UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended April 30, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number: 0-8454
JLG INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-1199382
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation or
organization)
1 JLG Drive, 17233-9533
McConnellsburg, PA
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(7l7) 485-5161
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ______
At May 26, 1999, there were 44,099,586 shares of capital stock of
the Registrant outstanding.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
April 30, July 31,
1999 1998
(Unaudited)
ASSETS
Current assets
Cash $ 37,989 $ 56,793
Accounts receivable 135,878 94,610
Inventories 75,565 47,568
Other current assets 8,315 6,544
Total current assets 257,747 205,515
Property, plant and equipment - net 56,250 57,652
Equipment held for rental - net 30,667 25,103
Other assets 13,405 19,069
$358,069 $307,339
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $ 1,256 $ 1,253
Accounts payable 59,168 43,119
Accrued expenses 32,214 38,471
Total current liabilities 92,638 82,843
Long-term debt, less current portion 2,254 2,455
Provisions for contingencies 10,510 8,800
Accrued employee benefits 6,701 5,473
Shareholders' equity
Capital stock:
Authorized shares: 100,000 at $.20 par
Outstanding shares: 44,100; fiscal
1998 - 44,096 8,820 8,819
Additional paid-in capital 15,534 15,626
Unearned compensation (1,464) (2,633)
Accumulated other comprehensive income (4,760) (3,662)
Retained earnings 227,836 189,618
Total shareholders' equity 245,966 207,768
$358,069 $307,339
The accompanying notes are an integral part of these financial
statements.
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
April 30, April 30,
1999 1998 1999 1998
Net sales $196,747 $146,323 $463,637 $353,674
Cost of sales 152,636 110,369 358,293 271,666
Gross profit 44,111 35,954 105,344 82,008
Selling, administrative and
product development expenses 18,558 15,137 49,858 39,612
Restructuring charges 1,689
Income from operations 25,553 20,817 55,486 40,707
Other income (deductions):
Interest expense (108) (62) (219) (197)
Miscellaneous, net 462 564 1,822 (597)
Income before income taxes 25,907 21,319 57,089 39,913
Income tax provision 8,608 7,248 18,210 13,570
Net income $ 17,299 $ 14,071 $ 38,879 $ 26,343
Earnings per common share $ .40 $ .32 $ .89 $ .60
Earnings per common share -
assuming dilution $ .39 $ .32 $ .87 $ .59
Cash dividends per share $ .005 $ .005 $ .015 $ .015
Weighted average shares 43,792 43,687 43,792 43,650
outstanding
Weighted average shares
outstanding - 44,915 44,394 44,915 44,424
assuming dilution
The accompanying notes are an integral part of these financial
statements.
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Nine Months Ended
April 30,
1999 1998
Operations
Net income $ 38,879 $ 26,343
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Depreciation and amortization 14,147 12,186
Changes in operating assets and
liabilities (60,760) (23,092)
Changes in other assets and liabilities 4,889 (3,327)
Other 3,821 3,778
Cash provided by operations 976 15,888
Investments
Purchases of property, plant and equipment (8,205) (7,995)
Net additions to equipment held for rental (10,697) (4,700)
Cash used for investments (18,902) (12,695) )
Financing
Repayment of long-term debt (198) (188)
Payment of dividends (661) (660)
Exercise of stock options and issuance
of restricted awards 1,078 (1,035)
Cash provided by (used for) financing 219 (1,883)
Currency adjustments
Effect of exchange rate changes on cash flows (1,097) (1,288)
Cash
Net (decrease) increase (18,804) 22
Beginning balance 56,793 25,436
Ending balance $ 37,989 $ 25,458
The accompanying notes are an integral part of these financial
statements.
JLG INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1999
(Unaudited)
BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all information
and notes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Interim results for the three and nine month periods ended April
30, 1999 are not necessarily indicative of the results that may
be expected for the fiscal year as a whole. For further
information, refer to consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K for
the fiscal year ended July 31, 1998.
INVENTORIES AND COST OF SALES
A precise inventory valuation under the LIFO (last-in, first-out)
method can only be made at the end of each fiscal year;
therefore, interim LIFO inventory valuation determinations,
including the determination at April 30, 1999, must necessarily
be based on management's estimate of expected fiscal year-end
inventory levels and costs.
Inventories consist of the following:
April 30, July 31,
1999 1998
Finished goods $50,222 $27,784
Work in process 8,921 9,291
Raw materials 21,001 15,067
80,144 52,142
Less LIFO provision 4,579 4,574
$75,565 $47,568
COMPREHENSIVE INCOME
The components of comprehensive income for the three and nine
months ended April 30, 1999 and 1998 were as follows:
Three Months Ended Nine Months Ended
April 30, April 30,
1999 1998 1999 1998
Net income $17,299 $14,071 $38,879 $26,343
Aggregate currency 1,319 290 1,097 1,288
translation adjustment $18,618 $14,361 $39,976 $27,631
BASIC AND DILUTED EARNINGS PER SHARE
The following table sets forth the computation of basic and
diluted earnings per share:
Three Months Ended Nine Months Ended
April 30, April 30,
1999 1998 1999 1998
Net income $17,299 $14,071 $38,879 $26,343
Denominator for basic
earnings per share --
weighted average share 43,792 43,687 43,792 43,650
Effect of dilutive securities
- employee stock options
and unvested restricted
shares 1,123 707 1,123 774
Denominator for diluted
earnings per share --
weighted average shares
adjusted for dilutive
securities 44,915 44,394 44,915 44,424
Earnings per common share $ .40 $ .32 $ .89 $ .60
Earnings per common share -
assuming dilution $ .39 $ .32 $ .87 $ .59
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 1999
is comprised of a self-insured retention of $5 million for
domestic claims, insurance coverage of $2 million for
international claims and catastrophic coverage for domestic and
international claims of $75 million in excess of the retention
and international primary coverage. 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 $12.1 million and $12.4 million
were established at April 30, 1999 and July 31, 1998,
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 April 30, 1999 and July
31, 1998, there were no insurance recoverables or offset
implications and there were no claims by the Company being
contested by insurers.
INCOME TAXES
The Company's effective tax rates for the nine month period ended
April 30, 1999 included a change in accounting estimate resulting
in a $1.2 million benefit to net income ($.03 per basic and
diluted earnings per share.) The change was primarily
attributable to certain tax incentives related to export sales
for the year ended July 31, 1998.
SUBSEQUENT EVENT
On May 11, 1999, the Company announced the signing of a
definitive merger agreement with Gradall Industries, Inc.
pursuant to which the Company has commenced an offer to purchase
all the outstanding shares of Gradall for approximately $200
million in cash. The transaction will be financed using a $250
million five-year unsecured revolving credit facility. The
transaction is expected to be completed during the fourth quarter
of the Company's fiscal year ending July 31, 1999 and is subject
to the tender of a majority of Gradall's shares.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS
Results for the Third Quarters of Fiscal 1999 and 1998
Sales for the third quarter of fiscal 1999 were $196.7 million,
up 34% over the $146.3 million in the comparable year-ago period.
Sales growth for the third quarter of fiscal 1999 was
attributable to strong domestic sales of $147.4 million, up 51%
from the comparable year-ago period sales of $97.9 million. The
increase resulted from market share gains, strong demand across
all product groups, customer acceptance of the Company's new
products and continued growth in the aerial work platform market.
European sales increased 16%, offsetting lower sales in other
regions of the world and boosting international sales to $49.3
million for the current year quarter from $48.4 million for the
comparable year-ago quarter.
Gross profit, as a percent of sales, decreased 2.2 percentage
points for the third quarter of fiscal 1999 compared to the same
period of fiscal 1998. The decrease principally reflects higher
sales discounts resulting from continued pricing pressures in the
Company's markets; costs associated with the ramp-up of
production to meet higher product demand and customer scheduling
requirements; and costs associated with new product
introductions. Partially offsetting these charges was a more
profitable geographic product mix and the benefits of continuing
cost reduction efforts.
Selling, administrative and product development expenses were up
$3.4 million, or 23% compared to the third quarter of 1998. As a
percent of sales, these expenses were 9% and 10% for the current
and last year's third quarter, respectively. The increase in
dollars is primarily the result of increased personnel and
related costs associated with serving the Company's expanding
customer base.
The effective tax rates were 33% and 34% for the current and last
year's third quarter, respectively. The reduction was primarily
attributable to certain tax incentives related to export sales.
Results for the First Nine Months of Fiscal 1999 and 1998
Sales for the first nine months of fiscal 1999 were $463.6
million, an increase of 31% from the $353.7 million in the
comparable prior year period. Domestic sales for the first nine
months of fiscal 1999 were $331.6 million, up 46% from the
comparable year-ago period of $227.7 million. International
sales for the current year period were $132.0 million,
representing 28% of total sales and up 5% from the $126.0 million
for the nine months of the previous year.
Gross profit, as a percent of sales, decreased .5 percentage
points in the first nine months of fiscal 1999 compared to the
same period of fiscal 1998. The decrease over the prior year
period was principally due to the same factors discussed in the
third quarter comparison.
Selling, administrative and product development expenses were up
$10.2 million, or 26% compared to the first nine months of fiscal
1998. As a percent of sales, these expenses were 11% for both
periods. The dollar increase over the prior year period was
principally due to the same factors discussed in the third
quarter comparison.
The prior year period included $1.7 million in restructuring
charges related to temporary workforce reductions.
Miscellaneous income net of interest expense was $1.6 million
compared to last year's expense of $793,000. This change was
largely the result of investment income earned on higher cash
balances and lower currency losses in the current year period.
The effective tax rate for the current year period was 32%, lower
than last year's rate of 34%. The current year's rate included a
change in accounting estimate resulting in a $1.2 million
benefit to net income ($.03 per basic and diluted earnings per
share.) The change was primarily attributable to certain tax
incentives related to export sales for the year ended July 31,
1998.
Financial Condition
The Company continues to maintain a strong financial position,
with the funding of capital projects and working capital needs
being principally made out of operating cash flow and cash
reserves, while remaining virtually debt-free. Working
capital increased by $42.4 million at April 30, 1999 compared
to July 31, 1998. The increase included additional inventory
to support the Company's strategic decision to provide a
higher level of product availability to its worldwide customer
base and higher accounts receivable balances principally
attributable to higher sales volume and extended payment terms
resulting from competitive market pressures .
On May 11, 1999, the Company announced the signing of a
definitive merger agreement with Gradall pursuant to which the
Company has commenced an offer to purchase all the outstanding
shares of Gradall for approximately $200 million in cash. This
transaction will be financed using a $250 million unsecured five-
year revolving credit facility. The Company believes the
combination of the unused portion of the new revolving credit
facility, a separate $40 million bank overdraft facility (which
will be reduced to $20 million upon closing) and cash expected to
be generated by operations will be sufficient to fund its ongoing
operations and capital-related projects for the next twelve
months.
The Company's exposure to product liability claims is
discussed in the note entitled Commitments and Contingencies
of the Notes to Condensed Consolidated Financial Statements 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 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.
Management expects strong European order levels and continuing
domestic factors that led to the solid third quarter performance
to result in another record performance for the fourth quarter.
The continuing demand for its products, indicated by a strong
order flow and backlog, positions the Company to achieve another
record setting year in fiscal 2000. New product innovations,
global market expansion, and the completion of the Gradall
acquisition, will provide the Company with a solid foundation for
growth into the new millennium. Additional information regarding
the anticipated effect of the Gradall acquisition is described in
the Company's Form 8-K dated May 13, 1999.
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
in date sensitive applications.
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 has substantially completed identification and
assessment, compliance plan development, remediation and testing,
and production implementation for its critical activities and
systems. The financial software in the Company's Australian
operation is being upgraded and one of the Company's key
production systems remains to be tested and such testing is
expected to be completed during June 1999. The Company has
determined that it has no exposure to contingencies related to
the Year 2000 issue for products it has sold. The Company has
received assurances from most of 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 Company is currently developing contingency plans.
The total cost of the Year 2000 project to date has not been
material and, based on its program to date, the Company does not
expect that future costs related to the project will have a
material adverse effect on the Company's financial position or
results of operations. Because the Company believes that its
internal systems are substantially Year 2000 compliant, the
Company believes that the most reasonably likely worst case Year
2000 scenario would result from suppliers' or other third
parties' failures to be Year 2000 compliant. 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. Altogether, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The Company does not have a material exposure to financial risk
from using derivative financial instruments to manage its foreign
currency exposures. For additional information, reference is
made to Item 7 in the Company's annual report on Form 10-K for
the fiscal year ended July 31, 1998. There has been no material
change in the Company's market risk exposures that affect the
quantitative and qualitative disclosures as presented as of July
31, 1998.
Independent Accountants' Review Report
The Board of Directors
JLG Industries, Inc.
We have reviewed the accompanying condensed consolidated balance
sheet of JLG Industries, Inc. and subsidiaries as of April 30,
1999, and the related condensed consolidated statements of income
for the three-month and nine-month periods ended April 30, 1999
and 1998 and the condensed consolidated statements of cash flows
for the nine-month period ended April 30, 1999 and 1998. These
financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data, and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the
objective of expressing an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying financial
statements referred to above for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of JLG
Industries, Inc. as of July 31, 1998, and the related
consolidated statements of income, shareholders' equity, and cash
flows for the year then ended (not presented herein), and in our
report dated September 3, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of July 31, 1998, is fairly stated,
in all material respects, in relation to the consolidated balance
sheet from which it has been derived.
/s/ Ernst & Young LLP
Baltimore, Maryland
May 17, 1999
PART II OTHER INFORMATION
ITEMS 1 - 5
None/not applicable.
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
15 Letter re: Unaudited Interim Financial
Information
27 Financial Data Schedule
99 Cautionary Statements Pursuant to the Securities
Litigation Reform Act
(b) The Company was not required to file Form 8-K pursuant
to requirements of such form for any of the three months
ended April 30, 1999. The Company filed a Form 8-K on May
13, 1999 under Item 5 Other Events with respect to its
definitive merger agreement with Gradall pursuant to which
the Company commenced an offer to purchase the outstanding
shares of Gradall.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized who is
also signing in his capacity as principal financial officer.
JLG INDUSTRIES, INC.
(Registrant)
/s/ Charles H. Diller,
Jr.
Charles H. Diller, Jr.
Executive Vice President
and
Chief Financial Officer
EXHIBIT 15
The Board of Directors
JLG Industries, Inc.
McConnellsburg, PA 17233
We are aware of the incorporation by reference in the
Registration Statements Form S-8, No. 33-60366; Form S-8, No.
33-61333; Form S-8, No. 33-75746; and Form S-3, No. 333-47487
of JLG Industries, Inc. of our report dated May 17, 1999,
relating to the unaudited condensed consolidated interim
financial statements of JLG Industries, Inc. which are
included in its Form 10-Q for the quarter ended April 30,
1999.
Pursuant to Rule 436(c) of the Securities Act of 1933 our report
is not a part of the registration statement prepared or certified
by accountants within the meaning of Section 7 or 11 of the
Securities Act of 1933.
/s/ Ernst & Young LLP
Baltimore, Maryland
June 10, 1999
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<PERIOD-END> APR-30-1999
<CASH> 37989
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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.
Demand Variability -- 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, the market availability of used equipment and
alternatives to purchases such as equipment leases directly from
the Company. 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. Many of the
companies are highly leveraged. 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. The inability of rental companies to
continue to obtain sufficient financing for equipment purchases
could substantially affect purchases of the Company's products by
these companies.
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, Year 2000 readiness,
impaired financial condition of suppliers, weather emergencies or
other natural disasters, may adversely affect the Company's
ability to satisfy its customers on a timely basis and thereby
affect the Company's financial performance.
Foreign Sales; 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 recently announced a
definitive agreement to acquire Gradall Industries and intends to
pursue other 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 and
interest rate market risk, diversion of management resources,
possible shareholder dilution, assumption of liabilities of
acquired businesses, corporate culture conflicts and
difficulties of integrating separate business organizations and
achieving potential business and operational synergies. 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.
