Fiscal 1997 was another year of significant accomplishments for JLG. We posted record results for the fourth consecutive year. We also expanded international sales to 30% of total revenues, increased sales from new products introduced within the past two years to 46% of total revenues, began production of scissor lift products at a new, state-of-the-art facility and started work on a major capital project for boom lift products.
After a four and one-half year period of unprecedented growth, the Company's orders began to soften during the second half, resulting from a temporary oversupply of aerial work platforms in the marketplace. In response to this situation, we proactively put in place a restructuring plan to re-size the Company for current market conditions. This restructuring plan is expected to include provisions of about $7 million, of which approximately $1.9 million were taken in the fourth quarter of fiscal 1997, and the remaining, non-recurring costs are expected to be charged against fiscal 1998's results.
The restructuring plan includes a 27% reduction of the workforce, or about 700 employees, which took place in September; two, one-week plant shutdowns to adjust production schedules and inventory levels, which occurred in August; and vacating a small manufacturing facility in Fort Littleton, Pennsylvania and transferring production of the vertical mast product line to McConnellsburg.
In addition to the restructuring efforts, we also plan to focus on seven specific improvement goals during the current fiscal year. We refer you to the special section, "Positioned For Long-Term Growth", which follows this Letter.
Performance Highlights
Our record sales for fiscal 1997 were
$526.3 million, surpassing the one-half
billion level for the first time and an increase
of 27% over the previous high of $413.4
million for fiscal 1996. Net income, also
a record, increased 10% to $46.1 million
from $42.1 million in the previous fiscal
year. Earnings per share rose to $1.06
compared to $.95 for fiscal 1996.
International sales increased for the third year in a row, up 62% to approximately $160 million and representing 30% of total revenues in fiscal 1997. We experienced growth in all major markets and continue to make progress on our strategic goal to attain 50% of our sales outside the United States.
During fiscal 1997, we began engineering and testing 27 new and improved products planned for introduction in fiscal 1998. These introductions will span all three of our product families.
Our key performance measures continue to position the Company at or near the top of the universe of industrial and farm equipment manufacturers. For fiscal 1997, our return on sales was 8.8%, our return on average assets was 21.6%, and our return on average shareholders' equity was 33.3%.
JLG was selected among the 25 finalists from a record number of entrants in the 1997 Industry Week "America's Best Plants" Awards Program for the McConnellsburg boom lift production facility. JLG also received a "Top 100 Products" Award for the 600 Series boom lift family from Construction Equipment magazine and was selected, in Pennsylvania, as one of the 1997 recipients of the Governor's Award for Environmental Excellence.
During fiscal 1997, we also achieved other significant performance milestones, including:
Outlook
Considering the increasingly competitive
nature of our marketplace, including temporary
product saturation, we have adopted
an aggressive business plan for the current
fiscal year, with increased emphasis on cost
reductions, quality improvements and
expanded market penetration throughout
our distribution network.
As an integral part of that business plan, we are committed to pursuing our seven-point improvement program during fiscal 1998 and are confident that these steps, along with the other actions that we have taken, will position us well for long-term profitable growth and enhanced shareholder value.
We want to thank our distributors, customers, employees, suppliers, and shareholders for their continued loyalty and support. We remain committed to the same fundamentals that helped JLG achieve four consecutive years of record results, and we expect that our creativity and persistence will be rewarded with a Company poised to resume long-term growth.
Sincerely,
L. David Black
Chairman of the Board,
President and
Chief Executive Officer
October 3, 1997
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Officers, pictured left-to-right, are: Ray Tremi, Tom Singer, Craig paylor, Ben Appleby, Dave Black, Chuck Diller, Mike Swartz, Sam Swope and Rao Bollimpalli. |