-----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, RbP+sUsbLY3mRzLlyEvyZRNa0s1h8d/aeKJXpduFtlWWePpfy/71Z0YvJcvSv6TG C2IYz/HDk8szuyCCLI1GpA== 0000950146-97-001504.txt : 19971007 0000950146-97-001504.hdr.sgml : 19971007 ACCESSION NUMBER: 0000950146-97-001504 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19971006 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JLG INDUSTRIES INC CENTRAL INDEX KEY: 0000216275 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION MACHINERY & EQUIP [3531] IRS NUMBER: 251199382 STATE OF INCORPORATION: PA FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-12123 FILM NUMBER: 97691025 BUSINESS ADDRESS: STREET 1: JLG DR CITY: MCCONNELLSBURG STATE: PA ZIP: 17233 BUSINESS PHONE: 7174855161 10-K 1 FORM 10-K ANNUAL REPORT - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 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: 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 incorporation or organization) Identification No.) 1 JLG Drive, McConnellsburg, PA 17233-9533 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (717) 485-5161 ---------------- Securities registered pursuant to Section 12(b) of the Act: Title of class Name of exchange on which registered -------------- ------------------------------------ Capital Stock ($.20 par value) New York Stock Exchange
---------------- 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. [X] At September 12, 1997, there were 44,011,695 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 $529,756,673. Documents Incorporated by Reference Portions of the Proxy Statement for the 1997 Annual Meeting of Shareholders are incorporated by reference into Part III. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS Item - ---- PART 1 1. Business .............................................................................. 1 Products ............................................................................ 1 Marketing .......................................................................... 1 Product Development ................................................................. 2 Competition ....................................................................... 2 Executive Officers of the Registrant ............................................... 2 Product Liability ................................................................. 2 Employees .......................................................................... 3 Foreign Operations ................................................................. 3 2. Properties ........................................................................... 3 3. Legal Proceedings ..................................................................... 3 4. Submission of Matters to a Vote of Security Holders ................................. 3 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters ............ 3 6. Selected Financial Data ............................................................... 4 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 8. Financial Statements and Supplementary Data .......................................... 8 Consolidated Balance Sheets ........................................................ 8 Consolidated Statements of Income .................................................. 9 Consolidated Statements of Shareholders' Equity ................................... 9 Consolidated Statements of Cash Flows ............................................... 10 Notes to Consolidated Financial Statements ......................................... 11 Report of Ernst & Young LLP, Independent Auditors ................................... 16 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 16 PART III 10. Directors and Executive Officers of the Registrant .................................... 16 11. Executive Compensation ............................................................... 17 12. Security Ownership of Certain Beneficial Owners and Management ........................ 17 13. Certain Relationships and Related Transactions ....................................... 17 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ..................... 17 Financial Statement Schedule ........................................................ 17 Exhibits .......................................................................... 18 Signatures ................................................................................ 19
PART I ITEM 1. BUSINESS The Company is the world's leading manufacturer, distributor and international marketer of aerial work platforms used primarily in industrial, commercial, institutional and construction applications. Sales are made principally to independent equipment rental companies 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 revenues from sales of used equipment and from equipment rentals and services provided by its JLG Equipment Services operations. Products Aerial work platforms are designed to permit workers to position themselves and their tools and materials efficiently 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 other devices. Aerial work platforms consist of boom, scissor and vertical mast lifts. These work platforms are mounted either at the end of telescoping and/or articulating booms or on top of scissor or other vertical lifting mechanisms, which, in turn, are mounted on, four-wheel chassis. The Company offers aerial work platforms powered by electric motors or gasoline, diesel, or propane engines. All of the Company's aerial work platforms are designed for stable operation in elevated positions. Boom lifts 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 lift models of various sizes with platform heights of 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. These machines can be maneuvered forward or backward and steered in any direction by the operator from the work platform, even while the boom is extended. 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 1,000 pounds. The distributor net price of the Company's standard models at July 31, 1997, ranged from approximately $18,700 to $325,000. Scissor lifts are designed to provide larger work areas, and generally to allow for heavier loads than boom lifts. Scissor lifts may be maneuvered in a manner similar to boom lifts, but the platforms may be extended only vertically, except for an available option that extends the deck horizontally up to 6 feet. Scissor lifts are available in various models, with maximum platform heights 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, 1997, ranged from approximately $9,500 to $49,100. Self-propelled and push-around vertical mast 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 in their retracted position can fit through standard door openings, yet reach platform heights of up to 36 feet when fully extended. The rated lift capacities range from 300 to 750 pounds. The distributor net price of the Company's standard models at July 31, 1997, ranged from approximately $3,400 to $8,600. 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 80 locations. The Company also has established distributors in the Asia/Pacific region, Australia, Japan and Latin America, including a joint-venture arrangement in Brazil. The Company's distributors rent and sell the Company's products and provide service support. The Company also sells directly through its own marketing organizations to certain major and national 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. 1 The Company maintains a national rental fleet of aerial 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 equipment to distributors with growing markets, but limited financial resources. This operation 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 $7,280,000, $6,925,000, and $5,542,000 for the fiscal years 1997, 1996 and 1995, respectively. New and redesigned products introduced in the past two years accounted for approximately 46% percent of fiscal 1997 sales. The Company has various registered trademarks and patents and considers them to be beneficial in its business. 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 aerial work platforms, such as ladders, scaffolding and other devices. The Company believes that its aerial work platforms in many applications are safer, more versatile and more efficient, taking into account labor costs, than traditional methods and that its aerial 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 aerial 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 significant competitive advantages. The Company believes it commands the largest share of the market for boom lift and scissor lift products and is one of the three largest producers of vertical mast lifts. Executive Officers of the Registrant
Positions with the Company Name Age (date of initial election) - ---- --- -------------------------- L. David Black 60 Chairman of the Board, President and Chief Executive Officer (1993); prior to 1993, President and Chief Executive Officer (1991). Charles H. Diller, Jr. 52 Executive Vice President and Chief Financial Officer (1990). Michael Swartz 52 Senior Vice President--Marketing (1990). Rao G. Bollimpalli 59 Senior Vice President--Engineering (1990). Raymond F. Treml 57 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 improperly operated or without proper maintenance or training. Based upon the Company's best estimate of anticipated losses, product liability costs approximated 0.7%, 0.9% and 1.4% of net sales, for the years ended July 31, 1997, 1996 and 1995, respectively. 2 For additional information relative to product liability insurance coverage and cost, see the note entitled Commitments and Contingencies of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report. Employees The Company had 2,686 and 2,705 persons employed as of July 31, 1997 and 1996, respectively. In September 1997, the Company reduced its workforce 27% pursuant to a restructuring plan to re-size the Company for current market conditions. 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 30%, 24% and 18% of total net sales for 1997, 1996 and 1995, respectively. Sales in Europe were 15%, 12% and 8% of total sales for 1997, 1996 and 1995, respectively. ITEM 2. PROPERTIES The Company has manufacturing plants and office space at six sites in Pennsylvania totaling 770,000 square feet and situated on 110 acres of land. Of this, 687,000 square feet are owned, with the remainder under long-term lease. The Company owns a small facility in Australia and has several other sales and service locations under operating leases in Australia and Scotland. 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 makes provisions relating to probable product liability claims. For information relative to product liability claims, see the note entitled Commitments and Contingencies of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report. 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.
- ------------------------------------------------------------------------------------ Average Shares Price per Share Traded Daily ---------------------------------------------------- Quarter Ended 1997 1996 1997 1996 - ------------------------------------------------------------------------------------ High Low High Low - ------------------------------------------------------------------------------------ October 31 ...... $24.25 $13.50 $ 8.33 $ 5.67 334,032 261,809 January 31 ...... $20.63 $14.50 $10.17 $ 7.67 273,575 219,170 April 30 ......... $21.38 $11.50 $19.08 $ 8.83 375,933 397,375 July 31 ......... $16.25 $11.00 $29.50 $12.00 325,347 916,362 - ------------------------------------------------------------------------------------
All share and per share data in the table above have 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 Company's quarterly cash dividend rate is currently $.005 per share, or $.02 on an annual basis. 3 ITEM 6. SELECTED FINANCIAL DATA ELEVEN-YEAR FINANCIAL SUMMARY (in thousands of dollars, except per share data)
- -------------------------------------------------------------------------------------------------- Year ended July 31 1997 1996 1995 1994 - -------------------------------------------------------------------------------------------------- RESULTS OF OPERATIONS - -------------------------------------------------------------------------------------------------- Net sales $526,266 $413,407 $269,211 $ 176,443 Gross profit 130,005 108,716 65,953 42,154 Selling, administrative and product development expenses (56,220) (44,038) (33,254) (27,147) Restructuring charge (1,897) Income (loss) from operations 71,888 64,678 32,699 15,007 Interest expense (362) (293) (376) (380) Other income (expense), net (288) 1,281 376 (24) Income (loss) before taxes 71,238 65,666 32,699 14,603 Income tax (provision) benefit (25,090) (23,558) (11,941) (5,067) Net income (loss) 46,148 42,108 20,758 9,536 - -------------------------------------------------------------------------------------------------- PER SHARE DATA - -------------------------------------------------------------------------------------------------- Net income (loss) 1.06 0.95 0.49 0.23 Cash dividends .02 0.015 0.0092 0.0083 Shares used in computation (in thousands) 43,606 44,392 42,508 41,950 - -------------------------------------------------------------------------------------------------- PERFORMANCE MEASURES - -------------------------------------------------------------------------------------------------- Return on sales 8.8% 10.2% 7.7% 5.4% Return on average assets 21.6% 28.5% 20.2% 12.1% Return on average shareholders' equity 33.3% 47.9% 37.1% 23.8% - -------------------------------------------------------------------------------------------------- FINANCIAL POSITION - -------------------------------------------------------------------------------------------------- Working capital 84,638 71,807 45,404 32,380 Current assets as a percent of current liabilities 219% 226% 216% 208% Property, plant and equipment, net 56,064 34,094 24,785 19,344 Total assets 249,392 182,628 119,708 91,634 Total debt 3,952 2,194 2,503 7,578 Shareholders' equity 161,945 113,208 68,430 45,706 Total debt as a percent of total capitalization 2% 2% 4% 14% Book value per share 3.70 2.61 1.60 1.09 - -------------------------------------------------------------------------------------------------- OTHER DATA - -------------------------------------------------------------------------------------------------- Product development expenditures 7,280 6,925 5,542 4,373 Capital expenditures, net of retirements 29,757 16,668 8,618 7,762 Additions to rental fleet, net of disposals 14,199 9,873 1,548 1,455 Depreciation and amortization 10,389 6,505 3,875 2,801 Employees 2,686 2,705 2,222 1,620 - --------------------------------------------------------------------------------------------------
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 distributed in April and October 1995 and the three-for-one stock split distributed in July 1996. 4
======================================================================================== 1993 1992 1991 1990 1989 1988 1987 - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- $123,034 $ 110,479 $ 94,439 $149,281 $121,330 $ 81,539 $ 59,827 28,240 22,542 20,113 37,767 32,384 23,598 17,075 (23,323) (22,024) (21,520) (21,834) (18,974) (14,117) (11,946) (4,922) (2,781) (1,015) 4,917 (4,404) (4,188) 14,918 13,410 9.481 5,129 (458) (1,218) (1,467) (2,344) (1,375) (925) (1,039) 180 (149) (707) 858 399 485 958 4,639 (5,771) (6,362) 13,432 12,434 9,041 5,048 (1,410) 2,733 3,122 (4,950) (4,882) (3,766) (3,008) 3,229 (3,038) (3,240) 8,482 7,552 5,275 2,040 - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- 0.07 (0.07) (0.08) 0.20 0.18 0.13 0.05 0.005 0.0208 0.0167 0.0125 0.0083 43,634 43,077 42,542 42,121 42,019 41,331 40,854 2.6% (2.8%) (3.4%) 5.7% 6.2% 6.5% 3.4% 4.6% (4.0%) (4.2%) 10.4% 11.9% 10.8% 4.9% 8.5% (7.9%) (7.7%) 21.8% 23.5% 21.2% 9.8% - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- 26,689 33,304 36,468 47,289 34,745 27,378 16,895 217% 268% 266% 304% 254% 250% 216% 13,877 13,511 13,726 14,402 11,343 8,677 7,975 72,518 73,785 74,861 86,741 70,570 57,692 42,431 4,471 12,553 14,175 18,404 13,799 11,805 5,513 38,939 37,186 38,596 44,109 35,331 28,465 22,582 10% 25% 27% 29% 28% 29% 20% 0.89 0.86 0.90 1.05 0.84 0.68 0.55 - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- 3,385 3,628 3,430 3,520 2,904 2,910 2,010 3,570 1,364 1,637 4,615 4,054 1,619 1,197 273 3,470 534 (1,437) (481) 912 2,500 2,569 1,953 1,771 1,609 1,968 1,830 1,324 1,014 1,182 1,565 1,455 972 804 - ----------------------------------------------------------------------------------------
5 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Sales for 1997 increased 27% over 1996 and 54% from 1996 to 1995. Excluding the Material Handling Division, which was divested in May 1996, the increase was 33% for 1997. The increase in sales reflected generally stronger demand across all product classes and markets. Sales to customers outside the United States were 30%, 24% and 18% of total sales in 1997, 1996 and 1995, respectively. Sales from new and redesigned products introduced over the past two years contributed 46%, 27% and 24% to sales in 1997, 1996 and 1995, respectively. Gross profit, as a percent of sales, decreased to 25% in 1997 from 26% in 1996. The decrease is principally due to a shift in product mix to smaller, less profitable models; the effects of increased sales discounts related to increasingly competitive market conditions; and product introduction costs. 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. Selling, administrative and product development expenses increased $12.2 million and $10.8 million in 1997 and 1996, respectively, but as a percent of sales were 11% for 1997 and 1996, compared to 12% for 1995. The dollar increase for both years principally reflected higher personnel and related costs, increased expenses associated with expanding foreign operations and increased consulting expenses. The increase in 1996 also included higher advertising costs which was partially offset by lower bad debt expenses. During the fourth quarter of 1997, the Company initiated plans to downsize and rationalize its operations. This resulted in a restructuring charge of $1.9 million for severance and termination benefits and costs associated with closing a smaller, less productive manufacturing facility and ceasing planned expansion of administrative facilities. The Company anticipates that an additional $5 million of restructuring costs related to workforce reductions and retraining employees will be incurred in 1998, which do not qualify for inclusion in 1997 under generally accepted accounting principles. For 1997, miscellaneous expense included $800,000 in currency conversion losses compared to $800,000 in gains for 1996. The effective income tax rates were 35%, 36% and 37% for 1997, 1996 and 1995, respectively. The decreases in the effective income tax rate are primarily due to tax benefits related to the increasing level of export sales and a lower effective state income tax rate. Financial Condition The Company continues to maintain a strong financial position, funding capital projects and working capital needs principally out of operating cash flow and cash reserves, while remaining virtually debt-free. Working capital increased by $12.8 million in 1997 and $26.4 million in 1996, principally as a result of increased sales growth, including higher inventory and receivable levels to support increased international business. At July 31, 1997, the Company had unused credit lines totaling $30 million and cash balances of $25.4 million. The Company considers these resources, coupled with cash expected to be generated by operations, adequate to meet its foreseeable funding needs, including anticipated 1998 expenditures of $13.3 million for capital projects and $14.0 million in additions to its equipment held for rental. The Company's exposure to product liability claims is discussed in the note entitled Commitments and Contingencies of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report. Future results of operations, financial condition and liquidity may be affected to the extent that the Company's ultimate exposure with respect to product liability varies from current estimates. 6 Outlook This Outlook section and other parts of this Management's Discussion and Analysis contain forward-looking information and involve risks and uncertainties that could significantly impact expected results. Certain important factors that, in some cases have affected and in the future could affect, the Company's results of operations and that could cause such future results of operations to differ are described in "Cautionary Statements Pursuant to the Securities Litigation Reform Act" which is an exhibit to this report. The outlook for fiscal 1998 is for the temporary product saturation that led to softer order patterns during the second half of fiscal 1997 to continue, but improvement is expected as the year progresses. Therefore, management expects fiscal 1998's sales to be significantly below 1997's levels, approximating fiscal 1996's $413 million. Net income and earnings per share are likewise expected to be significantly below 1997's level due principally to the softer order patterns, the continuation of the unfavorable product mix to smaller, less profitable machines and increasingly competitive market conditions. Management plans to focus on specific improvement goals during fiscal 1998 including: improve processes and reduce costs; accelerate new product development; expand global distribution; enhance customer support services; grow JLG Equipment Services; strengthen employee involvement and pursue strategic acquisitions. The goal of this business plan is to position the Company for long-term profitable growth and enhanced shareholder value. 7 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED BALANCE SHEETS
July 31 ----------------------- (in thousands, except per share data) 1997 1996 ================================================================================================= ASSETS - ------ Current Assets Cash ............................................................... $ 25,436 $ 30,438 Accounts receivable, less allowance for doubtful accounts of $1,282 in 1997 and $1,215 in 1996 .......................................... 70,164 54,342 Inventories: Finished goods ...................................................... 30,441 12,925 Work in process ................................................... 12,132 13,972 Raw materials ...................................................... 11,154 12,536 ------------------- 53,727 39,433 Other current assets ................................................ 6,381 4,649 ------------------- Total Current Assets ................................................ 155,708 128,862 Property, Plant and Equipment Land and improvements ................................................ 4,124 3,443 Buildings and improvements .......................................... 21,266 14,119 Machinery and equipment ............................................. 58,592 37,960 ------------------- 83,982 55,522 Less allowance for depreciation .................................... 27,918 21,428 ------------------- 56,064 34,094 Equipment Held for Rental, net of accumulated depreciation of $3,626 in 1997 and $1,475 in 1996 ............................................. 24,951 13,459 Other Assets ......................................................... 12,669 6,213 ------------------- $249,392 $182,628 =================== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current Liabilities Current portion of long-term debt .................................... $ 267 $ 243 Accounts payable ................................................... 43,027 34,535 Accrued payroll and related taxes .................................... 10,256 8,904 Accrued sales costs ................................................ 6,025 3,409 Other current liabilities .......................................... 11,495 9,964 ------------------- Total Current Liabilities .......................................... 71,070 57,055 Long-Term Debt ...................................................... 3,685 1,951 Contingent and Other Liabilities .................................... 12,692 10,414 Shareholders' Equity Capital stock: Authorized shares: 100,000, at $.20 par value Issued and outstanding shares: 1997--43,726 shares; 1996--43,382 shares ................................................ 8,745 8,676 Additional paid-in capital .......................................... 11,391 7,879 Equity adjustment from translation ................................. (2,180) (2,060) Retained earnings ................................................... 143,989 98,713 ------------------- Total Shareholders' Equity .......................................... 161,945 113,208 ------------------- $249,392 $182,628 ===================
The accompanying notes are an integral part of these financial statements. 8 CONSOLIDATED STATEMENTS OF INCOME
Years Ended July 31 --------------------------------- (in thousands, except per share data) 1997 1996 1995 =================================================================================== Net Sales .................................... $526,266 $413,407 $269,211 Cost of sales ................................. 396,261 304,691 203,258 ------------------------------- Gross Profit ................................. 130,005 108,716 65,953 Selling, administrative and product development expenses .................................... 56,220 44,038 33,254 Restructuring charge ........................ 1,897 ------------------------------- Income from Operations ........................ 71,888 64,678 32,699 Other income (deductions): Interest expense ........................... (362) (293) (376) Miscellaneous, net ........................... (288) 1,281 376 ------------------------------- Income before Taxes ........................... 71,238 65,666 32,699 Income tax provision ........................ 25,090 23,558 11,941 ------------------------------- Net Income .................................... $ 46,148 $ 42,108 $ 20,758 =============================== Net Income per Share ........................ $ 1.06 $ .95 $ .49 =============================== Weighted Average Shares ..................... 43,606 44,392 42,508 ===============================
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Equity Capital Stock Additional Adjustment -------------------- Paid-in from Retained Treasury (in thousands, except per share data) Shares Par Value Capital Translation Earnings Stock - ------------------------------------------------------------------------------------------------------------------- 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 Net income for the year ..................... 46,148 Dividends paid: $.02 per share............... (872) Aggregate translation adjustment, net of deferred tax benefit of $1,228 ............ (120) Stock option transactions .................. 344 69 3,512 - -------------------------------------------------------------------------------------------------------------------- Balances at July 31, 1997 .................. 43,726 $8,745 $11,391 ($2,180) $143,989 =====================================================================
The accompanying notes are an integral part of these financial statements. 9 CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended July 31 --------------------------------------------- (in thousands) 1997 1996 1995 ========================================================================================================= Operations Net income ............................................. $ 46,148 $ 42,108 $ 20,758 Adjustments to reconcile net income to cash provided by operating activities: Depreciation ....................................... 10,389 6,505 3,875 Provision for self-insured losses .................. 2,745 2,938 2,800 Deferred income taxes .............................. 775 502 (596) ------------------------------------------ 60,057 52,053 26,837 Changes in operating assets and liabilities: Accounts receivable ................................. (15,822) (23,748) (7,522) Inventories .......................................... (14,294) (13,686) (9,867) Other current assets ................................. (1,506) (278) 1,412 Accounts payable .................................... 8,492 16,680 5,251 Accrued expenses and other current liabilities ...... 5,499 3,076 4,328 Changes in other assets and liabilities ............... (7,819) (3,406) (1,857) ------------------------------------------ Cash provided by operations ........................... 34,607 30,691 18,582 Investments Purchases of property, plant and equipment ............ (29,795) (16,690) (11,035) Proceeds from sale of property, plant and equipment ............................................. 38 22 2,417 Additions to equipment held for rental ............... (14,199) (9,873) (1,548) Proceeds from sale of Material Handling Division ...... 10,954 ------------------------------------------ Cash used for investments .............................. (43,956) (15,587) (10,166) Financing Issuance of long-term debt ........................... 2,000 Repayment of long-term debt ........................... (242) (309) (5,081) Payment of dividends ................................. (872) (648) (389) Exercise of stock options ........................... 3,581 3,579 915 Stock issued for employee benefit plans ............... 1,159 ------------------------------------------ Cash provided by (used for) financing .................. 4,467 2,622 (3,396) Currency Adjustments Effect of exchange rate changes on cash ............... (120) (261) (135) Cash Net change in cash .................................... (5,002) 17,465 4,885 Beginning balance .................................... 30,438 12,973 8,088 ------------------------------------------ Ending balance ....................................... $ 25,436 $ 30,438 $ 12,973 ==========================================
The accompanying notes are an integral part of these financial statements. 10 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 1997. 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 because it results in a better matching of current costs and revenues. Inventories at July 31, 1997 and 1996 would have been higher by $5,870 and $4,307, 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 The Company distributed a three-for-one stock split in July 1996 and two-for-one splits in April 1995 and October 1995. The splits were effected by stock dividends. All share and per share data included in this report have been restated to reflect the stock splits. Product Development The Company incurred product development and other engineering expenses of $7,280, $6,925 and $5,542 in 1997, 1996 and 1995, respectively, which were charged to expense as incurred. Fair Value of Financial Instruments 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 Company has elected to apply Accounting Principals Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations in accounting for its stock options. Under this Opinion, the Company does not recognize compensation expense arising from such grants because the exercise price of the Company's stock options equals the market price of the underlying stock on the date of grant. Pro forma income and earnings per share data required by Financial Accounting Standards Board Statement No. 123, "Accounting for Stock-Based Compensation," are not included herein since they are not materially different from amounts reported. 11 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 all periods presented is computed by dividing net income by the weighted average shares outstanding. The effect of capital stock equivalents is immaterial to earnings per share. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, "Earnings Per Share," which is required to be adopted for periods ending after December 15, 1997. Earlier application is not permitted. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements for calculating primary earnings per share, the dilutive effect of options will be excluded. As a result of adopting Statement 128, no change is anticipated in the previously reported primary earnings per share for years ended July 31, 1997, 1996 and 1995. The impact of Statement 128 on the calculation of fully diluted earnings per share is not expected to be material. INCOME TAXES The income tax provision consisted of the following for the years ended July 31: - -------------------------------------------------------- 1997 1996 1995 - -------------------------------------------------------- Current: Federal ............. $23,442 $20,476 $10,641 State ................ 2,423 2,580 1,896 ----------------------------- 25,865 23,056 12,537 Deferred: Federal ............ (674) 435 (483) State ............... (101) 67 (113) ----------------------------- (775) 502 (596) ----------------------------- $25,090 $23,558 $11,941 ============================= The Company made income tax payments of $24,928, $24,435, and $11,858 in 1997, 1996, and 1995, 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:
- ------------------------------------------------------------------------------------ 1997 1996 1995 - ------------------------------------------------------------------------------------ Statutory U.S. federal income tax rate ......... 35% 35% 35% State tax provision, net of federal effect ...... 2 3 4 Other .......................................... (2) (2) (2) ------------------------------ 35% 36% 37% ==============================
12 Components of deferred tax assets and liabilities were as follows at July 31:
- --------------------------------------------------------------------- 1997 1996 - --------------------------------------------------------------------- Future income tax benefits: Contingent liabilities provisions ............ $4,542 $4,065 Employee benefits .............................. 1,910 1,331 Translation adjustments ........................ 1,256 1,193 Inventory valuation provisions ............... 921 649 Other .......................................... 673 966 ----- ------ 9,302 8,204 ----- ------ Deferred tax liabilities: Depreciation and asset basis differences ...... 1,577 1,165 Other .......................................... 153 ------ 1,577 1,318 ----- ------ 7,725 6,886 Less valuation allowance ........................ (280) (222) ----- ------ Net deferred tax assets ........................ $7,445 $6,664 =================
The current and long-term deferred tax asset amounts are included in other current and other asset amounts on the consolidated balance sheets. EMPLOYEE BENEFIT PLANS 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, mutual funds and the Company's capital stock. The aggregate expense relating to these plans was $4,716, $4,355 and $2,298 in 1997, 1996 and 1995, respectively. The Company's stock incentive plan has reserved 5,321 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 Compensation Committee of 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 Company's stock option plan for directors 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 1,920 shares of capital stock is authorized to be issued under the plan. 13 Outstanding options and transactions involving the plans are summarized as follows:
- ----------------------------------------------------------------------------------------------------------------- 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Excercise Options Price Options Price Options Price - ----------------------------------------------------------------------------------------------------------------- Outstanding options at the beginning of the year 1,705 $ 4.28 1,911 $ 2.58 2,077 $ 2.01 Options granted ................................. 36 17.44 275 12.57 455 4.72 Options canceled .............................. (34) 3.96 (8) 2.93 (44) 2.15 Options exercised .............................. (241) 2.33 (473) 2.07 (577) 1.19 -------------------------------------------------------------- Outstanding options at the end of the year ...... 1,466 $ 4.88 1,705 $ 4.28 1,911 $ 2.58 ============================================================== Exercisable options at the end of the year ...... 1,082 $ 3.95 778 $ 2.65 535 $ 1.74 ==============================================================
Exercise prices for options outstanding at July 31, 1997, ranged from $.94 to $17.44. The weighted average remaining contractual life of those options is seven years. RESTRUCTURING CHARGE During the fourth quarter of 1997, the Company initiated plans to downsize and rationalize its operations. This resulted in a restructuring charge of $1.9 million for severance and termination benefits and costs associated with closing a smaller, less productive manufacturing facility and ceasing planned expansion of administrative facilities. At July 31, 1997, $1.1 million of restructuring costs are included in other accrued expenses. INDUSTRY AND EXPORT DATA The Company operates in one dominant industry segment--the manufacture, sale and rental of aerial work platforms. The Company manufactures its products in the U.S., and the majority of its customers are U.S.-based equipment rental firms. Additionally, its receivables from these customers are generally not collateralized. One customer accounted for 13% of sales for 1997, 1996 and 1995. Export sales were 30%, 24% and 18% of total sales for 1997, 1996 and 1995, respectively. Sales in Europe were 15%, 12% and 8% of total sales for 1997, 1996 and 1995, 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 1997 was 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 firm. 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 $9.6 million and $8.9 million were established at July 31, 1997 and 1996, 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, 1997 and 1996, there were no insurance recoverables or offset implications and there were no claims by the Company being contested by insurers. 14 UNAUDITED QUARTERLY FINANCIAL INFORMATION Unaudited financial information was as follows for the fiscal quarters within the years ended July 31:
- --------------------------------------------------------------------------- Net Net Income Net Sales Gross Profit Income Per Share - --------------------------------------------------------------------------- 1997 October 31 ...... $120,206 $ 32,703 $12,343 $ .28 January 31 ...... 121,246 30,996 11,227 .26 April 30 ......... 143,642 35,691 12,921 .30 July 31 ......... 141,172 30,615 9,657 .22 ----------------------------------------------------- $526,266 $130,005 $46,148 $1.06 ===================================================== 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 =====================================================
REPORT OF MANAGEMENT The consolidated financial statements of JLG Industries, Inc. in this report were prepared by its management, which is responsible for their content. In management's opinion, the financial statements reflect amounts based upon its best estimates and informed judgments and present fairly the financial position, results of operations and cash flows of the Company in conformity with generally accepted accounting principles. The Company maintains a system of internal accounting controls and procedures which are intended, consistent with justifiable cost, to provide reasonable assurance that transactions are executed as authorized, that they are properly recorded to produce reliable financial records, and that accountability for assets is maintained. The accounting controls and procedures are supported by careful selection and training of personnel, examination by an internal auditor and continuing management commitment to the integrity of the internal control system. The financial statements have been audited by Ernst & Young LLP, independent auditors. The independent auditors have evaluated the Company's internal control and performed tests of procedures and accounting records in connection with the issuance of their reports on the fairness of the financial statements. The Board of Directors has appointed an Audit Committee composed entirely of directors who are not employees of the Company. The Audit Committee meets with representatives of management, the internal auditor and independent auditors both separately and jointly. Its functions include recommending the independent auditors and reviewing the scope and fee of the prospective annual audit and the results of their work; reviewing the adequacy of the Company's internal audit function, as well as the accounting and financial controls and procedures; and approving the nature and scope of nonaudit services performed by the independent auditors. /s/ L. David Black /s/ Charles H. Diller, - -------------------- ------------------------ L. David Black Charles H. Diller, Jr. Chairman of the Board, Executive Vice President President and and Chief Financial Officer Chief Executive Officer September 1, 1997 15 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, 1997 and 1996, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended July 31, 1997. Our audit also included the financial statement schedule listed in the index of Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule 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, 1997 and 1996, and the consolidated results of its operations and its cash flows for each of the three years in the period ended July 31, 1997, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Baltimore, Maryland September 4, 1997 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 set forth under the caption "Election of Directors" in the Company's Proxy Statement and is incorporated herein by reference. Identification of officers is presented in Item 1 of this report under the caption "Executive Officers of the Registrant." 16 ITEM 11. EXECUTIVE COMPENSATION The information required by this Item 11 relating to executive compensation is set forth under the captions "Board of Directors" and "Executive Compensation" of the Company's Proxy Statement and is herein incorporated by reference. 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 set forth under the caption "Voting Securities and Principal Holders" of the Company's Proxy Statement and is herein incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information required by this Item 13 relating to certain relationships and related transactions is set forth under the caption "Certain Transactions" of the Company's Proxy Statement and is herein incorporated by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) (1) The consolidated financial statements of the registrant and its subsidiaries are set forth in Item 8 of Part II of this report. (2) Financial Statement Schedule II, Valuation and Qualifying Accounts
Charged Balance at to Costs Charged Deductions Balance Beginning and to Other from at End (thousands of dollars) of Year Expenses Accounts Reserves(1) of Year - ------------------------------------------------------------------------------------------------------------ Year ended July 31, 1997 Allowance for doubtful accounts ...... $1,215 $ 96 ($ 29) $1,282 ============================================================== 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 ==============================================================
(1) Includes amounts written off and transferred to other accounts and adjustment resulting from conversion of foreign currencies 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. 17 (3) Exhibits 3.1 Articles of Incorporation of JLG Industries, Inc., which appears as Exhibit 3 to the Company's Form 10-Q (File No. 0-8454--filed December 13, 1996), is hereby incorporated by reference. 3.2 By-laws of JLG Industries, Inc., which appears as Exhibit 3.4 to the Company's Form 10-K (File No. 0-8454--filed October 17, 1996), is hereby incorporated by reference. 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 incorporated 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 JLG Industries, Inc. Directors' Deferred Compensation Plan amended and restated as of August 1, 1997. 10.3 JLG Industries, Inc. Stock Incentive Plan amended and restated as of August 1, 1997. 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 August 1, 1997. 10.8 JLG Industries, Inc. Supplemental Executive Retirement Plan effective June 1, 1995, which appears as Exhibit 3.4 to the Company's Form 10-K (File No. 0-8454--filed October 17, 1996), is hereby incorporated by reference. 10.9 JLG Industries, Inc. Executive Retiree Medical Benefits Plan effective June 1, 1995, which appears as Exhibit 3.4 to the Company's Form 10-K (File No. 0-8454--filed October 17, 1996), is hereby incorporated by reference. 10.10 JLG Industries, Inc. Executive Severance Plan effective June 1, 1995, which appears as Exhibit 3.4 to the Company's Form 10-K (File No. 0-8454--filed October 17, 1996), is hereby incorporated by reference. 10.11 JLG Industries, Inc. Executive Deferred Compensation Plan amended and restated as of August 1, 1997. 22 Listing of Subsidiaries 23 Consent of Independent Auditors 27 Financial Data Schedule 99 Cautionary Statements Pursuant to the Securities Litigation Reform Act of 1995
(b) The Company was not required to file Form 8-K pursuant to requirements of such form in the fourth quarter of fiscal 1997. 18 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 on September 18, 1997. JLG INDUSTRIES, INC. (Registrant) /s/ L. David Black --------------------------- 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 indicated as of September 18, 1997. /s/ Charles H. Diller, Jr. - ----------------------------------- Charles H. Diller, Jr., Executive Vice President, Chief Financial Officer, Secretary and Director /s/ George R. Kempton - ----------------------------------- George R. Kempton,Director /s/ Gerald Palmer - ----------------------------------- Gerald Palmer, Director /s/ Stephen Rabinowitz - ----------------------------------- Stephen Rabinowitz, Director /s/ Thomas C. Wajnert - ----------------------------------- Thomas C. Wajnert, Director 19 NOTES [JLG LOGO] EX-4.3 2 AGREEMENT EXHIBIT 4.3 - ----------- Agreement To Disclose Upon Request JLG Industries, Inc. (the "Company") hereby agrees that, with respect to any agreement relating to long-term debt of the Company that has not been filed as an exhibit to the Company's reports filed pursuant to the Securities Exchange Act of 1934 because such filing is not required pursuant to the provisions of S-K Item 601 (b) (4) (iii) (A), the Company will furnish a copy of any such agreement to the Securities and Exchange Commission upon request. JLG INDUSTRIES, INC. (Registrant) /s/ Charles H. Diller ------------------------------------- Charles H. Diller, Jr. Executive Vice President and Chief Financial Officer EX-10.2 3 DIRECTORS' DEFERRED COMPENSATION PLAN EXHIBIT 10.2 - ------------ JLG INDUSTRIES, INC. DIRECTORS' DEFERRED COMPENSATION PLAN As Amended and Restated Effective August 1, 1997 ----------------------------------------------------------------- Section 1. Establishment and Purpose 1.1 Establishment. Effective July 1, 1986, the Company established the Plan for the benefit of the Participants. 1.2 Purpose. The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation to directors of the Company who are not employees. The Plan permits Participants to elect to defer payment of part or all of their Compensation until the termination of their membership on the Board of Directors in accordance with the terms of the Plan. Section 2. Participation by Eligible Directors 2.1 Election of Benefits. An Eligible Director may become a Participant in the Plan by electing to defer, until the termination of his membership on the Board of Directors, receipt of part or all of the Compensation to be paid to him by the Company. 2.2 Advance Election. An election to defer the receipt of Compensation hereunder shall apply only to Compensation earned after the date the Participant's election is filed with the Administrative Committee. 2.3 Election Filing Deadline. An election to defer Compensation earned in a calendar year shall be filed with the Administrative Committee before the calendar year begins. Notwithstanding the foregoing, a newly appointed or otherwise newly eligible Eligible Director may file the requisite election to defer Compensation earned thereafter before the expiration of 30 days from either (i) his initial date of appointment, if the Eligible Director is a new appointment, or (ii) his initial date of eligibility, if the Eligible Director is newly eligible to participate in the Plan. 2.4 Irrevocable Election. Once filed, an election to defer Compensation shall be irrevocable and shall remain in effect until the end of the calendar year to which it pertains. Such election shall automatically apply to each subsequent calendar year unless the Participant, before the beginning of the calendar year revokes his prior election. In that event, he may file a new election with the Administrative Committee before the beginning of the calendar year in accordance with Sections 2.3 and 2.5 hereof. An Eligible Director who does not elect to defer Compensation in one calendar year may elect to defer Compensation in any subsequent calendar year, provided he remains an Eligible Director, by electing to defer Compensation in accordance with this Section 2. 2.5 Form and Content of Election. An election to defer Compensation hereunder shall be in writing, in a form acceptable to the Administrative Committee, and shall specify the portion of the Participant's Compensation to be deferred. 2.6 Form of Payment. A Participant electing to defer Compensation hereunder also shall elect as to whether such deferred Compensation shall be paid (a) in a single lump sum, or (b) in annual installments over a period, elected by the Participant, not to exceed fifteen years. An election of form of payment hereunder shall be in writing in a form acceptable to the Administrative Committee, and shall be effective as of the date the form is filed with the Administrative Committee. The election on file with the Administrative Committee on the date the Participant's membership on the Board of Directors of the Company terminates shall govern the payment of all amounts deferred hereunder provided that the election has been in effect for more than one year (365 days). If the election has not been in effect for more than one year (365 days), the entire amount deferred hereunder shall be paid in a single lump sum. Section 3. Account 3.1 Account. The Company shall maintain for bookkeeping purposes an Account in the name of each Participant to which shall be credited the amounts deferred under Section 2 hereof, plus amounts as provided in Section 3.2 hereof. 3.2 Investment Return. (a) Rate of Return Indices. The Administrative Committee shall select and maintain one or more rate of return indices as specified on Exhibit A attached hereto as amended from time to time. Compensation deferred hereunder shall be allocated to one or more of the rate of return indices and shall be credited with the applicable investment return (or loss) that such Compensation would have if it were invested in the specified index. (b) Election of Rate of Return Indices. (i) Each Participant shall specify in writing, at the time he completes his election to participate under Section 2 hereof, and in a form acceptable to the Administrative Committee, how any amounts to be deferred hereunder in the future shall be allocated among the indices specified on Exhibit A attached hereto. (ii) The Administrative Committee may, in its discretion and from time to time, permit a Participant to change any election previously made with respect to the allocation of amounts to be deferred hereunder in the future, subject to such conditions and such limitations as the Administrative Committee may prescribe. Any such change in election shall be in writing and in a form acceptable to the Administrative Committee. (iii) The Administrative Committee may, in its discretion and from time to time, permit a Participant to elect to reallocate amounts from one rate of return index to another, subject to such conditions and such limitations as the Administrative Committee may prescribe; provided that a Participant shall be permitted, at least once per calendar month, to reallocate amounts previously allocated. Any such reallocation election shall be in writing and in a form acceptable to the Administrative Committee. (iv) The Administrative Committee may require that any election under this Section 3.2 apply to the entire amount to which it pertains (e.g., 100% of the Participant's future contributions) or to such percentage or percentages of that amount as the Administrative Committee may specify (e.g., increments of 5%). (v) If a Participant fails to specify a rate of return index with respect to Compensation deferred hereunder, the Participant shall be presumed to have specified that his entire Account be allocated to the index determined by the Administrative Committee to represent the lowest risk of principal loss. (c) Crediting of Investment Return. The balance credited to the Participant's Account as of the last day of the prior month shall be credited with the applicable investment return (or loss) as of the last day of the month of crediting. All references herein to Compensation that is deferred pursuant to the Plan shall be deemed to include such deferred Compensation plus any investment return (or loss) credited pursuant to this Section 3.2. 3.3 Nonforfeitability of Accounts. Subject to the limitations of Section 5 hereof, balances credited to Participants' Accounts shall be nonforfeitable. Section 4. Distributions 4.1 Payment. The amount credited to a Participant's Account pursuant to Section 3 hereof shall be paid, or payments shall commence, as soon as practicable following the termination of the Participant's membership on the Board of Directors. If the Participant elects to receive his deferred Compensation in annual installments, the amount of the first installment shall be the value of the deferred Compensation that is subject to such election on the date as of which the installment is paid, multiplied by a fraction, the numerator of which is one and the denominator of which is the total number of installments. The amount of each remaining installment shall be the value of the unpaid deferred Compensation that is subject to such election on the date as of which the installment is paid, multiplied by a fraction, the numerator of which is one and the denominator of which is the remaining number of installments to be paid. 4.2 Death of Participant. (a) Amount of Death Benefit. Any amount credited to a Participant's Account hereunder that is unpaid at the time of the Participant's death shall be paid in a single lump sum to the Beneficiary designated by the Participant. (b) Payment of Death Benefits. A distribution pursuant to this Section 4.2 shall be made to the Participant's Beneficiary within 90 days after the Administrative Committee receives written notification of the Participant's death, together with any additional information or documentation that the Administrative Committee determines to be necessary or appropriate before it makes the distribution. 4.3 Hardship Distributions. At any time, upon the written application of the Participant, the Administrative Committee may (i) reduce or eliminate the Participant's future deferrals of Compensation hereunder, or (ii) accelerate and pay in a lump sum to the Participant all or part of the balance of the Compensation deferred hereunder, or both, if the Administrative Committee finds, in its sole discretion, that the Participant has incurred or will incur a severe financial hardship resulting from an accident or illness with respect to the Participant, his spouse, or his dependent (as defined in section 152 of the Code), or other event beyond the Participant's control. In such circumstances, the Administrative Committee shall reduce or eliminate the future deferrals and/or accelerate the payment only to the extent reasonably necessary to eliminate or to avoid the severe financial hardship. Section 5. Nature of Participant's Interest in Plan 5.1 No Right to Assets. Participation in the Plan does not create, in favor of any Participant or Beneficiary, any right or lien in or against any asset of the Company. Nothing contained in the Plan, and no action taken under its provisions, will create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person. The Company's promise to pay benefits under the Plan will at all times remain unfunded as to each Participant and Beneficiary, whose rights under the Plan are limited to those of a general and unsecured creditor of the Company. 5.2 No Right to Transfer Interest. Rights to benefits payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, or encumbrance. However, the Administrative Committee may permit a Participant or Beneficiary to enter into a revocable arrangement to pay all or part of his benefits under the Plan to a revocable grantor trust (a so-called "living trust"). In addition, the Administrative Committee may recognize the right of an alternate payee named in a domestic relations order to receive all or part of a Participant's benefits under the Plan, but only if (a) the domestic relations order would be a "qualified domestic relations order" within the meaning of section 414(p) of the Code (if section 414(p) applied to the Plan), (b) the domestic relations order does not attempt to give the alternate payee any right to any asset of the Company, (c) the domestic relations order does not attempt to give the alternate payee any right to receive payments under the Plan at a time or in an amount that the Participant could not receive under the Plan, and (d) the amount of the Participant's benefits under the Plan are reduced to reflect any payments made or due the alternate payee. 5.3 No Right to Board Membership. No provisions of the Plan and no action taken by the Company, the Board of Directors, or the Administrative Committee will give any person any right to be retained as a member of the Board of Directors. 5.4 Withholding and Tax Liabilities. The amount of any withholdings required to be made by any government or government agency will be deducted from benefits paid under the Plan to the extent deemed necessary by the Administrative Committee. In addition, the Participant or Beneficiary (as the case may be) will bear the cost of any taxes not withheld on benefits provided under the Plan, regardless of whether withholding is required. Section 6. Administration, Interpretation, and Modification of Plan 6.1 Plan Administrator. The Administrative Committee will administer the Plan. 6.2 Powers of Committee. The Administrative Committee's powers include, but are not limited to, the power to adopt rules consistent with the Plan; the power to decide all questions relating to the interpretation of the terms and provisions of the Plan; the power to determine the number and nature of the rate of return indices specified on Exhibit A attached hereto; the power to compute the amount of benefits that shall be payable to any Participant or Beneficiary in accordance with the provisions of the Plan, and in the event that the Administrative Committee determines that excessive benefits have been paid to any person, the Administrative Committee may suspend payment of future benefits to such person or his Beneficiary or reduce the amount of such future benefits until the excessive benefits and any interest thereon determined by the Committee have been recovered; and the power to resolve all other questions arising under the Plan (including, without limitation, the power to remedy possible ambiguities, inconsistencies, or omissions by a general rule or particular decision). The Administrative Committee has discretionary authority to exercise each of the foregoing powers. 6.3 Finality of Committee Determinations. Determinations by the Administrative Committee and any interpretation, rule, or decision adopted by the Administrative Committee under the Plan or in carrying out or administering the Plan will be final and binding for all purposes and upon all interested persons, their heirs, and their personal representatives. 6.4 Required Information. Any person eligible to receive benefits hereunder shall furnish to the Administrative Committee any information or proof requested by the Administrative Committee and reasonably required for the proper administration of the Plan. Failure on the part of any person to comply with any such request within a reasonable period of time shall be sufficient grounds for delay in the payment of any benefits that may be due under the Plan until such information or proof is received by the Administrative Committee. If any person claiming benefits under the Plan makes a false statement that is material to such person's claim for benefits, the Administrative Committee may offset against future payments any amount paid to such person to which such person was not entitled under the provisions of the Plan. 6.5 Incapacity. If the Administrative Committee determines that any person entitled to benefits under the Plan is unable to care for his affairs because of illness or accident, any payment due (unless a duly qualified guardian or other legal representative has been appointed) may be paid for the benefit of such person to his spouse, parent, brother, sister, or other party deemed by the Administrative Committee to have incurred expenses for such person. 6.6 Amendment, Suspension, and Termination. (a) Board of Directors. The Board of Directors has the right by written resolution to amend, suspend, or terminate the Plan at any time; provided that no such amendment, suspension, or termination of the Plan shall divest any Participant of the balance credited to his Account as of the effective date of such amendment, suspension, or termination, except to the extent that an affected Participant consents in writing to the amendment, suspension, or termination. (b) Administrative Committee. The Board of Directors delegates to the Administrative Committee the right by written resolution to amend the Plan for the limited purpose of amending Exhibit A of the Plan. 6.7 Power to Delegate Authority. (a) Board of Directors. The Board of Directors may, in its sole discretion, delegate to any person or persons all or part of its authority and responsibility under the Plan, including, without limitation, the authority to amend the Plan. (b) Administrative Committee. The Administrative Committee may, in its sole discretion, delegate to any person or persons all or part of its authority and responsibility under the Plan. 6.8 Headings. The headings used in this document are for convenience of reference only and may not be given any weight in interpreting any provision of the Plan. 6.9 Severability. If any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity of that provision will not affect the remaining provisions of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had never been included in the Plan. 6.10 Governing Law. The Plan will be construed, administered, and regulated in accordance with the laws of the Commonwealth of Pennsylvania, except to the extent that those laws are preempted by federal law. 6.11 Complete Statement of Plan. This Plan contains a complete statement of its terms. The Plan may be amended, suspended, or terminated only in writing and then only as provided in Section 6.6. A Participant's right to any benefit of a type provided under the Plan will be determined solely in accordance with the terms of the Plan. No other evidence, whether written or oral, will be taken into account in interpreting the provisions of the Plan. Section 7. Definitions 7.1 Gender and Number. In order to shorten and to improve the understandability of the Plan document by eliminating the repeated usage of such phrases as "his or her" and "Director or Directors," any masculine terminology herein shall also include the feminine and neuter, and the definition of any term herein in the singular shall also include the plural, except when otherwise indicated by the context. 7.2 Definitions. The following words and phrases as used in the Plan have the following meanings: "Account" means the bookkeeping account established for each Participant under Section 3.1 hereof. "Administrative Committee" means the Administrative Committee appointed to administer the Savings Plan. However, following a Change in Control, "Administrative Committee" means the trustee under the grantor trust maintained by the Company in connection with the Plan. "Associate" has the meaning assigned to that term for purposes of Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act. "Beneficial Owner" means the following: a Person is deemed to be the "Beneficial Owner" of, to "Beneficially Own," and to have "Beneficial Ownership" of, any securities: (1) which such Person or any of such Person's Securities Law or Associates beneficially owns, directly or indirectly; (2) which such Person or any of such Person's Securities Law or Associates has (A) the right or obligation to acquire (whether such right or obligation is exercisable or effective immediately or only after the passage of time) pursuant to any agreement, arrangement, or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided that a Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own," or to have "Beneficial Ownership" of, securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Securities Law or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any 15 agreement, arrangement, or understanding (whether or not in writing); provided that a Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own," or to have "Beneficial Ownership" of, any security under this clause (B) if the agreement, arrangement, or understanding to vote such security (i) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Securities Exchange Act, and (ii) is not also then reported by such Person on Schedule 13D under the Securities Exchange Act (or any comparable or successor report); or (3) which are beneficially owned, directly or indirectly, by any other Person (or any Securities Law or Associate thereof) with which such Person or any of such Person's Securities Law or Associates has any agreement, arrangement, or understanding (whether or not in writing) or with which such Person or any of such Person's Securities Law have otherwise formed a group for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (B)(i) of paragraph (2), above), or disposing of any securities of the Company. "Beneficiary" means the person designated by a Participant to receive benefits under the Plan after the Participant's death. Such a designation shall be in writing in a form acceptable to the Administrative Committee, and shall be effective as of the date the form is filed with the Administrative Committee. If a Participant dies before receiving the entire amount due to him under the Plan, and he has failed to designate a Beneficiary or his designated Beneficiary fails to survive him, his Beneficiary will be the person to whom he is married at the time of his death, or if he is not married at that time, his Beneficiary will be the executor of his will or the administrator of his estate. A Participant may revoke a prior designation of a Beneficiary at any time before the Participant's death by filing a new form with the Administrative Committee. "Board of Directors" means the Board of Directors of the Company. "Change in Control" means the first to occur of the following events: (1) an acquisition (other than directly from the Company) of securities of the Company by any Person, immediately after which such Person, together with all Securities Law and Associates of such Person, becomes the Beneficial Owner of securities of the Company representing 25 percent or more of the Voting Power; provided that, in determining whether a Change in Control has occurred, the acquisition of securities of the Company in a Non-Control Acquisition will not constitute an acquisition that would cause a Change in Control; or (2) three or more directors, whose election or nomination for election is not approved by a majority of the members of the Incumbent Board then serving as members of the Board of Directors, are elected within any single 12-month period to serve on the Board of Directors; provided that an individual whose election or nomination for election is approved as a result of either an actual or threatened Election Contest or Proxy Contest, including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, will be deemed not to have been approved by a majority of the Incumbent Board for purposes of this definition; or (3) members of the Incumbent Board cease for any reason to constitute at least a majority of the Board of Directors; or (4) approval by shareholders of the Company of: (A) a merger, consolidation, or reorganization involving the Company, unless (i) the shareholders of the Company, immediately before the merger, consolidation, or reorganization, own, directly or 16 indirectly immediately following such merger, consolidation, or reorganization, at least 75 percent of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation, or reorganization in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation, or reorganization; (ii) individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation, or reorganization constitute at least a majority of the board of directors of the Surviving Corporation; and (iii) no Person (other than (1) the Company or any Subsidiary thereof, (2) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, any Subsidiary thereof, or the Surviving Corporation, or (3) any Person who, immediately prior to such merger, consolidation, or reorganization, had Beneficial Ownership of securities representing 25 percent or more of the Voting Power) has Beneficial Ownership of securities representing 25 percent or more of the combined voting power of the Surviving Corporation's then outstanding voting securities; (B) a complete liquidation or dissolution of the Company; or (C) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary of the Company). "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Company" means JLG Industries, Inc., and any successor to JLG Industries, Inc. "Compensation" means the director's fees and all other amounts paid to the director by the Company for services as a director that Eligible Directors may elect to defer under the Plan. "Effective Date" means July 1, 1986. "Election Contest" means an election contest described in Rule 14a-11 promulgated under the Securities Exchange Act. "Eligible Director" means a non-employee director of the Company; provided that, on and after a Change in Control, each director of the Company who was an Eligible Director immediately before the Change in Control shall remain an Eligible Director as long as the director is a non-employee member of the Board of Directors. "Fiscal Year" means the twelve-month period beginning August 1st and ending on the subsequent July 31st. "Incumbent Board" means individuals who, as of the close of business on the Effective Date, are members of the Board of Directors; provided that, if the election, or nomination for election by the Company's shareholders, of any new director was approved by a vote of at least 75 percent of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened Election Contest or other actual or threatened Proxy Contest, including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest. "Non-Control Acquisition" means an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any of its 17 Subsidiaries, (2) the Company or any of its Subsidiaries, or (3) any Person in connection with a Non-Control Transaction. "Non-Control Transaction" means any transaction described in clauses (4)(A)(i) through (iii) of the definition of "Change in Control." "Participant" means an Eligible Director who becomes a participant in the Plan in accordance with Section 2.1 hereof and who has not been paid all Compensation deferred by the Participant under the Plan. "Person" means any individual, firm, corporation, partnership, joint venture, association, trust, or other entity. "Plan" means the "JLG Industries, Inc. Directors' Deferred Compensation Plan" as set forth herein and as amended from time to time. "Proxy Contest" means a solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors. "Savings Plan" means the JLG Industries, Inc. Employees' Retirement Savings Plan effective as of January 1, 1995, and as amended from time to time. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended and in effect from time to time. "Securities Law Affiliate" means an "affiliate" as defined for purposes of Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act. "Subsidiary" of any Person means any corporation or other entity of which at least 80 percent (or such lesser percentage as the Administrative Committee may determine) of the voting power of the voting equity securities or voting interest therein is owned, directly or indirectly, by such Person. "Surviving Corporation" means a corporation resulting from a merger, consolidation, or reorganization described in paragraph (4)(A)(i) of the definition of "Change in Control." "Voting Power" means the voting power of all securities of the Company then outstanding generally entitled to vote for the election of directors of the Company. JLG INDUSTRIES, INC. ATTEST: ____________________ BY: _________________________ TITLE: _____________________ TITLE: ______________________ 18 EX-10.3 4 STOCK INCENTIVE PLAN EXHIBIT 10.3 - ------------ JLG INDUSTRIES, INC. STOCK INCENTIVE PLAN (As Amended and Restated) 1. PURPOSE The JLG Industries, Inc. Stock Incentive Plan (the "Plan"), as amended and restated as of May 23, 1991, is designed to enable key personnel of JLG Industries, Inc. (the "Company") and its Subsidiaries to acquire or increase a proprietary interest in the Company, and thus to share in the future success of the Company's business. Accordingly, the Plan is intended as a further means not only of attracting and retaining outstanding personnel, but also of promoting a closer identity of interests between management and shareholders. Since the personnel eligible to receive Awards under the Plan will be those who are in positions to make important and direct contributions to the success of the Company, the directors believe that the grant of Awards under the Plan will be in the Company's interest. 2. DEFINITIONS In this Plan document, unless the context clearly indicates otherwise, words in the masculine gender shall be deemed to refer to females as well as males, any term used in the singular also shall refer to the plural, and the following capitalized terms shall have the following meanings set forth in this Section 2: (a) "Award" means an Option, Restricted Shares or a Right. Unless the context clearly indicates otherwise, the term "Awards" shall include Options, Restricted Shares and Rights. (b) "Beneficiary" means the person or persons designated in writing by the Grantee as his beneficiary in respect of an Award; or, in the absence of an effective designation or if the designated person or persons predecease the Grantee, the Grantee's Beneficiary shall be the person or persons who acquire by bequest or inheritance the Grantee's rights in respect of an Award. In order to be effective, a Grantee's designation of a Beneficiary must be on file with the Company before the Grantee's death. Any such designation may be revoked and a new designation substituted therefor at any time before the Grantee's death. (c) "Board of Directors" or "Board" means the Board of Directors of the Company. (d) "Change in Control" means the first to occur of the following events: (1) an acquisition (other than directly from the Company) of securities of the Company by any person, immediately after which such person, together with all securities law affiliates and associates of such person, becomes the beneficial owner of securities of the Company representing 25 percent or more of the voting power; provided that, in determining whether a Change in Control has occurred, the acquisition of securities of the Company in a non-control acquisition will not constitute an acquisition that would cause a Change in Control; or (2) three or more directors, whose election or nomination for election is not approved by a majority of the members of the incumbent Board then serving as members of the Board of Directors, are elected within any single 12-month period to serve on the Board of Directors; provided that an individual whose election or nomination for election is approved as a result of either an actual or threatened election contest or proxy contest, including 19 by reason of any agreement intended to avoid or settle any election contest or proxy contest, will be deemed not to have been approved by a majority of the incumbent Board for purposes of this definition; or (3) members of the incumbent Board cease for any reason to constitute at least a majority of the Board of Directors; or (4) approval by shareholders of the Company of: (i) a merger, consolidation, or reorganization involving the Company, unless (A) the shareholders of the Company, immediately before the merger, consolidation, or reorganization, own, directly or indirectly immediately following such merger, consolidation, or reorganization, at least 75 percent of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation, or reorganization in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation, or reorganization; (B) individuals who were members of the incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation, or reorganization constitute at least a majority of the board of directors of the surviving corporation; and (C) no person (other than (I) the Company or any Subsidiary thereof, (II) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, any Subsidiary thereof, or the surviving corporation, or (III) any person who, immediately prior to such merger, consolidation, or reorganization, had beneficial ownership of securities representing 25 percent or more of the voting power) has beneficial ownership of securities representing 25 percent or more of the combined voting power of the Surviving Corporation's then outstanding voting securities; (ii) a complete liquidation or dissolution of the Company; or (iii) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any person (other than a transfer to a Subsidiary). (e) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (f) "Committee" means a committee consisting of such number of members of the Compensation Committee of the Board of Directors with such qualifications as are required to satisfy the requirements of (i) Rule 16b-3 under the Securities Exchange Act of 1934, as in effect from time to time (or any successor rule of similar import) and (ii) Section 162(m) of the Code, and the regulations thereunder, as in effect from time to time (or any successor provision of similar import), to the extent that Awards made under the Incentive Plan are intended to qualify as performance-based compensation thereunder. (g) "Company" means JLG Industries, Inc. (h) "Disability" or "Disabled" means having a total and permanent disability as defined in Section 22(e)(3) of the Code. (i) "Fair Market Value" means, when used in connection with the Shares on a certain date, the fair market value of a Share as determined by the Committee, and shall be deemed equal to the mean of the high and low prices at which Shares are traded on such date (or on the next preceding day for which such information is ascertainable at the time of the Committee's determination) as reported for such 20 date by The Wall Street Journal (or if Shares are not traded on such date, on the next preceding day on which Shares are traded) (or if Shares are traded on such date but no edition of The Wall Street Journal reporting such prices for such date is published, the fair market value shall be deemed equal to the mean of the high and low prices at which Shares are traded on such date as reported through the National Association of Securities Dealers Automated Quotations System in any other newspaper). (j) "Grantee" means a person to whom an Award has been granted under the Plan. (k) "Incentive Stock Option" means an Option that complies with the terms and conditions set forth in Section 422(b) of the Code and is designated by the Committee as an Incentive Stock Option. (l) "Limited Stock Appreciation Right" or "Right" means a right that provides for payment in accordance with Section 10 hereof. (m) "Non-qualified Stock Option" means an Option granted under the Plan other than an Incentive Stock Option. (n) "Option" means any option to purchase a Share or Shares pursuant to the provisions of the Plan. Unless the context clearly indicates otherwise, the term "Option" shall include both Incentive Stock Options and Non-qualified Stock Options. (o) "Option Agreement" means the written agreement to be entered into by the Company and the Grantee, as provided in Section 7 hereof. (p) "Parent" means any parent corporation of the Company within the meaning of Section 424(e) of the Code (or a successor provision of similar import). (q) "Performance-Based Restricted Shares" means Restricted Shares that are intended to qualify as performance-based compensation under Section 162(m) of the Code, and the regulations thereunder. (r) "Plan" means the JLG Industries, Inc. Stock Incentive Plan, as amended and restated on May 23, 1991, as set forth herein and as amended from time to time (except where the context makes clear that the reference is to the Plan as in effect prior to May 23, 1991, which was called the JLG Industries, Inc. 1983 Stock Option Plan (as amended and restated)). (s) "Quota" means the portion of the total number of Shares subject to an Option that the Grantee of the Option may purchase during each of the several periods of the Term of the Option (if the Option is subject to Quotas), as provided in Section 12(a) hereof. (t) "Restricted Shares" means Shares granted pursuant to Section 11 hereof or purchased under a Non-qualified Stock Option pursuant to Section 9(d) hereof and subject to such restrictions and other terms and conditions as the Committee shall determine in accordance with the Plan. (u) "Retirement" means retirement pursuant to the JLG Industries, Inc. Employees' Retirement Savings Plan, as amended from time to time. (v) "Shares" means shares of the Company's $.20 par value common stock. (w) "Subsidiary" means a subsidiary corporation of the Company within the meaning of Section 424(f) of the Code (or a successor provision of similar import.) (x) "Term" means the period during which a particular Option or Right may be exercised. 21 3. EFFECTIVE DATE AND DURATION OF THE AMENDED AND RESTATED PLAN (a) This amendment and restatement of the Plan became effective as of May 23, 1991, and shall continue in effect for a term of ten years after that date. This amendment and restatement of the Plan as of May 23, 1991 shall not affect the terms of any Option that was outstanding on May 22, 1991; all such Options shall continue to be governed by the terms of the Plan in effect on May 22, 1991. (b) Awards may be granted at any time prior to the earlier of the expiration of the ten-year term of the Plan, as described in subsection (a) above, or the termination of the Plan pursuant to Section 19 hereof. For the purpose of commencing the ten-year period specified in Section 422(b)(2) of the Code during which Incentive Stock Options may be granted, this amendment and restatement of the Plan as of May 23, 1991 shall constitute the adoption of a new plan. An Award outstanding at the time the Plan is terminated (either by expiration of the ten-year term of the Plan or by termination of the Plan pursuant to Section 19 hereof) shall not cease to be or cease to become exercisable pursuant to its terms solely because of the termination of the Plan. 4. NUMBER AND SOURCE OF SHARES SUBJECT TO THE PLAN (a) Subject to the provision of subsection (d) below, the Company may grant Awards (including Replacement Options granted under Section 13(b) hereof) under the Plan, as amended and restated as of May 23, 1991, and as further amended as of November 21, 1994, with respect to not more than (i) the remaining number of Shares with respect to which additional Options were authorized to be granted under the Plan immediately prior to its amendment and restatement as of May 23, 1991 (namely 2,383 Shares) plus (ii) 500,000 additional Shares (subject, however, to increase as provided in subsection (c) below and to adjustment as provided in Section 17 hereof) which shall be provided from Shares in the treasury or by the issuance of Shares authorized but unissued. (b) If an Option granted on or after May 23, 1991 is surrendered before exercise, or lapses or is terminated without being exercised, in whole or in part, for any reason other than the exercise of a Right, the Shares subject to the Option shall be restored to the aggregate maximum number of Shares (specified in subsection (a) above) with respect to which Awards may be granted under the Plan, but only to the extent that the Option or any related Right has not been exercised. Similarly, if any Restricted Shares are forfeited and returned to the Company, such forfeited Shares shall be restored to such aggregate maximum number of Shares with respect to which Awards may be granted under the Plan. (c) If, on or after May 23, 1991, any of the Options granted before May 23, 1991 under the Plan as in effect before May 23, 1991 (which Options, to the extent still outstanding on May 23, 1991, were granted with respect to a total of 61,725 Shares) is surrendered before exercise, or lapses or is terminated without being exercised, in whole or in part, for any reason, the Company may grant Awards under the Plan with respect to the Shares subject to the Option in addition to the aggregate maximum number of Shares specified in subsection (a) above, but only to the extent that the Option has not been exercised. (d) The Company may grant Incentive Stock Options under the Plan only with respect to not more than 500,000 of the Shares specified in subsection (a) above. If an Incentive Stock Option granted on or after May 23, 1991 is surrendered before exercise, or lapses or is terminated without being exercised, in whole or in part, for any reason other than the exercise of a Right, the Shares subject to the Incentive Stock Option shall be restored to the aggregate maximum number of Shares (specified in subsection (a) above) with respect to which Awards may be granted under the Plan and to the aggregate maximum number (specified in the first sentence of this subsection (d)) of those Shares with respect to which Incentive Stock Option may be granted under the Plan, but only to the extent that the Incentive Stock Option or any related Right has not been exercised. 22 (e) The maximum number of Shares that can be the subject of Awards to any individual in any fiscal year of the Company is 100,000 Shares. For purposes of this subsection (e), (i) if an Award is canceled, the canceled Award shall be counted against the maximum number of Shares for which Awards may be granted to the individual, and (ii) if, after grant, the exercise price of an Option or Right is reduced (other than pursuant to the adjustment provisions of Section 17 hereof), the transaction shall be treated as the cancellation of the Option or Right and the grant of a new Option or Right, and both the Option or Right that is deemed to be canceled and the Option or Right that is deemed to be granted shall reduce the maximum number of Shares for which Options and Rights may be granted to the individual. 5. ADMINISTRATION OF THE PLAN (a) The Plan shall be administered by the Committee. (b) The Committee may adopt, amend and rescind rules and regulations relating to the Plan as it may deem proper, shall make all other determinations necessary or advisable for the administration of the Plan, and may provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company, to the extent not contrary to the express provisions of the Plan; provided, however, that the Committee may take action only upon the agreement of a majority of its members then in office. Notwithstanding the provisions of the preceding sentence, no action or determination by the Committee may adversely affect any right acquired by any Grantee or Beneficiary under the terms of any Award granted before the date such action or determination is taken or made, unless the affected Grantee or Beneficiary shall expressly consent; but it shall be conclusively presumed that any adjustment pursuant to Section 17 does not adversely affect any such right. Any action that the Committee may take through a written instrument signed by all of its members then in office shall be as effective as though taken at a meeting duly called and held. (c) The powers of the Committee shall include plenary authority to interpret the Plan, and, subject to the provisions hereof, the Committee may determine (i) the persons to whom Awards shall be granted; (ii) the number of Shares subject to each Award; (iii) the Term of each Award; (iv) the frequency of Awards and the date on which each Award shall be granted; (v) the type of each Award; (vi) the Quotas (if any), exercise periods, and other terms and conditions applicable to each Option and Right, and the provisions of each Option Agreement; (vii) any performance criteria pursuant to which Awards may be granted; and (viii) the restrictions and other terms and conditions of each grant of Restricted Shares and the provisions of any instruments evidencing such grants. The Committee also may accelerate at any time the exercisability of outstanding Options, provided that no Option shall be exercisable prior to the expiration of the mandatory six-month holding period specified in Section 12(a) hereof. (d) The determinations, interpretations, and other actions made or taken by the Committee pursuant to the provisions of the Plan shall be final, binding, and conclusive for all purposes and upon all persons. 6. EMPLOYEES ELIGIBLE TO RECEIVE OPTIONS (a) Awards may be granted under the Plan to key employees of the Company or any Subsidiary (including employees who are directors and/or officers). All determinations by the Committee as to the identity of the persons to whom Awards shall be granted hereunder shall be conclusive. (b) Directors who are not regular salaried employees of the Company or a Subsidiary shall not be eligible to receive Awards. (c) An individual Grantee may receive more than one Award. 23 7. OPTION AGREEMENT (a) No Option or Right shall be exercised by a Grantee unless he shall have executed and delivered an Option Agreement evidencing the grant of such Option or Right. The Agreement shall set forth the number of Shares subject to the Option or Right and the terms, conditions and restrictions applicable thereto. (b) Appropriate officers of the Company are hereby authorized to execute and deliver Option Agreements in the name of the Company as directed from time to time by the Committee. 8. INCENTIVE STOCK OPTIONS (a) The Committee may authorize the grant of Incentive Stock Options to officers and key employees, subject to the terms and conditions set forth in the Plan. The Option Agreement relating to an Incentive Stock Option shall state that the Option evidenced by the Option Agreement is intended to be an "incentive stock option" within the meaning of Section 422(b) of the Code. (b) The Term of each Incentive Stock Option shall end (unless the Option shall have terminated earlier under another provision of the Plan) on a date fixed by the Committee and set forth in the applicable Option Agreement. In no event shall the Term of an Incentive Stock Option extend beyond ten years from the date of grant. In the case of any Grantee who, on the date the Option is granted, owns (within the meaning of Section 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of the Company, a Parent, or a Subsidiary, the Term of the Option shall not extend beyond five years from the date of grant. (c) To the extent that the aggregate Fair Market Value of the stock with respect to which Incentive Stock Options(determined without regard to this paragraph (c)) are exercisable by any Grantee for the first time during any calendar year (under all stock option plans of the Company, its Parent and its Subsidiaries) exceeds $100,000, such Options shall not be Incentive Stock Options. For the purpose of this paragraph c), the Fair Market Value of stock shall be determined as of the time the Option with respect to such stock is granted. This paragraph (c) shall be applied by taking Options into account in the order in which they were granted. (d) The Option price to be paid by the Grantee to the Company for each Share purchased upon the exercise of an Incentive Stock Option shall be equal to the Fair Market Value of a Share on the date the Option is granted, except that with respect to any Incentive Stock Option granted to a Grantee who, on the date the Option is granted, owns (within the meaning of Section 424(d) of the Code) more than ten percent of the total combined voting power of all classes of stock of the Company, a Parent, or a Subsidiary, the Option price for each Share purchased shall not be less than 110 percent of the Fair Market Value of a Share on the date the Option is granted. In no event may an Incentive Stock Option be granted if the Option price per Share is less than the par value of a Share. (e) Any Grantee who disposes of Shares purchased upon the exercise of an Incentive Stock Option either (i) within two years after the date on which the Option was granted, or (ii) within one year after the transfer of such Shares to the Grantee, shall promptly notify the Company of the date of such disposition and of the amount realized upon such disposition. 9. NON-QUALIFIED STOCK OPTIONS (a) The Committee may authorize the grant of Non-qualified Stock Options subject to the terms and conditions set forth in the Plan. Unless an Option is designated by the Committee as an Incentive Stock Option, it is intended that the Option will not 24 be an "incentive stock option" within the meaning of Section 422(b) of the Code and, instead, will be a Non-qualified Stock Option. The Option Agreement relating to a Non-qualified Stock Option shall state that the Option evidenced by the Option Agreement will not be treated as an Incentive Stock Option. (b) The Term of each Non-qualified Stock Option shall end (unless the Option shall have terminated earlier under another provision of the Plan) on a date fixed by the Committee and set forth in the applicable Option Agreement. In no event shall the Term of a Non-qualified Stock Option extend beyond ten years from the date of grant of the Option. (c) In no event may a Non-qualified Stock Option be granted if the Option price per Share is less than the par value of a Share. (d) At the time of the grant of a Non-qualified Stock Option, the Committee shall specify whether the Shares purchased under the Option shall or shall not be Restricted Shares (or whether they shall be a specified combination of Shares that are, and Shares that are not, Restricted Shares). Restricted Shares purchased under an Option shall be subject to the terms, conditions and restrictions set out in subsections (b) through (e) of Section 11, and such additional terms, conditions and restrictions as the Committee may determine. Subject to the provisions of subsections (b) through (e) of Section 11, the Committee, at the time of grant, shall determine (and the Option Agreement shall specify) the terms and conditions of any Restricted Shares that may be purchased under the Non-qualified Stock Option, including the duration of the restrictions that shall be imposed on the Restricted Shares, and the dates on which, or circumstances in which, the restrictions shall expire, lapse or be removed or the Restricted Shares shall be forfeited. Shares purchased under an Option after the Company obtains actual knowledge that a Change in Control has occurred shall not be subject to any restrictions. 10. LIMITED STOCK APPRECIATION RIGHTS (a) The Committee may authorize the grant of Limited Stock Appreciation Rights in connection with all or part of any Option. (b) A Right may be exercised only at such times, by such persons, and to such extent, as the related Option is exercisable. Furthermore, a Right may be exercised only within the 60-day period beginning on the date on which the Company obtains actual knowledge that a Change in Control has occurred. As soon as the Company obtains actual knowledge that a Change in Control has occurred, the Company shall promptly notify each Grantee in writing of the Change in Control, whether or not the Grantee holds a Right. (c) The Shares that are subject to a Right shall not be used more than once to calculate the amount to be received pursuant to the exercise of the Right. The right of a Grantee to exercise an Option shall be canceled if and to the extent that the Shares subject to the Option are used to calculate the amount to be received upon the exercise of the related Right, and the right of a Grantee to exercise a Right shall be canceled if and to the extent that the Shares with respect to which the Right may be exercised are purchased upon the exercise of the related Option. (d) A Right may be granted coincident with or after the grant of any related Option, provided that the Committee shall consult with counsel before granting a Right after the grant of a related Incentive Stock Option. (e) The amount to be paid to the Grantee upon exercise of a Right that is related to a Non-qualified Stock Option shall be paid in cash, and shall be equal to the number of Shares with respect to which the Right is exercised multiplied by the excess of (1) the higher of (i) the highest Fair Market Value of a Share during the period commencing on the ninetieth (90th) day preceding the exercise of the 25 Right and ending on the date of exercise; or (ii) if an event described in paragraph (i) of the definition of "Change in Control", above, has occurred, the highest price per Share (A) paid for any Share in any transaction occurring during the period described in clause (i) by any person or group (as defined in the definition of "Change in Control", above) whose acquisition of Shares caused the Change in Control to occur, or (B) paid for any Share as shown on Schedule 13D (or an amendment thereto) filed pursuant to Section 13(d) of the Securities Exchange Act of 1934 by any such person or group, over (2) the Option price of the related Non-qualified Stock Option. (f) The amount to be paid to the Grantee upon exercise of a Right that is related to an Incentive Stock Option shall be paid in cash, and shall be equal to the number of Shares with respect to which the Right is exercised multiplied by the excess of (i) the Fair Market Value (as of the exercise date of the Right) of a Share over (ii) the Option price of the related Incentive Stock Option. 11. RESTRICTED SHARES (a) The Committee may authorize the grant of Restricted Shares subject to the terms and conditions set forth in the Plan. The following terms, conditions and restrictions and such additional terms, conditions and restrictions as may be determined by the Committee shall apply to Restricted Shares. Subject to the provisions of this Section 11 (including, in the case of Performance-Based Restricted hares, paragraph (f)), the Committee shall determine at the time of grant the size and the terms and conditions of each grant of Restricted Shares, including the duration of the restrictions that shall be imposed on the Restricted Shares, the dates on which, or circumstances in which, the restrictions shall expire, lapse or be removed or the Restricted Shares shall be forfeited, and the price to be paid to the Company by the Grantee (and the terms of payment thereof) for the Restricted Shares. In no event, however, shall the price of a Restricted Share be less than the par value of a Share on the date of grant. The Committee may cause to be issued an instrument evidencing the grant of the Restricted Shares to the Grantee, which instrument may set forth the restrictions and other terms and conditions of the grant. (b) A Grantee who has acquired Restricted Shares (pursuant to either a grant of Restricted Shares or the exercise of an Option to purchase Restricted Shares) shall have beneficial ownership of the Restricted Shares, including the right to receive dividends on (subject, in the case of Performance-Based Restricted Shares, to the provisions of paragraph (f)) and the right to vote, the Restricted Shares. A certificate or certificates representing the number of Restricted Shares acquired shall be registered in the name of the Grantee. The Committee, in its sole discretion, shall determine when the certificate or certificates shall be delivered to the Grantee (or, in the event of the Grantee's death, to his Beneficiary), may provide for the holding of such certificate or certificates in custody by a bank or other institution or by the Company itself pending their delivery to the Grantee or Beneficiary, and may provide for any appropriate legend to be borne by the certificate or certificates referring to the terms, conditions and restrictions applicable to the Shares. Any attempt to dispose of the Shares in contravention of such terms, conditions and restrictions shall be ineffective. (c) While subject to the restrictions imposed by the Committee in accordance with this Section 11, Restricted Shares (1) shall not be sold, assigned, conveyed, transferred, pledged, hypothecated, or otherwise disposed of, and (2) shall be returned to the Company forthwith, and all the rights of the Grantee to such Shares shall immediately terminate, if the Grantee's continuous employment with the Company or any Subsidiary shall 26 terminate for any reason, except as provided in Section 11(d). The return of the Shares shall be accomplished, if necessary, by the Grantee's delivering or causing to be delivered to the Company the certificate(s) for the Shares, accompanied by such endorsement(s) and/or instrument(s) of transfer as may be required by the Company. Upon the return of Shares in accordance with this paragraph (2), the Company shall pay to the Grantee an amount in cash equal to the lesser of the aggregate price paid for the Shares returned or the current fair market value of the Shares returned. (d) Subject to the following provisions of this Section 11(d), the restrictions imposed on Restricted Shares shall lapse on such date or dates as the Committee shall determine when the Restricted Shares (or any Option to purchase them) are granted. In addition, if a Grantee who has been in the continuous employment of the Company or a Subsidiary since the date on which he acquired the Restricted Shares becomes Disabled or dies while in such employment, then the restrictions imposed on the Restricted Shares shall lapse; provided that, if such Restricted Shares are intended to qualify as Performance-Based Restricted Shares, they shall cease to qualify as performance-based compensation for purposes of Section 162(m) of the Code if the restrictions lapse on the account of the Disability or death of the Grantee. Further, all restrictions imposed on Restricted Shares shall lapse immediately following the date on which the Company obtains actual knowledge that a Change in Control has occurred; provided that, if such Restricted Shares are intended to qualify as Performance-Based Restricted Shares, they shall cease to qualify as performance-based compensation for purposes of Section 162(m) of the Code if the restrictions lapse on account of a Change in Control. (e) If, after Restricted Shares are transferred to a Grantee (pursuant to either a grant of Restricted Shares or the exercise of an Option to purchase Restricted Shares), the Grantee properly elects, pursuant to section 83(b) of the Code, to include in gross income for Federal income tax purposes the amount determined under section 83(b) of the Code, the Grantee shall furnish to the Company a copy of his completed and signed election form, and shall pay (or make arrangements satisfactory to the Company to pay) to the Company any Federal, state or local taxes required to be withheld with respect to the Shares. If the Grantee fails to make such payments, the Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to the Grantee any Federal, state or local taxes of any kind required by law to be withheld with respect to the Shares. (f) The Committee may authorize the grant of Performance-Based Restricted Shares subject to the following terms and conditions, in addition to all other applicable terms and conditions set forth in the Plan: (1) The restrictions imposed on Performance-Based Restricted Shares shall expire, lapse or be removed based solely on the account of the attainment of performance targets established by the Committee using one or more of the following objective financial criteria pertaining to the Company as the applicable business objectives: (i) earning per share, (ii) return on equity, (iii) return on assets, (iv) stock price appreciation, (v) annual sales and (vi) annual net income. The establishment of the actual performance targets and, if an award is based on more than one of the foregoing financial criteria, the weighing of such financial criteria, shall be at the sole discretion of the Committee; provided, however, that in all cases the performance targets must be established by the Committee in writing no later than 90 days after the commencement of the fiscal year to which the performance target(s) relates and when achievement of the performance target(s) is substantially uncertain. Once established by the Committee, the performance target(s) may not be changed to increase the amount of compensation that otherwise would be due upon the attainment of the performance target(s). 27 (2) Dividends shall be payable on Performance-Based Restricted Shares only to the extent of the Shares received based upon the attainment of the preestablished performance target(s). (3) Prior to the release of restrictions on any Performance-Based Restricted Shares, the Committee shall certify in writing (which may be set forth in the minutes of the Committee) that the preestablished performance target(s) have been satisfied. 12. TERMS AND QUOTAS OF OPTION (a) Each Option and Right granted under the Plan shall be exercisable only during a Term commencing at least six months after the date on which the Option or Right was granted. The Committee shall have authority to grant both Options exercisable in full at any time during their Term and Options exercisable in Quotas. In exercising an Option that is subject to Quotas, the Grantee may purchase less than the full Quota available under the Option during any period. Quotas or portions thereof not purchased in earlier periods shall accumulate and shall be available for purchase in later periods within the Term of the Option. (b) Upon the expiration of the mandatory six-month holding period specified in subsection (a) above, any Option shall be exercisable in full, notwithstanding the applicability of any Quota or other limitation on the exercise of such Option, immediately following the date on which the Company obtains actual knowledge that a Change in Control has occurred. 13. EXERCISE OF OPTION OR RIGHT (a) Options or Rights shall be exercised by delivering or mailing to the Committee: (1) a notice, in the form and in the manner prescribed by the Committee, specifying the number of Shares to be purchased, or the number of Shares with respect to which a Right shall be exercised, and (2) if an Option is exercised, payment in full of the Option price for the Shares so purchased (i) by money order, cashier's check, or certified check; (ii) by the tender of Shares to the Company, or by the attestation to the ownership of the Shares that otherwise would be tendered to the Company in exchange for the Company's reducing the number of Shares that it issues to the Grantee by the number of Shares necessary for payment in full of the Option price for the Shares so purchased; (iii) by money order, cashier's check, or certified check and the tender of Shares to the Company, or by money order, cashier's check, or certified check and the attestation to the ownership of the Shares that otherwise would be tendered to the Company in exchange for the Company's reducing the number of Shares that it issues to the Grantee by the number of Shares necessary for payment in full of the Option price for the Shares so purchased; or (iv) unless the Committee expressly notifies the Grantee otherwise (at the time of grant in the case of an Incentive Stock Option or at any time prior to full exercise in the case of a Non-qualified Stock Option), and except to the extent that the Option is an Option to purchase Restricted Shares, by the Grantee's (a) irrevocable instructions to the Company to deliver the Shares issuable upon exercise of the Option promptly to the broker for the Grantee's account and (b) irrevocable instruction letter to the broker to sell Shares sufficient to pay the exercise price and upon such sale to deliver the exercise price to the Company, provided that at the time of such 28 exercise, such exercise would not subject the Grantee to liability under section 16(b) of the Securities Exchange Act of 1934, or would be exempt pursuant to Rule 16b-3 promulgated under such Act or any other exemption from such liability. The Company shall deliver an acknowledgment to the broker upon receipt of instructions to deliver the Shares. The Company shall deliver the Shares to the broker upon the settlement date. The broker shall deliver to the Company cash sale proceeds sufficient to cover the exercise price upon receipt of the Shares from the Company. Shares tendered or attested to in exchange for Shares issued under the Plan must be held by the Grantee for at least six months prior to their tender or their attestation to the Company, and may not be Restricted Shares at the time they are tendered or attested to. The Committee shall determine acceptable methods for tendering or attesting to Shares to exercise an Option under the Plan, and may impose such limitations and prohibitions on the use of Shares to exercise Options as it deems appropriate. For purposes of determining the amount of the Option price satisfied by tendering or attesting to Shares, such Shares shall be valued at their Fair Market Value on the date of tender or attestation, as applicable. Except as provided in this paragraph, the date of exercise shall be deemed to be the date that the notice of exercise and payment of the Option price are received by the Committee. For exercise pursuant to Section 13(a)(2)(iv) of the Plan, the date of exercise shall be deemed to be the date that the notice of exercise is received by the Committee. (b) At the time it grants a Non-qualified Stock Option, the Committee may provide in the Option Agreement that if the Grantee exercises the Non-qualified Stock Option (the "Exercised Option") by tendering Shares to the Company to pay the Option price in accordance with subsection (a) above, he shall be granted, as of the date of exercise, a Non-qualified Stock Option (the "Replacement Option") to purchase a number of Shares not exceeding the number of Shares he tendered to pay the Option price in exercising the Exercised Option; provided, however, that no Replacement Option shall be granted to the extent that it, would cause the limitations set forth in Sections 4(a) and 4(e) hereof to be exceeded. The terms of the Replacement Option shall be identical to the terms of the Exercised Option, except that (i) the Option price per Share shall be equal to the Fair Market Value of a Share on the date on which the Replacement Option is granted, but in no event shall the Option price per Share be less than the par value of a Share on that date; (ii) the Term shall commence at least six months after the date the Replacement Option is granted, and (iii) the Committee may establish new Quotas (or no Quotas at all) with respect to the Replacement Option. (c) Subject to subsection (d) below, upon receipt of the notice of exercise and, if an Option is exercised, upon payment of the Option price, the Company shall promptly deliver to the Grantee (or Beneficiary) a certificate or certificates for the Shares purchased, without charge to him for issue or transfer tax, and if a Right is exercised, shall promptly distribute cash to be paid upon the exercise of the Right. (d) The exercise of each Option and Right and the grant or distribution of Restricted Shares under the Plan shall be subject to the condition that if at any time the Company shall determine (in accordance with the provisions of the following sentence) that it is necessary as a condition of, or in connection with, such exercise (or the delivery or purchase of Shares thereunder), grant or distribution (i) to satisfy withholding tax or other withholding liabilities, (ii) to effect the listing, registration, or qualification on any securities exchange or under any state or Federal law of any Shares otherwise deliverable in connection with such exercise, grant or distribution, or (iii) to obtain the consent or approval of any regulatory body, then in any such event such exercise, grant or distribution shall not be effective unless such withholding, listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company in its reasonable and good faith judgment. Any such determination (described in the 29 preceding sentence) by the Company must be reasonable, must be made in good faith, and must be made without any intent to postpone or limit such exercise, grant or distribution beyond the minimum extent necessary and without any intent otherwise to deny or frustrate any Grantee's rights in respect of any Award. In seeking to effect or obtain any such withholding, listing, registration, qualification, consent or approval, the Company shall act with all reasonable diligence. Any such postponement or limitation affecting the right to exercise an Option or Right or the grant or distribution of Restricted Shares shall not extend the time within which the Option or Right may be exercised or the Restricted Shares may be granted or distributed, unless the Company and the Grantee choose to amend the terms of the Award to provide for such an extension; and neither the Company nor its directors or officers shall have any obligation or liability to the Grantee or to a Beneficiary with respect to any Shares with respect to which the Award shall lapse, or with respect to which the grant or distribution shall not be effected, because of a postponement or limitation that conforms to the provisions of this subsection (d). (e) Except as provided in Section 13(f) below, Options and Rights granted under the Plan shall be nontransferable other than by will or by the laws of descent and distribution in accordance with Section 14(a) hereof, and an Option or Right may be exercised during the lifetime of the Grantee only by him. (f) Subject to the approval of the Committee in its sole discretion, Non-qualified Stock Options, Limited Stock Appreciation Rights that are granted in connection with Non-qualified Stock Options, and Restricted Stock may be transferable to members of the immediate family of the Grantee and to one or more trusts for the benefit of such family members, partnerships in which such family members are the only partners, or corporations in which such family members are the only stockholders. "Members of the immediate family" means the Grantee's spouse, children, stepchildren, grandchildren, parents, grandparents, siblings (including half brothers and sisters), and individuals who are family members by adoption. (g) Upon the purchase of Shares under an Option, the stock certificate or certificates may, at the request of the purchaser, be issued in his name and the name of another person as joint tenants with right of survivorship. 14. EXERCISE OF OPTION OR RIGHT AFTER DEATH, DISABILITY, RETIREMENT, OTHER TERMINATION OF EMPLOYMENT, OR CHANGE IN CONTROL (a) Death If a Grantee's employment with the Company and its Subsidiaries shall cease due to the Grantee's death, or if the Grantee shall die within three months after cessation of employment while an Option is exercisable pursuant to subsection (d) or (e) below, any Option held by the Grantee on the date of his death may be exercised only within twelve months after the Grantee's death, and only by the Grantee's Beneficiary, to the extent that the Option could have been exercised immediately before the Grantee's death. (b) Disability If a Grantee's employment with the Company and its Subsidiaries shall cease due to his Disability, after at least six months of continuous employment with the Company and/or a Subsidiary immediately following the date on which an Option was granted, the Grantee may exercise the Option, to the extent that the Option could be exercised at the cessation of employment, at any time within two years after the Grantee shall so cease to be an employee. (c) Retirement If a Grantee's employment with the Company and its Subsidiaries ceases due to his Retirement, after at least six months of continuous employment with the Company and/or a Subsidiary immediately following the date on which an Option 30 was granted, the Grantee may exercise the Option, to the extent the Option could be exercised at the cessation of employment, at any time within two years after the Grantee's Retirement. (d) Termination of Employment for Any Other Reason The Option Agreement shall specify the period, if any, during which an Option may be exercised subsequent to the termination of a Grantee's employment with the Company and its Subsidiaries at any time other than within three months after the date on which the Company obtains actual knowledge that a Change in Control has occurred and for any reason other than those specified in subsections (a) through (c) above; provided, however, that the Option Agreement shall not permit the exercise of any Option later than three months after such termination; and provided further that the Option may not be exercised to an extent greater than the extent to which it could be exercised at the cessation of employment. (e) Termination of Employment After a Change in Control If, within three months after the Company obtains actual knowledge that a Change in Control has occurred, a Grantee's employment with the Company and its Subsidiaries ceases for any reason other than those specified in subsections (a) through (c) above, the Grantee may exercise the Option at any time within three months after such cessation of employment. (f) Notwithstanding any other provision of this Section 14, in no event shall an Option be exercisable after the expiration date specified in the Option Agreement. 15. TAX WITHHOLDING (a) The Company shall have the right to collect an amount sufficient to satisfy any Federal, State and/or local withholding tax requirements that might apply with respect to any Award to a Grantee (including, without limitation, the exercise of an Option or Right, the disposition of Shares, or the grant or distribution of Restricted Shares) in the manner specified in subsection (b) or (c) below. Alternatively, a Grantee may elect to satisfy any such withholding tax requirements in the manner specified in subsection (d) or (e) below to the extent permitted therein. (b) The Company shall have the right to require Grantees to remit to the Company an amount sufficient to satisfy any such withholding tax requirements. (c) The Company and its Subsidiaries also shall, to the extent permitted by law, have the right to deduct from any payment of any kind (whether or not related to the Plan) otherwise due to a Grantee any such taxes required to be withheld. (d) If the Committee in its sole discretion approves, a Grantee may irrevocably elect to have any withholding tax obligation satisfied by (i) having the Company withhold Shares otherwise deliverable to the Grantee, or (ii) delivering Shares (other than Restricted Shares) to the Company, provided that the Shares withheld or delivered have a Fair Market Value (on the date that the amount of tax to be withheld is determined) equal to the amount required to be withheld. (e) A Grantee may elect to have any withholding tax obligation satisfied in the manner described in Section 13(a)(2)(iv) hereof, to the extent permitted therein. 16. SHAREHOLDER RIGHTS No person shall have any rights of a shareholder by virtue of an Option or Right except with respect to Shares actually issued to him, and the issuance of Shares shall confer no retroactive right to dividends. 17. ADJUSTMENT FOR CHANGES IN CAPITALIZATION (a) Subject to the provisions of Section 18 hereof, in the event that there is any change in the Shares through merger, consolidation, reorganization, recapitalization or 31 otherwise; or if there shall be any dividend on the Shares, payable in Shares; or if there shall be a stock split or a combination of Shares, the aggregate number of shares available for Awards, the number of Shares subject to outstanding Awards, and the Option price per Share of each out standing Option may be proportionately adjusted by the Board of Directors as it deems equitable in its absolute discretion to prevent dilution or enlargement of the rights of the Grantees; provided that any fractional Shares resulting from such adjustments shall be eliminated. (b) Subject to the provisions of Section 18 hereof, any Shares to which a Grantee shall become entitled as a result of a stock dividend on Restricted Shares, or as a result of a stock split, combination of Shares, merger, consolidation, reorganization, recapitalization or other event affecting Restricted Shares, shall have the same status, be subject to the same restrictions, and bear the same legend (if any) as the Shares with respect to which they were issued, except as may be otherwise provided by the Board of Directors. (c) The Board's determination with respect to any such adjustments shall be conclusive. 18. EFFECTS OF MERGER OR OTHER REORGANIZATION If the Company shall be the surviving corporation in a merger or other reorganization, Awards shall extend to stock and securities of the Company after the merger or other reorganization to the same extent that a person who held, immediately before the merger or reorganization, the number of Shares corresponding to the number of Shares covered by the Award would be entitled to have or obtain stock and securities of the Company under the terms of the merger or reorganization. 19. TERMINATION, SUSPENSION, OR MODIFICATION OF PLAN The Board of Directors may at any time terminate, suspend, or modify the Plan, except that the Board shall not, without approval by the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to vote, at a meeting duly held in accordance with applicable law, change (other than through adjustment for changes in capitalization as provided in Section 17 hereof) (a) the aggregate number of Shares for which Awards may be granted; (b) the class of persons eligible for Awards; (c) the minimum Option price, applicable to Options or Rights, that is provided for under the terms of the Plan; or (d) the maximum duration of the Plan. No termination, suspension or modification of the Plan shall adversely affect any right acquired by any Grantee, or by any Beneficiary, under the terms of any Award granted before the date of such termination, suspension or modification, unless such Grantee or Beneficiary shall expressly consent; but it shall be conclusively presumed that any adjustment pursuant to Section 17 hereof does not adversely affect any such right. 20. APPLICATION OF PROCEEDS The proceeds received by the Company from the sale of Shares (including Restricted Shares) under the Plan shall be used for general corporate purposes. 21. GENERAL PROVISIONS The grant of an Award in any year shall not give the Grantee any right to similar grants in future years or any right to be retained in the employ of the Company or its Subsidiaries. 22. GOVERNING LAW The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the Commonwealth of Pennsylvania except to the extent that such laws may be superseded by any Federal law. 32 EX-10.7 5 DIRECTORS STOCK OPTION PLAN EXHIBIT 10.7 - ------------ JLG Industries, Inc. Directors Stock Option Plan 1. Purpose ------- The JLG Industries, Inc. Directors Stock Option Plan (the "Plan") is designed to enable Outside Directors of JLG Industries, Inc. (the "Company") to acquire or increase a proprietary interest in the Company, and thus to share in the future success of the Company's business. Accordingly, the Plan is intended as a further means not only of attracting and retaining outstanding Outside Directors, but also of promoting a closer identity of interests between Outside Directors and shareholders. 2. Definitions ----------- In this Plan document, unless the context clearly indicates otherwise, words in the masculine gender shall be deemed to refer to females as well as males, any term used in the singular also shall refer to the plural, and the following capitalized terms shall have the following meanings set forth in this Section 2: (a) "Beneficiary" means the person or persons designated in writing by the Grantee as his beneficiary in respect of an Option; or, in the absence of an effective designation or if the designated person or persons predecease the Grantee, the Grantee's Beneficiary shall be the person or persons who acquire by bequest or inheritance the Grantee's rights in respect of an Option. In order to be effective, a Grantee's designation of a Beneficiary must be on file with the Company before the Grantee's death. Any such designation may be revoked and a new designation substituted therefor at any time before the Grantee's death. (b) "Board of Directors" or "Board" means the Board of Directors of the Company. (c) "Change in Control" means the first to occur of the following events: (1) an acquisition (other than directly from the Company) of securities of the Company by any person, immediately after which such person, together with all securities law affiliates and associates of such person, becomes the beneficial owner of securities of the Company representing 25 percent or more of the voting power; provided that, in determining whether a Change in Control has occurred, the acquisition of securities of the Company in a non-control acquisition will not constitute an acquisition that would cause a Change in Control; or (2) three or more directors, whose election or nomination for election is not approved by a majority of the members of the incumbent Board then serving as members of the Board of Directors, are elected within any single 12-month period to serve on the Board of Directors; provided that an individual whose election or nomination for election is approved as a result of either an actual or threatened election contest or proxy contest, including by reason of any agreement intended to avoid or settle any election contest or proxy contest, will be deemed not to have been approved by a majority of the incumbent Board for purposes of this definition; or (3) members of the incumbent Board cease for any reason to constitute at least a majority of the Board of Directors; or (4) approval by shareholders of the Company of: 33 (i) a merger, consolidation, or reorganization involving the Company, unless (A) the shareholders of the Company, immediately before the merger, consolidation, or reorganization, own, directly or indirectly immediately following such merger, consolidation, or reorganization, at least 75 percent of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation, or reorganization in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation, or reorganization; (B) individuals who were members of the incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation, or reorganization constitute at least a majority of the board of directors of the surviving corporation; and (C) no person (other than (I) the Company or any Subsidiary thereof, (II) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, any Subsidiary thereof, or the surviving corporation, or (III) any person who, immediately prior to such merger, consolidation, or reorganization, had beneficial ownership of securities representing 25 percent or more of the voting power) has beneficial ownership of securities representing 25 percent or more of the combined voting power of the Surviving Corporation's then outstanding voting securities; (ii) a complete liquidation or dissolution of the Company; or (iii) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any person (other than a transfer to a Subsidiary). (d) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (e) "Committee" means a committee consisting of such number (not less than two) of members of the Compensation Committee of the Board of Directors with such qualifications as are required to satisfy the requirements of Rule 16b-3 of the Securities Exchange Act of 1934 as in effect from time to time (or any successor rule of similar import). (f) "Company" means JLG Industries, Inc. (g) "Disability" means having a total and permanent disability as defined in Section 22(e)(3) of the Code. (h) "Employee" means any person who is an employee , as defined in Section 3401(c) of the Code, of the Company, any Subsidiary, or any Parent. (i) "Fair Market Value" means, when used in connection with the Shares on a certain date, the mean of the high and low prices at which Shares are traded on the trading day preceding the date of determination as reported for such day by The Wall Street Journal (or if Shares are not traded on such day, on the next preceding day on which Shares are traded) or, if the prices at which Shares are traded are not reported by the Wall Street Journal, any other appropriate method that the Company deems fair and equitable. (j) "Grantee" means a person to whom an Option has been granted under the Plan. (k) "Option" means any option to purchase a Share or Shares pursuant to the provisions of the Plan. 34 (l) "Option Agreement" means the written agreement to be entered into by the Company and the Grantee, as provided in Section 5 hereof. (m) "Outside Director" means each member of the Board of Directors who is not an Employee. (n) "Parent" means any parent corporation of the Company within the meaning of Section 424(e) of the Code (or a successor provision of similar import). (o) "Plan" means the JLG Industries, Inc. Directors Stock Option Plan, as set forth herein and as amended from time to time. (p) "Shares" means shares of the Company's $.20 par value capital stock. (q) "Subsidiary" means a subsidiary corporation of the Company within the meaning of Section 424(f) of the Code (or a successor provision of similar import). (r) "Term" means the period during which a particular Option may be exercised. 3. Adoption Date and Duration of the Plan -------------------------------------- The Plan is effective September 27, 1993, and shall continue in effect until December 31, 2003, unless it is sooner terminated in accordance with Section 13 hereof; provided, however, that if the Plan is not approved by the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to vote, at a meeting duly held in accordance with applicable law, the Plan and all Options shall be of no effect. An Option outstanding at the time the Plan is terminated shall not cease to be or cease to become exercisable pursuant to its terms solely because of the termination of the Plan. 4. Number and Source of Shares Subject to the Plan ----------------------------------------------- (a) The Company may grant Options under the Plan with respect to not more than 1,968,000 Shares, which shall be provided from Shares in the Company's treasury, by the issuance of Shares authorized but unissued, or from outstanding Shares purchased in the open market. (b) If an Option previously granted is surrendered before exercise, or lapses or is terminated without being exercised, in whole or in part, the Shares subject to the Option shall become available for the granting of Options under the Plan within the aggregate maximum number of Shares stated in subsection (a), but only to the extent that such Option has not been exercised. 5. Grant of Options ---------------- (a) In each year during the term of the Plan, a single Option to purchase 6,000 Shares shall automatically be granted to each individual who is an Outside Director on the date of grant for that year; provided, however, that such Options shall not be granted unless the Company had a net profit before extraordinary events (as determined by the Company's independent auditors and reflected in the Company's annual report) for the immediately preceding fiscal year. The date of grant of such Options in each year shall be the date on which the results of the election of directors held at the Company's annual meeting for that year are certified by the judge of elections. (b) At any time after shareholder approval of the Plan and prior to the termination of the Plan, a single Option shall automatically be granted to each individual who is appointed to the Board for the first time by action of the Board and not action of the Company's shareholders. The date of grant of such an Option shall be the date on which the Outside Director is appointed to the Board for the first time. The number of Shares subject to such an Option shall be determined according to the following formula: 16.4384 x (365 -Y), where Y is the number of days between the immediately preceding annual meeting and the date of grant. 35 (c) All such grants shall be subject to and conditioned upon shareholder approval of the Plan as provided in Section 3. The Options shall not be incentive stock options within the meaning of Section 422(b) of the Code. Options may be granted under the Plan only as provided in this Section 5. (d) Appropriate officers of the Company are hereby authorized to execute and deliver Option Agreements in the name of the Company. 6. Terms of Options ---------------- (a) The Option price per Share of each Option shall be equal to the Fair Market Value of a Share on the date of the grant of the Option. (b) Each Option shall have a Term of ten years, unless it is sooner terminated in accordance with the provisions of the Plan. In no event shall an Option be exercisable after the expiration of such Term. (c) Each Option shall first become exercisable with respect to all of the Shares on the first anniversary of the date of the grant of the Option, except that no Option may be exercised prior to the expiration of six months after the later of (i) the date of the grant of the Option or (ii) the date of shareholder approval of the Plan. (d) A Grantee may at any time or from time to time during the Term of an Option exercise all or any portion of the Option that is then exercisable. (e) Notwithstanding the provisions of subsection (c), upon the expiration of the mandatory six-month holding period specified in subsection (c) above, all outstanding Options shall become exercisable in full, immediately following the date on which the Company obtains actual knowledge that a Change in Control has occurred. 7. Exercise of Option ------------------ (a) Options shall be exercised by delivering or mailing to the Company: (1) a notice, in the form and in the manner prescribed by the Company, specifying the number of Shares to be purchased, and (2) payment in full of the Option price for the Shares so purchased (i) by money order, cashier's check, or certified check; (ii) by the tender of Shares to the Company, or by the attestation to the ownership of the Shares that otherwise would be tendered to the Company in exchange for the Company's reducing the number of Shares that it issues to the Grantee by the number of Shares necessary for payment in full of the Option price for the Shares so purchased; (iii) a combination thereof; or (iv) unless the Committee expressly notifies the Grantee otherwise at any time prior to full exercise, by the Grantee's (a) irrevocable instructions to the Company to deliver the Shares issuable upon exercise of the Option promptly to the broker for the Grantee's account and (b) irrevocable instruction letter to the broker to sell Shares sufficient to pay the exercise price and upon such sale to deliver the exercise price to the Company, provided that at the time of exercise, such exercise would not subject the Grantee to liability under section 16(b) of the Securities Exchange Act of 1934, or would be exempt pursuant to Rule 16b-3 promulgated under such Act or any other exemption from such liability. The Company shall deliver an acknowledgment to the broker upon receipt of instructions to deliver the Shares. The Company shall deliver the Shares to the broker upon the settlement date. The broker shall deliver to the Company cash sale proceeds sufficient to cover the exercise price upon receipt of the Shares from the Company. 36 The Company shall determine acceptable methods for tendering or attesting to Shares to exercise an Option under the Plan, and may impose such limitations and prohibitions on the use of Shares to exercise Options as it deems appropriate. For purposes of determining the amount of the Option price satisfied by tendering or attesting to Shares, such Shares shall be valued at their Fair Market Value on the date of tender or attestation, as applicable. Except as provided in this paragraph, the date of exercise shall be deemed to be the date that the notice of exercise and payment of the Option price are received by the Committee. For exercise pursuant to Section 7(a)(2)(iv) of the Plan, the date of exercise shall be deemed to be the date that the notice of exercise is received by the Committee. (b) Subject to subsection (c) below, upon receipt of the notice of exercise and upon payment of the Option price, the Company shall promptly deliver to the Grantee (or Beneficiary) a certificate or certificates for the Shares purchased, without charge to him for issue or transfer tax. (c) The exercise of each Option under the Plan shall be subject to the condition that if at any time the Company shall determine (in accordance with the provisions of the following sentence) that it is necessary as a condition of, or in connection with, such exercise (or the delivery or purchase of Shares thereunder) (i) to satisfy withholding tax or other withholding liabilities, (ii) to effect the listing, registration, qualification on any securities exchange, on any quotation system, or under any state or federal law, of any Shares otherwise deliverable in connection with such exercise, or (iii) to obtain the consent or approval of any regulatory body, then in any such event such exercise shall not be effective unless such withholding, listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Company in its reasonable and good faith judgment. In seeking to effect or obtain any such withholding, listing, registration, qualification, consent or approval, the Company shall act with all reasonable diligence. Any such postponement or limitation affecting the right to exercise an Option shall not extend the time within which the Option may be exercised, unless the Company and the Grantee choose to amend the terms of the Option to provide for such an extension; and neither the Company nor its directors or officers shall have any obligation or liability to the Grantee or to a Beneficiary by reason of any such postponement or limitation. (d) Except as provided in Section 7(e) below, Options granted under the Plan shall be nontransferable other than by will or by the laws of descent and distribution in accordance with Section 8(a) hereof, and an Option may be exercised during the lifetime of the Grantee only by him. (e) Subject to the approval of the Committee in its sole discretion, Options may be transferable to members of the immediate family of the Grantee and to one or more trusts for the benefit of such family members, partnerships in which such family members are the only partners, or corporations in which such family members are the only stockholders. "Members of the immediate family" means the Grantee's spouse, children, stepchildren, grandchildren, parents, grandparents, siblings (including half brothers and sisters), and individuals who are family members by adoption. (f) Upon the purchase of Shares under an Option, the stock certificate or certificates may, at the request of the purchaser, be issued in his name and the name of another person as joint tenants with right of survivorship. 8. Exercise of Option after Termination of Status as a Director ------------------------------------------------------------ (a) Death If a Grantee's status as a member of the Board shall terminate due to the Grantee's death, or if the Grantee shall die while an Option is exercisable pursuant 37 to subsection (d) below, any Option held by the Grantee on the date of his death may be exercised at any time within twelve months after the Grantee's death, and only by the Grantee's Beneficiary. (b) Disability If a Grantee's status as a member of the Board shall terminate due to his Disability, the Grantee may exercise the Option at any time within two years after such termination. (c) Retirement If a Grantee's status as a member of the Board shall terminate due to his retirement, the Grantee may exercise the Option at any time within two years after such termination. (d) Termination of Status as a Director for any Other Reason If a Grantee's status as a member of the Board shall terminate for any reason other than those specified in subsection (a), (b) or (c) above, the Grantee may exercise the Option at any time within six months after the termination of such status, to the extent that the Option was exercisable on the date of such termination. (e) Notwithstanding any other provision of this Plan, except for the six-month waiting period described in the final sentence of Section 6(c) and the ten-year Term of the Option described in Section 6(b), an Option shall become immediately exercisable in full upon Disability or death of the Grantee, and any Option that would have become immediately exercisable in full upon the Grantee's Disability or death but for the application of such six-month waiting period shall become immediately exercisable in full upon the expiration of such six-month waiting period. 9. Tax Withholding --------------- The Company shall have the right to collect an amount sufficient to satisfy any federal, state and/or local withholding tax requirements that might apply with respect to any Option to a Grantee. 10. Shareholder Rights ------------------ An Option shall not confer upon the Grantee any rights of a shareholder, unless and until Shares are actually issued to him pursuant to the exercise of the Option. 11. Adjustment for Changes in Capitalization ---------------------------------------- Subject to the provisions of Section 13 hereof, in the event that there if any change in the Shares through merger, consolidation, reorganization, recapitalization or otherwise; or if there shall be any dividend on the Shares, payable in Shares; or if there shall be a stock split or a combination of Shares, the number of Shares subject to outstanding Options, and the Option price per Share of each outstanding Option may be proportionately adjusted by the Board of Directors as it deems equitable in its sole and absolute discretion to prevent dilution or enlargement of the rights of the Grantees; provided that any fractional Shares resulting from such adjustments shall be eliminated. 12. Effects of Merger or Other Reorganization ----------------------------------------- If the Company shall be the surviving corporation in a merger or other reorganization, Options shall extend to stock and securities of the Company after the merger or other reorganization to the same extent that a person who held, immediately before the merger or reorganization, the number of Shares corresponding to the number of Shares covered by the Award would be entitled to have or obtain stock and securities of the Company under the terms of the merger or reorganization. 38 13. Termination, Suspension or Modification of Plan ----------------------------------------------- The Board of Directors may at any time terminate, suspend, or modify the Plan; provided that the Board shall not, without approval by the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to vote, at a meeting duly held in accordance with applicable law, (a) change the class of persons eligible for Options; (b) change the Option price of Options as provided in Section 6 (other than through adjustments for changes in capitalization as provided in Section 11 hereof); (c) increase the maximum duration of the Plan; (d) materially increase the benefits accruing to participants under the Plan; or (e) materially increase the number of securities that may be issued under the Plan; and provided further that the provisions of the Plan that affect the eligibility to participate in the Plan, or that affect the number, Option price or timing of Options shall not be amended more than once every six months, other than to comport with changes in the Code, the Employee Retirement Income Security Act, or the rules thereunder. The last proviso is intended to comply with the exemption for formula awards under 17 C.F.R. ss. 240.16b-3(c)(2)(ii)(B) and shall be construed consistent with, applied only to the extent required by such provision. No termination, suspension or modification of the Plan shall adversely affect any right acquired by any Grantee, or by any Beneficiary, under the terms of any Option granted before the date of such termination, suspension or modification, unless such Grantee or Beneficiary shall expressly consent; but it shall be conclusively presumed that any adjustment pursuant to Section 11 hereof does not adversely affect any such right. 14. Application of Proceeds ----------------------- The proceeds received by the Company from the sale of Shares under the Plan shall be used for general corporate purposes. 15. General Provisions ------------------ The grant of an Option in any year shall not confer upon the Grantee any right to remain a member of the Board. 16. Governing Law ------------- The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the Commonwealth of Pennsylvania, except to the extent that such laws may be superseded by any federal law. 39 EX-10.11 6 EXECUTIVE DEFERRED COMPENSATION PLAN EXHIBIT 10.11 - ------------- JLG INDUSTRIES, INC. EXECUTIVE DEFERRED COMPENSATION PLAN As Amended and Restated Effective August 1, 1997 ----------------------------------------------------------------- Section 1. Establishment and Purpose 1.1 Establishment. Effective October 1, 1996, the Company established the Plan for the benefit of the Participants. 1.2 Purpose. The Plan is an unfunded plan maintained primarily for the purpose of providing deferred compensation to a select group of management and highly compensated employees. The Plan permits Participants to elect to defer payment of part or all of their Compensation until their termination of employment with the Company in accordance with the terms of the Plan. Section 2. Participation by Eligible Executives 2.1 Election of Benefits. An Eligible Executive may become a Participant in the Plan by electing to defer, until his termination of employment with the Company, receipt of part or all of the Compensation to be paid to him by the Company. 2.2 Advance Election. An election to defer the receipt of Compensation, hereunder shall apply only to Compensation earned after the date the Participant's election is filed with the Administrative Committee. 2.3 Election Filing Deadline. An election to defer Compensation, other than Bonus Compensation, earned in a calendar year shall be filed with the Administrative Committee before the calendar year begins, and an election to defer Bonus Compensation earned in a Fiscal Year shall be filed with the Administrative Committee on or before June 1 of the Fiscal Year with respect to which the Bonus Compensation is earned. Notwithstanding the foregoing, (i) an Eligible Executive may file the requisite election to defer Compensation earned thereafter before the expiration of 30 days from the initial effective date of the Plan, and (ii) a newly hired or otherwise newly eligible Eligible Executive may file the requisite election to defer Compensation earned thereafter before the expiration of 30 days from either (a) his initial date of employment, if the Eligible Executive is a new hire, or (b) his initial date of eligibility, if the Eligible Executive is newly eligible to participate in the Plan. 2.4 Irrevocable Election. Once filed, an election to defer Compensation shall be irrevocable and shall remain in effect until the end of the calendar year or Fiscal Year to which it pertains. Such election shall automatically apply to each subsequent calendar year or Fiscal Year unless the Participant, before the beginning of the calendar year or on or before June 1 of the Fiscal Year, revokes his prior election. In that event, he may file a new election with the Administrative Committee before the beginning of the calendar year or on or before June 1 of the Fiscal Year in accordance with Sections 2.3 and 2.5 hereof. An Eligible Executive who does not elect to defer Compensation in one calendar year or Fiscal Year may elect to defer Compensation in any subsequent calendar year or Fiscal Year, provided he remains an Eligible Executive, by electing to defer Compensation in accordance with this Section 2. 2.5 Form and Content of Election. An election to defer Compensation hereunder shall be in writing, in a form acceptable to the Administrative Committee, and shall specify the portion of the Participant's Compensation to be deferred. 2.6 Form of Payment. A Participant electing to defer Compensation hereunder also shall elect as to whether such deferred Compensation shall be paid (a) in a single lump sum, or (b) in annual installments over a period, elected by the Participant, not to exceed fifteen years. An election of form of payment hereunder shall be in writing in a form acceptable to the 40 Administrative Committee, and shall be effective as of the date the form is filed with the Administrative Committee. The election on file with the Administrative Committee on the date of the Participant's termination of employment with the Company shall govern the payment of all amounts deferred hereunder provided that the election has been in effect for more than one year (365 days). If the election has not been in effect for more than one year (365 days), the entire amount deferred hereunder shall be paid in a single lump sum. Section 3. Accounts 3.1 Accounts. The Company shall maintain for bookkeeping purposes an Account in the name of each Participant. Each Account shall have a Deferred Compensation Subaccount to which shall be credited amounts deferred under Section 2 hereof, plus amounts as provided in Section 3.3 hereof. Each Account also shall have a Company Contribution Subaccount to which shall be credited amounts as provided in Sections 3.2 and 3.3 hereof. 3.2 Company Contributions. As of the last day of each calendar year, the Administrative Committee shall credit an additional amount to the Compensation that each Participant has deferred hereunder equal to the amount, if any, that the Company would have contributed to the Savings Plan on behalf of the Participant with respect to that year as a Matching Contribution (as defined in Section 5.1 of the Savings Plan), if any, and a Profit-Sharing Contribution (as defined in Section 5.2 of the Savings Plan), if any, had the Limitations not applied to the Participant with respect to his participation in the Savings Plan during that year; provided, however, that the Participant shall be credited with the amount that the Company would have contributed to the Savings Plan on behalf of the Participant with respect to the year as a Matching Contribution (as defined in Section 5.1 of the Savings Plan) only to the extent that the amount the Participant elected to defer for the year under Article 2 hereof is equivalent to the amount that the Participant would have had to contribute to the Savings Plan (had he not been prevented from doing so by the Limitations) to receive the related Matching Contribution under the Savings Plan. All references herein to Compensation that is deferred pursuant to the Plan shall be deemed to include deferred Compensation plus any additional amounts credited pursuant to this Section 3.2. 3.3 Investment Return. (a) Rate of Return Indices. The Administrative Committee shall select and maintain one or more rate of return indices as specified on Exhibit A attached hereto as amended from time to time. Compensation deferred hereunder shall be allocated to one or more of the rate of return indices and shall be credited with the applicable investment return (or loss) that such Compensation would have if it were invested in the specified index. (b) Election of Rate of Return Indices. (i) Each Participant shall specify in writing, at the time he completes his election to participate under Section 2 hereof, and in a form acceptable to the Administrative Committee, how any amounts to be deferred hereunder in the future shall be allocated among the indices specified on Exhibit A attached hereto. (ii) The Administrative Committee may, in its discretion and from time to time, permit a Participant to change any election previously made with respect to the allocation of amounts to be deferred hereunder in the future, subject to such conditions and such limitations as the Administrative Committee may prescribe. Any such change in election shall be in writing and in a form acceptable to the Administrative Committee. (iii) The Administrative Committee may, in its discretion and from time to time, permit a Participant to elect to reallocate amounts from one rate of return index to another, subject to such conditions and such limitations as the Administrative Committee may prescribe; provided that a Participant shall be permitted, at least once per calendar month, to reallocate amounts previously allocated. Any such reallocation election shall be in writing and in a form acceptable to the Administrative Committee. 41 (iv) The Administrative Committee may require that any election under this Section 3.3 apply to the entire amount to which it pertains (e.g., 100% of the Participant's future contributions) or to such percentage or percentages of that amount as the Administrative Committee may specify (e.g., increments of 5%). (v) If a Participant fails to specify a rate of return index with respect to Compensation deferred hereunder, the Participant shall be presumed to have specified that his entire Account be allocated to the index determined by the Administrative Committee to represent the lowest risk of principal loss. (c) Crediting of Investment Return. The balance credited to the Participant's Account as of the last day of the prior month shall be credited with the applicable investment return (or loss) as of the last day of the month of crediting. All references herein to Compensation that is deferred pursuant to the Plan shall be deemed to include such deferred Compensation plus any investment return (or loss) credited pursuant to this Section 3.3. 3.4 Treatment Under SERP. Amounts credited to a Participant's Company Contribution Subaccount, if any, pursuant to Section 3.2 hereof, and any investment return (or loss) credited to such amounts pursuant to Section 3.3 hereof, shall be used to reduce monthly installments under the SERP pursuant to Section 3.4(b) of the SERP. Amounts credited to a Participant's Deferred Compensation Subaccount, if any, pursuant to Section 2 hereof, and any investment return (or loss) credited to such amounts pursuant to Section 3.3 hereof, shall not be taken into account under Section 3.4(b) of the SERP. 3.5 Vesting of Accounts. Subject to the limitations of Section 5 hereof, balances credited to Participants' Accounts shall be nonforfeitable; provided that, effective for individuals who become Participants on or after August 1, 1997, amounts credited to such Participants' Company Contribution Subaccounts pursuant to Section 3.2 hereof shall vest in accordance with the following vesting schedule based on the Participants' Years of Service (as defined in Section 2.1 of the Savings Plan): Full Years of Service Percentage --------------------- ---------- 1 0% 2 25% 3 50% 4 100% Section 4. Distributions 4.1 Payment. The amount credited to a Participant's Account pursuant to Section 3 hereof shall be paid, or payments shall commence, as soon as practicable following the Participant's termination of employment with the Company. If the Participant elects to receive his deferred Compensation in annual installments, the amount of the first installment shall be the value of the deferred Compensation that is subject to such election on the date as of which the installment is paid, multiplied by a fraction, the numerator of which is one and the denominator of which is the total number of installments. The amount of each remaining installment shall be the value of the unpaid deferred Compensation that is subject to such election on the date as of which the installment is paid, multiplied by a fraction, the numerator of which is one and the denominator of which is the remaining number of installments to be paid. 4.2 Death of Participant. (a) Amount of Death Benefit. Any amount credited to a Participant's Account hereunder that is unpaid at the time of the Participant's death shall be paid in a single lump sum to the Beneficiary designated by the Participant. (b) Payment of Death Benefits. A distribution pursuant to this Section 4.2 shall be made to the Participant's Beneficiary within 90 days after the Administrative Committee receives written notification of the Participant's death, together with any additional information or documentation that the Administrative Committee determines to be necessary or appropriate before it makes the distribution. 42 4.3 Hardship Distributions. At any time, upon the written application of the Participant, the Administrative Committee may (i) reduce or eliminate the Participant's future deferrals of Compensation hereunder, or (ii) accelerate and pay in a lump sum to the Participant all or part of the balance of the Compensation deferred hereunder, or both, if the Administrative Committee finds, in its sole discretion, that the Participant has incurred or will incur a severe financial hardship resulting from an accident or illness with respect to the Participant, his spouse, or his dependent (as defined in section 152 of the Code), or other event beyond the Participant's control. In such circumstances, the Administrative Committee shall reduce or eliminate the future deferrals and/or accelerate the payment only to the extent reasonably necessary to eliminate or to avoid the severe financial hardship. Section 5. Nature of Participant's Interest in Plan 5.1 No Right to Assets. Participation in the Plan does not create, in favor of any Participant or Beneficiary, any right or lien in or against any asset of the Company. Nothing contained in the Plan, and no action taken under its provisions, will create or be construed to create a trust of any kind, or a fiduciary relationship, between the Company and a Participant or any other person. The Company's promise to pay benefits under the Plan will at all times remain unfunded as to each Participant and Beneficiary, whose rights under the Plan are limited to those of a general and unsecured creditor of the Company. 5.2 No Right to Transfer Interest. Rights to benefits payable under the Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, or encumbrance. However, the Administrative Committee may permit a Participant or Beneficiary to enter into a revocable arrangement to pay all or part of his benefits under the Plan to a revocable grantor trust (a so-called "living trust"). In addition, the Administrative Committee may recognize the right of an alternate payee named in a domestic relations order to receive all or part of a Participant's benefits under the Plan, but only if (a) the domestic relations order would be a "qualified domestic relations order" within the meaning of section 414(p) of the Code (if section 414(p) applied to the Plan), (b) the domestic relations order does not attempt to give the alternate payee any right to any asset of the Company, (c) the domestic relations order does not attempt to give the alternate payee any right to receive payments under the Plan at a time or in an amount that the Participant could not receive under the Plan, and (d) the amount of the Participant's benefits under the Plan are reduced to reflect any payments made or due the alternate payee. 5.3 No Employment Rights. No provisions of the Plan and no action taken by the Company, the Board of Directors, the Compensation Committee, or the Administrative Committee will give any person any right to be retained in the employ of the Company, and the Company specifically reserves the right and power to dismiss or discharge any Participant. 5.4 Withholding and Tax Liabilities. The amount of any withholdings required to be made by any government or government agency will be deducted from benefits paid under the Plan to the extent deemed necessary by the Administrative Committee. In addition, the Participant or Beneficiary (as the case may be) will bear the cost of any taxes not withheld on benefits provided under the Plan, regardless of whether withholding is required. Section 6. Administration, Interpretation, and Modification of Plan 6.1 Plan Administrator. The Administrative Committee will administer the Plan. 6.2 Powers of Committee. The Administrative Committee's powers include, but are not limited to, the power to adopt rules consistent with the Plan; the power to decide all questions relating to the interpretation of the terms and provisions of the Plan; the power to determine the number and nature of the rate of return indices specified on Exhibit A attached hereto; the power to compute the amount of benefits that shall be payable to any Participant or Beneficiary in accordance with the provisions of the Plan, and in the event that the Administrative Committee determines that excessive benefits have been paid to any person, the Administrative Committee may suspend payment of future benefits to such person or his Beneficiary or reduce the amount of such future benefits until the excessive benefits and any interest thereon determined by 43 the Committee have been recovered; and the power to resolve all other questions arising under the Plan (including, without limitation, the power to remedy possible ambiguities, inconsistencies, or omissions by a general rule or particular decision). The Administrative Committee has discretionary authority to exercise each of the foregoing powers. 6.3 Finality of Committee Determinations. Determinations by the Administrative Committee and any interpretation, rule, or decision adopted by the Administrative Committee under the Plan or in carrying out or administering the Plan will be final and binding for all purposes and upon all interested persons, their heirs, and their personal representatives. 6.4 Required Information. Any person eligible to receive benefits hereunder shall furnish to the Administrative Committee any information or proof requested by the Administrative Committee and reasonably required for the proper administration of the Plan. Failure on the part of any person to comply with any such request within a reasonable period of time shall be sufficient grounds for delay in the payment of any benefits that may be due under the Plan until such information or proof is received by the Administrative Committee. If any person claiming benefits under the Plan makes a false statement that is material to such person's claim for benefits, the Administrative Committee may offset against future payments any amount paid to such person to which such person was not entitled under the provisions of the Plan. 6.5 Incapacity. If the Administrative Committee determines that any person entitled to benefits under the Plan is unable to care for his affairs because of illness or accident, any payment due (unless a duly qualified guardian or other legal representative has been appointed) may be paid for the benefit of such person to his spouse, parent, brother, sister, or other party deemed by the Administrative Committee to have incurred expenses for such person. 6.6 Amendment, Suspension, and Termination. (a) Board of Directors. The Board of Directors has the right by written resolution to amend, suspend, or terminate the Plan at any time; provided that no such amendment, suspension, or termination of the Plan shall divest any Participant of the balance credited to his Account as of the effective date of such amendment, suspension, or termination, except to the extent that an affected Participant consents in writing to the amendment, suspension, or termination. Termination of the Plan shall not give rise to accelerated vesting of any unvested portion of a Participant's Account. (b) Administrative Committee. The Board of Directors delegates to the Administrative Committee the right by written resolution to amend the Plan for the limited purpose of amending Exhibit A of the Plan. 6.7 Power to Delegate Authority. (a) Board of Directors. The Board of Directors may, in its sole discretion, delegate to any person or persons all or part of its authority and responsibility under the Plan, including, without limitation, the authority to amend the Plan. (b) Administrative Committee. The Administrative Committee may, in its sole discretion, delegate to any person or persons all or part of its authority and responsibility under the Plan. 6.8 Headings. The headings used in this document are for convenience of reference only and may not be given any weight in interpreting any provision of the Plan. 6.9 Severability. If any provision of the Plan is held illegal or invalid for any reason, the illegality or invalidity of that provision will not affect the remaining provisions of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provision had never been included in the Plan. 6.10 Governing Law. The Plan will be construed, administered, and regulated in accordance with the laws of the Commonwealth of Pennsylvania, except to the extent that those laws are preempted by federal law. 44 6.11 Complete Statement of Plan. This Plan contains a complete statement of its terms. The Plan may be amended, suspended, or terminated only in writing and then only as provided in Section 6.6. A Participant's right to any benefit of a type provided under the Plan will be determined solely in accordance with the terms of the Plan. No other evidence, whether written or oral, will be taken into account in interpreting the provisions of the Plan. Section 7. Definitions 7.1 Gender and Number. In order to shorten and to improve the understandability of the Plan document by eliminating the repeated usage of such phrases as "his or her" and "Executive or Executives," any masculine terminology herein shall also include the feminine and neuter, and the definition of any term herein in the singular shall also include the plural, except when otherwise indicated by the context. 7.2 Definitions. The following words and phrases as used in the Plan have the following meanings: "Account" means the bookkeeping account established for each Participant under Section 3.1 hereof. Each Account shall include a Deferred Compensation Subaccount and a Company Contribution Subaccount. "Administrative Committee" means the Administrative Committee appointed to administer the Savings Plan. However, following a Change in Control, "Administrative Committee" means the trustee under the grantor trust maintained by the Company in connection with the Plan. "Associate" has the meaning assigned to that term for purposes of Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act. "Beneficial Owner" means the following: a Person is deemed to be the "Beneficial Owner" of, to "Beneficially Own," and to have "Beneficial Ownership" of, any securities: (1) which such Person or any of such Person's Securities Law or Associates beneficially owns, directly or indirectly; (2) which such Person or any of such Person's Securities Law or Associates has (A) the right or obligation to acquire (whether such right or obligation is exercisable or effective immediately or only after the passage of time) pursuant to any agreement, arrangement, or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided that a Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own," or to have "Beneficial Ownership" of, securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Securities Law or Associates until such tendered securities are accepted for purchase or exchange; or (B) the right to vote pursuant to any agreement, arrangement, or understanding (whether or not in writing); provided that a Person shall not be deemed the "Beneficial Owner" of, or to "Beneficially Own," or to have "Beneficial Ownership" of, any security under this clause (B) if the agreement, arrangement, or understanding to vote such security (i) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations of the Securities Exchange Act, and (ii) is not also then reported by such Person on Schedule 13D under the Securities Exchange Act (or any comparable or successor report); or (3) which are beneficially owned, directly or indirectly, by any other Person (or any Securities Law or Associate thereof) with which such Person or any of such Person's Securities Law or Associates has any agreement, arrangement, or understanding (whether or not in writing) or with which such Person or any of such Person's Securities Law have otherwise formed a group for the purpose of 45 acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (B)(i) of paragraph (2), above), or disposing of any securities of the Company. "Beneficiary" means the person designated by a Participant to receive benefits under the Plan after the Participant's death. Such a designation shall be in writing in a form acceptable to the Administrative Committee, and shall be effective as of the date the form is filed with the Administrative Committee. If a Participant dies before receiving the entire amount due to him under the Plan, and he has failed to designate a Beneficiary or his designated Beneficiary fails to survive him, his Beneficiary will be the person to whom he is married at the time of his death, or if he is not married at that time, his Beneficiary will be the executor of his will or the administrator of his estate. A Participant may revoke a prior designation of a Beneficiary at any time before the Participant's death by filing a new form with the Administrative Committee. "Board of Directors" means the Board of Directors of the Company. "Bonus Compensation" means cash compensation received under the JLG Industries, Inc. Management Incentive Plan. "Change in Control" means the first to occur of the following events: (1) an acquisition (other than directly from the Company) of securities of the Company by any Person, immediately after which such Person, together with all Securities Law and Associates of such Person, becomes the Beneficial Owner of securities of the Company representing 25 percent or more of the Voting Power; provided that, in determining whether a Change in Control has occurred, the acquisition of securities of the Company in a Non-Control Acquisition will not constitute an acquisition that would cause a Change in Control; or (2) three or more directors, whose election or nomination for election is not approved by a majority of the members of the Incumbent Board then serving as members of the Board of Directors, are elected within any single 12-month period to serve on the Board of Directors; provided that an individual whose election or nomination for election is approved as a result of either an actual or threatened Election Contest or Proxy Contest, including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest, will be deemed not to have been approved by a majority of the Incumbent Board for purposes of this definition; or (3) members of the Incumbent Board cease for any reason to constitute at least a majority of the Board of Directors; or (4) approval by shareholders of the Company of: (A) a merger, consolidation, or reorganization involving the Company, unless (i) the shareholders of the Company, immediately before the merger, consolidation, or reorganization, own, directly or indirectly immediately following such merger, consolidation, or reorganization, at least 75 percent of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation, or reorganization in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation, or reorganization; (ii) individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation, or reorganization constitute at least a majority of the board of directors of the Surviving Corporation; and 46 (iii) no Person (other than (1) the Company or any Subsidiary thereof, (2) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, any Subsidiary thereof, or the Surviving Corporation, or (3) any Person who, immediately prior to such merger, consolidation, or reorganization, had Beneficial Ownership of securities representing 25 percent or more of the Voting Power) has Beneficial Ownership of securities representing 25 percent or more of the combined voting power of the Surviving Corporation's then outstanding voting securities; (B) a complete liquidation or dissolution of the Company; or (C) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary of the Company). "Code" means the Internal Revenue Code of 1986, as amended from time to time. "Company" means JLG Industries, Inc., and any successor to JLG Industries, Inc. Employment with the Company includes employment with any corporation, partnership, or other organization required to be aggregated with the Company under sections 414(b) and (c) of the Code. "Company Contribution Subaccount" means the subaccount within the Participant's Account to which Company Contributions are credited as described in Section 3.1 hereof. "Compensation" means the base salary that Eligible Executives may elect to defer under the Plan and includes Bonus Compensation. "Compensation Committee" means the Compensation Committee of the Board of Directors. "Deferred Compensation Subaccount" means the subaccount within the Participant's Account to which amounts deferred under Section 2 are credited as described in Section 3.1 hereof. "Effective Date" means October 1, 1996. "Election Contest" means an election contest described in Rule 14a-11 promulgated under the Securities Exchange Act. "Eligible Executive" means an employee of the Company who is an officer of the Company or who holds any other key position designated by the Compensation Committee in its sole discretion; provided that, on and after a Change in Control, each employee of the Company who was an Eligible Executive immediately before the Change in Control shall remain an Eligible Executive as long as the employee is employed by the Company. "Fiscal Year" means the twelve-month period beginning August 1st and ending on the subsequent July 31st. "Incumbent Board" means individuals who, as of the close of business on the Effective Date, are members of the Board of Directors; provided that, if the election, or nomination for election by the Company's shareholders, of any new director was approved by a vote of at least 75 percent of the Incumbent Board, such new director shall, for purposes of the Plan, be considered as a member of the Incumbent Board; provided further that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened Election Contest or other actual or threatened Proxy Contest, including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest. 47 "Limitations" means (a) the limitations on contributions to defined contribution plans under sections 401(k), 401(m), 402(g), and 415(c) of the Code; and (b) the limitations imposed by sections 401(a)(4), 401(a)(17), and 415(e) of the Code and by any other provision of the Code to the extent that such provision limits the amount of Pretax Contributions, Matching Contributions, and Profit-Sharing Contributions that otherwise would be made to the Savings Plan. "Non-Control Acquisition" means an acquisition by (1) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any of its Subsidiaries, (2) the Company or any of its Subsidiaries, or (3) any Person in connection with a Non-Control Transaction. "Non-Control Transaction" means any transaction described in clauses (4)(A)(i) through (iii) of the definition of "Change in Control." "Participant" means an Eligible Executive who becomes a participant in the Plan in accordance with Section 2.1 hereof and who has not been paid all Compensation deferred by the Participant under the Plan. "Person" means any individual, firm, corporation, partnership, joint venture, association, trust, or other entity. "Plan" means the "JLG Industries, Inc. Executive Deferred Compensation Plan" as set forth herein and as amended from time to time. "Proxy Contest" means a solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors. "Savings Plan" means the JLG Industries, Inc. Employees' Retirement Savings Plan effective as of January 1, 1995, and as amended from time to time. "Securities Exchange Act" means the Securities Exchange Act of 1934, as amended and in effect from time to time. "Securities Law Affiliate" means an "affiliate" as defined for purposes of Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act. "SERP" means the JLG Industries, Inc. Supplemental Executive Retirement Plan effective as of June 1, 1995, and as amended from time to time. "Subsidiary" of any Person means any corporation or other entity of which at least 80 percent (or such lesser percentage as the Administrative Committee may determine) of the voting power of the voting equity securities or voting interest therein is owned, directly or indirectly, by such Person. "Surviving Corporation" means a corporation resulting from a merger, consolidation, or reorganization described in paragraph (4)(A)(i) of the definition of "Change in Control." "Voting Power" means the voting power of all securities of the Company then outstanding generally entitled to vote for the election of directors of the Company. JLG INDUSTRIES, INC. 48 ATTEST: BY: ------------------------------- -------------------------- TITLE: TITLE: -------------------------------- ----------------------- 49 EX-22 7 LISTING OF SUBSIDIARIES EXHIBIT 22 - ---------- Listing of Subsidiaries Percent of Voting Securities Jurisdiction of Owned by Subsidiary Incorporation the Company ---------- ------------- ----------- JLG Equipment Services, Inc. Pennsylvania 100% Fulton International, Inc. Delaware 100% Fulton International Foreign Sales Corporation Barbados 100% Zontess Pty. Ltd. Australia 100% The financial statements of the above listed subsidiaries are included in the Company's Consolidated Financial Statements incorporated herein by reference. 50 EX-23 8 CONSENT OF INDEPENDENT AUDITORS EXHIBIT 23 - ---------- Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements on Form S-8, No. 33-60366, No. 33-61333 and No. 33-75746 of our report dated September 4, 1997, with respect to the consolidated financial statements and schedule of JLG Industries, Inc. included in the Annual Report (Form 10-K) for the year ended July 31, 1997. /s/ Ernst & Young LLP Baltimore, Maryland September 4, 1997 51 EX-27 9 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 1000 12-MOS JUL-31-1997 JUL-31-1997 25436 0 71446 1282 53727 155708 83982 27918 249392 71070 0 8745 0 0 153200 246932 526266 526266 396261 454378 288 0 362 71238 25090 46148 0 46148 0 46148 1.06 1.06
EX-99 10 CAUTIONARY STATEMENTS 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 that 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 regularly 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 110 independent equipment rental companies 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. A change in 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 - Given the cyclical nature of demand, the Company must periodically expand and contract its manufacturing facilities. Capital investments to acquire additional manufacturing facilities involves significant risks. Excess manufacturing capacity adversely affects profitability because higher fixed costs are spread over a lower sales volume. Insufficient capacity adversely affects profitability as long lead-times required to fill customer orders may impair the Company's ability to compete for new business and subcontracting costs incurred to increase capacity affect profitability. 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 material 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. 53 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. Product line expansion by existing competitors and potential entry by new competitors also may affect the Company's market position. 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. Sales from new and redesigned products introduced over the past two years represented 46% of total revenues for the year ended July 31, 1997. 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, President and Chief Executive Officer, could adversely affect the Company's business and prospects. 54 -----END PRIVACY-ENHANCED MESSAGE-----