturer, distributor and international marketer of mobile elevating work platforms and truck-mounted material handling equipment used primarily in construction and industrial applications. Sales are made principally to independent equipment distributors that rent the Company's products and provide service support to equipment users. Equipment purchases by end-users, either directly from the Company or through distributors, comprise a significant, but smaller portion of sales. Demand for the Company's products tends to be cyclical, responding historically to varying levels of construction and industrial activity, principally in the United States and, to a lesser extent, in other industrialized nations. During recessionary conditions, demand for 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. Certain additional factors that may affect the Company's financial performance are described in Cautionary Statements Pursuant to the Securities Litigation Reform Act which is an exhibit to this report. Results for the Second Quarters of Fiscal 1996 and 1995 Sales for the second quarter of fiscal 1996 were $87.6 million, an increase of $35.4 million, or 68% over the comparable prior year period. The growth in sales was generally across all product classes and markets. New and redesigned products introduced over the preceding two-year period contributed nearly 20% of fiscal 1996 second quarter sales. Gross profit, as a percent of sales, was 26% for the second fiscal quarters of both 1996 and 1995. Higher material costs as a result of outsourcing additional production due to capacity limitations, less profitable product mix and higher product liability costs were largely offset by the impact of spreading fixed costs over a larger sales volume. Selling, general and administrative expenses were $9.8 million, or 11% of sales, for the second fiscal quarter of 1996 compared to $7.7 million, or 15% of net sales for the 1995 comparable period. The dollar increase included increased personnel and related costs, as well as higher advertising, consulting, depreciation and research and development costs. The effective income tax rates for the second quarters of both fiscal 1996 and 1995 were 35%. The effective rate for the 1996 second quarter reflects an increased benefit related to export sales. The rate for the 1995 quarter includes a decrease in estimated taxes payable. Results for the First Six Months of Fiscal 1996 and 1995 Sales for the first six months of fiscal 1996 were $174.3 million, an increase of $68.4 million or 65% from the previous year's comparable period. The growth in revenues included increased demand across virtually all product classes and markets, except for the Company's material handling products which experienced some decline in demand. The gross profit percentage for both six month periods was 25%. In comparing the 1996's gross profit percentage to the prior year, the factors were essentially the same as discussed in the second quarter comparison. Selling, general and administrative expenses were $19.6 million, or 11% of sales, for the first six months of fiscal 1996 compared to $14.5 million, or 14% of net sales for the 1995 comparable period. The dollar increase was essentially due to the same factors as discussed in the second quarter comparison. The effective tax rate was 35% for both six month periods. The factors effecting these percentage comparisons are the same as discussed in the second quarter comparison. Financial Condition The Company continues to maintain a strong financial position, not withstanding the use of cash and increased borrowings during the second quarter to purchase a new scissor lift manufacturing facility in Bedford, Pennsylvania, to satisfy seasonal cash needs and to increase working capital to support the sales growth. Working capital was $53.4 million at January 31, 1996, up from $45.4 million at July 31, 1995. Total debt as a percent of total capital was 11% at January 31, 1996 compared to 4% at July 31, 1995. At January 31, 1996, the Company had unused credit lines totaling $1.7 million and cash balances of $2.8 million. In February 1996, the Company increased its credit line by $10 million to provide for cash needs as discussed above. The Company considers these resources, coupled with cash expected to be generated by operations, adequate to meet its planned funding needs. In addition, the Company will expand its scissor lift manufacturing facility in 1996. Acquisition, relocation and refitting costs are estimated to be $9 million payable over the next nine months. The Company intends to finance this project with borrowed capital. Furthermore, the Company expects to generate $10 million from the planned divestiture of its Materials Handling Division prior to the end of its 1996 fiscal year. The Company's exposure to product liability claims is discussed in Note C -- Commitments and Contingencies. Future results of operations, financial condition and liquidity may be affected to the extent that the Company's ultimate liability with respect to product liability varies from current estimates. Outlook The outlook for the balance of the Company's fiscal 1996 year is very positive. Demand for the Company's elevating work platforms continues very strong and the level of unfilled orders remains high. However, demand for the Company's material handling products, which represent less than 10% of total sales, has declined coinciding with reduced residential construction activity and announcement of the Company's planned divestiture of this product group. The timing and terms of the proposed divestiture are uncertain, but management does not expect this transaction to have a material effect on the Company's results of operations in fiscal 1996. Rental fleet utilization for elevating work platforms remains strong throughout the United States and demand for used equipment exceeds its supply. Additionally, new products to be introduced by the Company during the third fiscal quarter should add incremental sales and earnings growth. Limitations on adding manufacturing capacity to meet demand, particularly for scissor lifts, will be an offsetting factor. 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 January 31, 1996, and the related condensed consolidated statements of income for the three-month and six-month periods ended January 31, 1996 and 1995, and the consolidated statements of cash flows for the six-month periods ended January 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, 1995, and the related consolidated statements of income, shareholders' equity and cash flows for the year then ended, not presented herein, and in our report dated September 7, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of July 31, 1995, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. Baltimore, Maryland Ernst & Young February 12, 1996 PART II OTHER INFORMATION ITEMS 1 - 5 None/not applicable. ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are included herein: 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 January 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 EX-15 2 LETTER RE UNAUDITED INTERIM FINANCIAL INFORMATION EXHIBIT 15 The Board of Directors JLG Industries, Inc. We are aware of the incorporation by reference in the registration statements (Form S-8 No. 33-60366, Form S-8 No. 2-87955 and Form S-8 No. 33-75746) of JLG Industries, Inc. of our report dated February 12, 1996, relating to the unaudited condensed consolidated interim financial statements of JLG Industries, Inc. which are included in its Form 10-Q for the quarter ended January 31, 1996. Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Baltimore, Maryland Ernst & Young LLP February 12, 1996 EX-99 3 CAUTIONARY STATEMENTS PURSUANT TO SECURITIES LITIGATION REFORM ACT OF 1995 EXHIBIT 99 Cautionary Statements Pursuant to the Securities Litigation Reform Act of 1995 The Company wishes to inform its investors of the following important factors that in some cases have affected, and in the future could affect, the Company's results of operations and could cause such future results of operations to differ materially from those expressed in any forward looking statements made by or on behalf of the Company. Disclosure of these factors is intended to permit the Company to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Many of these factors have been discussed in prior SEC filings by the Company. Though the Company has attempted to list comprehensively these important cautionary factors, the Company wishes to caution investors that other factors may in the future prove to be important in affecting the Company's results of operations. Cyclical Demand -- Demand for new equipment manufactured by the Company 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. Other factors affecting demand include the availability and cost of financing for equipment purchases and the market availability of used equipment. Company management continuously monitors these and other factors that affect demand for the Company's equipment. However, predicting levels of demand beyond a short term is necessarily imprecise and demand may at times change dramatically. Consolidating Customers Base; Rental Companies -- The principal customers for the Company's new equipment are over 130 independent equipment distributors that rent the Company's products and provide service support to equipment users. In recent years growth in sales to equipment rental companies has outpaced growth in direct sales to end users resulting in equipment rental companies comprising a larger share of total sales. At the same time there has been substantial consolidation in ownership among rental companies resulting in a more limited number of major customers comprising a substantial portion of total sales. Unanticipated purchasing decisions by any of these major customers could materially affect overall demand for the Company's products and the Company's financial performance. More generally, during recessionary conditions, demand for equipment by equipment rental companies typically declines more sharply than demand for equipment purchased by end-users. Manufacturing Capacity -- Despite continuous improvement programs that have achieved substantial improvements in manufacturing efficiency and throughput, the Company's ability to meet additional growth in demand for new equipment is constrained by manufacturing capacity limits. Long lead- times required to fill customer orders is a negative factor in the Company's ability to compete for new business and subcontracting costs incurred to increase capacity affect profitability. The Company recently acquired an 109,000 square foot manufacturing facility which, when fully operational by year-end 1996, should alleviate capacity constraint for scissor lifts. However, capacity to manufacture boom lifts, which comprise a larger percentage of sales, is becoming increasingly limited. Given the cyclical nature of demand, this investment, or other capital investments to acquire additional lift manufacturing facilities involves significant risks. Product Liability -- Use of the Company's products involves risks of personal injury and property damage and liability exposure for the Company. The Company insures against this liability through a combination of a self- insurance retention and catastrophic coverage in excess of the retention. The Company monitors all incidents of which it becomes aware involving the use of its products that result in personal injury or property damage and establishes accrued liability reserves on its financial statements based on liability estimates with respect to claims arising from such incidents. Future or unreported incidents involving personal injury or property damage or unanticipated variances between actual liabilities for known incidents and Company estimates may adversely affect the Company's financial performance. Availability of Product Components -- The Company obtains raw materials and certain manufactured components from third-party suppliers. To reduce materials costs and inventories, the Company relies on supplier partnership arrangements with preferred vendors as a sole source for just-in-time delivery of many raw materials and manufactured components. Because the Company maintains limited raw materials inventories, even brief unanticipated delays in delivery by suppliers, including due to labor disputes, impaired financial condition of suppliers, weather emergencies or other natural disasters, may adversely affect the Company's ability to satisfy its customers on a timely basis and thereby affect the Company's financial performance. Foreign Sales -- A growing component of the Company's business has been export sales to Europe, Latin America and Asia. Maintenance and continued growth of this segment of the Company's business may be affected by changes in trade, monetary and fiscal policies, laws and regulations of the United States and other trading nations and by foreign currency exchange rate fluctuations and the ability or inability of the Company to hedge against exchange rate risks. Competition; Continued Innovation -- The Company faces substantial competition in the market for its products and some of the Company's competitors are, or in the future may be, owned by larger enterprises that may have greater financial resources and offer wider product lines than the Company. Throughout its history, the Company has devoted substantial resources to product development and has generally succeeded in being a market leader in introducing new high-reach products or incorporating new features and functions into existing products. New products introduced within the prior two years account for typically between 20 and 25 percent of product sales in current years. The Company also holds certain patents which it believes are valuable. Successful product innovation by competitors that reach the market prior to comparable innovation by the Company or that are amenable to patent protection may adversely affect the Company's financial performance. Unanticipated Litigation -- The Company occasionally has faced unanticipated intellectual property and shareholder litigation which has involved significant unbudgeted expenditures. The costs and other effects of any future, unanticipated legal or administrative proceedings may be significant. Dependence Upon Key Personnel -- The Company believes that it has developed a strong management team which intends to continue the Company's growth and profitability. However, the loss or unavailability of certain key management personnel, principally L. David Black, the Company's Chairman of the Board and President, could adversely affect the Company's business and prospects. EX-27 4 ARTICLE 5 FDS FOR FORM 10-Q
5 1000 3-MOS 6-MOS JUL-31-1996 JUL-31-1996 JAN-31-1996 JAN-31-1996 2817 2817 0 0 50661 50661 1358 1358 43215 43215 101035 101035 49640 49640 21317 21317 143850 143850 47626 47626 0 0 2877 2877 0 0 0 0 81882 81882 143850 143850 87558 174259 87558 174259 65100 130307 74947 149864 (168) (399) 0 0 58 103 12721 24691 4453 8642 8268 16049 0 0 0 0 0 0 8268 16049 .58 1.12 .58 1.12
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