SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the period ended October 31, 1994
or
[ ] 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 Identification No.)
incorporation or organization)
JLG Drive, McConnellsburg, PA 17233
(Address of Principal Executive Offices) (Zip Code)
(7l7) 485-5161
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
At November 21, 1994, there were 3,522,656 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 $136,062,588.
PART I FINANCIAL INFORMATION
JLG INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
October, 31 July 31,
1994 1994
(Unaudited)
ASSETS
Current assets
Cash $11,579 $8,088
Accounts receivable 23,110 25,750
Inventories:
Finished goods 7,449 4,968
Work in process 9,633 9,242
Raw materials 9,299 9,012
26,381 23,222
Future income tax benefits 3,551 3,531
Other current assets 1,578 1,871
Total Current Assets 66,199 62,462
Property, plant and equipment - net 20,035 19,344
Equipment held for rental - net 3,738 4,190
Other assets 5,481 5,638
$95,453 $91,634
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $1,302 $1,301
Accounts payable 13,062 14,770
Accrued expenses 15,847 14,011
Total Current Liabilities 30,211 30,082
Long-term debt 5,963 6,277
Accrued contingent liabilities 7,313 7,680
Other deferred credits and liabilities 1,941 1,889
Shareholders' equity
Capital stock:
Authorized shares: 10,000 at $.20 par
Outstanding shares: 1994 - 3,523
shares, net of 181 treasury shares;
1994 - 3,492 shares 741 735
Additional paid-in capital 13,443 13,065
Equity adjustment from translation (1,740) (1,899)
Retained earnings 40,660 36,884
Treasury stock (3,079) (3,079)
Total Shareholders' Equity 50,025 45,706
$95,453 $91,634
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended
October 31,
1994 1993
Net sales $53,724 $36,757
Cost of sales 40,740 28,128
Gross profit 12,984 8,629
Selling, general and
administrative expenses 6,788 6,529
Income from operations 6,196 2,100
Other deductions:
Interest expense (112) (78)
Miscellaneous, net (111) (31)
Income before taxes 5,973 1,991
Income tax provision 2,110 739
Net income $3,863 $1,252
Net income per share $1.10 $.35
Dividends per share $.025 $.025
Weighted average shares
outstanding 3,507 3,557
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
October 31,
1994 1993
OPERATIONS:
Net income $3,863 $1,252
Adjustments to reconcile net income to cash
(used for) provided by operating activities:
Depreciation and amortization 732 648
Provision for self-insured losses 647 670
Deferred income taxes (53) (182)
5,189 2,388
Changes in operating assets and
liabilities (717) (3,665)
Changes in other assets and liabilities 705 (982)
Cash provided by (used for) operations 5,177 (2,259)
INVESTMENTS:
Purchases of property, plant and
equipment (1,133) (1,243)
FINANCING:
Issuance of short-term debt 3,888
Repayment of long-term debt (325) (380)
Payment of dividends (87) (91)
Acquisition of treasury stock (3,500)
Cash used for financing (412) (83)
CURRENCY ADJUSTMENTS - effect of exchange rate
changes on cash flows (141) 100
CASH:
Net increase (decrease) 3,491 (3,485)
Beginning balance 8,088 4,848
Ending balance $11,579 $1,363
The accompanying notes are an integral part of these financial statements.
JLG INDUSTRIES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
October 31 1994
(unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with instructions to Form 10-Q and therefore, do
not include all information and notes necessary for a fair presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, such financial statements
include all adjustments (consisting only of normal recurring accruals) which
management of the Company considers necessary for a fair presentation of the
results of operations.
Interim results for the three months ended October 31, 1994 are not
necessarily an indication of the results for the fiscal year as a whole. For
further information, refer to consolidated financial statements and notes
included in the Form 10-K filing for the fiscal year ended July 31, 1994.
NOTE B - INVENTORIES AND COST OF SALES
A precise inventory valuation under the LIFO (last-in, first-out) method can
only be made at the end of each fiscal year; therefore, interim LIFO inventory
valuation determinations, including the determination at October 31, 1994, must
necessarily be based on management's estimate of expected fiscal year-end
inventory levels and costs.
NOTE C - COMMITMENTS AND CONTINGENCIES
The Company is a party to personal injury and property damage litigation
arising out of incidents involving the use of its products. Annually the
Company sets its product liability insurance program based on the Company's
current and historical claims experience and the availability and cost of
insurance. The combination of these annual programs constitutes the Company's
aggregate product liability insurance coverage. The Company's program for
fiscal year 1995 is comprised of a self-insurance retention of $5 million and
catastrophic coverage of $20 million in excess of the retention.
Cumulative amounts estimated to be payable by the Company with respect to
pending product liability claims for all years in which the Company is liable
under its self-insurance retention have been accrued as liabilities, including
$2.9 million for incidents the Company believes may result in claims.
Estimates of such accrued liabilities are based on an evaluation of the merits
of individual claims and historic claims experience; thus, the Company's
ultimate liability may exceed or be less than the amounts accrued. Amounts
accrued are paid over varying periods, which generally do not exceed five
years. The methods of making such estimates and establishing the resulting
accrued liability are reviewed continually and any adjustments resulting
therefrom are reflected in current earnings.
As is customary in the heavy equipment industry, the Company has entered into
limited recourse agreements with various commercial finance companies to
provide equipment financing to its distributors. Under these arrangements, the
Company is required, in the event of a distributor's default, to purchase the
notes from the finance companies and liquidate the supporting collateral, or to
reimburse such institutions for certain deficiencies resulting from their
repossession and resale of the equipment. The Company was contingently liable
at October 31, 1994 for approximately $3.4 million of contingent losses under
such arrangements and has accrued as a liability estimated losses of $1.5
million thereunder.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information given below is intended to assist in understanding the
Company's financial condition and results of operations as reflected in the
Consolidated Condensed Financial Statements (pages 3 through 7).
As a manufacturer of capital goods, the Company is primarily dependent upon
sales to the construction and industrial sectors of the economy. Business in
these sectors, particularly the construction sector, tends to be cyclical;
thus, demand for the Company's products, and ultimately the Company's financial
performance and cash flows, tends to fluctuate in response to the business
cycles within these sectors.
LIQUIDITY AND SOURCES OF CAPITAL
Current assets as a percent of current liabilities were 219% at October 31,
1994, compared to 208% at July 31, 1994. Working capital was $36.0 million at
October 31, 1994, compared to $32.4 million at July 31, 1994. The improvement
in the ratio of current assets to current liabilities and the higher level of
working capital at October 31, 1994, were primarily due to the accumulation of
cash generated by operating activities.
At October 31, 1994, the Company had unused credit lines totaling $11 million
and cash balances of $11.6 million. The Company considers these resources,
coupled with cash expected to be generated by operations, adequate to fund its
anticipated fiscal 1995 working capital needs and estimated capital
expenditures of $11 million.
The Company's exposure to product liability claims and its contingent liability
relative to the support of equipment financing for its distributors are
discussed in NOTE C - COMMITMENTS AND CONTINGENCIES. Future results of
operations, financial condition and liquidity may be affected to the extent
that the Company's ultimate liability with respect to those programs varies
from current estimates.
RESULTS FOR THE FIRST QUARTERS OF FISCAL 1995 AND 1994
Net sales for the first quarter of fiscal 1995 were $53.7 million, an increase
of $17.0 million, or 46% from the previous year. The growth in revenues was
due to increased demand across virtually all product classes. New products
also contributed to the increase.
Net income for the first quarter of fiscal 1995 was $3.9 million, an increase
of $2.6 million, or 209% over the first quarter of fiscal 1994. The increase
was principally the result of the higher sales volume.
Gross profit, as a percent of net sales, increased to 24.2% in the first
quarter of fiscal 1995 from 23.5% the previous year, primarily as a result of
higher selling prices and cost reductions, which were partially offset by
increased cost of material.
Selling, general and administrative expenses for the first quarter of fiscal
1995 increased 4.0% or $259,000 compared to the same period of fiscal 1994, but
decreased as a percent of sales to 12.6% from 17.8%. The increase in spending
is due to higher payroll and related costs. These increases were offset, in
part, by reduced legal costs.
The effective tax rate was 35.3% in the first quarter of fiscal 1995, compared
to 37.1% in the fiscal 1994 first quarter. The lower tax rate for the fiscal
1995 period was due to a revision in the estimate of future taxes payable.
Ernst & Young LLP
Independent Auditors' Review Report
The Board of Directors
JLG Industries, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of JLG
Industries, Inc. and subsidiaries as of October 31, 1994, and the related
condensed consolidated statements of income and cash flows for the three-month
periods ended October 31, 1994 and 1993. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of JLG Industries, Inc. as of July
31, 1994, and the related consolidated statements of income, shareholders'
equity and cash flows for the year then ended, not presented herein, and in our
report dated September 8, 1994, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of July 31, 1994,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
November 15, 1994 Ernst & Young LLP
PART II OTHER INFORMATION
Items 1 - 3
None/not applicable.
Item 4
The Company held its annual Meeting of Shareholders on November 21, 1994.
Management solicited proxies for the election of nine directors, approval
of amendments to the stock incentive and directors stock option plans,
and for ratification of the appointment of Ernst & Young LLP as the
Company's independent auditors for the 1995 fiscal year. Of the 3,522,656
Shares of capital stock outstanding on the record date, 2,371,964 were
voted in person or by proxy at the meeting. The tabulated results are
set forth below:
1. Election of directors:
FOR WITHHELD
L.D. Black 2,359,394 12,570
C.H. Diller, Jr. 2,359,399 12,565
G.R. Kempton 2,359,229 12,735
J.A. Mezera 2,358,929 13,035
G. Palmer 2,353,694 18,270
S. Rabinowitz 2,353,744 18,220
P.K. Shockey 2,355,879 16,085
T.C. Wajnert 2,353,744 18,220
C.O. Wood, III 2,358,429 13,535
2. Approval of amendments to the stock incentive plan.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
1,680,583 340,370 29,482 393,529
3. Approval of amendments to the directors stock option plan.
BROKER
FOR AGAINST ABSTAIN NON-VOTES
1,840,839 108,193 29,403 393,529
4. Ratification of the appointment of Ernst & Young LLP as independent auditors
for the ensuing year.
FOR AGAINST ABSTAIN
2,347,861 15,371 8,732
Item 5
None/not applicable.
Item 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
15 Letter re: Unaudited Interim Financial Information
(b) The Company was not required to file Form 8-K pursuant to
requirements of such form for any of the three months ended October 31,
1994.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized who is also signing in his capacity as
principal financial officer.
JLG INDUSTRIES, INC.
(Registrant)
/s/ Charles H. Diller, Jr.
Charles H. Diller, Jr.
Executive Vice President and
Chief Financial Officer
EXHIBIT 15
Ernst & Young LLP
November 15, 1994
The Board of Directors
JLG Industries, Inc.
We are aware of the incorporation by reference in the registration statements
(Form S-8 No. 33-60366, Form S-8 No. 2-87955 and Form S-8 No. 33-75746) of JLG
Industries, Inc. of our report dated November 15, 1994, relating to the
unaudited condensed consolidated interim financial statements of JLG
Industries, Inc., which are included in its Form 10-Q for the quarter ended
October 31, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part
of the registration statement prepared or certified by accountants within the
meaning of Section 7 or 11 of the Securities Act of 1933.
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