<PAGE> 1
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 October 31, 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 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
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 December 2, 1999, there were 44,320,948 shares of capital stock of the
Registrant outstanding.
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) October 31, July 31,
1999 1999
----------- --------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 7,317 $ 19,033
Accounts receivable-net 196,714 162,820
Inventories 175,536 125,571
Other current assets 9,406 8,563
-------- --------
Total current assets 388,973 315,987
PROPERTY, PLANT AND EQUIPMENT - NET 104,364 100,534
EQUIPMENT HELD FOR RENTAL - NET 16,325 23,068
GOODWILL - NET 154,316 155,655
OTHER ASSETS 30,788 30,573
-------- --------
$694,766 $625,817
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term debt $ 7,864 $ 2,656
Current portion of long-term debt 799 625
Accounts payable 71,054 78,793
Accrued expenses 51,027 57,598
-------- --------
Total current liabilities 130,744 139,672
LONG-TERM DEBT, LESS CURRENT PORTION 237,444 172,512
ACCRUED POSTRETIREMENT BENEFITS 21,808 21,471
OTHER LONG-TERM LIABILITIES 10,074 9,463
PROVISIONS FOR CONTINGENCIES 10,014 11,416
SHAREHOLDERS' EQUITY
Capital stock:
Authorized shares: 100,000 at $.20 par
Issued and outstanding shares: 44,298; fiscal 1999 - 44,250 8,861 8,850
Additional paid-in capital 17,996 17,246
Unearned compensation (1,572) (1,324)
Accumulated other comprehensive income (3,637) (3,495)
Retained earnings 263,034 250,006
-------- --------
Total shareholders' equity 284,682 271,283
-------- --------
$694,766 $625,817
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 3
<TABLE>
<CAPTION>
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
Three Months Ended
October 31,
1999 1998
--------- ---------
<S> <C> <C>
NET SALES $217,995 $128,655
Cost of sales 165,422 98,930
-------- --------
GROSS PROFIT 52,573 29,725
Selling, administrative and
product development expenses 27,055 15,015
Goodwill amortization 1,561 --
-------- --------
INCOME FROM OPERATIONS 23,957 14,710
Other income (deductions):
Interest expense (3,434) (54)
Miscellaneous, net 506 879
-------- --------
INCOME BEFORE INCOME TAXES 21,029 15,535
Income tax provision 7,781 5,282
-------- --------
NET INCOME $ 13,248 $ 10,253
======== ========
EARNINGS PER COMMON SHARE $ .30 $ .23
======== ========
EARNINGS PER COMMON SHARE -
ASSUMING DILUTION $ .29 $ .23
======== ========
CASH DIVIDENDS PER SHARE $ .005 $ .005
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 4
<TABLE>
<CAPTION>
JLG INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three Months Ended
October 31,
1999 1998
-------- --------
<S> <C> <C>
OPERATIONS
Net income $ 13,248 $ 10,253
Adjustments for noncash items:
Depreciation and amortization 6,983 4,573
Other 1,224 1,461
Changes in operating assets and liabilities (95,766) (25,448)
Changes in other assets and liabilities (3,490) (2,266)
-------- --------
Cash used for operations (77,801) (11,427)
INVESTMENTS
Purchases of property, plant and equipment (9,977) (1,192)
Sales of (additions to) equipment held for rental 5,612 (6,028)
-------- --------
Cash used for investments (4,365) (7,220)
FINANCING
Net issuance of short-term debt 5,208 --
Issuance of long-term debt 65,169 --
Repayment of long-term debt (64) (71)
Payment of dividends (221) (220)
Exercise of stock options and issuance of restricted awards 514 267
-------- --------
Cash provided by (used for) financing 70,606 (24)
CURRENCY ADJUSTMENTS
Effect of exchange rate changes on cash (156) 247
-------- --------
CASH
Net change in cash (11,716) (18,424)
Beginning balance 19,033 56,793
-------- --------
Ending balance $ 7,317 $ 38,369
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 5
JLG INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1999
(in thousands, except per share data)
(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 month period ended October 31, 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, 1999.
BASIC AND DILUTED EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share for the three months ended October 31:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Net income $13,248 $10,253
======= =======
Denominator for basic earnings per share --
weighted average shares 43,969 43,792
Effect of dilutive securities - employee stock options and
unvested restricted shares 1,528 1,121
------- -------
Denominator for diluted earnings per share --
weighted average shares adjusted for
dilutive securities 45,497 44,913
======= =======
Earnings per common share $ .30 $ .23
======= =======
Earnings per common share - assuming dilution $ .29 $ .23
======= =======
</TABLE>
Options to purchase 758 shares of common stock at a range of $17.31 to $21.94
were outstanding during the first quarter of fiscal 2000 but were not included
in the computation of diluted earnings per share because the options' exercise
price was greater than the average market price of the common shares.
4
<PAGE> 6
COMPREHENSIVE INCOME
The following table sets forth the components of comprehensive income for the
three months ended October 31:
<TABLE>
<CAPTION>
1999 1998
------- -------
<S> <C> <C>
Net income $13,248 $10,253
Aggregate currency translation adjustment 141 246
------- -------
$13,389 $10,499
======= =======
</TABLE>
INVENTORIES AND COST OF SALES
A precise inventory valuation under the LIFO (last-in, first-out) method can
only be made at the end of each fiscal year; therefore, interim LIFO inventory
valuation determinations, including the determination at October 31, 1999, must
necessarily be based on management's estimate of expected fiscal year-end
inventory levels and costs.
Inventories consist of the following:
<TABLE>
<CAPTION>
October 31, July 31,
1999 1999
----------- --------
<S> <C> <C>
Finished goods $113,287 $ 68,994
Work in process 15,529 12,544
Raw materials 51,428 48,561
-------- --------
180,244 130,099
Less LIFO provision 4,708 4,528
-------- --------
$175,536 $125,571
======== ========
</TABLE>
SEGMENT INFORMATION
The Company operates in two reportable business segments - machinery, which
consists of the design, manufacture and sale of new equipment; and customer
services and support, which consists of after-sales service and support,
including parts sales, equipment rentals, used equipment sales and rebuilding
used equipment. The Company evaluates the performance of its reportable segments
based upon a number of factors including segment profit. Segment profit excludes
interest, miscellaneous income/expense and income taxes. Intersegment sales and
transfers are accounted for at cost and are not significant.
Business segment information consisted of the following for the three months
ended October 31:
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Sales to unaffiliated customers:
Machinery $182,129 $111,878
Customer services and support 35,866 16,777
-------- --------
$217,995 $128,655
======== ========
Segment profit (loss):
Machinery $ 24,193 $ 15,853
Customer services and support 11,087 6,040
General corporate expenses (11,323) (7,183)
-------- --------
$ 23,957 $ 14,710
======== ========
</TABLE>
5
<PAGE> 7
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 2000 is comprised of a self-insured retention of $7
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 $13.2 million and $14.1 million were established at
October 31, 1999 and July 31, 1999, 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 October 31, 1999 and July 31, 1999, there
were no insurance recoverables or offset implications and there were no claims
by the Company being contested by insurers.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS FOR THE FIRST QUARTERS OF FISCAL 2000 AND 1999
Sales for the first quarter of fiscal 2000 were $218.0 million, up 69% over the
$128.7 million in the comparable year-ago period. The acquisition of Gradall on
June 18, 1999 contributed $37.1 million to the current year first quarter sales.
Domestic sales for the first quarter of fiscal 2000 were $162.9 million, up 80%
from the comparable year-ago period sales of $90.7 million. Excluding Gradall,
sales increased by $36.8 million or 41 percent. International sales were $55.1
million for the current year quarter, up $17.2 million or 45% from the
comparable year-ago quarter.
Aerial work platforms led the sales gain with a 36 percent increase over the
comparable year-ago period. These products are currently available for sale or
rental in more than 2,100 rental company outlets in North America, up from 600
outlets just two years ago when the Company changed its distribution practices.
The Company expects this number to continue to grow as its sales force is able
to reach an increasing number of the rental company outlets; as the number of
total rental outlets grows; and as aerial work platforms products are included
in the product portfolios of a greater number of the rental locations. Aerial
work platforms shipments benefited from the 31 new products introduced over the
past two fiscal years, which accounted for 33 percent of current year first
quarter revenues. The Company's solid sales gains also continue to reflect the
strong growth rate for the North American rental industry and continuing robust
demand in Europe. The strength of the Company's international markets,
particularly Europe, reflect an improving global economic picture as well as a
heightened need for increasing workplace productivity and concern for worker
safety, both of which are key benefits of using the Company's products. Gradall
brand excavator sales were up slightly compared to the year-ago pro forma level,
but below expectations due to a large order destined for Turkey being delayed
because of the recent earthquakes in that region. These products are expected to
ship over the next six months. Gradall brand material handler shipments were
below expectations and last year's pro-forma level mainly due to the procurement
timing of rental customers and a change in our distribution practices adopted
for those products as part of the integration of the Company and Gradall.
Gross profit margins improved to 24.1% for the first quarter over the comparable
year-ago quarter's 23.1%. The principal contributors to this improvement were
cost reductions and the leveraging of certain fixed costs over a higher
production base, as well as a better product mix. These improvements more than
offset start-up costs for new facilities in Pennsylvania and Ohio; Gradall
products carrying profit margins that have been historically lower than the
aerial work platform products; and the effects of increased sales discounts
associated with higher volume program pricing and competitive market conditions.
Selling, administrative and product development expenses were up $12.0 million
from last year's first quarter reflecting the addition of Gradall as well as
higher personnel and related costs associated with the Company's continued
investment in expanding its distribution and increasing levels of customer
support for all product groups. At 12.4% of sales, these expenses were only
seven tenths of a percent above the year-ago quarter.
The current year quarter includes goodwill amortization of $1.6 million related
to the Gradall acquisition. Interest expense was up $3.4 million, primarily due
to the higher levels of borrowing to fund the acquisition of Gradall and, to a
lesser extent, to fund higher working capital requirements.
7
<PAGE> 9
The effective tax rate of 37% was up from 34% for the year-ago quarter,
primarily due to goodwill charges not being tax deductible and lower tax
benefits related to export sales as a result of these sales projected to be a
smaller percentage of overall sales for the current year.
FINANCIAL CONDITION
Cash used for operations increased to $77.8 million in the first quarter of
fiscal 2000 from $11.4 million in the comparable quarter of 1999. The increase
in cash used for operations in fiscal 2000 compared to fiscal 1999 was primarily
due to a $70 million change in operating assets and liabilities principally
reflecting higher receivable and inventory levels. Receivables were higher in
dollar terms and days sales outstanding due to expanded use of extended payment
terms as an added sales inducement. In anticipation of the high level of demand
corresponding to the prime buying season of the Company's customers, which
historically begins early in the calendar year, and to ensure product
availability, the Company in fiscal 2000 changed its strategy for managing
inventory levels and its supply chain by maintaining relatively constant
production levels. Although, in the short term this results in higher inventory
levels during the first half of the fiscal year, in the longer term, management
believes this will be a more efficient and cost-effective approach to capture
seasonal peaks of demand.
Cash used for investing activities during the first quarter of fiscal 2000 was
$4.4 million compared to $7.2 million for last year's first quarter. The
increase primarily relates to capital expenditures for the Shippensburg,
Pennsylvania and Orrville, Ohio facilities. Partially offsetting the increase in
cash used for investing activities were sales of equipment held for rental.
Cash used for financing activities was $70.6 million for the first quarter of
fiscal 2000 compared to twenty-four thousand dollars provided for the first
quarter of fiscal 1999. Increased borrowings under the existing revolving credit
agreement and lines of credit were used for business expansion as discussed
above. On November 17, 1999, the Board of Directors increased its quarterly cash
dividend to $.01 per common share, or four cents per common share on an
annualized basis.
At October 31, 1999, the Company had unused credit lines totaling $13 million
and is currently in the process of adding $100 million to its credit lines to
fund future working capital requirements. This additional line is expected to be
in place by the end of the calendar year. The Company believes that these
resources, coupled with cash expected to be generated by operations, to be
sufficient to fund its ongoing operations and capital-related projects for
fiscal 2000. These expenditures are expected to consist of capital projects
primarily for the Shippensburg, Pennsylvania and Orrville, Ohio facilities.
The Company's exposure to product liability claims is discussed in the note
entitled Commitments and Contingencies of the Notes to 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 certain 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
8
<PAGE> 10
described in "Cautionary Statements Pursuant to the Securities Litigation Reform
Act" which is an exhibit to this report.
The Company's North American customers remain optimistic that calendar year 2000
will be another excellent growth year for the rental industry, as well as end
user markets. With Europe expected to have another record year, coupled with
continuing recovery for the Company's business in other parts of the world
market, management anticipates another strong contribution from international
sales. Additionally, management expects revenues to benefit from the 14 new
products introduced last fiscal year and the more than 30 new and redesigned
products expected to be introduced this year.
Based on these expectations, management anticipates this year's revenues to grow
to the $1.0 to $1.1 billion range, including the contribution from the Gradall
acquisition. Also, earnings per share this year are expected to be in the $1.60
to $1.65 range which is consistent with analysts' consensus estimates and in
line with the Company's long-term target of 20 percent EPS growth.
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 completed identification and assessment, compliance plan
development, remediation and testing, and production implementation for its
critical 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. 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 has developed
contingency plans where applicable.
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.
9
<PAGE> 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates and foreign
currency exchange rates, which could affect its future results of operations and
financial condition. The Company manages exposure to these risks principally
through its regular operating and financing activities.
While the Company is exposed to changes in interest rates as a result of its
outstanding debt, the Company does not currently utilize any derivative
financial instruments related to its interest rate exposure. Total short-term
and long-term debt outstanding at October 31, 1999 was $246.9 million,
consisting of $240.2 million in variable rate borrowing and $6.7 million in
fixed rate borrowing. At the current level of variable rate borrowing, a
hypothetical 10% increase in interest rates would decrease pre-tax current year
earnings by approximately $1.6 million on an annual basis. A hypothetical 10%
change in interest rates would not result in a material change in the fair value
of the Company's fixed rate debt. 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, 1999.
10
<PAGE> 12
Independent Accountants' Review Report
The Board of Directors
JLG Industries, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of JLG
Industries, Inc. (the "Company") as of October 31, 1999, and the related
condensed consolidated statements of income and cash flows for the three-month
periods ended October 31, 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,
1999, 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 9, 1999, 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, 1999, 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
November 16, 1999
11
<PAGE> 13
PART II OTHER INFORMATION
ITEMS 1 - 3 AND 5
None/not applicable.
ITEM 4
The Company held its Annual Meeting of Shareholders on November 17, 1999.
Management solicited proxies for the election of seven directors; for approval
of the Company's Annual Management Incentive Plan; for approval of the Company's
Amended and Restated Stock Incentive Plan; and for ratification of the
appointment of Ernst & Young LLP as the Company's independent auditors for the
2000 fiscal year. Of the 44,280,539 shares of capital stock outstanding on the
record date, 42,893,755 or 97% were voted in person or by proxy at the meeting
date. The tabulated results are set forth below:
Election of directors
For Against
---------- -------
L. D. Black 42,113,948 779,807
C. H. Diller, Jr. 42,138,786 754,969
G. R. Kempton 42,133,862 759,893
J. A. Mezera 42,051,818 841,937
S. Rabinowitz 42,038,828 854,927
T. C. Wajnert 42,129,917 763,838
C. O. Wood, III 42,060,063 833,692
Approval of the Company's Annual Management Incentive Plan.
For Against Abstain Broker non-votes
---------- --------- ------- ----------------
41,029,453 1,657,165 207,137 0
Approval of the Company's Amended and Restated Stock Incentive Plan.
For Against Abstain Broker non-votes
---------- --------- ------- ----------------
24,461,825 11,650,635 206,929 6,574,366
Ratification of the appointment of Ernst & Young LLP as independent auditors for
the ensuing year.
For Against Abstain Broker non-votes
---------- --------- ------- ----------------
42,231,205 503,828 158,722 0
12
<PAGE> 14
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are included herein:
3.1 By-laws of JLG Industries, Inc.
10.1 JLG Industries, Inc. Executive Severance Plan effective
November 17, 1999
10.2 Employment Agreement dated November 1, 1999 between
JLG Industries, Inc. and William M. Lasky
15 Letter re: Unaudited Interim Financial Information
27 Financial Data Schedule
99 Cautionary Statements Pursuant to the Securities Litigation
Reform Act
(b) On August 31, 1999, the Company filed a Form 8-K/A to include previously
omitted information regarding the Gradall acquisition including financial
statements for Gradall and pro forma financial information for the Company
relative to its acquisition 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
13
<PAGE> 1
Exhibit 3.1
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.
<PAGE> 2
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 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.
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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
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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.
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
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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 Chief Executive Officer, a
Chief Operating Officer, a President, a Vice-President, a Secretary and a
Treasurer. The Board of Directors may also choose
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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.
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
28.1 The Chairman of the Board shall provide leadership to the Board of
Directors in discharging its functions; shall preside at all meetings of the
Board of Directors and shareholders, shall act as a liaison between the Board of
Directors and the Corporation's management; and, with the Chief Executive
Officer, shall represent the Corporation to the shareholders, investors and
other external groups. The Chairman of the Board may sign certificates
representing stock of the Corporation the issuance of which shall have been
authorized by the Board of Directors. The Chairman of the Board shall be
ex-officio a member of all committees of the Board of Directors and shall
perform such other duties as are specified by these by-laws or as from time to
time may be assigned by the Board of Directors. If the Chairman of the Board is
absent or incapacitated, the President, if a director, or such other director
appointed by the Board of Directors, shall have the powers and duties of the
Chairman of the Board.
CHIEF EXECUTIVE OFFICER
28.2. The Chief Executive Officer shall be the Corporation's principal
executive officer, with responsibility for the general management of the
Corporation's business affairs, subject to the direction of the Board of
Directors. The Chief Executive Officer shall develop and recommend to the Board
of Directors long-term strategies for the Corporation, annual business plans and
budgets to
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support those strategies, and plans for management development and succession
that will provide the Corporation with an effective management team. The Chief
Executive Officer shall serve as the Corporation's chief spokesperson to
internal and external groups and may 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. The Chief
Executive Officer shall perform such other duties as are specified by these
by-laws or as may from time to time be assigned by the Board of Directors. If
the Chief Executive Officer is absent or incapacitated, the President shall have
the powers and duties of the Chief Executive Officer.
PRESIDENT
29.1. The President shall have such duties as are assigned by the Chief
Executive Officer or the Board of Directors. The President may sign certificates
of stock of the Corporation the issuance of which shall have been authorized by
the Board of Directors.
CHIEF OPERATING OFFICER
29.2. Under the direction of the Chief Executive Officer, the Chief
Operating Officer shall oversee the management of the Corporation's day-to-day
business in a manner consistent with the Corporation's financial and operating
goals and objectives. The Chief Operating Officer may 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. The
Chief Operating Officer shall perform such other duties as are specified by
these by-laws or as may from time to time be assigned by the Board of Directors.
VICE-PRESIDENT
30. In the absence of the President or the Chief Operating Officer to
perform the duties of such office (including, in the absence of the Chief
Executive Officer, the duties of that office), or in the event of each of such
officer's 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
Board of 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 Chief Operating Officer or President, as applicable. The
Vice-Presidents shall perform such other duties and
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have such other powers as may be prescribed by the Board of Directors, the Chief
Executive Officer, 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. The Secretary 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 Chief Executive Officer. The Secretary 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 Chief Executive Officer, and shall perform such other duties
and have such other powers as may be prescribed by the Board of Directors or
Chief Executive Officer.
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. The Treasurer 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 Chief Executive Officer 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 such officer's inability or
refusal to act, perform the duties and exercise the powers of the Treasurer,
under the supervision of the Chief Executive Officer, and shall perform such
other duties and have such other powers as may be prescribed by the Board of
Directors or Chief Executive Officer.
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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.
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.
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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.
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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
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.
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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
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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 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
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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
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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
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 judgment 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:
15
<PAGE> 16
(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.
16
<PAGE> 1
Exhibit 10.1
JLG INDUSTRIES, INC.
EXECUTIVE SEVERANCE PLAN
Effective November 17, 1999
<PAGE> 2
JLG Industries, Inc.
Executive Severance Plan
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.......................................................1
1.1. Establishment...............................................................................1
1.2. Purpose.....................................................................................1
SECTION 2. PARTICIPATION BY ELIGIBLE EXECUTIVES........................................................1
2.1. Eligible Executives on Effective Date.......................................................1
2.2. No Other Participants.......................................................................1
2.3. Written Proof of Participation Required.....................................................1
SECTION 3. SEVERANCE BENEFITS..........................................................................1
3.1. Basic Benefit...............................................................................1
3.2. Additional Benefit .........................................................................2
3.3. Dismissal from Employment...................................................................2
3.4. Good Reason in Connection with Change in Control............................................2
SECTION 4. NATURE OF PARTICIPANT'S INTEREST IN PLAN....................................................3
4.1. No Right to Assets..........................................................................3
4.2. No Right to Transfer Interest...............................................................3
4.3. No Employment Rights........................................................................4
4.4. Withholding and Tax Liabilities.............................................................4
SECTION 5. ADMINISTRATION, INTERPRETATION, AND MODIFICATION OF PLAN....................................4
5.1. Plan Administrator..........................................................................4
5.2. Powers of Committee.........................................................................4
5.3. Finality of Committee Determinations........................................................4
5.4. Incapacity..................................................................................4
5.5. Amendment, Suspension, and Termination......................................................4
5.6. Power to Delegate Board Authority...........................................................4
5.7. Headings....................................................................................5
5.8. Severability................................................................................5
5.9. Governing Law...............................................................................5
5.10. Complete Statement of Plan..................................................................5
SECTION 6. TERMS USED IN THE PLAN......................................................................5
6.1. Gender and Number...........................................................................5
6.2. Definitions.................................................................................5
</TABLE>
<PAGE> 3
JLG INDUSTRIES, INC.
EXECUTIVE SEVERANCE PLAN
Effective November 17, 1999
SECTION 1. ESTABLISHMENT AND PURPOSE OF THE PLAN.
1.1. ESTABLISHMENT. Effective June 1, 1995, the Company established the
Plan for the benefit of the Participants and to replace their severance pay
benefits under the Prior Plan.
1.2. PURPOSE. The Plan is an unfunded plan maintained primarily for the
purpose of providing severance pay benefits to a select group of management and
highly compensated employees.
SECTION 2. PARTICIPATION BY ELIGIBLE EXECUTIVES.
2.1. ELIGIBLE EXECUTIVES ON EFFECTIVE DATE. An employee who has an
agreement in effect on the Effective Date under the Prior Plan will become a
Participant in the Plan beginning on the Effective Date if he agrees in writing
to waive all rights he may have under the Prior Plan.
2.2. ELIGIBLE EXECUTIVES AFTER EFFECTIVE DATE. If an Eligible Executive
was not covered by an agreement under the Prior Plan on the Effective Date, the
Eligible Executive shall not become a Participant in the Plan unless the
Compensation Committee, in its sole discretion, permits him to do so. If the
Compensation Committee does permit him to participate in the Plan, the Eligible
Executive will become a Participant in the Plan on the date specified by the
Compensation Committee in its sole discretion.
2.3. WRITTEN PROOF OF PARTICIPATION REQUIRED. No employee will become a
Participant in the Plan unless he and the Company execute a copy of the Plan
document recognizing his participation in the Plan. The executed copy will
constitute an agreement between the Company and the employee that binds both of
them to the terms of the Plan. Their agreement will be binding on their heirs,
executors, administrators, successors, and assigns, both present and future. The
executed copy must be signed on the Company's behalf by an authorized officer
(other than the employee) and by the employee on his own behalf. In the case of
an employee who becomes a Participant under Section 2.1, the executed copy will
constitute the employee's written agreement to waive all rights he may have
under the Prior Plan.
SECTION 3. SEVERANCE BENEFITS.
3.1. BASIC BENEFIT.
(a) LUMP-SUM BENEFIT. A Participant who is Dismissed from employment
with the Company is entitled to a Severance Benefit. The Severance Benefit will
be paid to the Participant in an immediate lump sum equal to the Applicable
Percentage of his base salary and cash bonus for the final twelve calendar
months of his employment with the Company. If the Participant dies after being
Dismissed from employment with the Company but before receiving his Severance
Benefit, the lump sum described in the preceding sentence will be paid to his
Beneficiary. Notwithstanding any other provision of this Section 3.1(a), a
Participant will not be entitled to a Severance Benefit if he is entitled to a
retirement benefit under the SERP unless, at the time he is Dismissed from
employment with the Company, a Change in Control has occurred.
(b) APPLICABLE PERCENTAGE. A Participant's Applicable Percentage is
the percentage that is specified by the Compensation Committee with respect to
the Participant for purposes of the Plan and that is reflected in the written
agreement between the Company and the Participant executed in accordance with
Section 2.3.
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<PAGE> 4
3.2. ADDITIONAL BENEFIT. A Participant who is Dismissed from
employment with the Company in connection with a Change in Control is entitled
to an additional benefit under this Section 3.2 if the Participant is paid from
any plan, program or arrangement sponsored by the Company, in connection with
the Change in Control, a total amount that is an "excess parachute payment"
within the meaning of section 280G(b) of the Code and a tax is imposed on the
Participant under section 4999 of the Code. The additional benefit will be paid
to the Participant in an immediate lump sum equal to the amount of tax imposed
upon the Participant under section 4999 of the Code in respect of the excess
parachute payment (but the additional benefit shall not include any amount in
respect of tax that the Participant will owe solely on account of the additional
benefit paid under this Section 3.2). If the Participant dies after being
Dismissed from employment with the Company but before receiving any additional
benefit that might be due under this Section 3.2, the lump sum described in the
preceding sentence will be paid to his Beneficiary.
3.3. DISMISSAL FROM EMPLOYMENT. A Participant is Dismissed from
employment with the Company if his employment with the Company is terminated
involuntarily by the Company for any reason other than disloyalty,
mismanagement, abdication of job responsibility, or conviction of a felony, any
one of which results in significant injury to the business of the Company. A
Participant also will be considered Dismissed from employment with the Company
if his employment with the Company is terminated for Good Reason in connection
with a Change in Control. For purposes of this Section 3.3, a Participant's
employment with the Company is not considered terminated merely because there is
a change in the ownership of the Company, or merely because all or part of the
Company is merged, consolidated, spun off, liquidated, or otherwise reorganized,
or merely because all or part of the tangible and intangible assets of the
Company are sold or otherwise transferred to new ownership, if the Participant
continues to be employed by the Company or a successor business immediately
following any of the foregoing transactions.
3.4. GOOD REASON IN CONNECTION WITH CHANGE IN CONTROL. A Participant's
employment with the Company is terminated for Good Reason in connection with a
Change in Control if his termination occurs no earlier than six months before
the Change in Control, no later than two years after the Change in Control, and
no later than six months after any of the following triggering events:
(a) A change in the Participant's status or position with the
Company that, in his reasonable judgment, represents a demotion from
his prior status or position with the Company;
(b) The assignment to the Participant of duties or
responsibilities that, in his reasonable judgment, are inconsistent
with his status or position with the Company;
(c) A reduction by the Company in the Participant's base
salary;
(d) A change in the terms of the compensation arrangements
applicable to the Participant that represents a significant reduction
in the value of such compensation arrangements to him;
(e) A material increase in the Participant's responsibilities
or duties without a commensurate increase in his base salary;
(f) The imposition of any requirement that the Participant be
based anywhere other than within 50 miles of where his principal
office was located;
(g) A material increase in the frequency or duration of the
Participant's business travel;
(h) The Company's failure to obtain the express assumption of
this Plan with respect to the Participant by any successor to the
Company; or
(i) Any violation by the Company of any agreement with the
Participant (including any violation of the Participant's rights under
this Plan).
In addition, a Participant's employment with the Company will be deemed
terminated for Good Reason in connection with a Change in Control if the
Participant is the Chief Executive Officer of the Company immediately preceding
the Change in Control and his employment with the Company is terminated for any
reason within six months after the Change in Control. For purposes of this
Section 3.4, it is immaterial whether the Participant's employment with the
Company is terminated voluntarily by the Participant or involuntarily by the
Company (or its successor).
2
<PAGE> 5
SECTION 4. NATURE OF PARTICIPANT'S INTEREST IN PLAN.
4.1. NO RIGHT TO ASSETS. Participation in the Plan does not create, in
favor of any Participant or Beneficiary, any right or lien in or against any
asset of the Company. Nothing contained in the Plan, and no action taken under
its provisions, will create or be construed to create a trust of any kind, or a
fiduciary relationship, between the Company and a Participant or any other
person. The Company's promise to pay benefits under the Plan will at all times
remain unfunded as to each Participant and Beneficiary, whose rights under the
Plan are limited to those of a general and unsecured creditor of the Company.
4.2. NO RIGHT TO TRANSFER INTEREST. Rights to benefits payable under
the Plan are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, or encumbrance. However, the Administrative
Committee may permit a Participant or Beneficiary to enter into a revocable
arrangement to pay all or part of his benefits under the Plan to a revocable
grantor trust (a so-called "living trust"). In addition, the Administrative
Committee may recognize the right of an alternate payee named in a domestic
relations order to receive all or part of a Participant's benefits under the
Plan, but only if (a) the domestic relations order would be a "qualified
domestic relations order" within the meaning of section 414(p) of the Code (if
section 414(p) applied to the Plan), (b) the domestic relations order does not
attempt to give the alternate payee any right to any asset of the Company, (c)
the domestic relations order does not attempt to give the alternate payee any
right to receive payments under the Plan at a time or in an amount that the
Participant could not receive under the Plan, and (d) the amount of the
Participant's benefits under the Plan are reduced to reflect any payments made
or due the alternate payee.
3
<PAGE> 6
4.3. NO EMPLOYMENT RIGHTS. No provisions of the Plan and no action
taken by the Company, the Board of Directors, the Compensation Committee, or the
Administrative Committee will give any person any right to be retained in the
employ of the Company, and the Company specifically reserves the right and power
to dismiss or discharge any Participant.
4.4. WITHHOLDING AND TAX LIABILITIES. The amount of any withholdings
required to be made by any government or government agency will be deducted from
benefits paid under the Plan to the extent deemed necessary by the
Administrative Committee. In addition, the Participant or Beneficiary (as the
case may be) will bear the cost of any taxes not withheld on benefits provided
under the Plan, regardless of whether withholding is required.
SECTION 5. ADMINISTRATION, INTERPRETATION, AND MODIFICATION OF PLAN.
5.1. PLAN ADMINISTRATOR. The Administrative Committee will administer
the Plan.
5.2. POWERS OF COMMITTEE. The Administrative Committee's powers
include, but are not limited to, the power to adopt rules consistent with the
Plan; the power to decide all questions relating to the interpretation of the
terms and provisions of the Plan; and the power to resolve all other questions
arising under the Plan (including, without limitation, the power to remedy
possible ambiguities, inconsistencies, or omissions by a general rule or
particular decision). The Administrative Committee has discretionary authority
to exercise each of the foregoing powers.
5.3. FINALITY OF COMMITTEE DETERMINATIONS. Determinations by the
Administrative Committee and any interpretation, rule, or decision adopted by
the Administrative Committee under the Plan or in carrying out or administering
the Plan will be final and binding for all purposes and upon all interested
persons, their heirs, and their personal representatives.
5.4. INCAPACITY. If the Administrative Committee determines that any
person entitled to benefits under the Plan is unable to care for his affairs
because of illness or accident, any payment due (unless a duly qualified
guardian or other legal representative has been appointed) may be paid for the
benefit of such person to his spouse, parent, brother, sister, or other party
deemed by the Administrative Committee to have incurred expenses for such
person.
5.5. AMENDMENT, SUSPENSION, AND TERMINATION. The Board of Directors has
the right by written resolution to amend, suspend, or terminate the Plan at any
time. However, no amendment, suspension, or termination will apply to an
employee who already is a Participant in the Plan without his express written
consent.
5.6. POWER TO DELEGATE BOARD AUTHORITY. The Board of Directors may, in
its sole discretion, delegate to any person or persons all or part of its
authority and responsibility under the Plan, including, without limitation, the
authority to amend the Plan.
4
<PAGE> 7
5.7. HEADINGS. The headings used in this document are for convenience
of reference only and may not be given any weight in interpreting any provision
of the Plan.
5.8. SEVERABILITY. If any provision of the Plan is held illegal or
invalid for any reason, the illegality or invalidity of that provision will not
affect the remaining provisions of the Plan, and the Plan will be construed and
enforced as if the illegal or invalid provision had never been included in the
Plan.
5.9. GOVERNING LAW. The Plan will be construed, administered, and
regulated in accordance with the laws of the Commonwealth of Pennsylvania,
except to the extent that those laws are preempted by federal law.
5.10. COMPLETE STATEMENT OF PLAN. This Plan supersedes the Prior Plan
with respect to the Participants. This Plan contains a complete statement of its
terms. The Plan may be amended, suspended, or terminated only in writing and
then only as provided in Section 5.5. A Participant's right to any benefit of a
type provided under the Plan will be determined solely in accordance with the
terms of the Plan. No other evidence, whether written or oral, will be taken
into account in interpreting the provisions of the Plan. Notwithstanding the
preceding provisions of this Section 5.10, for purposes of determining benefits
with respect to a Participant, this Plan will be deemed to include (a) the
provisions of the written agreement between the Company and the Participant
executed in accordance with Section 2.3, and (b) the provisions of any other
written agreement between the Company and the Participant to the extent such
other agreement explicitly provides for the incorporation of some or all of its
terms into this Plan.
SECTION 6. TERMS USED IN THE PLAN.
6.1. GENDER AND NUMBER. Words used in the masculine gender in the Plan
are intended to include the feminine and neuter genders, where appropriate.
Words used in the singular form in the Plan are intended to include the plural
form, where appropriate, and vice versa.
6.2. DEFINITIONS. When used in capitalized form in the Plan, the
following words and phrases have the following meanings, unless the context
clearly indicates that a different meaning is intended:
"ADMINISTRATIVE COMMITTEE" means the Administrative Committee
appointed to administer the JLG Industries, Inc. Employees' Retirement
Savings Plan. However, following a Change in Control, "Administrative
Committee" means the trustee under the grantor trust maintained by the
Company in connection with the Plan.
"APPLICABLE PERCENTAGE" has the meaning assigned to that term
in Section 3.1(b).
"ASSOCIATE" has the meaning assigned to that term for purposes
of Rule 12b-2 of the General Rules and Regulations under the Securities
Exchange Act.
5
<PAGE> 8
"BENEFICIAL OWNER" means the following: a Person is deemed to
be the "Beneficial Owner" of, to "Beneficially Own," and to have
"Beneficial Ownership" of, any securities:
(1) which such Person or any of such Person's
Securities Law Affiliates or Associates beneficially owns,
directly or indirectly;
(2) which such Person or any of such Person's
Securities Law Affiliates or Associates has (A) the right or
obligation to acquire (whether such right or obligation is
exercisable or effective immediately or only after the passage
of time) pursuant to any agreement, arrangement, or
understanding (whether or not in writing) or upon the exercise
of conversion rights, exchange rights, rights, warrants or
options, or otherwise; provided that a Person shall not be
deemed the "Beneficial Owner" of, or to "Beneficially Own," or
to have "Beneficial Ownership" of, securities tendered
pursuant to a tender or exchange offer made by such Person or
any of such Person's Securities Law Affiliates or Associates
until such tendered securities are accepted for purchase or
exchange; or (B) the right to vote pursuant to any agreement,
arrangement, or understanding (whether or not in writing);
provided that a Person shall not be deemed the "Beneficial
Owner" of, or to "Beneficially Own," or to have "Beneficial
Ownership" of, any security under this clause (B) if the
agreement, arrangement, or understanding to vote such security
(i) arises solely from a revocable proxy given in response to
a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable rules and regulations of
the Securities Exchange Act, and (ii) is not also then
reported by such Person on Schedule 13D under the Securities
Exchange Act (or any comparable or successor report); or
(3) which are beneficially owned, directly or
indirectly, by any other Person (or any Securities Law
Affiliate or Associate thereof) with which such Person or any
of such Person's Securities Law Affiliates or Associates has
any agreement, arrangement, or understanding (whether or not
in writing) or with which such Person or any of such Person's
Securities Law Affiliates have otherwise formed a group for
the purpose of acquiring, holding, voting (except pursuant to
a revocable proxy as described in clause (B)(i) of paragraph
(2), above), or disposing of any securities of the Company.
"BENEFICIARY" means the person designated in writing by a
Participant to receive his Severance Benefits under the Plan after he
dies. If a Participant fails to designate a Beneficiary or his
designated Beneficiary fails to survive him, his Beneficiary will be
the person to whom he is married at the time of his death, or if he is
not married at that time, his Beneficiary will be the executor of his
will or the administrator of his estate. A Participant may revoke in
writing a prior designation of a Beneficiary at any time before the
Participant dies.
6
<PAGE> 9
"BOARD OF DIRECTORS" means the Board of Directors of the
Company.
"CHANGE IN CONTROL" means the first to occur of the following
events:
(1) an acquisition (other than directly from the
Company) of securities of the Company by any Person,
immediately after which such Person, together with all
Securities Law Affiliates and Associates of such Person,
becomes the Beneficial Owner of securities of the Company
representing 25 percent or more of the Voting Power; provided
that, in determining whether a Change in Control has occurred,
the acquisition of securities of the Company in a Non-Control
Acquisition will not constitute an acquisition that would
cause a Change in Control; or
(2) three or more directors, whose election or
nomination for election is not approved by a majority of the
members of the Incumbent Board then serving as members of the
Board of Directors, are elected within any single 12-month
period to serve on the Board of Directors; provided that an
individual whose election or nomination for election is
approved as a result of either an actual or threatened
Election Contest or Proxy Contest, including by reason of any
agreement intended to avoid or settle any Election Contest or
Proxy Contest, will be deemed not to have been approved by a
majority of the Incumbent Board for purposes of this
definition; or
(3) members of the Incumbent Board cease for any
reason to constitute at least a majority of the Board of
Directors; or
(4) approval by shareholders of the Company of:
(A) a merger, consolidation, or
reorganization involving the Company, unless
(i) the shareholders of the
Company, immediately before the merger,
consolidation, or reorganization, own,
directly or indirectly immediately following
such merger, consolidation, or
reorganization, at least 75 percent of the
combined voting power of the outstanding
voting securities of the corporation
resulting from such merger, consolidation,
or reorganization in substantially the same
proportion as their ownership of the voting
securities immediately before such merger,
consolidation, or reorganization;
7
<PAGE> 10
(ii) individuals who were members of
the Incumbent Board immediately prior to the
execution of the agreement providing for
such merger, consolidation, or
reorganization constitute at least a
majority of the board of directors of the
Surviving Corporation; and
(iii) no Person (other than (1) the
Company or any Subsidiary thereof, (2) any
employee benefit plan (or any trust forming
a part thereof) maintained by the Company,
any Subsidiary thereof, or the Surviving
Corporation, or (3) any Person who,
immediately prior to such merger,
consolidation, or reorganization, had
Beneficial Ownership of securities
representing 25 percent or more of the
Voting Power) has Beneficial Ownership of
securities representing 25 percent or more
of the combined voting power of the
Surviving Corporation's then outstanding
voting securities;
(B) a complete liquidation or dissolution of
the Company; or
(C) an agreement for the sale or other
disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer
to a Subsidiary of the Company).
"CODE" means the Internal Revenue Code of 1986, as amended and
in effect from time to time.
"COMPANY" means JLG Industries, Inc., and any successor to JLG
Industries, Inc. Employment with the Company includes employment with
any corporation, partnership, or other organization required to be
aggregated with the Company under sections 414(b) and (c) of the Code.
"COMPENSATION COMMITTEE" means the Compensation Committee of
the Board of Directors.
"DISMISSED" has the meaning assigned to that term in
Section 3.3.
"EFFECTIVE DATE" means June 1, 1995.
"ELECTION CONTEST" means an election contest described in Rule
14a-11 promulgated under the Securities Exchange Act.
"ELIGIBLE EXECUTIVE" means an employee of the Company (i) who
was covered by an agreement under the Prior Plan on the Effective
Date, or (ii) who is an officer of the Company or who holds any other
key position designated by the Compensation Committee in its sole
discretion.
8
<PAGE> 11
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended and in effect from time to time.
"GOOD REASON" has the meaning assigned to that term in
Section 3.4.
"INCUMBENT BOARD" means individuals who, as of the close of
business on the Effective Date, are members of the Board of Directors;
provided that, if the election, or nomination for election by the
Company's shareholders, of any new director was approved by a vote of
at least 75 percent of the Incumbent Board, such new director shall,
for purposes of the Plan, be considered as a member of the Incumbent
Board; provided further that no individual shall be considered a
member of the Incumbent Board if such individual initially assumed
office as a result of either an actual or threatened Election Contest
or other actual or threatened Proxy Contest, including by reason of
any agreement intended to avoid or settle any Election Contest or
Proxy Contest.
"NON-CONTROL ACQUISITION" means an acquisition by (1) an
employee benefit plan (or a trust forming a part thereof) maintained
by (A) the Company or (B) any of its Subsidiaries, (2) the Company or
any of its Subsidiaries, or (3) any Person in connection with a
Non-Control Transaction.
"NON-CONTROL TRANSACTION" means any transaction described in
clauses (4)(A)(i) through (iii) of the definition of "Change in
Control."
"PARTICIPANT" means a member of a select group of management
or highly compensated employees of the Company who has become a
participant in the Plan under Section 2.
"PERSON" means any individual, firm, corporation, partnership,
joint venture, association, trust, or other entity.
"PLAN" means the JLG Industries, Inc. Executive Severance Plan
as set forth in this document.
"PRIOR PLAN" means an individual agreement (customarily
denominated a "Deferred Compensation Benefit Agreement") between the
Company and the employee that provides for unfunded deferred
compensation benefits and certain other benefits specified in the
agreement.
"PROXY CONTEST" means a solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors.
"SECTION" means a section of this Plan. For example, a
reference to Section 2 includes a reference to Sections 2.1 through
2.3, while a reference to Section 2.1 is intended as a reference to
Section 2.1 only.
9
<PAGE> 12
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended and in effect from time to time.
"SECURITIES LAW AFFILIATE" means an "affiliate" as defined for
purposes of Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act.
"SERP" means JLG Industries, Inc. Supplemental Executive
Retirement Plan.
"SUBSIDIARY" of any Person means any corporation or other
entity of which at least 80 percent (or such lesser percentage as the
Administrative Committee may determine) of the voting power of the
voting equity securities or voting interest therein is owned, directly
or indirectly, by such Person.
"SURVIVING CORPORATION" means a corporation resulting from a
merger, consolidation, or reorganization described in paragraph
(4)(A)(i) of the definition of "Change in Control."
10
<PAGE> 13
"VOTING POWER" means the voting power of all securities of the
Company then outstanding generally entitled to vote for the election of
directors of the Company.
JLG INDUSTRIES, INC.
ATTEST: BY:
------------------------ ------------------------
TITLE: TITLE:
------------------------- ---------------------
11
<PAGE> 1
Exhibit 10.2
November 1, 1999
PERSONAL & CONFIDENTIAL
William M. Lasky
8721 Ponte Vedra
Holland, Ohio 43528
Dear Bill:
We are pleased to confirm to you our offer of employment with JLG
Industries, Inc. (the "Company") according to the terms set forth in this
letter:
Title: President and Chief Operating Officer.
Commencement Date: December 1, 1999 (the "Commencement Date").
Board Seat: You will be appointed to serve as a member of the
Company's Board of Directors and will continue to
hold such position during your tenure as Chief
Operating Officer, subject to annual election by
shareholders.
Base Salary: $375,000 per annum, payable semi-monthly.
Signing Bonus: $165,000 payable on the Commencement Date, plus an
amount equal to 50% of the amount, if any, by which
the gross cash bonuses (exclusive of any withholding)
paid to you by your current employer for 1999
performance under your current employer's Additional
Compensation Plan and any other individual or group
incentive plans in which you participate is less than
$250,000. Such additional amount shall be payable by
the Company within ten (10) days following your
providing the Company on or before June 30, 1999 with
satisfactory evidence of payment by your current
employer of your 1999 performance bonuses.
Incentive Plan: You will participate in the Company's Annual
Management Incentive Plan (the "MIP"). The MIP is
designed to offer "performance based compensation" in
compliance with Internal Revenue Code Section 162(m).
Accordingly, your participation will be evidenced by
a separate award letter pursuant to the terms of the
MIP.
The final amount awarded each year will determined by
the Company's Compensation Committee typically based
upon a percentage of your base salary, multiplied by
factors
<PAGE> 2
determined by reference to the level of achievement
of your personal performance objective(s), and the
applicable Company performance modifier for the year,
with the resulting amount subject to reduction based
on other subjective criteria at the discretion of the
Committee.
For fiscal 2000, your award, before exercise of the
Committee's discretion, will range from $0 to
$480,000 based upon 97.5% (65% times 150%) of your
prorated base salary for the year, multiplied by a
percentage of up to 100% based upon achievement of
your personal performance objective(s) and by a
percentage ranging up to 175% for "distinguished"
Company performance based on a matrix of fully
diluted earnings per share outcomes for fiscal 2000.
Stock Options: On the Commencement Date, you will receive two sets
of options - Regular Options and Special Options - to
purchase shares of Common Stock of the Company. The
options will be granted pursuant to the Company's
Stock Incentive Plan (the "Stock Plan") and will be
evidenced by two separate stock option agreements
entered into pursuant to the Stock Plan. The exercise
price of all options will be the mean average of the
high and low prices at which the Company's shares are
traded on the New York Stock Exchange ("NYSE") on the
trading day immediately preceding the Commencement
Date. Unexercised options, including any unvested
options, will cease to be exercisable on the tenth
anniversary of the Commencement Date. The number of
options and principal vesting terms will be as
follows:
Regular Options: 60,300 options that, subject to your
continued employment with the Company, will vest in
three equal installments on the third, fourth and
fifth anniversaries of the Commencement Date.
Special Options: 123,500 options 50% of which will
vest upon your promotion to Chief Executive Officer,
with the remaining 50% vesting in three equal
installment on the first, second and third
anniversaries of your promotion to Chief Executive
Officer; provided, that, any options that remain
unvested as of the fifth anniversary of the
Commencement Date shall vest on that date if you are
then an employee of the Company.
Restricted Shares: On the Commencement Date you will receive 46,000
Restricted Shares granted pursuant to the Stock Plan
and evidenced by a separate Restricted Share
Agreement. The
<PAGE> 3
Restricted Shares will vest ratably and
simultaneously with vesting of the Special Options.
Change in Control: All options and Restricted Shares will vest and
become fully exercisable immediately upon a "Change
in Control" as defined in the Stock Plan.
Other Benefit Plans: You will be eligible for the standard retirement and
other benefit programs provided for executive
officers of the Company. Without limiting the
generality of the foregoing, these benefits include:
(i) participation in the Company's 401(k) plan which
currently provides for Company matching of 50% of the
first 5% of Eligible Compensation contributed to the
plan (eligible compensation for 1999 is limited to
$160,000) and a discretionary profit sharing
contribution by the Company which typically has been
approximately 5% of Eligible Compensation not in
excess of the Social Security wage base plus 10% of
Eligible Compensation in excess of the Social
Security wage base, (ii) participation in the
Company's Supplemental Executive Retirement Plan
("SERP") which, for Executive Vice Presidents at full
vesting after five years of service currently
provides a retirement benefit of 60% of average
highest two-year salary plus MIP award reduced
principally by (a) all defined benefit or cash
balance plan amounts received from JLG contributions
or from other employers, (b) all other defined
contribution balances received from JLG contributions
or other employers, and (c) 50% of social security
benefits (SERP benefits vest 25% per year commencing
with the second anniversary of the Commencement Date
until fully vested), (iii) participation in the
Company's Executive Deferred Compensation Plan which
permits participants to elect to defer receipt of a
portion of salary and MIP award and to direct the
investment of deferred amounts among the investment
options available under the Company's 401(k) plan,
(iv) participation in the Company's medical insurance
plan and supplemental executive medical benefit
program, (v) term life insurance which currently
provides a death benefit equal to two times annual
base salary, and (vi) four weeks of paid vacation per
year (not including public or Company holidays). In
addition, the Company will reimburse you for
financial planning services on the same basis as this
benefit is provided to the Company's current Chief
Executive Officer and, to facilitate appropriate
business entertainment, during the term of your
employment the Company will pay reasonable membership
initiation fees and annual dues for your
<PAGE> 4
admission as a member of a country club located
within a 50 mile radius of the Company's
headquarters.
Transition Benefits: In accordance with the Company's relocation policy,
the Company will reimburse you for all reasonable and
necessary expenses that you incur in connection with
your relocation within 12 months following the
Commencement Date from your current principal
residence to a new principal residence within a 50
mile radius of the Company's headquarters, including
associated commuting expense and temporary living
arrangements prior to relocation of your principal
residence. In addition, to the extent available from
the Company's medical insurance carrier, the Company
will provide medical insurance benefits for your
daughter; provided that the Company's annual
financial obligation for this benefit shall not
exceed $25,000 and; provided, further, that such
benefit will cease at such time as your daughter
receives any other comprehensive medical insurance
coverage.
Separation: Your employment will be "at will". Either you or the
Company may terminate your employment at any time for
any reason. Promptly upon termination of your
employment, you will return to the Company all
documents, papers, materials and other property of
the Company relating to its affairs or containing
proprietary information of the Company that are then
in your possession or under your control and resign
as a member of the Company's Board of Directors.
Pursuant to a separate agreement, you shall be
entitled to severance benefits on the same basis as
other participants in the Company's Executive
Severance Plan, which currently provides for any
"Dismissed" participant a "Severance Benefit" equal
to an "Applicable Percentage" of then current base
salary plus MIP awards for the 12 months preceding
the termination date. Your "Applicable Percentage"
will be 200%. In addition, if you become eligible to
receive a Severance Benefit prior to your promotion
to Chief Executive Officer, you also shall be
entitled to Company-provided outplacement counseling
services.
Confidentiality: You agree not to disclose to anyone (except to the
extent reasonably necessary for you to perform your
duties) any confidential or proprietary materials,
documents, records or other confidential or
proprietary information concerning the business or
affairs of the Company or any affiliates thereof
which you may have acquired in the course of or as an
incident to your employment with the Company or any
affiliates thereof.
<PAGE> 5
You represent and warrant that there are no
contractual impediments which restrict your
acceptance of this employment and that you will not
bring to your employment or use in connection with
such employment any confidential or proprietary
information that you used or had access to by reason
of any previous employment that is the property of
any previous employer.
Non-Compete: During the term of your employment with the Company
and for a period of two years thereafter, you will
not, without the prior written consent of the Board
of Directors of the Company, directly or indirectly
engage in or assist any activity which is competitive
with the business of the Company (other than on
behalf of the Company) including, without limitation,
whether such engagement or assistance is an officer,
director, employee, partner or investor (other than
as a holder of less than 5% of the outstanding
capital stock of a publicly traded corporation),
anywhere in the world that the Company has been
engaged. For a period of two years after the
termination of your employment, you will not solicit
for employment any employees of the Company. You
agree that if the scope of these obligations are
determined to exceed that which may be enforceable
under applicable law, the scope of these obligations
shall be reformed to provide for enforcement to the
maximum extent permitted under applicable law.
Intellectual Property
Rights: You agree that any developments by way of invention,
design, copyright, trademark or other matters which
may be developed or perfected by you during the term
of your employment, and which relate to the business
of the Company, shall be the property of the Company
without any interest therein by you, and you will, at
the request and expense of the Company, apply for and
prosecute letters patent thereon in the United States
or in foreign countries if the Company so requests,
and will assign and transfer the same to the Company
together with any letters patent, copyrights,
trademarks and applications therefor; provided,
however, that that foregoing shall not apply to an
invention that you develop entirely on your own time
without using the Company's equipment, supplies,
facilities or trade secret information.
Assignment; Successors: This letter agreement is personal in its nature and
none of the parties hereto shall, without the consent
of others, assign or transfer this letter agreement
or any rights or obligations hereunder, provided
that, in the event of the merger, consolidation,
transfer, or sale of
<PAGE> 6
all or substantially all of the assets of the Company
with or to any other individual or entity, this
letter agreement shall, subject to the provisions
hereof, be binding upon and inure to the benefit of
such successor and such successor shall discharge and
perform all the promises, covenants, duties, and
obligations of the Company hereunder, and all
references herein to the "Company" shall refer to
such successor. The Company will require that any
successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or
substantially all of the business or assets of the
Company to assume expressly and agree to perform this
letter agreement in the same manner and to the same
extent that the Company would be required to perform
it if no such succession had taken place.
This letter agreement is governed by and is to be construed
and enforced in connection with the laws of the Commonwealth of Pennsylvania and
any action commenced hereunder must be brought in a court located in the such
Commonwealth. The obligations of the Company set forth in this letter agreement
are subject to approval of this letter agreement by the Company's Board of
Directors. This letter agreement, including the various separate agreements
referred to herein, embodies our entire understanding and supersedes all prior
understandings, whether oral or written, relating to this offer. This letter
agreement cannot be amended or otherwise modified except by a writing signed by
you and the Company.
We look forward to welcoming you to the Company.
Sincerely yours,
/s/ L. David Black
------------------------------------------
Chairman of the Board, President and Chief
Executive Officer
JLG Industries, Inc.
Employment Offer Accepted: /s/ William M. Lasky
Employment Date:
<PAGE> 1
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 November 16,
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 October 31, 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
December 13, 1999
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-END> OCT-31-1999
<CASH> 7,317
<SECURITIES> 0
<RECEIVABLES> 199,944
<ALLOWANCES> 3,230
<INVENTORY> 175,536
<CURRENT-ASSETS> 388,973
<PP&E> 157,487
<DEPRECIATION> 53,123
<TOTAL-ASSETS> 694,766
<CURRENT-LIABILITIES> 130,744
<BONDS> 0
0
0
<COMMON> 8,861
<OTHER-SE> 275,821
<TOTAL-LIABILITY-AND-EQUITY> 694,766
<SALES> 217,995
<TOTAL-REVENUES> 217,995
<CGS> 165,422
<TOTAL-COSTS> 194,038
<OTHER-EXPENSES> (506)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,434
<INCOME-PRETAX> 21,029
<INCOME-TAX> 7,781
<INCOME-CONTINUING> 13,248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,248
<EPS-BASIC> .30
<EPS-DILUTED> .29
</TABLE>
<PAGE> 1
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. 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
<PAGE> 2
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, Africa 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 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 and
Chief Executive Officer, could adversely affect the Company's business and
prospects.
