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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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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)
<TABLE>
<S> <C>
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)
</TABLE>
Registrant's telephone number, including area code:
(717) 485-5161
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Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<S> <C>
Title of class Name of exchange on which registered
-------------- ------------------------------------
Capital Stock ($.20 par value) New York Stock Exchange
</TABLE>
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Securities registered pursuant to Section 12(g) of the Act:
None
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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.
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<PAGE>
TABLE OF CONTENTS
Item
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<TABLE>
<S> <C> <C>
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
</TABLE>
<PAGE>
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
<PAGE>
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
<TABLE>
<CAPTION>
Positions with the Company
Name Age (date of initial election)
- ---- --- --------------------------
<S> <C> <C>
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).
</TABLE>
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
<PAGE>
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.
<TABLE>
<CAPTION>
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Average Shares
Price per Share Traded Daily
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Quarter Ended 1997 1996 1997 1996
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<S> <C> <C> <C> <C> <C> <C>
High Low High Low
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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
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</TABLE>
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
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
ELEVEN-YEAR FINANCIAL SUMMARY
(in thousands of dollars, except per share data)
<TABLE>
<CAPTION>
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Year ended July 31 1997 1996 1995 1994
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<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS
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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
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PER SHARE DATA
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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
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PERFORMANCE MEASURES
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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%
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FINANCIAL POSITION
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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
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OTHER DATA
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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
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</TABLE>
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
<PAGE>
<TABLE>
<CAPTION>
========================================================================================
1993 1992 1991 1990 1989 1988 1987
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<S> <C> <C> <C> <C> <C> <C>
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$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
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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%
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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
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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
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</TABLE>
5
<PAGE>
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
<PAGE>
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
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31
-----------------------
(in thousands, except per share data) 1997 1996
=================================================================================================
<S> <C> <C>
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
===================
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended July 31
---------------------------------
(in thousands, except per share data) 1997 1996 1995
===================================================================================
<S> <C> <C> <C>
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
===============================
</TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Equity
Capital Stock Additional Adjustment
-------------------- Paid-in from Retained Treasury
(in thousands, except per share data) Shares Par Value Capital Translation Earnings Stock
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
=====================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended July 31
---------------------------------------------
(in thousands) 1997 1996 1995
=========================================================================================================
<S> <C> <C> <C>
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
==========================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
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
<PAGE>
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:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
1997 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
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%
==============================
</TABLE>
12
<PAGE>
Components of deferred tax assets and liabilities were as follows at July 31:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
1997 1996
- ---------------------------------------------------------------------
<S> <C> <C>
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
=================
</TABLE>
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
<PAGE>
Outstanding options and transactions involving the plans are summarized as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Excercise
Options Price Options Price Options Price
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
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
==============================================================
</TABLE>
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
<PAGE>
UNAUDITED QUARTERLY FINANCIAL INFORMATION
Unaudited financial information was as follows for the fiscal quarters within
the years ended July 31:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Net Net Income
Net Sales Gross Profit Income Per Share
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
=====================================================
</TABLE>
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
<PAGE>
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
<PAGE>
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
<TABLE>
<CAPTION>
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
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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
==============================================================
</TABLE>
(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
<PAGE>
(3) Exhibits
<TABLE>
<S> <C>
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
</TABLE>
(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
<PAGE>
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
<PAGE>
NOTES
[JLG LOGO]
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
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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
<PAGE>
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
<PAGE>
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.
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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.
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(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.
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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
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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
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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
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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).
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<PAGE>
(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
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<PAGE>
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
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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
<PAGE>
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
<PAGE>
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
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:
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<PAGE>
(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.
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<PAGE>
(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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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
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<PAGE>
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.
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(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.
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<PAGE>
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
<PAGE>
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.
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<PAGE>
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
<PAGE>
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
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<PAGE>
(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.
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"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.
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ATTEST: BY:
------------------------------- --------------------------
TITLE: TITLE:
-------------------------------- -----------------------
49
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
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
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 25436
<SECURITIES> 0
<RECEIVABLES> 71446
<ALLOWANCES> 1282
<INVENTORY> 53727
<CURRENT-ASSETS> 155708
<PP&E> 83982
<DEPRECIATION> 27918
<TOTAL-ASSETS> 249392
<CURRENT-LIABILITIES> 71070
<BONDS> 0
<COMMON> 8745
0
0
<OTHER-SE> 153200
<TOTAL-LIABILITY-AND-EQUITY> 246932
<SALES> 526266
<TOTAL-REVENUES> 526266
<CGS> 396261
<TOTAL-COSTS> 454378
<OTHER-EXPENSES> 288
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 362
<INCOME-PRETAX> 71238
<INCOME-TAX> 25090
<INCOME-CONTINUING> 46148
<DISCONTINUED> 0
<EXTRAORDINARY> 46148
<CHANGES> 0
<NET-INCOME> 46148
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 1.06
</TABLE>
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
<PAGE>
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
