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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, 1998
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from ___________ to ___________
Commission file number: 0-8454
JLG INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1199382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 JLG Drive, McConnellsburg, PA 17233-9533
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(7l7) 485-5161
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Securities registered pursuant to Section 12(b) of the Act:
(Title of class) (Name of exchange on which registered)
---------------- --------------------------------------
Capital Stock ($.20 par value) New York Stock Exchange
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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 11, 1998, there were 44,095,560 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 $642,691,778.
Documents Incorporated by Reference
Portions of the Proxy Statement for the 1998 Annual Meeting of Shareholders are
incorporated by reference into Part III.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item
PART I
<S> <C>
1. Business ............................................................................ 1
Products .......................................................................... 1
Marketing and Distribution ........................................................ 1
Customer Service and Support ...................................................... 1
Product Development ............................................................... 2
Competition ....................................................................... 2
Material and Supply Arrangements .................................................. 2
Product Liability ................................................................. 2
Employees ......................................................................... 3
Foreign Operations ................................................................ 3
Executive Officers of the Registrant .............................................. 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 .................................. 17
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 Schedules ................................................... 17
Exhibits ........................................................................ 17
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 easily 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-type or other
vertical lifting mechanisms, which, in turn, are mounted on mobile, 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 other vertical lifting devices. 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,
1998, ranged from approximately $19,300 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, 1998, ranged from approximately $9,500 to $50,800.
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 41 feet when fully extended. The
rated lift capacity is 350 pounds. The distributor net price of the Company's
standard models at July 31, 1998, ranged from approximately $3,300 to $8,000.
Marketing and Distribution
The Company's products are marketed internationally through independent rental
companies and a network of independent distributors who rent and sell the
Company's products and provide service support. North American customers are
located in all fifty states in the U.S., as well as in Canada and Mexico.
International customers are located in Europe, the Asia/Pacific region,
Australia, Japan and South America, including a joint-venture arrangement in
Brazil.
The Company has been certified as meeting ISO-9001 and 9002 standards. The
Company believes that certification is valuable because a number of customers
require certification as a condition to doing business.
Customer Service and Support
The Company's customer service and support operations focus on after-sales
service and support activities, including replacement parts sales, equipment
rentals, used equipment sales, reconditioning used equipment and training. The
service and support business is a significant factor in overall customer
satisfaction and a strong contributor to the equipment purchase decision.
1
<PAGE>
The Company distributes replacement parts to customers through a system of
several parts depots and supplier direct shipment programs. These parts depots
provide the Company's customers with immediate access to substantially all the
parts required to support the Company's equipment. Sales of replacement parts
have historically been less cyclical and typically generate higher margins than
sales of new equipment.
The Company maintains a national rental fleet of aerial work platforms. The
purpose of this fleet is to assist the Company's customers in servicing large,
one-time projects and in meeting periods of unanticipated rental demand, and to
make available more equipment to customers with growing markets, but limited
financial resources. This business also repairs and reconditions equipment for
its own use or for sale to its customers. This operation has been certified as
meeting ISO 9002 standards relating to customer service quality.
The Company supports the sales, service, and rental programs of its customers
with product advertising, cooperative promotional programs, major trade show
participation, and training programs covering service, products and safety. The
Company supplements domestic sales and service support to its international
customers through its overseas facilities in the United Kingdom and Australia.
To facilitate the sale of its products, the Company provides an array of
financing and leasing services to its customers and end-users through its JLG
Financial Services business. These programs are diverse and provide customers
with various financing options and are funded through a third party financial
institution generally without recourse to the Company.
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 $9,579,000,
$7,280,000 and $6,925,000 for the fiscal years 1998, 1997 and 1996,
respectively. New and redesigned products introduced in the past two years
accounted for approximately 32% of fiscal 1998 sales.
The Company has various registered trademarks and patents relating to its
products and business. While the Company considers them to be beneficial in the
operation of its business, the Company is not dependent on any single patent or
trademark or group of patents or trademarks.
Competition
The Company competes principally with nine aerial work platform manufacturers.
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 offers the widest breadth of products as well as the widest array of
product capabilities and functions in the aerial work platform industry. The
Company believes this provides a competitive advantage in the marketplace. 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.
The Company's products also compete 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.
Material and Supply Arrangements
The Company obtains raw materials, principally steel; other component parts,
most notably engines, drive motors, tires, bearings and hydraulics; and supplies
from third parties. The Company is currently experiencing constraints in the
supply of certain purchased parts resulting from suppliers operating at or near
capacity. The Company expects these constraints to be resolved in the near
future.
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 operated carelessly
or without proper maintenance. Based upon the Company's best estimate of
anticipated losses, product liability costs approximated 1.0%, 0.7% and 0.9% of
net sales, for the years ended July 31, 1998, 1997 and 1996, 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 2,664 and 2,686 persons employed as of July 31, 1998 and 1997,
respectively. 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 32%, 30% and 24% of total net
sales for 1998, 1997 and 1996, respectively.
Executive Officers of the Registrant
Positions with the Company
Name Age (date of initial election)
- ---- --- --------------------------
L. David Black 61 Chairman of the Board, President and Chief
Executive Officer (1993).
Charles H. Diller, Jr. 53 Executive Vice President and Chief
Financial Officer (1990).
Rao G. Bollimpalli 60 Senior Vice President - Engineering (1990).
Raymond F. Treml 58 Senior Vice President - Operations (1998);
prior to 1998, Senior Vice President -
Manufacturing (1990).
All executive officers listed above are elected to hold office for one year or
until their successors are elected and qualified, and have been employed in the
capacities noted for more than five years, except as indicated. No family
relationship exists among the above-named executive officers.
ITEM 2. PROPERTIES
The Company has manufacturing plants and office space at five sites in
Pennsylvania totaling 759,000 square feet and situated on 102 acres of land. Of
this, 708,000 square feet are owned, with the remainder under long-term lease.
The Company has several international sales offices under operating leases. The
Company's properties used in its operations are considered to be in good
operating condition, well-maintained and suitable for their present purposes.
The Company's McConnellsburg and Bedford facilities are encumbered as security
for long-term borrowings.
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 SHAREHOLER MATTERS
The Company's capital stock is traded on the New York Stock Exchange under the
symbol JLG. The table below sets forth the market prices and average shares
traded daily for the past two fiscal years.
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Average Shares
Price per Share Traded Daily
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Quarter Ended 1998 1997 1998 1997
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High Low High Low
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October 31 ....... $13.44 $11.00 $24.25 $13.50 247,997 334,032
January 31 ....... $14.88 $11.38 $20.63 $14.50 159,738 273,575
April 30 ......... $17.25 $13.00 $21.38 $11.50 228,716 375,933
July 31 .......... $20.75 $15.50 $16.25 $11.00 135,681 325,347
- --------------------------------------------------------------------------------
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>
==========================================================================================================
Years ended July 31 1998 1997 1996 1995
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RESULTS OF OPERATIONS
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<S> <C> <C> <C> <C>
Net sales ........................................ $ 530,859 $ 526,266 $ 413,407 $ 269,211
Gross profit ..................................... 128,157 130,005 108,716 65,953
Selling, administrative and
product development expenses .................... (55,388) (56,220) (44,038) (33,254)
Restructuring charge ............................. (1,689) (1,897)
Income (loss) from operations .................... 71,080 71,888 64,678 32,699
Interest expense ................................. (254) (362) (293) (376)
Other income (expense), net ...................... (356) (288) 1,281 376
Income (loss) before taxes ....................... 70,470 71,238 65,666 32,699
Income tax (provision) benefit ................... (23,960) (25,090) (23,558) (11,941)
Net income (loss) ................................ 46,510 46,148 42,108 20,758
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PER SHARE DATA
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Earnings per common share ........................ 1.07 1.06 0.98 0.49
Earnings per common share - assuming dilution .... 1.05 1.04 0.96 0.48
Cash dividends ................................... .02 .02 0.015 0.0092
==========================================================================================================
PERFORMANCE MEASURES
==========================================================================================================
Return on sales .................................. 8.8% 8.8% 10.2% 7.7%
Return on average assets ......................... 17.9% 21.7% 28.5% 20.2%
Return on average shareholders' equity ........... 26.2% 33.6% 47.9% 37.1%
==========================================================================================================
FINANCIAL POSITION
==========================================================================================================
Working capital .................................. 122,672 84,129 71,807 45,404
Current assets as a percent of current liabilities 248% 218% 226% 216%
Property, plant and equipment, net ............... 57,652 56,064 34,094 24,785
Total assets ..................................... 307,339 248,374 182,628 119,708
Total debt ....................................... 3,708 3,952 2,194 2,503
Shareholders' equity ............................. 207,768 160,927 113,208 68,430
Total debt as a percent of total capitalization . 2% 2% 2% 4%
Book value per share ............................. 4.71 3.68 2.61 1.60
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OTHER DATA
==========================================================================================================
Product development expenditures ................. 9,579 7,280 6,925 5,542
Capital expenditures, net of retirements ......... 13,577 29,757 16,668 8,618
Additions to rental fleet, net of disposals ...... 5,377 14,199 9,873 1,548
Depreciation and amortization .................... 15,750 10,389 6,505 3,875
Employees ........................................ 2,664 2,686 2,705 2,222
==========================================================================================================
</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>
====================================================================================================================================
Years ended July 31 1994 1993 1992 1991 1990 1989 1988
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RESULTS OF OPERATIONS
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<S> <C> <C> <C> <C> <C> <C> <C>
Net sales ........................................ $176,443 $123,034 $110,479 $ 94,439 $149,281 $121,330 $ 81,539
Gross profit ..................................... 42,154 28,240 22,542 20,113 37,767 32,384 23,598
Selling, administrative and
product development expenses .................... (27,147) (23,323) (22,024) (21,520) (21,834) (18,974) (14,117)
Restructuring charge ............................. (4,922) (2,781) (1,015)
Income (loss) from operations .................... 15,007 4,917 (4,404) (4,188) 14,918 13,410 9,481
Interest expense ................................. (380) (458) (1,218) (1,467) (2,344) (1,375) (925)
Other income (expense), net ...................... (24) 180 (149) (707) 858 399 485
Income (loss) before taxes ....................... 14,603 4,639 (5,771) (6,362) 13,432 12,434 9,041
Income tax (provision) benefit ................... (5,067) (1,410) 2,733 3,122 (4,950) (4,882) (3,766)
Net income (loss) ................................ 9,536 3,229 (3,038) (3,240) 8,482 7,552 5,275
====================================================================================================================================
PER SHARE DATA
====================================================================================================================================
Earnings per common share ........................ 0.23 0.08 (0.07) (0.08) 0.20 0.18 0.13
Earnings per common share - assuming dilution .... 0.23 0.08 (0.07) (0.08) 0.20 0.18 0.13
Cash dividends ................................... 0.0083 0.005 0.0208 0.0167 0.0125 0.0083
====================================================================================================================================
PERFORMANCE MEASURES
====================================================================================================================================
Return on sales .................................. 5.4% 2.6% (2.8%) (3.4%) 5.7% 6.2% 6.5%
Return on average assets ......................... 12.1% 4.6% (4.0%) (4.2%) 10.4% 11.9% 10.8%
Return on average shareholders' equity ........... 23.8% 8.5% (7.9%) (7.7%) 21.8% 23.5% 21.2%
====================================================================================================================================
FINANCIAL POSITION
====================================================================================================================================
Working capital .................................. 32,380 26,689 33,304 36,468 47,289 34,745 27,378
Current assets as a percent of current liabilities 208% 217% 268% 266% 304% 254% 250%
Property, plant and equipment, net ............... 19,344 13,877 13,511 13,726 14,402 11,343 8,677
Total assets ..................................... 91,634 72,518 73,785 74,861 86,741 70,570 57,692
Total debt ....................................... 7,578 4,471 12,553 14,175 18,404 13,799 11,805
Shareholders' equity ............................. 45,706 38,939 37,186 38,596 44,109 35,331 28,465
Total debt as a percent of total capitalization . 14% 10% 25% 27% 29% 28% 29%
Book value per share ............................. 1.09 0.89 0.86 0.90 1.05 0.84 0.68
====================================================================================================================================
OTHER DATA
====================================================================================================================================
Product development expenditures ................. 4,373 3,385 3,628 3,430 3,520 2,904 2,910
Capital expenditures, net of retirements ......... 7,762 3,570 1,364 1,637 4,615 4,054 1,619
Additions to rental fleet, net of disposals ...... 1,455 273 3,470 534 (1,437) (481)
Depreciation and amortization .................... 2,801 2,500 2,569 1,953 1,771 1,609 1,968
Employees ........................................ 1,620 1,324 1,014 1,182 1,565 1,455 972
====================================================================================================================================
</TABLE>
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
The Company achieved record sales for 1998, marking the fifth consecutive record
year. The modest increase in sales from 1997 to 1998 reflected record
international sales that were partially offset by lower domestic sales. The 27%
increase in sales from 1997 to 1996 resulted from generally stronger demand
across all product classes and markets. Sales to customers outside the United
States were 32%, 30% and 24% in 1998, 1997 and 1996, respectively. Sales from
new and redesigned products introduced over the past two years represented 32%,
46% and 27% of sales in 1998, 1997 and 1996, respectively.
Gross profit, as a percent of sales, decreased to 24% in 1998 from 25% in 1997.
The major contributors to this decrease were the effects of increased sales
discounts related to increasingly competitive market conditions and unfavorable
currency effects due to the strength of the U.S. dollar. These reductions were
partially offset by lower product costs as a result of cost reductions. Gross
profit, as a percent of sales, decreased to 25% in 1997 from 26% in 1996. The
decrease was due to a shift in product mix to smaller, less profitable models;
product pricing pressures; and product introduction costs.
Selling, general and product development expenses decreased $832,000 in 1998
compared to an increase of $12.2 million in 1997 and, as a percent of sales,
were 10% for 1998 compared to 11% for 1997 and 1996. For 1998, the decrease in
dollars was primarily attributable to reduced personnel related costs and
consulting expenses. Partially offsetting these reductions were higher product
development costs in support of new and redesigned products. The dollar increase
for 1997 principally reflected higher personnel and related costs, increased
expenses associated with expanding foreign operations, and increased consulting
expenses.
For 1998, miscellaneous expense was primarily comprised of currency conversion
losses of $1,611,000, partially offset by higher investment income. For 1997,
miscellaneous expense included $768,000 in currency conversion losses compared
to $812,000 in gains for 1996.
The effective income tax rates were 34%, 35% and 36% for 1998, 1997 and 1996,
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
state income tax expense.
Financial Condition
The Company continues to maintain a strong financial position, with the funding
of capital projects and working capital needs principally out of operating cash
flow and cash reserves, while remaining virtually debt-free. Working capital
increased by $39 million in 1998 and $13 million in 1997, principally due to
increased cash and higher receivable balances associated with extended payment
terms dictated by competitive pressures in the marketplace and a higher percent
of international sales which typically have longer payment terms.
Supplementing its working capital at July 31, 1998, the Company had unused
credit lines totaling $30 million. The Company considers these resources,
coupled with cash expected to be generated by operations, adequate to meet its
foreseeable funding needs for anticipated 1999 expenditures, including higher
inventory levels to support shorter delivery requirements, $32 million for
additional equipment held for rental and $16 million for other capital-related
projects.
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.
Outlook
This Outlook section and other parts of this Management's Discussion and
Analysis and accompanying Annual Report 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.
6
<PAGE>
Management anticipates another record year for sales and profits in fiscal 1999,
with goals to increase sales by as much as 15% and profit at a somewhat greater
rate. Management's outlook assumes continued economic strength in the U.S. and
in Europe, as well as continued availability of capital to fuel growth in the
rental industry. Management expects that new products, its strategic response to
changing market dynamics and expanding global distribution should allow the
Company to outpace the growth in its industry.
Year 2000
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. These programs treat
years as occurring between 1900 and the end of 1999 and do not self-convert to
reflect the upcoming change in the century. If not corrected, computer
applications could fail or create erroneous results by or at the Year 2000.
The Company has undertaken a program to understand the nature and extent of the
work required to make its systems Year 2000 compliant. This program encompasses
information systems, shop floor equipment and facilities systems, the Company's
products and the readiness of the Company's suppliers and customers. The program
includes the following phases: identification and assessment, compliance plan
development, remediation and testing, production implementation and contingency
plan development for critical areas.
The Company's objective is to become Year 2000 compliant with its critical
activities and systems by December 31, 1998, allowing substantial time for
further testing, verification and conversion of less important activities and
systems. The Company has determined that it has no exposure to contingencies
related to the Year 2000 issue for products it has sold and that its information
technology systems are substantially Year 2000 compliant. Testing of the
information systems is scheduled to be completed prior to December 31, 1998. The
Company is also requesting assurances by no later than December 31, 1998 from
its significant suppliers and customers that they are addressing this issue to
ensure that there will be no major disruptions to the Company's business.
The total cost of the Year 2000 project to date has not been material. Based on
its program to date, the Company does not expect that future costs of
modifications will have a material adverse effect on the Company's financial
position or results of operations. Because the Company expects that its internal
systems will become Year 2000 compliant in a timely manner, the Company believes
that the most reasonably likely worst case Year 2000 scenario would result from
suppliers or other third parties failing to achieve Year 2000 compliance.
Depending upon the number of third parties, their identity and the nature of the
non-compliance, the Year 2000 issue could have a material adverse effect on the
Company's financial position or results of operations. However, the Company will
develop contingency plans, which should be complete in early 1999, should any
critical problems occur in any of the assessment areas noted above. Accordingly,
the Company does not expect Year 2000 problems to result in any material adverse
effect on the Company's financial position or results of operations.
Foreign Currency Risk
The Company manufactures its products in the United States and sells these
products in that market as well as international markets, principally Europe and
Australia. As a result of the sales of its products in foreign markets, the
Company's financial results are affected by fluctuations in the value of the
U.S. dollar as compared to foreign currencies. Based on a sensitivity analysis
performed at July 31, 1998, the Company has estimated that a 10% strengthening
in the value of the dollar relative to the currencies in which the Company's
sales are denominated would result in a decrease in operating income of
approximately $6.6 million for the year ended July 31, 1998. The Company's
sensitivity analysis of the effects of changes in foreign currency exchange
rates does not factor in a potential change in sales levels or local currency
prices.
Euro Conversion
On January 1, 1999, certain countries of the European Union are scheduled to
establish fixed conversion rates between their existing currencies and one
common currency, the euro. The euro will then trade on currency exchanges and
may be used in business transactions. Beginning in January 2002, new
euro-denominated currencies will be issued and the existing currencies will be
withdrawn from circulation. The Company is currently evaluating the systems and
business issues raised by the euro conversion. These issues include the need to
adapt computer and other business systems and equipment and the competitive
impact of cross-border transparency. The Company has not yet completed its
estimate of the potential impact likely to be caused by the euro conversion;
however, at present the Company has no reason to believe the euro conversion
will have a material impact on the Company's financial condition or results of
operations.
7
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 31
----------------------
(in thousands, except per share data) 1998 1997
=======================================================================================
<S> <C> <C>
ASSETS
Current Assets
Cash ....................................................... $ 56,793 $ 25,436
Accounts receivable, less allowance for doubtful accounts of
$1,597 in 1998 and $1,282 in 1997 ........................ 94,610 70,164
Inventories ................................................ 47,568 53,727
Other current assets ....................................... 6,544 5,872
-----------------------
Total Current Assets ..................................... 205,515 155,199
Property, Plant and Equipment
Land and improvements ...................................... 5,140 4,124
Buildings and improvements ................................. 28,778 21,266
Machinery and equipment .................................... 61,592 58,592
-----------------------
95,510 83,982
Less allowance for depreciation ............................ 37,858 27,918
-----------------------
57,652 56,064
Equipment Held for Rental, net of accumulated
depreciation of $5,166 in 1998 and $3,626 in 1997 .......... 25,103 24,951
Other Assets ................................................. 19,069 12,160
-----------------------
$ 307,339 $ 248,374
=======================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt .......................... $ 1,253 $ 267
Accounts payable ........................................... 43,119 43,027
Accrued payroll and related taxes .......................... 11,652 10,256
Accrued sales costs ........................................ 3,937 6,025
Income taxes ............................................... 7,251 757
Other current liabilities .................................. 15,631 10,738
-----------------------
Total Current Liabilities ................................ 82,843 71,070
Long-term Debt ............................................... 2,455 3,685
Contingent Liabilities ....................................... 8,800 7,646
Accrued Employee Benefits .................................... 5,473 5,046
Shareholders' Equity
Capital stock:
Authorized shares: 100,000 at $.20 par value
Issued and outstanding shares: 1998 - 44,096 shares;
1997 - 43,726 shares ................................... 8,819 8,745
Additional paid-in capital ................................. 15,626 11,391
Unearned compensation ...................................... (2,633) (1,018)
Accumulated other comprehensive income ..................... (3,662) (2,180)
Retained earnings .......................................... 189,618 143,989
-----------------------
Total Shareholders' Equity ............................... 207,768 160,927
-----------------------
$ 307,339 $ 248,374
=======================
</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) 1998 1997 1996
==============================================================================================
<S> <C> <C> <C>
Net Sales .............................................. $ 530,859 $ 526,266 $ 413,407
Cost of sales .......................................... 402,702 396,261 304,691
-----------------------------------
Gross Profit ........................................... 128,157 130,005 108,716
Selling, administrative and product development expenses 55,388 56,220 44,038
Restructuring charges .................................. 1,689 1,897
-----------------------------------
Income from Operations ................................. 71,080 71,888 64,678
Other income (deductions):
Interest expense ..................................... (254) (362) (293)
Miscellaneous, net ................................... (356) (288) 1,281
-----------------------------------
Income before Taxes .................................... 70,470 71,238 65,666
Income tax provision ................................... 23,960 25,090 23,558
-----------------------------------
Net Income ............................................. $ 46,510 $ 46,148 $ 42,108
===================================
Earnings per Common Share .............................. $ 1.07 $ 1.06 $ .98
===================================
Earnings per Common Share-- Assuming Dilution .......... $ 1.05 $ 1.04 $ .96
===================================
Weighted Average Shares Outstanding ................... 43,666 43,606 43,014
===================================
Weighted Average Shares Outstanding-- Assuming Dilution 44,431 44,401 43,770
===================================
</TABLE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Capital Stock Additional Other
------------------ Paid-in Unearned Comprehensive Retained
(in thousands except share data) Shares Par Value Capital Compensation Income Earnings
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balances at July 31, 1995 ............... 42,825 $ 8,565 $ 4,411 ($ 1,799) $ 57,253
Comprehensive income:
Net income for the year ............... 42,108
Other comprehensive income -
Aggregate translation adjustment,
net of deferred tax benefit of $737 . (261)
Dividends paid: $.015 per share ......... (648)
Shares issued under stock option plans .. 557 111 3,468
- ---------------------------------------------------------------------------------------------------------------
Balances at July 31, 1996 ............... 43,382 8,676 7,879 (2,060) 98,713
===============================================================================================================
Comprehensive income:
Net income for the year ............... 46,148
Other comprehensive income -
Aggregate translation adjustment,
net of deferred tax benefit of $1,228 (120)
Dividends paid: $.02 per share .......... (872)
Shares issued under stock option
plans and restricted share awards ..... 344 69 3,512 (1,516)
Amortization of unearned compensation ... 498
- ---------------------------------------------------------------------------------------------------------------
Balances at July 31, 1997 ............... 43,726 8,745 11,391 (1,018) (2,180) 143,989
===============================================================================================================
Comprehensive income:
Net income for the year ............... 46,510
Other comprehensive income -
Aggregate translation adjustment,
net of deferred tax benefit of $1,428 (1,482)
Dividends paid: $.02 per share .......... (881)
Shares issued under stock option
plans and restricted share awards ..... 370 74 4,235 (3,219)
Amortization of unearned compensation ... 1,604
- ---------------------------------------------------------------------------------------------------------------
Balances at July 31, 1998 ............... 44,096 $ 8,819 $ 15,626 ($ 2,633) ($ 3,662) $189,618
===============================================================================================================
</TABLE>
The accompanying notes are an integral part of these statements
9
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended July 31
---------------------------------
(in thousands) 1998 1997 1996
======================================================================================
<S> <C> <C> <C>
Operations
Net income ..................................... $ 46,510 $ 46,148 $ 42,108
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Depreciation ............................... 15,750 10,389 6,505
Provision for self-insured losses .......... 4,844 2,745 2,938
Deferred income taxes ...................... 1,924 775 502
Changes in operating assets and liabilities:
Accounts receivable ................... (24,446) (15,822) (23,748)
Inventories ........................... 6,159 (14,294) (13,686)
Other current assets .................. (672) (997) (278)
Accounts payable ...................... 92 8,492 16,680
Accrued expenses and other
current liabilities ................. 9,148 5,499 3,076
Changes in other assets and liabilities ........ (9,085) (7,310) (3,406)
---------------------------------
Cash provided by operations ...................... 50,224 35,625 30,691
Investments
Purchases of property, plant
and equipment ................................ (13,577) (29,757) (16,668)
Additions to equipment held for rental ......... (5,377) (14,199) (9,873)
Proceeds from sale of Material Handling
Division ..................................... 10,954
---------------------------------
Cash used for investments ........................ (18,954) (43,956) (15,587)
Financing
Issuance of long-term debt ..................... 2,000
Repayment of long-term debt .................... (244) (242) (309)
Payment of dividends ........................... (881) (872) (648)
Exercise of stock options and issuance
of restricted awards ........................ 2,694 2,563 3,579
---------------------------------
Cash provided by financing ....................... 1,569 3,449 2,622
Currency Adjustments
Effect of exchange rate changes on cash ........ (1,482) (120) (261)
Cash
Net change in cash ............................. 31,357 (5,002) 17,465
Beginning balance .............................. 25,436 30,438 12,973
---------------------------------
Ending balance ................................. $ 56,793 $ 25,436 $ 30,438
=================================
</TABLE>
The accompanying notes are an integral part of these 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 1998.
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.
Revenue Recognition
Sales of aerial work platforms and service parts are generally unconditional
sales that are recorded when product is shipped and invoiced to independently
owned and operated distributors and customers. Provisions for warranty are
estimated and accrued at the time of sale. Actual warranty costs do not
materially differ from estimates. In addition, net sales include rental revenues
earned on the lease of equipment held for rental. Rental revenues are recognized
in the period earned over the lease term.
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 product costs and revenues.
Inventories consist of the following at July 31:
================================================================================
1998 1997
================================================================================
Finished goods ............................................. $27,784 $33,689
Work in process ............................................ 9,291 13,537
Raw materials .............................................. 15,067 12,371
------------------
52,142 59,597
Less LIFO provision ........................................ 4,574 5,870
------------------
$47,568 $53,727
==================
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. The split was
effected by a stock dividend. All share and per share data included in the
financial statements have been restated to reflect the stock split.
Product Development
The Company incurred product development and other engineering expenses of
$9,579, $7,280 and $6,925 in 1998, 1997 and 1996, respectively, which were
charged to expense as incurred.
Concentrations of Credit Risk
Financial instruments which potentially expose the Company to concentrations of
credit risk consist primarily of trade
11
<PAGE>
receivables. This concentration of credit risk is mitigated by a geographically
diverse customer base and the Company's credit and collection process. The
Company performs credit evaluations for all customers and secures transactions
with letters of credits where necessary. Write-offs for uncollected trade
receivables have not been significant.
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.
The aggregate foreign currency transactions included in the results of
operations were losses of $1,611 and $768 in 1998 and 1997, respectively and
gains of $812 in 1996.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosure about Segments of an Enterprise and Related Information" which
establishes standards for reporting information about operating segments. The
Company is required to adopt this standard effective July 31, 1999. Adoption
will not have any effect on reported results of operations or financial
position.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Developing or Obtaining
Computer Internal-Use Software". This statement will require the capitalization
of certain costs incurred after the date of adoption in connection with
developing or obtaining software for internal use. It is effective for the
Company beginning August 1, 1999. The Company does not believe its adoption will
have a material impact on its results of operations or financial position.
In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities" which requires
that an entity record all derivatives in the statement of financial position at
their fair value. It also requires changes in the fair value of derivatives to
be recorded each period in current earnings or other comprehensive income,
depending on whether a derivative is designated as part of a hedge transaction
and, if it is, the type of hedge transaction. The Company is required to adopt
this new accounting standard beginning August 1, 1999. The Company does not
expect adoption of this statement to have a significant impact on its results of
operations or financial position.
EMPLOYEE RETIREMENT PLAN
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 mutual funds and the Company's
common stock. The aggregate expense relating to these plans was $5,332, $4,716
and $4,355 in 1998, 1997 and 1996, respectively.
INDUSTRY AND EXPORT DATA
The Company operates in one dominant industry segment - the manufacture and sale
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. One
customer accounted for 12% of sales for 1998 and 13% for 1997 and 1996. Export
sales were 32%, 30% and 24% of total sales for 1998, 1997 and 1996,
respectively, of which Europe accounted for 18%, 15% and 12% of total sales.
12
<PAGE>
INCOME TAXES
The income tax provision consisted of the following for the years ended July 31:
================================================================================
1998 1997 1996
================================================================================
Current:
Federal ................. $ 23,900 $ 23,442 $ 20,476
State ................... 1,984 2,423 2,580
--------------------------------------------
25,884 25,865 23,056
Deferred:
Federal ................. (1,828) (674) 435
State ................... (96) (101) 67
--------------------------------------------
(1,924) (775) 502
--------------------------------------------
$ 23,960 $ 25,090 $ 23,558
============================================
The Company made income tax payments of $16,790, $24,928, and $24,435 in 1998,
1997, and 1996, respectively.
Components of deferred tax assets and liabilities were as follows at July 31:
================================================================================
1998 1997
================================================================================
Future income tax benefits:
Contingent liabilities provisions ................ $ 5,908 $ 4,542
Employee benefits ................................ 2,736 1,910
Translation adjustments .......................... 1,561 1,361
Inventory valuation provisions ................... 959 921
Other ............................................ 512 288
---------------------
11,676 9,022
---------------------
Deferred tax liabilities:
Depreciation and asset basis differences ......... 2,307 1,577
---------------------
Net deferred tax assets ............................ $ 9,369 $ 7,445
=====================
The current and long-term deferred tax asset amounts are included in other
current and other asset amounts on the consolidated balance sheets.
STOCK BASED INCENTIVE PLANS
The Company's stock incentive plan has reserved 4,954 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 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 1,917 shares of capital
stock is authorized to be issued under the plan.
Outstanding options and transactions involving the plans are summarized as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1998 1997 1996
- -----------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding options at the
beginning of the year .. 1,466 $ 4.88 1,705 $ 4.28 1,911 $ 2.58
Options granted .......... 479 14.59 36 17.44 275 12.57
Options canceled ......... (40) 8.66 (34) 3.96 (8) 2.93
Options exercised ........ (110) 3.00 (241) 2.33 (473) 2.07
-----------------------------------------------------
Outstanding options at the
end of the year ........ 1,795 $ 7.51 1,466 $ 4.88 1,705 $ 4.28
=====================================================
Exercisable options at the
end of the year ........ 1,281 $ 4.63 1,082 $ 3.95 778 $ 2.65
=====================================================
</TABLE>
13
<PAGE>
Information with respect to stock options outstanding at July 31, 1998 is as
follows:
Options Outstanding Options Exercisable
- --------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Range of Number Remaining Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
- --------------------------------------------------------------------------------
$1.12 to $1.59 470 5 $ 1.14 470 $ 1.14
$2.93 to $3.30 353 6 3.03 353 3.03
$5.64 to $9.21 321 7 6.84 321 6.84
$11.41 to$17.69 651 9 14.85 137 15.46
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 information regarding net income and
earnings per share has been determined as if the Company had accounted for its
employee stock options under the fair value method. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following assumptions:
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Volatility factor ................................. .478 .484 .400
Expected life in years ............................ 3.0 2.0 2.5
Dividend yield .................................... .15% .11% .18%
Interest rate ..................................... 5.73% 5.69% 6.04%
Weighted average fair market value at date of grant $ 5.12 $ 5.37 $ 3.72
For purposes of pro forma disclosures, the estimated fair value of the options
is amortized over the options' vesting period. The Company's pro forma
information follows for the years ending:
- --------------------------------------------------------------------------------
1998 1997 1996
- --------------------------------------------------------------------------------
Pro forma net income .................... $ 46,021 $ 45,837 $ 41,998
Pro forma basic earnings per common share $ 1.05 $ 1.05 $ .96
This pro forma impact only takes into account options granted since January 1,
1995 and is likely to increase in future years as additional options are granted
and amortized over the vesting period.
BASIC AND DILUTED EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share". Statement 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, the calculation of basic earnings per share
excludes any dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for all periods have
been presented, and where appropriate, restated to conform to the Statement 128
requirements.
The following table sets forth the computation of basic and diluted earnings per
share for the years ended July 31:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
1998 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income .............................................. $46,510 $46,148 $42,108
Denominator for basic earnings per share--
weighted average shares ............................... 43,666 43,606 43,014
Effect of dilutive securities - employee stock options
and unvested restricted shares ........................ 765 795 756
---------------------------
Denominator for diluted earning per share--
weighted average shares adjusted for dilutive securities 44,431 44,401 43,770
===========================
Earnings per common share ............................... $ 1.07 $ 1.06 $ .98
===========================
Earnings per common share-- assuming dilution ........... $ 1.05 $ 1.04 $ .96
===========================
</TABLE>
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 1998 is comprised of a self-insured retention of $5
million
14
<PAGE>
for domestic claims, insurance coverage of $5 million for international claims
and catastrophic coverage of $50 million in excess of the retention and primary
insurance. The Company contracts with an independent 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 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 product liability claims of which the Company is aware,
accrued liabilities of $12.4 million and $9.6 million were established at July
31, 1998 and 1997, respectively. While the Company's ultimate liability may
exceed or be less than the amounts accrued, the Company believes that it is
unlikely that it would experience losses that are materially in excess of such
reserve amounts. As of July 31, 1998 and 1997, there were no insurance
recoverables or offset implications and there were no claims by the Company
being contested by insurers.
RESTRUCTURING COSTS
During the calendar 1997, the Company downsized and rationalized its operations.
This resulted in restructuring charges for severance and termination benefits,
costs associated with closing a smaller, less productive manufacturing facility
and other asset impairments of $1,689 and $1,897 for 1998 and 1997,
respectively.
UNAUDITED QUARTERLY FINANCIAL INFORMATION
Unaudited financial information was as follows for the fiscal quarters within
the years ended July 31:
- --------------------------------------------------------------------------------
Earnings
Per
Earnings Common
Per Share
Net Common Assuming
Net Sales Gross Profit Income Share Dilution
- --------------------------------------------------------------------------------
1998
October 31 ......... $ 95,644 $ 21,168 $ 4,626 $ .11 $ .10
January 31 ......... 111,707 24,885 7,646 .17 .17
April 30 ........... 146,323 35,954 14,071 .3 .32
July 31 ............ 177,185 46,150 20,167 .47 .46
--------------------------------------------------------
$530,859 $128,157 $ 46,510 $ 1.07 $ 1.05
========================================================
1997
October 31 ......... $120,206 $ 32,703 $ 12,342 $ .28 $ .28
January 31 ......... 121,246 30,996 11,227 .26 .25
April 30 ........... 143,642 35,691 12,921 .30 .29
July 31 ............ 141,172 30,615 9,658 .22 .22
--------------------------------------------------------
$526,266 $130,005 $ 46,148 $ 1.06 $ 1.04
========================================================
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.
15
<PAGE>
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, Jr.
L. David Black Charles H. Diller, Jr.
Chairman of the Board, Executive Vice President
President and and Chief Financial Officer
Chief Executive Officer
September 11, 1998
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, 1998 and 1997, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended July 31, 1998. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements 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, 1998 and 1997, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended July 31,
1998, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Baltimore, Maryland
September 3, 1998
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
16
<PAGE>
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."
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"
in the Company's Proxy Statement and is incorporated herein 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" in the Company's Proxy Statement and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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 Schedules
The 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.
(3) Exhibits
3.1 Articles of Incorporation of JLG Industries, Inc., which appears
as Exhibit 3 to the Company's Form 10-Q (File No. 0-8454-- filed
December 13, 1997), is hereby incorporated by reference.
3.2 By-laws of JLG Industries, Inc.
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 JLG Industries, Inc. Directors' Deferred Compensation Plan
amended and restated as of August 1, 1997 which appears as
Exhibit 10.2 to the Company's 10-K (File No. 0-8454 -- filed
October 6, 1997, is hereby incorporated by reference.
10.2 JLG Industries, Inc. Stock Incentive Plan amended and restated as
of August 1, 1998.
10.3 Credit Agreement dated December 21, 1989 among JLG Industries,
Inc., the First National Bank of Maryland, and CoreStates Bank N.
A., 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.
10.4 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 CoreStates Bank N.
A., 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.
17
<PAGE>
10.5 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 CoreStates Bank N.
A., 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.
10.6 JLG Industries, Inc. Directors Stock Option Plan amended and
restated as of August 1, 1998.
10.7 JLG Industries, Inc. Supplemental Executive Retirement Plan
effective June 1, 1995, which appears as Exhibit 10.8 to the
Company's Form 10-K (File No. 0-8454 -- filed October 17, 1996),
is hereby incorporated by reference.
10.8 JLG Industries, Inc. Executive Retiree Medical Benefits Plan
effective June 1, 1995, which appears as Exhibit 10.9 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 Severance Plan effective June 1,
1995, which appears as Exhibit 10.10 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 Deferred Compensation Plan amended
and restated as of August 1, 1997 which appears as Exhibit 10.11
to the Company's 10-K (File No. 0-8454 -- filed October 6, 1997,
is hereby incorporated by reference.
22 Listing of subsidiaries
23 Consent of independent auditors
27 Financial Data Schedule
99 Cautionary Statements Pursuant to the Securities Litigation
Reform Act of 1995
(b) The Company was not required to file Form 8-K pursuant to requirements of
such form in the fourth quarter of fiscal 1998
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 23, 1998
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 23, 1998.
/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/ James A. Mezera
- ------------------------------------------------
James A. Mezera, Director
/s/ Gerald Palmer
- ------------------------------------------------
Gerald Palmer, Director
/s/ Charles O. Wood, III
- ------------------------------------------------
Charles O. Wood, III, Director
19
<PAGE>
NOTES
20
<PAGE>
INVESTOR INFORMATION
================================================================================
Common Stock Data
The Company's capital stock is traded on the New York Stock Exchange under the
symbol JLG.
The Company's quarterly cash dividend rate is currently $.005 per share, or $.02
on an annual basis. When declared, dividends are paid in January, April, July
and October.
The Company believes that approximately 50% of its stock is held by about 126
institutions, mutual funds, banks, insurance and investment companies and
pension funds. In addition, there are about 4,700 shareholders of record,
including 2,300 employees, as well as approximately 20,000 beneficial
shareholders.
Investor Relations Program
The Company has an active investor relations program directed to both individual
and institutional investors. The Company's investor relations mission is to
maintain an ongoing awareness of the Company's performance among its
shareholders and the investment community, in accordance with applicable
reporting requirements.
During the 1998 fiscal year, the Company held numerous meetings with members of
the investment community, participated in various investment conferences and
hosted meetings at its corporate headquarters with security analysts and
portfolio managers. The Company is followed by about ten sell-side analysts, in
addition to Value Line and Standard & Poor's.
In June 1998, the Company hosted a two-day field trip at its corporate
headquarters in McConnellsburg, Pennsylvania which was attended by 30 analysts,
institutional shareholders and potential investors. The theme of the meeting was
"Strategically Positioned for Market Leadership in a New Century."
During fiscal 1998, the Company became a Corporate Member of the National
Association of Investors Corporation (NAIC) and participated in six Investor
Fairs. The Company is ranked among the Top 200 Companies in the NAIC for shares
held by NAIC investment clubs.
The Company's investor relations contact is Charles H. Diller, Jr., Executive
Vice President and Chief Financial Officer, who may be reached at (717)
485-5161.
Corporate Headquarters
JLG Industries, Inc.
1 JLG Drive
McConnellsburg, PA 17233-9533
Telephone: (717) 485-5161
Fax: (717) 485-6417
Annual Meeting of Shareholders
The Annual Meeting will be held at the Company's headquarters in McConnellsburg,
Pennsylvania, at 4:30 p.m., Thursday, November 19, 1998. All shareholders are
cordially invited to attend. Whether planning to attend or not, shareholders are
urged to mark, sign, date, and return their proxy cards promptly, so their
interests will be represented at the Meeting.
Shareholder Services
For prompt assistance regarding address changes, consolidation of duplicate
accounts, lost certificates and related matters, please contact ChaseMellon
Shareholder Services, 85 Challenger Road, Overpeck Centre, Ridgefield Park, NJ
07660, telephone (800) 756-3353.
Shareholders who add to their holdings of the Company's stock are advised to
have their broker or bank register the shares in exactly the same name and
account as those of present holdings. Whenever there is the slightest variation
in the name or address of a shareholder, a separate account must be established.
This leads to duplicate mailings and added expense to the Company.
21
<PAGE>
Anyone presently having more than one account registered in his or her name can
assist the Company by consolidating their accounts. To combine such holdings,
shareholders should forward the names and numbers of the accounts involved,
along with a signed request, to the Company's transfer agent.
Shareholder Communications
In order to receive the hard copy circulation of quarterly earnings releases to
shareholders, please request to be placed on a special Direct Mail List by
sending a letter or postcard including your name and complete mailing address
to:
JLG Industries, Inc.
Investor Relations - Direct Mail List
1 JLG Drive
McConnellsburg, PA 17233-9533
Financial information is available by calling the Company's investor line at
(717) 485-6523. The Company also offers investors and shareholders information
via its web site at www.jlg.com where you can view Company product and general
information, the annual report and access to press releases.
EXHIBIT 3.2
BY-LAWS
OF JLG INDUSTRIES, INC.
(A Pennsylvania Corporation)
OFFICES
1. The registered office shall be at P.O. Box 695, McConnellsburg,
Pennsylvania 17233.
2. The Corporation may also have offices at such other places as the Board
of Directors may from time to time appoint or the business of the Corporation
may require.
SEAL
3. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Pennsylvania".
SHAREHOLDERS' MEETING
4. All meetings of the shareholders shall be held at such place within or
without the Commonwealth of Pennsylvania as the Board of Directors may designate
from time to time and in the absence of such designation shall be held at the
principal office of the Corporation in Ayr Township, Pennsylvania.
5. The annual meeting of the shareholders shall be held on the fourth
Monday of November in each year, or at such other date as may be fixed by the
Board of Directors, in order to elect the Board of Directors of the Corporation
and transact such other business as may properly be brought before the meeting.
If the annual meeting shall not be called and held within six months after the
fourth Monday in November, any shareholder may call such meeting.
6. The presence, in person or by proxy, of the holders of a majority of the
outstanding shares entitled to vote, shall constitute a quorum at all meetings
of the shareholders for the transaction of business except as otherwise provided
by law, by articles of incorporation or by these by-laws. If however, such
quorum shall not be present or represented at any meeting of the shareholders,
those entitled to vote thereat, present in person or represented by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite number of shares shall be
present. In the case of any meeting called for the election of directors,
adjournment or adjournments may be taken only from day to day until such
directors have been elected, and those who attend the second of such adjourned
meetings, although less than a quorum, shall nevertheless constitute a quorum
for the purpose of electing directors.
7. At each meeting of the shareholders every shareholder having the right
to vote shall be entitled to vote in person or by proxy appointed by an
instrument in writing subscribed by such shareholder and delivered to the
Secretary at or prior to the meeting. No unrevoked proxy shall be valid after
eleven months from the date of its execution, unless a longer time is expressly
provided therein, but in no event shall a proxy, unless coupled with an
interest, be voted on after three years from the date of its execution. In all
elections for directors cumulative voting shall not be permitted. No share shall
be voted at any meeting upon which any installment is due and unpaid. The
original share ledger or transfer book, or a duplicate thereof kept in this
Commonwealth shall be prima facie evidence of the right of the person named
therein to vote thereon.
8. Written notice of the annual meeting shall be mailed to each shareholder
entitled to vote thereat, at such address as appears on the books of the
Corporation, at least five days prior to the meeting.
9. In advance of any meeting of shareholders, the Board of Directors may
appoint judges of election, who need not be shareholders, to act at such meeting
or any adjournment thereof. If judges of election be not so appointed, the
chairman of any such meeting may, and on the request of any shareholders or his
proxy, shall make such appointment at the meeting. The number of judges may be
one or three. If appointed at a meeting on the request of one or more
shareholders or proxies, the majority of shares present and entitled to vote
shall determine whether one or three judges are to be appointed. On request of
the chairman of the meeting, or of any shareholder or his proxy, the judges
shall make a report in writing of any challenge or question or matter determined
by them, and execute a certificate of any fact found by them. No person who is a
candidate for office shall act as a judge.
10. Special meetings of the shareholders may be called at any time by
resolution adopted by the Board of Directors. At any time upon adoption of a
resolution by the Board of
<PAGE>
-15-
Directors to call a special meeting, it shall be the duty of the Secretary to
call a special meeting of the shareholders, to be held at such time as the
Secretary may fix, not less than 10 nor more than 60 days after receipt of the
request.
11. Business transacted at all special meetings shall be confined to the
objects stated in the call and matters germane thereto.
12. Written notice of a special meeting of the shareholders, stating the
time and place and object thereof, shall be mailed, postage prepaid, to each
shareholder entitled to vote thereat at such address as appears on the books of
the Corporation, at least five days before such meeting, unless a greater period
of notice is required by statute in a particular case.
VOTING LIST
13. The officer or agent having charge of the transfer books shall make a
complete list of the shareholders entitled to vote at the meetings, arranged in
alphabetical order, with the address of and the number of shares held by each.
Such list shall be produced and kept open at the time and places of the meeting,
and shall be subject to the inspection of any such shareholder during the whole
time of the meeting. The original share ledger or transfer book, or a duplicate
thereof kept in this Commonwealth, shall be prima facie evidence as to who are
the shareholders entitled to examine such list or share ledger or transfer book,
or to vote in person or by proxy, at any meeting of shareholders.
DIRECTORS
14. The business of this Corporation shall be managed by its Board of
Directors, which shall consist of such number of persons, not less than 3 and no
more than 15, as may be determined from time to time by the Board of Directors;
provided that no determination by the Board of Directors may reduce the term of
office of any incumbent Director. Directors shall be elected by the shareholders
at the annual meeting of shareholders of the Corporation. Any person to be
eligible for election by the shareholders must meet the requirements of a
"Qualified Nominee" as defined below in this section and must be nominated by
either the Board of Directors or by a shareholder or group of shareholders that
own, as reflected on the Corporation's share register, at least one share of the
Corporation's stock that is then currently entitled to vote at a meeting called
for the election of directors. Any such nominations by persons other than the
Board of Directors must be received by the Secretary of the Corporation no later
than the anniversary of the date which shall have been ninety (90) days prior to
the date of the immediately preceding year's annual meeting accompanied by
written statements signed by each person so nominated setting forth all
information in respect of such person as would be required to be included in a
proxy statement filed with the Securities and Exchange Commission pursuant to
Rule 14(a) under the Securities Exchange Act of 1934, as amended, had such
person been nominated, or intended to be nominated, by the Board of Directors,
and stating that such person consents to such nomination and consents to serve
as a Director of the Corporation if elected. The Secretary shall promptly refer
all such proposed nominations to the Nominating Committee of the Board of
Directors. Within fifteen (15) days following the receipt by the Secretary of a
stockholder notice of nomination pursuant hereto, the Nominating Committee shall
instruct the Secretary of the Corporation to advise the notifying stockholder of
any deficiencies in the notice as determined by the Committee. The notifying
stockholder shall cure such deficiencies within fifteen (15) days of receipt of
such notice. No persons shall be eligible for election as a director of the
Corporation unless nominated in accordance herewith. Nominations not made in
accordance herewith may, in the discretion of the presiding officer at the
meeting and with the advice of the Nominating Committee, be disregarded by the
presiding officer and, upon his or her instructions, all votes cast for each
such nominee may be disregarded. The determinations of the presiding officer at
the meeting shall be conclusive and binding upon all stockholders of the
Corporation for all purposes. A person will be a "Qualified Nominee" if such
person (i) beneficially owns at least one thousand shares of the Corporation's
Common Stock, par value $.20 per share, such amount to be adjusted from time to
time following September 5, 1996, by any stock split, stock dividend,
reclassification or recapitalization by the Corporation (the "Minimum Shares"),
or (ii) commits to the Corporation in writing to purchase the Minimum Shares
within 18 months of being nominated as a director candidate, provided that any
person who fails to acquire the Minimum Shares within 18 months of being
nominated may not be considered a Qualified Nominee until such person
beneficially owns the Minimum Shares.
15. In addition to the powers and authorities by these by-laws expressly
conferred upon them, the Board may exercise all such powers of the Corporation
and do all such lawful acts and things as are not be statute or by the articles
of incorporation or by these by-laws directed or required to be exercised or
done by the shareholders.
<PAGE>
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MEETINGS OF THE BOARD OF DIRECTORS
16. The meetings of the Board of Directors may be held at such place within
this Commonwealth, or elsewhere, as a majority of the directors may from time to
time appoint, or as may be designated in the notice calling the meeting.
17. Each newly elected Board may meet at such place and time as shall be
fixed by the shareholders at the meeting at which such directors are elected,
and no notice shall be necessary to the newly elected directors in order legally
to constitute the meeting, or they may meet at such place and time as may be
fixed by the consent in writing of all the directors.
18. Regular meetings of the Board shall be held without notice at such time
and place as shall be determined by the Board.
19. Special meetings of the Board may be called by the Chairman of the
Board on at least three days notice to each director, either personally or by
mail or by telegram; special meetings shall be called by the Chairman of the
Board of Secretary in a like manner and on like notice on the written request of
two directors, or more.
20. A majority of the directors in office shall be necessary to constitute
a quorum for the transaction of business, and the acts of a majority of the
directors present at a meeting at which a quorum is present shall be the acts of
the Board of Directors. If all the directors shall severally or collectively
consent in writing to any action to be taken by the Corporation, such action
shall be as valid corporate action as though it had been authorized at a meeting
of the Board of Directors.
21. The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee to consist of two
or more of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such committee, to the
extent provided by resolution of the Board of Directors, shall have and shall
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation to
be affixed to all papers which may require it. In the absence or
disqualification of any member of any such committee or committees, the member
of members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may, by unanimous vote, appoint
another member of the Board of Directors to act at the meeting in place of any
such absent or disqualified member.
LIABILITY OF DIRECTORS
22. A director, as such, shall not be personally liable for monetary
damages for any action taken, or any failure to take any action, unless the
director has breached or failed to perform the duties of his or her office under
42 Pa. C.S. Section 8363 and the breach or failure to perform constitutes
self-dealing, willful misconduct or recklessness. The provisions of this Section
shall not apply to the responsibility or liability of a director pursuant to any
criminal statue or the liability of a director for the payment of taxes pursuant
to local, state or federal law.
COMPENSATION OF DIRECTORS
23. Directors as such, shall not receive any stated salary for their
services, but by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board PROVIDED, that nothing herein contained shall be construed
to preclude any director from serving the Corporation in any other capacity and
receiving compensation therefor.
OFFICERS
24. The officers of the Corporation shall be chosen by the Board of
Directors and shall be a Chairman of the Board, a President, a Vice-President, a
Secretary and a Treasurer. The Board of Directors may also choose additional
Vice-Presidents, and one or more Assistant Secretaries and Assistant Treasurers.
Any number of offices may be held by the same person. It shall not be necessary
for the officers to be directors.
25. The Board of Directors shall fix the salaries of all officers of the
Corporation.
26. The officers of the Corporation shall hold office for one year and
until their successors are chosen and have qualified. Any officer elected or
appointed by the Board of Directors may be removed by the Board of Directors
whenever in their judgment the best interests of the Corporation will be served
thereby.
<PAGE>
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LIABILITY OF OFFICERS
27. An officer, as such, shall not be personally liable to the Corporation
or its shareholders, for monetary damages, unless the officer has breached or
failed to perform the duties of his or her office under the Corporation's
articles of incorporation, these by-laws or applicable provisions of law, and
the breach or failure to perform constitutes self-dealing, willful misconduct or
recklessness. The provisions of this Section shall not apply to the
responsibility or liability of an officer pursuant to any criminal statute or
the liability of an officer for the payment of taxes pursuant to local, state or
federal law.
CHAIRMAN OF THE BOARD
28. The Chairman of the Board shall preside at all meetings of the
stockholders and of the Board of Directors, and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He may sign
certificates representing stock of the Corporation the issuance of which shall
have been authorized by the Board of Directors. From time to time he shall
report to the Board of Directors all matters within his knowledge which the
interests of the Corporation may require to be brought to their notice. He shall
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the Corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation. He shall be ex-officio a member of all committees of the Board
of Directors. He shall perform such other duties as are given to him by these
by-laws or as from time to time may be assigned to him by the Board of
Directors.
PRESIDENT
29. The President shall be the chief executive officer of the Corporation,
and subject to the direction of the Board of Directors, shall have general
supervision over the business and affairs of the Corporation and over its
officers and agents and general management and control of all of its properties.
In the absence of the Chairman of the Board, he shall preside at all meetings of
the stockholders or of the Board of Directors at which he is present. He may
sign certificates of stock of the Corporation the issuance of which shall have
been authorized by the Board of Directors. He shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some other officer or agent of the Corporation. He
shall perform such other duties as are given to him by these by-laws or as may
from time to time be assigned to him by the Board of Directors.
VICE-PRESIDENT
30. In the absence of the President to perform the duties of chief
executive officer of the Corporation, or in the event of his inability to act,
the Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the directors, or in the absence of
any designation, then in the order of their election) shall have all the powers
of and be subject to all the restrictions upon the President. The
Vice-Presidents, under the supervision of the President, shall perform such
other duties and have such other powers as may be prescribed by the Board of
Directors or the President.
SECRETARY
31. The Secretary shall attend all sessions of the Board and all meetings
of the shareholders and act as clerk thereof, and record all the votes of the
Corporation and the minutes of all its transactions in a book to be kept for
that purpose; and shall perform like duties for all committees of the Board of
Directors when required. He shall give, or cause to be given, notice of all
meetings of the shareholders and of the Board of Directors, and shall perform
such other duties as may be prescribed by the Board of Directors or President,
and under whose supervision he shall be. He shall keep in safe custody the
corporate seal of the Corporation, and when authorized by the Board, affix the
same to any instrument requiring it.
32. The Assistant Secretary, or if there be more than one, the Assistant
Secretaries in the order determined by the Board of Directors (or if there be no
such determination, then in the order of their election) shall, in the absence
of the Secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Secretary, under the supervision of the
President, and shall perform such other duties and have such other powers as may
be prescribed by the Board of Directors or President.
<PAGE>
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TREASURER
33. The Treasurer shall have custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation, and shall keep the moneys of the Corporation in a
separate book account to the credit of the Corporation.
34. He shall disburse the funds of the Corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
President and directors, at the regular meetings of the Board, or whenever they
may require it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation.
35. The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurer in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Treasurer, under the
supervision of the President, and shall perform such other duties and have such
other powers as may be prescribed by the Board of Directors or President.
VACANCIES
36. If the office of any officer or agent, one or more, becomes vacant for
any reason, the Board of Directors may choose a successor or successors, who
shall hold office for the unexpired term in respect of which such vacancy
occurred.
Vacancies in the Board of Directors shall be filled, by persons who are
Qualified Nominees as defined in Section 14 of those By-Laws, by the vote of a
majority of the remaining members of the Board though less than a quorum, and
each person so elected shall be a director until his successor is elected by the
shareholders, who may make such election at the next annual meeting of the
shareholders or at any special meeting duly called for that purpose and held
prior thereto.
<PAGE>
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CORPORATE RECORDS
37. There shall be kept at the principal office of the Corporation an
original or duplicate record of the proceedings of the shareholders and of the
directors, and the original or a copy of its by-laws, including all amendments
or alterations thereto to date, certified by the Secretary of the Corporation.
An original or duplicate share register shall also be kept at the principal
office, or at the office of a transfer agent or registrar within this
Commonwealth, giving the names of the shareholders in alphabetical order, and
showing their respective addresses and the number and classes of shares held by
each.
SHARE CERTIFICATES
38. The share certificates of the Corporation shall be numbered and
registered in the transfer books of the Corporation, as they are issued. They
shall be signed by either the Chairman of the Board or the President and by the
Secretary and shall bear the corporate seal. Any or all signatures on the
certificates may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
TRANSFERS OF SHARES
39. Assuming no conflict with valid share transfer restrictions, transfers
of shares shall be made on the books of the Corporation upon surrender of the
certificates therefor, endorsed by the person named in the certificate or by his
attorney, lawfully constituted in writing.
CLOSING TRANSFER BOOKS OR FIXING RECORD DATE
40. The Board of Directors may fix a time, not less than ten or more than
ninety days, prior to the date of any meeting of shareholders, or the date fixed
for the payment of any dividend or distribution, or the date for the allotment
of rights, or the date when any change, conversion or exchange of shares will be
made or go into effect, as a record date for the determination of the
shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of any such dividend or distribution or to receive
any such allotment of rights, or to exercise the rights in respect to any
change, conversion or exchange of shares. In such cases, only such shareholders
as shall be shareholders of record on the date so fixed shall be entitled to
notice of, and to vote at, such meeting, or to receive payment of such dividend
or distribution, or to receive such allotment of rights, or to exercise such
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the Corporation after any record date fixed, as aforesaid. The Board of
Directors may close the books of the Corporation against transfers of shares
during the whole or any part of such period, and in such case written or printed
notice thereof shall be mailed at least ten days before the closing thereof to
each shareholder of record at the address appearing on the records of the
Corporation or supplied by him to the Corporation for the purpose of notice.
While the stock transfer books of the Corporation are closed, no transfer of
shares shall be made thereon. If no record date is fixed for the determination
of shareholders entitled to receive notice of, or vote at, a shareholders
meeting, transferees of shares which are transferred on the books of the
Corporation within ten days next preceding the date of such meeting shall not be
entitled to notice of or vote at such meeting.
LOST CERTIFICATE
41. Any person claiming a share certificate to be lost or destroyed shall
make an affidavit or affirmation of that fact and advertise the same in such
manner as the Corporation may require, and shall, if required by the
Corporation, give the Corporation a bond of indemnity with sufficient surety to
protect the Corporation or any person injured by the issue of a new certificate
from any liability or expense which it or they may incur by reason of the
original certificate remaining outstanding, whereupon a new certificate may be
issued of the same tenor and for the same number of shares as the one alleged to
be lost or destroyed, but always subject to the approval of the Corporation.
CHECKS
42. All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers as the Board of Directors may from time to
time designate.
FISCAL YEAR
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43. The fiscal year shall begin the 1st day of August of each year.
DIVIDENDS
44. Subject to the provisions of the statutes, the Board of Directors may
declare and pay dividends upon the outstanding shares of the Corporation out of
its surplus from time to time and to such extent as they deem advisable, in
cash, property or in shares of the Corporation.
Before payment of any dividend there may be set aside out of the net
profits of the Corporation such sum or sums as the directors, from time to time,
in their absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the directors shall
think conducive to the interests of the Corporation, and the directors may
abolish any such reserve in the manner in which it was created.
DIRECTORS' ANNUAL STATEMENT
45. The Chairman of the Board and Board of Directors shall present at each
annual meeting a full and complete statement of the business and affairs of the
Corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
NOTICES
46. Whenever written notice is required to be given to any person, it may
be given to such person, either personally or by sending a copy thereof through
the mail, or by telegram, charges prepaid, to his address appearing on the books
of the Corporation, or supplied by him to the Corporation for the purpose of
notice. If the notice is sent by mail or by telegraph, it shall be deemed to
have been given to the person entitled thereto when deposited in the United
States mail or with a telegraph office for transmission to such person. Such
notice shall specify the place, day and hour of the meeting and, in the case of
a special meeting, the general nature of the business to be transacted.
Any shareholder or director may waive any notice required to be given under
these by-laws.
<PAGE>
-21-
INDEMNIFICATION
47.A. The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation), by reason of the
fact that he is or was a director or officer of the Corporation, or is or was
serving at the request of the Corporation as a director, officer or member of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of the
Corporation, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
B. The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director or officer of the Corporation,
or is or was serving at the request of the Corporation as a director, officer or
member of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Corporation; provided, however, that
no indemnification shall be made in respect of any claim, issue or matter as to
be which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the court of common pleas of the county in which the registered
office of the Corporation is located or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the court of common
pleas or such other court shall deem proper.
C. To the extent that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in paragraphs A or B of this Section 47 or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
D. Any indemnification under paragraphs A or B of this Section 47 (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the director or
officer is proper in the circumstances because he had met the applicable
standard of conduct set forth in such paragraph. Such determination shall be
made (1) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding; or (2) if
such quorum is not obtainable, or, even if obtainable, a majority vote of a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion; or (3) by the shareholders.
E. Expenses incurred in defending a civil or criminal action, suit, or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized in the manner provided in
paragraph D of this Section 47 upon receipt of an undertaking by or on behalf of
the director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Section 47.
F. The indemnification provided by this Section 47 shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any by-law, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
48.A. The Corporation shall indemnify any person who was or is an
"authorized representative" of the Corporation (which shall mean for purposes of
this Section a director or officer of the Corporation, or a person serving at
the request of the Corporation as a director, officer, partner, trustee or
fiduciary of another corporation, partnership, joint venture, trust, employee
benefit plan or other entity or enterprise) and who was or is a party (which
shall mean for
<PAGE>
-22-
purposes of this Section any threatened, pending or completed action, suit,
appeal or proceeding of any nature, whether civil, criminal, administrative, or
investigative, whether formal or informal, including an action by or in the
right of the Corporation or a class of its security holders) by reason of the
fact that he or she was or is an authorized representative of the Corporation,
against any liability (which shall mean for purposes of this Section any damage,
judgment, penalty, fine, amount paid in settlement, punitive damages, excise tax
assessed with respect to an employee benefit plan, or cost or expense of any
nature including, without limitation, attorneys' fees and disbursements)
including, without limitation, liabilities resulting from any actual or alleged
breach or neglect of duty, error, misstatement or misleading statement,
negligence, gross negligence or act giving rise to strict or products liability,
except where such indemnification is for acts or failures to act constituting
self-dealing, willful misconduct or recklessness. If an authorized
representative is entitled to indemnification in respect of a portion, but not
all, of any liabilities to which such person may be subject, the Corporation
shall indemnify such authorized representative to the maximum extent for such
portion of the liabilities. The termination of any proceeding by judgment,
order, settlement, indictment or conviction or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the authorized
representative is not entitled to indemnification.
B. Notwithstanding any other provision of this Section, the Corporation
shall not indemnify under this Section an authorized representative for any
liability incurred in a proceeding initiated (which shall not be deemed to
include counter-claims or affirmative defenses) or participated in as an
intervenor or amicus curiae by the person seeking indemnification unless such
initiation of or participation in the proceeding is authorized, either before or
after its commencement, by the affirmative vote of a majority of the directors
in office. This paragraph does not apply to reimbursement of expenses incurred
in successfully prosecuting or defending the rights of an authorized
representative granted by or pursuant to this Section.
C. Expenses (including attorneys' fees and disbursements) incurred in good
faith shall be paid by the Corporation on behalf of an authorized representative
in advance of the final disposition of a proceeding described in paragraph A of
this Section upon receipt of an undertaking by or on behalf of the authorized
representative to repay such amount if it shall ultimately be determined
pursuant to paragraph F of this Section that such person is not entitled to be
indemnified by the Corporation as authorized in this Section. The financial
ability of such authorized representative to make such repayment shall not be a
prerequisite to the making of an advance.
D. To further effect, satisfy or secure the indemnification obligations
provided herein or otherwise, the Corporation may maintain insurance, obtain a
letter of credit, act as self-insurer, create a reserve, trust, escrow, cash
collateral or other fund or account, enter into indemnification agreements,
pledge or grant a security interest in any assets or properties of the
Corporation, or use any other mechanism or arrangement whatsoever in such
amounts, at such costs, and upon such other terms and conditions as the Board of
Directors shall deem appropriate. Absent fraud, the determination of the Board
of Directors with respect to such amounts, costs, terms and conditions shall be
conclusive against all security holders, officers and directors and shall not be
subject to voidability.
E. An authorized representative shall be entitled to indemnification within
30 days after a written request for indemnification has been received by the
Secretary of the Corporation.
F. Any dispute related to the right to indemnification or advancement of
expenses as provided under this Section, except with respect to indemnification
for liability arising under the Securities Act of 1933 which the Corporation has
undertaken to submit to a court for adjudication, shall be decided only by
arbitration, to be conducted at the Corporation's executive offices (or such
other location to which the Corporation has given its consent), in accordance
with the commercial arbitration rules then in effect of the American Arbitration
Association, before a panel of three arbitrators, one of whom shall be selected
by the Corporation, the second of whom shall be selected by the authorized
representative and the third of whom shall be selected by the other two
arbitrators. In the absence of the American Arbitration Association or if for
any reason arbitration under the arbitration rules of the American Arbitration
Association cannot be initiated, or if the arbitrators selected by the
Corporation and the authorized representative cannot agree on the selection of
the third arbitrator within 30 days after such time as the Corporation and the
authorized representative have each been notified of the selection of the
other's arbitrator, the necessary arbitrator or arbitrators shall be selected by
the presiding judge of the Court of Common Pleas of Fulton County, Pennsylvania
(or of the court of general jurisdiction in the municipality in which the
Corporation's executive offices are located). Each arbitrator selected as
provided herein is required to be or have been a director of a corporation whose
shares of common stock were listed during at least one year of such service on
the New York Stock Exchange or the American Stock Exchange or quoted on the
National Association of Securities Dealers Automated quotations Systems. The
<PAGE>
-23-
party or parties challenging the right of an authorized representative to the
benefits of this Section shall have the burden of proof. The Corporation shall
reimburse an authorized representative for the expenses (including attorneys'
fees and disbursements) incurred in successfully prosecuting or defending such
arbitration. Any award entered by the arbitrators shall be final, binding and
nonappealable, and judgement may be entered thereon by any party in accordance
with applicable law in any court of competent jurisdiction. This arbitration
provision shall be specifically enforceable.
G. An authorized representative shall be deemed to have discharged such
person's duty to the Corporation if he or she has relied in good faith on
information, advice or an opinion, report or statement prepared by:
(1) one or more officers or employees of the Corporation whom such
authorized representative reasonably believes to be reliable and competent
with respect to the matter presented;
(2) legal counsel, public accountants or other persons as to matters
that the authorized representative reasonably believes are within the
person's professional or expert competence; or
(3) a committee of the Board of Directors on which he or she does not
serve as to matters within its area of designated authority, which
committee he or she reasonably believes to merit confidence.
H. All rights to indemnification under this Section shall be deemed a
contract between the Corporation and the authorized representative pursuant to
which the Corporation and each authorized representative intend to be legally
bound. Any repeal, amendment or modification hereof shall be prospective only
and shall not affect any rights or obligations then existing.
I. The indemnification and advancement of expenses provided by, or granted
pursuant to, this Section shall not be deemed exclusive of any other rights to
which a person seeking indemnification or advancement of expenses may be
entitled under any statute, certificate or articles of incorporation, by-law,
agreement, vote of shareholders or directors or otherwise, both as to action in
his or her official capacity and as to action in any other capacity, and shall
continue as to a person who has ceased to be an authorized representative in
respect of matters arising prior to such time and shall inure to the benefit of
the heirs, executors, administrators and personal representatives of such a
person.
J. Each person who shall act as an authorized representative of the
Corporation shall be deemed to be doing so in reliance upon the rights of
indemnification provided by this Section.
AMENDMENTS
49. Except as otherwise provided by the Business Corporation Law, these
by-laws may be amended (i) at any regular or special meeting of the Board of
Directors by the affirmative vote of a majority of the members of the Board, or
(ii) at any annual or special meeting of the shareholders by the affirmative
vote of shareholders entitled to cast at least a majority of the votes which all
shareholders are entitled to cast thereon, provided that in the case of any such
meeting of the shareholders, notice of the proposed amendment shall have been
contained in the notice of such meeting and provided further that the
shareholders shall always have the power to change any such action by the Board.
-24-
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
<PAGE>
EXHIBIT 10.2
JLG INDUSTRIES, INC.
STOCK INCENTIVE PLAN
August 1, 1998
(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 by reason of any agreement intended to avoid
or settle any election contest
<PAGE>
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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
<PAGE>
-16-
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.
<PAGE>
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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
<PAGE>
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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.
(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.
<PAGE>
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(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.
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.
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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 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.
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(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 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 Shares, 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
<PAGE>
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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 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.
<PAGE>
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(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).
(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
<PAGE>
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(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 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
<PAGE>
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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 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.
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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 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 five 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.
<PAGE>
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(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 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
<PAGE>
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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.
-29-
EXHIBIT 10.6
JLG Industries, Inc.
Directors Stock Option Plan
August 1, 1998
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
<PAGE>
-30-
(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).
(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.
<PAGE>
-31-
(k) "Option" means any option to purchase a Share or Shares pursuant to
the provisions of the Plan.
(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
<PAGE>
-32-
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.
(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
<PAGE>
-33-
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.
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
<PAGE>
-34-
(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 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
five 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
<PAGE>
-35-
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.
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.
<PAGE>
-36-
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%
JLG Manufacturing, LLC Pennsylvania 100%
The financial statements of the above listed subsidiaries are included in the
Company's Consolidated Financial Statements incorporated herein by reference.
-37-
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 and Form S-3, No.
333-47487 of our report dated September 3, 1998, with respect to the
consolidated financial statements of JLG Industries, Inc. included in the Annual
Report (Form 10-K) for the year ended July 31, 1998.
/s/ Ernst & Young LLP
Baltimore, Maryland
October 7, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 56793
<SECURITIES> 0
<RECEIVABLES> 96207
<ALLOWANCES> 1597
<INVENTORY> 47568
<CURRENT-ASSETS> 205515
<PP&E> 95510
<DEPRECIATION> 37858
<TOTAL-ASSETS> 307339
<CURRENT-LIABILITIES> 82843
<BONDS> 0
<COMMON> 8819
0
0
<OTHER-SE> 198949
<TOTAL-LIABILITY-AND-EQUITY> 307339
<SALES> 530859
<TOTAL-REVENUES> 530859
<CGS> 402702
<TOTAL-COSTS> 459779
<OTHER-EXPENSES> 356
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 254
<INCOME-PRETAX> 70470
<INCOME-TAX> 23960
<INCOME-CONTINUING> 46510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 46510
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.05
</TABLE>
-39-
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 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
investment 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 insurance 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 material
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 those due to capacity constraints, labor disputes, impaired financial
condition of
<PAGE>
-40-
suppliers, weather emergencies or other natural disasters, may adversely affect
the Company's ability to satisfy its customers on a timely basis and thereby
affect the Company's financial performance.
Foreign Sales; Currency Risks -- A growing component of the Company's business
has been export sales to Europe, Australia, 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. 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. 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.
Mergers and Acquisitions -- The Company intends to pursue strategic acquisitions
as a means of increasing sales and earnings and promoting shareholder value.
Acquisitions generally may involve a number of risks that may affect the
Company's financial performance including increased leverage, diversion of
management resources, possible shareholder dilution, assumption of liabilities
of acquired businesses and corporate culture conflicts. In addition, specific
acquisitions may involve other risks unique to the acquired business. Finally,
there is no assurance that the Company will be able to conclude satisfactory
agreements to acquire any businesses as a means to increase sales and earnings.
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.
