UNITED
STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM
10-K (Mark One)|X| Annual Report
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the fiscal year ended
  July 31, 2004|_| Transition Report
  Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934For the transition period
  from ______________ to ______________Commission file number:
  1-12123 JLG INDUSTRIES, INC.(Exact name of registrant as specified in its charter) PENNSYLVANIA
  
  25-1199382(State or other jurisdiction of
  incorporation
  or organization)
  
  (I.R.S. Employer
  Identification No.)1 JLG Drive,
  McConnellsburg, PA
  
  17233-9533(Address of
  principal executive offices)
  
  (Zip Code) Registrants telephone
number, including area code:
(717) 485-5161 Securities registered
pursuant to Section 12(b) of the Act: (Title of class)
  
  (Name of exchange on which registered)Capital Stock ($.20 par
  value)
  
  New York Stock Exchange Securities registered
pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrants knowledge, in definitive
proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |_| Indicate by check mark whether the registrant
is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_| At September 24, 2004, there
were 43,901,798 shares of capital stock of the Registrant outstanding, and the aggregate market value of the voting
stock held by non-affiliates of the Registrant at that date was $695,311,728. Documents Incorporated
by Reference Portions of the Proxy Statement for the 2004
Annual Meeting of Shareholders are incorporated by reference into Part III.  TABLE OF CONTENTS
ItemPART I1.
  Business
  1Products and Services
  1Segment Financial Information
  5Marketing and Distribution
  5Product Development
  5Intellectual Property
  5Seasonal Nature of Business
  5Competition
  5Material and Supply Arrangements
  6Product Liability
  6Employees
  6Environmental
  6Foreign Operations
  6Executive Officers of the Registrant
  7Available Information
  72.
  Properties
  83.
  Legal Proceedings
  94.
  Submission of Matters to a Vote of
  Security Holders
  9PART II5.
  Market for the Registrants Common
  Equity and Related Stockholder Matters
  96.
  Selected Financial Data
  107.
  Managements Discussion and
  Analysis of Financial Condition and Results of Operations
  12Overview
  12Results of Operations
  12Critical Accounting Policies and Estimates
  17Financial Condition
  20Outlook
  22Market Risk
  23Recent Accounting Pronouncements
  24Off-Balance Sheet Arrangements
  247A.
  Quantitative and Qualitative
  Disclosures About Market Risk
  248.
  Financial Statements and
  Supplementary Data
  25Consolidated Statements of Income
  25Consolidated Balance Sheets
  26Consolidated Statements of Shareholders Equity
  27Consolidated Statements of Cash Flows
  28Notes to Consolidated Financial Statements
  29Report of Independent Registered Public Accounting Firm
  569.
  Changes in and Disagreements with
  Accountants on Accounting and Financial Disclosure
  579A.
  Controls and Procedures
  579B.
  Other Information
  57PART III10.
  Directors and Executive Officers
  of the Registrant
  5811.
  Executive Compensation
  5812.
  Security Ownership of Certain
  Beneficial Owners and Management
  5813.
  Certain Relationships and Related
  Transactions
  5814.
  Principal Accountant Fees and
  Services
  58PART IV15.
  Exhibits, Financial Statement
  Schedules and Reports on Form 8-K
  58(a) (1) Financial Statements
  58(a) (2) Financial Statement Schedules
  58(a) (3) Exhibits
  59(b)       Reports
  on Form 8-K
  61Signatures
  62PART
I
ITEM 1. BUSINESS

Founded in 1969, we are the worlds leading
producer of access equipment (aerial work platforms and telehandlers) and highway-speed telescopic
hydraulic excavators (excavators). Our diverse product portfolio encompasses leading brands such as JLG® aerial
work platforms; JLG, SkyTrak®, Lull® and Gradall® telehandlers; Gradall
excavators; Triple-L drop-deck trailers; and an array of complementary
accessories that increase the versatility
and efficiency of these products for end-users. We market our products and
services through a multichannel approach that includes a highly trained sales
force, and utilizes a broad range of marketing techniques, integrated supply programs and a network of
distributors in the industrial, commercial, institutional and construction markets. In addition to designing and
manufacturing our products, we offer world-class after-sales service and
support and financing and leasing solutions for our customers. Our
manufacturing facilities are located in
the United States, Belgium and France, with sales and service operations on six
continents.

Building on our European presence while remaining
focused on the access industry, on April 30, 2004, we completed our purchase of Delta Manlift SAS
(Delta), a subsidiary of The Manitowoc Company (Manitowoc). Headquartered in Tonneins, France, Delta has two
facilities that manufacture the Toucan® Manlift® brand of vertical mast lifts, a line of aerial work
platforms distributed throughout Europe for use principally in industrial and maintenance operations. In addition, we
purchased certain intellectual property and related assets of Manitowocs
discontinued product lines, which will permit us to re-launch selected models
of the Liftlux brand scissor lifts. The Liftlux brand of scissor lifts,
primarily known for large capacity and height, are popular with specialty re-rental companies in Europe and North
America and complement the upper end of our scissor lift line. For additional information relative to our
Delta acquisition, see Note 2 of the Notes to Consolidated Financial Statements, Item 8 of Part II of this
report.
On August 1, 2003, we completed our acquisition of
the OmniQuip® business unit (OmniQuip) of Textron Inc., which includes all operations relating to the
SkyTrak and Lull brand telehandler products. OmniQuip manufactures and markets
telehandlers and is North Americas leading producer of telehandlers used in
numerous applications by commercial and residential building contractors, as
well as by customers in other construction, military and agricultural markets.
OmniQuip is also a key supplier of telehandlers to the U.S. military. For addi­tional information relative to our OmniQuip
acquisition, see Note 2 of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report.
Products and
Services

We are
organized in three business segmentsMachinery, Equipment Services, and Access
Financial Solutions.

Machinery
Our Machinery segment consists of the design,
manufacture and sale of new aerial work platforms, telehandlers, telescoping hydraulic excavators and trailers.
Our JLG brand aerial work platforms are designed
to permit workers to position themselves, their tools and materials efficiently and safely in elevated work
areas of up to 150 feet high that otherwise might have to be reached by the erection of scaffolding, by the
use of ladders or through other devices. We produce three basic types of mobile aerial work platforms under the
JLG brand: boom lifts, scissor lifts, and vertical mast lifts. These work platforms are mounted at the end of
telescoping and/or articulating booms or on top of scissor-type or other vertical lifting mechanisms, which, in turn,
are mounted on mobile chassis. Various standard accessories for specified end-user applications also may be
incorporated into certain aerial work platform models. Our aerial work
platforms are primarily used in construction, industrial and commercial
applications and are designed for
stable operation in elevated positions.
Our boom lifts are especially useful for reaching
over machinery and equipment mounted on floors and for reaching other elevated positions not effectively
approached by other vertical lifting devices. They are also ideal for applications where the chassis cannot be
positioned directly beneath the intended work area. We produce
1

boom lift models of various sizes with
platform heights of up to 150 feet. The boom may be rotated up to 360 degrees
in either direction, raised or lowered from vertical to below horizontal, and
extended while the work platform remains
horizontal and stable. These machines can be maneuvered forward or backward and
steered in any direction by the
operator from the work platform, even while the boom is extended or raised.
Boom-type models have work platforms,
which vary in size from 30 inches by 48 inches to 36 inches by 96 inches, with
the rated lift capacities ranging
from 500 to 1,000 pounds.
Our
scissor lifts are designed to provide access from directly below or adjacent to
a work area. In general, scissor lifts have
larger work areas and allow for heavier loads than boom lifts. Compact electric
models can maneuver in restricted
areas, and many are designed to fit through standard doorways. Larger models,
usually with internal combustion
engines, find usage in outdoor environments and generally provide higher
capacities and larger work areas
than indoor models. Scissor lifts may be maneuvered in a manner similar to boom
lifts, but the plat­forms may be
extended only vertically, except for an available option that extends the deck
horizontally up to six feet. Scissor
lifts are available in various models, with maximum platform heights of up to
50 feet and various platform sizes up to seven feet wide and up to 14 feet
long. The rated lift capacities range from 500 to 2,500 pounds.

Our vertical mast lifts consist of a work platform
attached to an aluminum or steel mast that extends vertically, which, in turn, is mounted on either a
push-around or self-propelled base. Some European models, acquired in the Spring 2004, feature articulating jibs mounted
at the top of the vertical mast, allowing a measure of horizontal outreach. Available in various models,
these machines in their retracted position can fit through standard door openings, yet reach platform heights of up to
41 feet when fully extended, and have rated lift capacities ranging between 300 and 500 pounds. In addition,
our stock picker models can reach up to 21 feet and have a capacity of up to
500 pounds.
Our JLG, SkyTrak, Lull and Gradall brand
telehandlers are typically used by residential, non-residential and institutional building contractors and
agricultural workers for lifting, transporting and placing a wide variety of materials at their point of use or storage. The
SkyTrak and Lull brands are our newest lines, having been added as a result of our August 1, 2003 acquisition of
OmniQuip. With the acquisition, we have become North Americas leading
manufacturer and marketer of telehandlers, which have rated lift capacities
ranging from 6,600 to 12,000 pounds and
maximum lifting heights ranging from 23 to 55 feet, as well as a variety of
material handling attachments. In
addition to the SkyTrak and Lull commercial lines, the acquisition also brought
the All-Terrain Lifter, Army System
(ATLAS) sole source contract with the U.S. Army, as well as the Millennia
Military Vehicle (MMV), which has
found favor with the U.S. Marine Corps.
We are also a growing player in the European
telehandler segment and our European-design telehandlers leverage our traditional aerial work platform
product line and our existing European-based manufacturing, sales and service operations. During 2002, we
launched our first European-design compact telehandler line for industrial applications and, in fiscal 2003, we
complemented that line with the purchase of assets related to a line of telehandlers specifically designed for
agricultural applications. This latest acquisition will, for the first time, provide us with a telehandler product
appropriate for the European agricultural market, which is responsible for a significant portion of all
telehandlers sold there. In addition, we are also targeting diversification of our channels to market through an intended
strategic alliance with SAME Deutz-Fahr Group (SDFG), which, if consummated, will market our line of compact
telehandlers in the European agricultural segment through its distributor
network. This relationship, if consummated, will enhance our efforts to market
telehandlers to the agricultural
market and help diversify our end-use customers, which historically have been
found in construction, general
industry and maintenance markets. All European-designed telehandlers are
produced in our Maasmechelen,
Belgium facility.

Our Gradall brand excavators are typically used by
contractors and government agencies for ditching, sloping, finish grading and
general maintenance and infrastructure projects. Our excavators are
distinguished from other types of
excavators by their telescoping, rotating booms and low overhead clearance
requirements. Unlike the
2

articulated booms on traditional excavators,
the Gradall booms arm-like motion increases the machines versatility, optimizing the potential to use a wide
variety of attachments. We manufacture and market a variety of track-mounted
and wheel-mounted excavators, including specialized models used in mining,
steel production and hazardous waste removal applications and we are the
leading supplier of highway-speed wheel-mounted excavators in North America.
In North America, we also manufacture a line of
Triple-L brand equipment trailers with towing capacities ranging from 2,000 to 10,000 pounds, and we
assemble and market portable light towers in Australia.
Equipment Services

Our Equipment Services segment focuses on
after-sales service and support activities that enhance our ability to generate additional revenues throughout the
life cycle of the products that we sell. We remanufacture and recondition (to certain specified standards,
including ANSI standards) and repair and resell JLG used equipment. In addition, we resell used equipment of
competing manufacturers. We offer a variety of service warranties on these machines. We are the only access equipment
manufacturer which has complete in-house re-manufacturing capability and which sells re­manufactured
equipment with a factory warranty equivalent to our new equipment. This capability has been established in
North America since 1993 through a separate dedicated facility in McConnellsburg, Pennsylvania and during fiscal
2004, we purchased a facility in Tonneins, France, near our recently
acquired Delta operations, with the intention of expanding our Equipment
Services capability to Europe for the
benefit of customers located there.

The North America operation has been certified as
meeting ISO 9002 standards relating to customer service quality. The European operation is currently in a
start-up phase.
We also
distribute replacement parts for our and competing manufacturers equipment
through supplier-direct shipment
programs and a system of two parts depots in North America and single parts
depots in each of Europe and
Australia. Sales of replacement parts have historically been less cyclical and
typically generate higher margins than
sales of new equipment. To help facilitate parts sales, we use Internet-based
e-commerce in an effort to develop
closer relationships with our customers. For example, we handle most of our
warranty transactions and nearly half
of our parts orders via the Internet.
As another service to our customers, at July 31,
2004, we had a rental fleet of approximately 590 units that we deploy in North
America to support our rental company customers demands for short-term rental
contracts. Through a joint venture,
we maintain a similar rental fleet of approximately 680 units in Europe. The
rental aspect of our North American
and European operations is designed to support, rather than compete with, our
rental company customers, offering added fleet management flexibility by making
additional machines available on
short-term leases to meet peak demand needs of large projects. Also, in Great
Britain, we operate a small fleet of
service vehicles.
We support the sales, service, and rental
programs of our customers with product advertising, cooperative promotional
programs, major trade show participation, and training programs covering
service, products and safety. We
supplement domestic sales and service support to our international customers
through overseas facilities in Australia, Belgium, Brazil, France,
Germany, Hong Kong, Italy, New Zealand, Norway, Poland, South Africa, Spain, Sweden and the United Kingdom, and a joint
venture in the Netherlands.

In July 2004, we announced the formation of JLG
Service Plus, Inc. (ServicePlus), a wholly owned subsidiary. In response to our customers needs, services
offered through ServicePlus® facilities will range from preventive maintenance programs to general repairs to the
reconditioning of our equipment. The initial location is in Houston, Texas, at a facility with 35 service
bays.
Access Financial Solutions
Access Financial Solutions focuses on pre-sales
services by providing equipment financing and leasing solutions in connection with sales of our products that are
tailored to meet our customers individual economic, capital structure and operational requirements. We conduct
this business through our wholly owned subsidiary, Access Financial Solutions, Inc. (AFS). Financing
arrangements offered by AFS include installment sale contracts, capital
leases, synthetic leases, operating leases and rental purchase guarantees.
Terms of these arrangements vary
3

depending on the type of transaction, but
typically range between 36 and 72 months and may require us to guarantee certain of our customers obligations
to third-party financing companies. These guarantees are a result of entering into agreements with finance
companies whereby our equipment is sold to a finance company which, in turn, sells or leases it to a
customer or is sold to a customer which is financed by a financing company. Under certain terms and conditions, we
retain a limited liability in the event the customer defaults on the financing.
During the financing term, the customer generally is responsible for insurance,
taxes and maintenance of the equipment, and the customer bears the risk of
damage to or loss of the equipment. For additional information relative to guarantees, see Note 17 of the Notes
to Consolidated Financial Statements, Item
8 of Part II of this report.
The staff of AFS is comprised of seasoned
professionals who are experienced in credit analysis and financial services support. AFS adheres to credit policies
that require various levels of credit approval depending on the transaction
size and overall credit concentration with any customer. For example, Chief
Executive Officer credit approval is required for any single customer credit
including open account balance in excess of $10 million and approval of the Finance Committee of the Board of
Directors is required for any single customer credit in excess of $25 million. Credit decisions to extend
financing to customers are based on a rigorous credit review process that
incorporates both financial analyses as well as business rationale to support a
particular customer. Once identified
as a key customer, AFS regularly reviews the customers financial results and
projections and its business and
expansion plans and continuously monitors our overall credit exposure to that
customer.

During fiscal 2004, we supported our customers in
directly financing $12.5 million in sales, and arranging third-party financing for an additional $153.2 million
in sales or approximately 1% and 16% of our total machinery sales, respectively. We rely on our customary
sources of liquidity, including borrowings under our credit facilities, to fund
AFS direct financings. Historically, we have monetized a substantial portion of
the receivables originated by AFS
through an ongoing program of syndications, limited recourse financings and
other monetization transactions.
During fiscal 2004, we sold, through various limited recourse monetization
transactions with one fund­ing
provider, $13.4 million in finance receivables originated by AFS. In connection
with some of these monetization transactions,
we have limited recourse obligations relating to possible defaults by the
obligors under the terms of the
contracts, which comprise the finance receivables. For additional information
relative to limited recourse obligations,
see Note 3 of the Notes to Consolidated Financial Statements, Item 8 of Part II
of this report. Depend­ing on the
nature of the AFS monetization transaction, we either retain servicing of the
finance receivables and remit collections to the third-party purchaser or
lender, as the case may be, or we engage a third-party servicer. These monetization transactions allow us to
provide ongoing liquidity for our customer financing activities.
We expect that our originations and monetizations
of finance receivables will continue and that our limited recourse debt balance will continue to decline.
In September 2003, we entered into a program agreement with General Electric
Capital Corporation (GECC) to provide private label financing solutions for
our customers in North America, and,
in March 2004, we entered into an Operating Agreement with GECC to provide
financing solutions for our customers
in Europe. In addition, in April, June and July 2004, we entered into
additional program agreements to
provide private label financing solutions for our customers in the United
States and Canada. The terms of
these additional agreements are similar to those under the GECC agreements.
Under all of these agreements, our
customers will continue to have direct interaction with our AFS personnel, but
with the finance companies providing direct funding for transactions that meet
agreed credit criteria subject to limited
recourse to us. Transactions funded by the finance companies will not be held
by us as financial assets, and therefore
their subsequent monetization will not be recorded on our balance sheet as
limited recourse debt. Transactions
not funded by the finance companies may still be funded by us to the extent of
our liquidity sources and
subsequently monetized or they may be funded directly by other credit
providers.

4

Segment
Financial Information
Financial information regarding each of our
segments appears in Note 10 of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report.
Marketing and
Distribution
Our products are marketed in over 3,500 locations
worldwide through independent rental companies and distributors that rent and sell our products and
provide service support, as well as through other sales and service branches or organizations in which we hold
equity positions. North American customers are located in all 50 states in the U.S., as well as in Canada and
Mexico. International customers are located in Europe, the Asia/ Pacific region, Australia, Japan, Africa, the
Middle East and Latin America, and our sales force is comprised of almost 150
employees worldwide. In North America, teams of sales employees are dedicated
to specific major customers, channels
or geographic regions. Our sales employees in Europe and the rest of the world
are spread among our 21 international
sales and service offices.
Sales to one
customer, United Rentals, Inc., accounted for 14%, 15% and 21% of our
consolidated revenues for the years ended July 31, 2004, 2003 and 2002,
respectively.

Certain of our
operations have been certified as meeting ISO 9001 and ISO 9002 standards. We
believe that ISO certification
is valuable because a number of customers require such certification as a
condition to doing business.
Product
Development
We invest significantly in product development,
diversification and improvement, including the modification of existing products for special applications. Our
product development staff is comprised of over 160 employees. Product development expenditures totaled
approximately $20.2 million, $16.1 million and $15.6 million for the fiscal years 2004, 2003 and 2002, respectively.
In those same years, new or redesigned products introduced within the preceding 24 months comprised 24%, 29%
and 30% of sales, respectively.
Intellectual
Property
We have various registered trademarks and patents
relating to our products and our business, including registered trademarks for
the JLG, Gradall, SkyTrak and Lull brand names. While we consider this
intellectual property to be
beneficial in the operation of our business, we are not dependent on any single
patent or trademark or group of
patents or trademarks.
Seasonal Nature
of Business
Our business is seasonal with a substantial
portion of our sales occurring in the spring and summer months which constitute the traditional construction
season. In addition, within any fiscal quarter the majority of our sales occur
within the final month of the quarter.
Competition
We operate in the global construction,
maintenance and industrial equipment market. Our competitors range from some of the worlds largest multi-national
construction equipment manufacturers to small single-product niche manufacturers. Within this global market, we
face competition principally from two significant aerial work platform manufacturers, approximately 26 smaller
aerial work platform manufacturers, seven major telehandler manufacturers and approximately 15 smaller
telehandler manufacturers, as well as numerous manufacturers of other niche
products such as boom trucks, cherry pickers, mast climbers, straight mast and
truck-mounted fork-lifts,
rough-terrain and all-terrain cranes, truck-mounted cranes, portable material
lifts and various types of earth
moving equipment that offer similar or overlapping functionality to our
products. We believe we are the worlds leading manufacturer of aerial work
platforms and one of the worlds leading manufacturers of telehandlers. We are currently a niche supplier of
excavators, but within the narrow category of highway-speed, wheeled-mounted
excavators, we are the leading supplier in North America.
5


Material and
Supply Arrangements
We obtain raw materials, principally steel; other
component parts, most notably engines, drive motors, tires, bearings and hydraulic components; and supplies
from third parties. We also outsource certain assemblies and fabricated parts.
We rely on preferred vendors as a sole source for just-in-time delivery of
many raw materials and manufactured components. We believe these arrangements
have resulted in reduced investment requirements, greater access to technology
developments and lower per-unit costs. Because we maintain limited raw material and component inventories, even brief
unanticipated delays in delivery by suppliers may adversely affect our ability to satisfy our customers on a
timely basis and thereby affect our financial performance. In addition, market prices of some of the raw
materials we use (such as steel) have recently increased significantly. If we
are not able to pass raw material or component price increases on to our
customers, our margins could be adversely affected.
Product
Liability
We have rigorous product safety standards and we
continually work to improve the safety and reliability of our products. We monitor accidents and possible
claims and establish liability estimates with respect to claims based on internal evaluations of the merits of
individual claims and the reserves assigned by our independent insurance claims adjustment firm. The methods of
making such estimates and establishing the resulting accrued liability are reviewed frequently, and any
adjustments resulting from such reviews are reflected in current earnings. Reserves are based on actual incidents and
do not necessarily directly relate to sales activity. Based upon our best estimate of anticipated losses, product
liability costs approximated 1.0%, 0.9% and 1.1% of revenues for the years ended July 31, 2004, 2003 and 2002,
respectively.
For additional information relative to product
liability insurance coverage and cost, see Note 17 of the Notes to Consolidated Financial Statements, Item 8 of
Part II of this report.
Employees

We had 3,056 employees as of July 31, 2004.
Approximately 8% of our employees are represented by a union under a contract, which expires April 22, 2006.

Environmental
Our operations are subject to various
international, federal, state and local environmental laws and regulations.
These laws and regulations are administered by international, federal, state
and local agencies. Among other
things, these laws and regulations regulate the discharge of materials into the
water, air and land, and govern the
use and disposal of hazardous and non-hazardous materials. We believe that our
operations are in substantial
compliance with all applicable environmental laws and regulations, except for
violations that we believe would not
have a material adverse effect on our business or financial position.
Foreign
Operations
We manufacture our products in the U.S., Belgium
and France for sale throughout the world. Revenues from customers outside
the U.S. were 23%, 27% and 28% of revenues for 2004, 2003 and 2002,
respectively. Revenues from European
customers were 15%, 19% and 22% of revenues for 2004, 2003 and 2002,
respectively. Additional financial
information regarding our foreign operations appears in Note 10 of the Notes to
Consolidated Financial Statements,
Item 8 of Part II of this report.
6

Executive Officers of the Registrant
Name
  
  Age
  
  Positions with the Company and business experience during
  past five years(date of initial election)William M. Lasky
  
  57
  
  Chairman of the Board, President and Chief Executive Officer
  (2001); prior to 2000, President and Chief Executive Officer; prior to 2000,
  President and Chief Operating Officer; prior to 1999, President, Dana
  Corporation, Worldwide Filtration Products Group.James H. Woodward, Jr.
  
  51
  
  Executive Vice President and Chief Financial Officer (2002); prior
  to 2002, Senior Vice President and Chief Financial Officer; prior to 2000,
  Vice President and Director E-Business, Dana Corporation; prior to 2000, Vice
  President and Corporate Controller, Dana Corporation.Peter L. Bonafede, Jr.
  
  54
  
  Senior Vice President Manufacturing (2000); prior to 2000,
  President, Global Chemical Technologies; prior to 1999, Vice President and
  General Manager, Ingersoll-Rand Company, Blaw-Knox Division.Craig E. Paylor
  
  48
  
  Senior Vice PresidentSales, Marketing and Customer Support (2002);
  prior to 2002, Senior Vice PresidentSales and Market Development; prior to
  1999, Vice PresidentSales and Marketing.Wayne P. MacDonald
  
  51
  
  Senior Vice PresidentEngineering (2002); prior to 2002, Vice
  PresidentEngineering; prior to 2000, Director, Advanced Technology
  Development and Applications Engineering.Philip H. Rehbein
  
  54
  
  Senior Vice PresidentStrategic Operations (2004); prior to 2004,
  Senior Vice PresidentFinance (August 2002), Vice PresidentFinance (May
  2002); prior to 2002, Vice President and General ManagerGradall; prior to
  2001, Vice PresidentFinance; prior to 1999, Vice President and Corporate
  Controller.Thomas D. Singer
  
  52
  
  Senior Vice President, General Counsel and Secretary (2001); prior
  to 2001, Vice President, General Counsel and Assistant Secretary.Significant EmployeesIsrael Celli
  
  51
  
  Vice PresidentInternational Sales, Marketing and Customer Support
  (2002); prior to 2002, General Manager of Latin America; prior to 2000,
  Marketing Director for Latin America, Case Brasil and Cia. (CNH Global).All executive
officers listed above are elected to hold office for one year or until their
successors are elected and qualified, and have been employed in the capacities
noted for more than five years, except as indicated. No family relationship
exists among the above-named executive officers.
Available
Information

We file annual,
quarterly, and current reports, proxy statements, and other documents with the
Securities and Exchange Commission (SEC) under the Securities Exchange Act of
1934 (the Exchange Act). The public may read and copy any materials that we
file with the SEC at the SECs Public Reference Room at 450 Fifth Street, NW,
Washington, DC 20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC
maintains an Internet website that contains reports, proxy and information
statements, and other information regarding issuers, including us, that file
electronically with the SEC. The public can obtain any documents that we file
with the SEC at www.sec.gov.

7

We maintain a
website at www.jlg.com. We make available on our website under Investor
RelationsSEC Documents, free of charge, our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and, if applicable,
amendments to those reports as soon as reasonably practicable after we
electronically file or furnish such material to the SEC. Information contained
on our website is not incorporated by reference into this report.
ITEM 2. PROPERTIES
The following table
lists the principal manufacturing and office facilities and principal products
manufactured at each of the facilities:
Location
  
  Size
  
  Owned/Leased
  
  ProductsNew EquipmentMcConnellsburg, Pennsylvania
  
  515,000 sq. ft.
  
  Owned
  
  Boom lifts, TelehandlersShippensburg, Pennsylvania
  
  320,000 sq. ft.
  
  Owned
  
  Boom lifts, Scissor lifts, Vertical Mast liftsLaVerne, California
  
  20,000 sq. ft.
  
  Leased
  
  TrailersMaasmechelen, Belgium
  
  80,000 sq. ft.
  
  Leased
  
  Boom lifts, Scissor lifts, TelehandlersNew Philadelphia, Ohio
  
  430,000 sq. ft.
  
  Owned
  
  ExcavatorsOakes, North Dakota
  
  78,000 sq. ft.
  
  Leased
  
  TelehandlersTonneins, France
  
  38,000 sq. ft.
  
  Owned
  
  Vertical Mast liftsTonneins, France
  
  63,000 sq. ft.
  
  Leased
  
  Vertical Mast liftsUsed EquipmentMcConnellsburg, Pennsylvania
  
  45,000 sq. ft.
  
  Owned
  
  Equipment ServicesMcConnellsburg, Pennsylvania
  
  27,000 sq. ft.
  
  Leased
  
  Equipment ServicesPort Macquarie, Australia
  
  25,000 sq. ft.
  
  Leased
  
  Equipment ServicesTonneins, France
  
  29,000 sq. ft.
  
  Leased
  
  Equipment ServicesHouston, Texas
  
  72,000 sq. ft.
  
  Leased
  
  Equipment ServicesWe also lease
executive offices in Hagerstown, Maryland and a number of small distribution,
administration or service facilities throughout the world.
We own a
340,000-square-foot facility in Orrville, Ohio and a 75,000-square-foot
facility in Bedford, Pennsylvania that are no longer used for manufacturing and
have been placed for sale and another 130,000-square-foot facility in Bedford,
Pennsylvania, which we have temporarily idled.

Our
McConnellsburg and Bedford, Pennsylvania facilities are encumbered as security
for long-term borrowings.
8

ITEM 3. LEGAL
PROCEEDINGS

On February 27,
2004, we announced that the SEC had begun an informal inquiry relating to
accounting and financial reporting following our February 18, 2004 announcement
that we would be restating our audited financial statements for the fiscal year
ended July 31, 2003 and for the first fiscal quarter ended October 31, 2003.
The notification advised that the existence of the inquiry should not be
construed as an expression or opinion of the SEC that any violation of law has occurred,
nor should it reflect adversely on the character or reliability of any person
or entity or on the merits of our securities. We continue to cooperate with any
requests for information from the SEC related to the informal inquiry.

We make provisions
relating to probable product liability claims. For information relative to
product liability claims, see Note 17 of the Notes to Consolidated Financial
Statements, Item 8 of Part II and the discussion in Part I, Item 1 of this
report.
ITEM 4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET
FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our capital
stock is traded on the New York Stock Exchange under the symbol JLG. The table
below sets forth the high and low closing prices and average shares traded
daily for the past two fiscal years.
Price per Share
  
  Average Shares
  Traded DailyQuarter
  Ended
  
  2004
  
  2003
  
  2004
  
  2003High
  
  Low
  
  High
  
  LowOctober 31
  
  $
  12.25
  
  $
  8.52
  
  $
  9.74
  
  $
  6.81
  
  
  254,798
  
  
  148,575January 31
  
  $
  16.53
  
  $
  11.41
  
  $
  9.35
  
  $
  6.50
  
  
  252,874
  
  
  129,226April 30
  
  $
  16.46
  
  $
  11.64
  
  $
  6.62
  
  $
  3.98
  
  
  446,754
  
  
  222,556July 31
  
  $
  15.73
  
  $
  12.62
  
  $
  8.99
  
  $
  5.20
  
  
  292,613
  
  
  214,063Our quarterly
cash dividend rate is currently $.005 per share, or $.02 on an annual basis.
As of September
9, 2004, there were approximately 1,940 shareholders of record of our capital
stock and another 14,500 shareholders in street names.

For tabular
information regarding securities authorized for issuance under equity
compensation plans, see Note 12 of the Notes to Consolidated Financial
Statements, Item 8 of Part II of this report.
9

ITEM 6. SELECTED FINANCIAL DATA
ELEVEN-YEAR FINANCIAL SUMMARY(in thousands of dollars, except per share data and
number of employees)
Years Ended July 31
  
  2004
  
  2003
  
  2002RESULTS OF OPERATIONSRevenues
  
  $
  1,193,962
  
  $
  751,128
  
  $
  770,070Gross profit
  
  
  225,400
  
  
  134,442
  
  
  132,087Selling, administrative and product development expenses
  
  
  (149,467
  )
  
  (95,367
  )
  
  (95,279
  )Goodwill amortization
  
  
  
  
  
  
  
  
  Restructuring charges
  
  
  (27
  )
  
  (2,754
  )
  
  (6,091
  )Income from operations
  
  
  75,906
  
  
  36,321
  
  
  30,717Interest expense
  
  
  (38,098
  )
  
  (27,985
  )
  
  (16,255
  )Other income (expense), net
  
  
  4,073
  
  
  6,691
  
  
  4,759Income before taxes and cumulative effect of change in accounting
  principle
  
  
  41,881
  
  
  15,027
  
  
  19,221Income tax provision
  
  
  (15,232
  )
  
  (2,635
  )
  
  (6,343
  )Income before cumulative effect of change in accounting principal
  
  
  26,649
  
  
  12,392
  
  
  12,878Cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  (114,470
  )Net income (loss)
  
  
  26,649
  
  
  12,392
  
  
  (101,592
  )PER SHARE DATAEarnings per common share before cumulative effect of change in
  accounting principle
  
  $
  .62
  
  $
  .29
  
  $
  .31Cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.72
  )Earnings (loss) per common share
  
  
  .62
  
  
  .29
  
  
  (2.41
  )Earnings per common shareassuming dilution before cumulative effect of change
  in accounting principle
  
  
  .61
  
  
  .29
  
  
  .30Cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.65
  )Earnings (loss) per common shareassuming dilution
  
  
  .61
  
  
  .29
  
  
  (2.35
  )Cash dividends
  
  
  .02
  
  
  .02
  
  
  .025PERFORMANCE MEASURES (before cumulative effect of
  change in accounting principle)Return on revenues
  
  
  2.2
  %
  
  1.6
  %
  
  1.7
  %Return on average assets
  
  
  2.7
  %
  
  1.5
  %
  
  1.6
  %Return on average shareholders equity
  
  
  10.5
  %
  
  5.2
  %
  
  3.8
  %FINANCIAL POSITIONWorking capital
  
  $
  340,552
  
  $
  382,763
  
  $
  231,203Current assets as a percent of current liabilities
  
  
  216
  %
  
  273
  %
  
  188
  %Property, plant and equipment, net
  
  
  91,504
  
  
  79,699
  
  
  84,370Total assets
  
  
  1,027,444
  
  
  936,202
  
  
  778,241Total debt
  
  
  423,534
  
  
  460,570
  
  
  279,329Shareholders equity
  
  
  281,270
  
  
  247,714
  
  
  236,042Total debt as a percent of total capitalization
  
  
  60
  %
  
  65
  %
  
  54
  %Book value per share
  
  
  6.41
  
  
  5.71
  
  
  5.52OTHER DATAProduct development expenditures
  
  $
  20,216
  
  $
  16,142
  
  $
  15,586Capital expenditures, net of retirements
  
  
  11,978
  
  
  10,324
  
  
  12,390Net additions (retirements) to rental fleet
  
  
  5,871
  
  
  4,073
  
  
  5,554Depreciation and amortization
  
  
  25,681
  
  
  19,937
  
  
  20,959Employees
  
  
  3,056
  
  
  2,263
  
  
  2,801This summary should be read
in conjunction with Managements Discussion and Analysis. All share and per
share data have been adjusted for the two-for-one stock splits distributed in
April and October 1995, and the three-for-one stock split distributed in July
1996. Amounts subsequent to 1998 reflect the acquisition of Gradall Industries,
Inc. in June 1999. Amounts subsequent to 2003 reflect the acquisitions of
OmniQuip in August 2003 and Delta in April 2004.
10


Years Ended July 31
  
  2001
  
  2000
  
  1999
  
  1998
  
  1997
  
  1996
  
  1995
  
  1994RESULTS OF OPERATIONSRevenues
  
  $
  963,872
  
  $
  1,056,168
  
  $
  720,224
  
  $
  530,859
  
  $
  526,266
  
  $
  413,407
  
  $
  269,211
  
  $
  176,443Gross
  profit
  
  
  188,794
  
  
  231,086
  
  
  166,953
  
  
  128,157
  
  
  130,005
  
  
  108,716
  
  
  65,953
  
  
  42,154Selling,
  administrative and product development expenses
  
  
  (104,585
  )
  
  (109,434
  )
  
  (75,431
  )
  
  (55,388
  )
  
  (56,220
  )
  
  (44,038
  )
  
  (33,254
  )
  
  (27,147
  )Goodwill
  amortization
  
  
  (6,052
  )
  
  (6,166
  )
  
  (750
  )
  
  
  
  
  
  
  
  
  
  
  
  
  
  Restructuring
  charges
  
  
  (4,402
  )
  
  
  
  
  
  
  
  (1,689
  )
  
  (1,897
  )
  
  
  
  
  
  
  
  Income
  from operations
  
  
  73,755
  
  
  115,486
  
  
  90,772
  
  
  71,080
  
  
  71,888
  
  
  64,678
  
  
  32,699
  
  
  15,007Interest
  expense
  
  
  (22,195
  )
  
  (20,589
  )
  
  (1,772
  )
  
  (254
  )
  
  (362
  )
  
  (293
  )
  
  (376
  )
  
  (380
  )Other
  income (expense), net
  
  
  2,737
  
  
  1,146
  
  
  2,016
  
  
  (356
  )
  
  (288
  )
  
  1,281
  
  
  376
  
  
  (24
  )Income
  before taxes and cumulative effect of change in accounting principle
  
  
  54,297
  
  
  96,043
  
  
  91,016
  
  
  70,470
  
  
  71,238
  
  
  65,666
  
  
  32,699
  
  
  14,603Income
  tax provision
  
  
  (20,091
  )
  
  (35,536
  )
  
  (29,745
  )
  
  (23,960
  )
  
  (25,090
  )
  
  (23,558
  )
  
  (11,941
  )
  
  (5,067
  )Income
  before cumulative effect of change in accounting principal
  
  
  34,206
  
  
  60,507
  
  
  61,271
  
  
  46,510
  
  
  46,148
  
  
  42,108
  
  
  20,758
  
  
  9,536Cumulative
  effect of change in accounting principle
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Net
  income (loss)
  
  
  34,206
  
  
  60,507
  
  
  61,271
  
  
  46,510
  
  
  46,148
  
  
  42,108
  
  
  20,758
  
  
  9,536PER SHARE DATA
  
  $
  .81
  
  $
  1.39
  
  $
  1.40
  
  $
  1.07
  
  $
  1.06
  
  $
  .98
  
  $
  .49
  
  $
  .23Earnings
  per common share before cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Cumulative
  effect of change in accounting principle
  
  
  .81
  
  
  1.39
  
  
  1.40
  
  
  1.07
  
  
  1.06
  
  
  .98
  
  
  .49
  
  
  .23Earnings
  (loss) per common shareEarnings
  per common shareassuming dilution before cumulative effect of change in accounting
  principle
  
  
  .80
  
  
  1.37
  
  
  1.36
  
  
  1.05
  
  
  1.04
  
  
  .96
  
  
  .48
  
  
  .23Cumulative
  effect of change in accounting principle
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Earnings
  (loss) per common shareassuming dilution
  
  
  .80
  
  
  1.37
  
  
  1.36
  
  
  1.05
  
  
  1.04
  
  
  .96
  
  
  .48
  
  
  .23Cash
  dividends
  
  
  .04
  
  
  .035
  
  
  .02
  
  
  .02
  
  
  .02
  
  
  .015
  
  
  .0092
  
  
  .0083PERFORMANCE MEASURES (before cumulative effect of change in
  accounting principle)Return
  on revenues
  
  
  3.5
  %
  
  5.7
  %
  
  8.5
  %
  
  8.8
  %
  
  8.8
  %
  
  10.2
  %
  
  7.7
  %
  
  5.4
  %Return
  on average assets
  
  
  4.4
  %
  
  8.5
  %
  
  17.3
  %
  
  17.9
  %
  
  21.7
  %
  
  28.5
  %
  
  20.2
  %
  
  12.1
  %Return
  on average shareholders equity
  
  
  10.5
  %
  
  20.8
  %
  
  28.1
  %
  
  26.2
  %
  
  33.6
  %
  
  47.9
  %
  
  37.1
  %
  
  23.8
  %FINANCIAL POSITIONWorking
  capital
  
  $
  254,752
  
  $
  165,923
  
  $
  176,315
  
  $
  122,672
  
  $
  84,129
  
  $
  71,807
  
  $
  45,404
  
  $
  32,380Current
  assets as a percent of current liabilities
  
  
  250
  %
  
  187
  %
  
  226
  %
  
  248
  %
  
  218
  %
  
  226
  %
  
  216
  %
  
  208
  %Property,
  plant and equipment, net
  
  
  98,403
  
  
  105,879
  
  
  100,534
  
  
  57,652
  
  
  56,064
  
  
  34,094
  
  
  24,785
  
  
  19,344Total
  assets
  
  
  825,589
  
  
  653,587
  
  
  625,817
  
  
  307,339
  
  
  248,374
  
  
  182,628
  
  
  119,708
  
  
  91,634Total
  debt
  
  
  299,187
  
  
  98,302
  
  
  175,793
  
  
  3,708
  
  
  3,952
  
  
  2,194
  
  
  2,503
  
  
  7,578Shareholders
  equity
  
  
  333,441
  
  
  324,051
  
  
  271,283
  
  
  207,768
  
  
  160,927
  
  
  113,208
  
  
  68,430
  
  
  45,706Total
  debt as a percent of total capitalization
  
  
  47
  %
  
  23
  %
  
  39
  %
  
  2
  %
  
  2
  %
  
  2
  %
  
  4
  %
  
  14
  %Book
  value per share
  
  
  7.91
  
  
  7.42
  
  
  6.13
  
  
  4.71
  
  
  3.68
  
  
  2.61
  
  
  1.60
  
  
  1.09OTHER DATAProduct
  development expenditures
  
  $
  15,858
  
  $
  15,751
  
  $
  9,279
  
  $
  9,579
  
  $
  7,280
  
  $
  6,925
  
  $
  5,542
  
  $
  4,373Capital
  expenditures, net of retirements
  
  
  10,685
  
  
  22,251
  
  
  24,838
  
  
  13,577
  
  
  29,757
  
  
  16,668
  
  
  8,618
  
  
  7,762Net
  additions (retirements) to rental fleet
  
  
  12,437
  
  
  (8,016
  )
  
  4,645
  
  
  5,377
  
  
  14,199
  
  
  9,873
  
  
  1,548
  
  
  1,455Depreciation
  and amortization
  
  
  28,775
  
  
  25,970
  
  
  19,530
  
  
  15,750
  
  
  10,389
  
  
  6,505
  
  
  3,875
  
  
  2,801Employees
  
  
  3,300
  
  
  3,770
  
  
  3,960
  
  
  2,664
  
  
  2,686
  
  
  2,705
  
  
  2,222
  
  
  1,62011

ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

Fueled by an
improved North American economy and successful integration of our OmniQuip
acquisition, our fiscal 2004 revenues increased 59% to a record $1.2 billion.
Excluding OmniQuip and Delta products, traditional JLG revenues increased by
$186.3 million, or 25%, with sales from the SkyTrak, Lull and military-design
telehandlers contributing $250.3 million and Delta contributing $6.2 million.
Our operating profitability reached $75.9 million, a 109% increase from last
year with an operating margin of 6.4% improved from last years 4.8%. Net
income more than doubled to $26.6 million, or $0.61 per diluted share, compared
to $12.4 million, or $0.29 per diluted share a year ago. We also continued to
improve key operating metrics, reducing trade receivable days sales
outstanding to 78 days at year-end from 103 days last year while improving our
inventory turns to 5.8 from 3.4. We achieved these results despite increased
raw material costs and industry-wide component shortages due in part to the
magnitude of demand that followed three years of an industry depression.
Additionally, and as expected, the financial health of our European customers
has continued to improve as their economies strengthen.

Throughout the
year we completed several key initiatives highlighted by the acquisition and
integration of our OmniQuip operations. This included consolidating most
administrative functions, transferring production to McConnellsburg,
Pennsylvania, and the subsequent closing of five facilities in Port Washington,
WI and Mendota Heights, MN. We also continued to make investments in our
European presence by establishing an equipment services remanufacturing and
reconditioning operations in Tonneins, France, to strengthen our position for
international growth opportunities. For the European AWP market segment, we
expanded our product offering through the acquisition of Delta and certain
intellectual property and related assets.
Additionally,
we opened our new parts center in Maasmechelen, Belgium from which we can bring
this service closer to our customers, and we launched the Internet-based
e-commerce system in Europe, offering replacement parts to our customers in an
efficient, timely and convenient process as we have already done in North
America. We launched our initial ServicePlus operation in Houston, Texas.
Toward the
latter part of fiscal 2004, escalating raw material costs, particularly steel
and energy, began to impact our business. We implemented a steel surcharge in
March 2004 on all new orders, with the expectation that it would be a temporary
measure, a view that was shared by many industry experts. However, anticipated
pricing relief did not materialize, and our ongoing challenge arises from the continued uncertainty associated with raw material costs. As
we monitor the situation, we also evaluate alternative actions to offset these
rising costs. Compounding the high costs of raw materials have been vendor
capacity constraints. As our supply chain increased production to keep pace
with the strong demand, component delays overshadowed our manufacturing
efficiencies in the latter part of the year.

In the
discussion and analysis of financial condition and results of operations that
follows, we attempt to list contributing factors in order of significance to
the point being addressed.
RESULTS OF
OPERATIONS

We reported net
income of $26.6 million, or $0.61 per share on a diluted basis, for fiscal
2004, compared to net income of $12.4 million, or $0.29 per share on a diluted
basis, for fiscal 2003, and income before the cumulative effect of change in
accounting principle related to the adoption of Statement of Financial
Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, of $12.9 million, or $0.30 per share on a diluted basis,
for fiscal 2002. As discussed below and more fully described in Note 16 of the
Notes to Consolidated Financial Statements, Item 8 of Part II of this report,
earnings for 2004, 2003 and 2002 included charges of $0.1 million, $4.0 million
and $6.7 million, respectively, related to repositioning our operations to more
appropriately align our costs with our business activity. Certain of these charges are included in cost of sales and others are included in restructuring charges in our Consolidated Statements of
Income. In addition, earnings for fiscal 2004 included unfavorable currency
adjustments of $2.3 million compared to favorable currency adjustments of $5.4
million and $2.9 million for fiscal 2003 and 2002, respectively.

For fiscal
2004, our revenues were $1.2 billion, up 59% from the $751.1 million for fiscal
2003 which were down 2.5% from the $770.1 million reported for fiscal 2002.
12


The following
tables outline our revenues by segment, product, and geography (in thousands)
for the years ended July 31:
Years Ended July 31,2004
  
  2003
  
  2002Segment:Machinery
  
  $
  973,610
  
  $
  594,484
  
  $
  621,283Equipment Services
  
  
  204,454
  
  
  136,737
  
  
  133,058Access Financial Solutions (a)
  
  
  15,898
  
  
  19,907
  
  
  15,729$
  1,193,962
  
  $
  751,128
  
  $
  770,070Products:Aerial work platforms
  
  $
  562,056
  
  $
  428,564
  
  $
  475,241Telehandlers
  
  
  358,865
  
  
  117,475
  
  
  87,443Excavators
  
  
  52,689
  
  
  48,445
  
  
  58,599After-sales service and support, including parts sales, and used and
  reconditioned equipment sales
  
  
  196,576
  
  
  130,335
  
  
  124,587Financial products (a)
  
  
  15,203
  
  
  19,184
  
  
  14,227Rentals
  
  
  8,573
  
  
  7,125
  
  
  9,973$
  1,193,962
  
  $
  751,128
  
  $
  770,070Geographic:United States
  
  $
  923,696
  
  $
  546,494
  
  $
  556,252Europe
  
  
  178,392
  
  
  145,038
  
  
  167,940Other
  
  
  91,874
  
  
  59,596
  
  
  45,878$
  1,193,962
  
  $
  751,128
  
  $
  770,070(a)
  Revenues for Access Financial Solutions and for
  financial products are not the same because Access Financial Solutions also
  receives revenues from rental purchase agreements that are recorded for
  accounting purposes as rental revenues from operating leases.The increase in
Machinery segment sales from $594.5 million for fiscal 2003 to $973.6 million
for fiscal 2004, or 63.8%, was principally attributable to the additional sales
from OmniQuip products, increased sales of aerial work platforms in North
America, Europe and Australia, and higher telehandler sales from new products,
principally the new North America all-wheel-steer machines. After considering
the increase in revenues related to the OmniQuip and Delta acquisitions, the
remaining increase in sales is the result of general economic improvements in
North America reflecting positive trends in construction spending, capacity
utilization and consumer confidence. In addition, the European economy is
showing continued improvements, although lagging the North American economic
recovery, and there is somewhat of an easing of credit availability to the
rental industry.

The increase in
Equipment Services segment revenues from $136.7 million for fiscal 2003 to $204.5
million for fiscal 2004, or 49.5%, was due to the additional OmniQuip revenues,
increased service parts sales as a result of our customers fleets aging and
increased utilization of fleet equipment, an increase in sales of replacement
parts for our competing manufacturers equipment and higher rental fleet and
rebuild sales as a result of improved market conditions and increased demand
for used equipment.
The decrease in
Access Financial Solutions segment revenues from $19.9 million for fiscal 2003
to $15.9 million for fiscal 2004, or 20.1%, was principally attributable to an early
payoff of a financed receivable, partially offset by higher finance income due
to a larger portfolio. While we have increased interest income attributable to
our pledged finance receivables, a corresponding increase in our limited
recourse debt resulted in $10.1 million of interest income being passed on to
monetization purchasers in the form of interest expense on limited recourse
debt. In accordance with the required accounting treatment, the interest
portion of the payments to monetization purchasers is reflected as interest
expense in our Consolidated Statements of Income.
The
decrease in Machinery segment sales from $621.3 million for fiscal 2002 to
$594.5 million for fiscal 2003, or 4.3%, was primarily attributable to reduced
sales of aerial work platforms principally due to the economic pressures in
North America and economic pressures and tightened credit conditions in Europe,
partially offset by increased sales in Australia. In addition, sales of our
excavator product line declined due to softness in the United States
construction market and reduced state and municipal budgets. The decrease in
sales of aerial work platforms and excavators was partially offset by increased
telehandler sales from new product introductions,

13

principally from the new North America all-wheel-steer machines and our
European-designed product offerings. Fiscal 2002 Machinery segment revenues
also benefited from the reversal of previously accrued volume-related customer
incentives that were not achieved during the year.

The increase in
Equipment Services segment revenues from $133.1 million for fiscal 2002 to
$136.7 million for fiscal 2003, or 2.8%, was principally
attributable to increased parts sales and sales of used equipment partially offset by decreased sales of rental fleet
equipment.
The increase in Access Financial Solutions
segment revenues from $15.7 million for fiscal 2002 to $19.9 million for
fiscal 2003, or 26.6%, was principally attributable to income received on a
larger portfolio of pledged finance receivables from accumulated monetization
transactions. While we have increased interest income attributable to our
pledged finance receivables, a corresponding increase in our limited recourse
debt resulted in $7.7 million of interest
income being passed on to monetization purchasers in the form of interest
expense on limited recourse debt.
Our domestic revenues for fiscal 2004 were $923.7
million, up 69% from fiscal 2003 revenues of $546.5 million. The increase in our domestic revenues was
principally due to the additional sales from OmniQuip products of $250.3
million as well as increased sales of aerial work platforms, telehandlers,
parts, rental fleet and rebuild equipment
and excavators as a result of general economic improvements in North America.
Revenues generated from sales
outside the United States during fiscal 2004 were $270.3 million, up 32.1% from
fiscal 2003. The increase in our revenues generated from sales outside the
United States was primarily attributable to improved market conditions resulting in increased sales of
aerial work platforms in Europe and Australia and higher telehandler sales resulting from new product
introductions in Europe.
Our domestic revenues for fiscal 2003 were $546.5
million, down 1.8% from fiscal 2002 revenues of $556.3 million. The decrease in our domestic revenues was
principally attributable to lower sales of aerial work platforms primarily due
to economic pressures in North America and our excavator product line due to
the softness in the United States construction market and reduced state
and municipal budgets. This decrease was partially offset by higher sales of telehandlers and service parts
as well as increased revenues from financial products. Revenues generated
from sales outside the United States during fiscal 2003 were $204.6 million,
down 4.3% from fiscal 2002. The decrease in our revenues generated from sales
outside the United States was primarily attributable to lower aerial
work platform sales in Europe due to economic pressures and customer credit
constraints, partially offset by increased sales of aerial work platforms in
Australia and increased telehandler sales in Europe.
Our gross profit margin increased to 18.9% in
fiscal 2004 from 17.9% in fiscal 2003. The increase was attributable to
higher margins in our Equipment Services and Machinery segments.
The gross profit margin of our Machinery
segment was 14.8% for fiscal 2004 compared to 14.2% for fiscal 2003.The
increase in fiscal 2004 was primarily due to cost reductions associated with
our capacity rationalization plan, the favorable impact of currency, the
OmniQuip acquisition and the higher sales volume during fiscal 2004 compared to fiscal 2003. The increase in our gross
profit margin was partially offset by an increase in market prices of raw
materials, such as steel and energy, OmniQuip integration expenses of $9.4
million, increased freight costs due to increased production rates and
expediting materials associated with steel availability and a less favorable product mix.
The gross profit margin of our Equipment Services
segment was 32.2% for fiscal 2004 compared to 22.4% for fiscal 2003. The
increase in fiscal 2004 was primarily due to an increase in higher margin
service parts sales as a percentage
of total segment revenues due primarily to the additional sales from products
acquired in the OmniQuip acquisition and improved margins on used
equipment sales reflecting increased demand for used equipment.
The gross profit margin of our Access Financial
Solutions segment was 95.9% for fiscal 2004 compared to 96.8% for fiscal 2003. The decrease in fiscal 2004 was
primarily due to a decrease in financial product revenues as a percentage of total segment revenues. Because the
costs associated with these revenues are principally selling and administrative
expenses and interest expense, gross margins are typically higher in this
segment.
Our gross profit margin increased to 17.9% in
fiscal 2003 from 17.2% in fiscal 2002. The increase was attributable to higher
margins in our Equipment Services and Access Financial Services segments.
The
gross profit margin of our Machinery segment was 14.2% for fiscal 2003 compared
to 14.2% for fiscal 2002. The gross profit margin of our Machinery segment was
unchanged in fiscal 2003 principally due to the weakening of the U.S. dollar against the Euro, British pound and
Australian dollar, as well as fewer trade-in
14

packages resulting in lower trade-in premiums
and a more profitable product mix mainly a result of new product
introductions. These increases were offset by higher product costs associated
with the start-up of our Maasmechelen,
Belgium facility, the transfer of the telehandler product line to our
McConnellsburg, Pennsylvania facility, the negative effect on fixed
overhead leveraging due to lower sales volume compared to fiscal 2002 and higher warranty costs associated with extended
warranty periods.
The gross profit margin of our Equipment Services
segment was 22.4% for fiscal 2003 compared to 22.0% for fiscal 2002. The
gross profit margin of our Equipment Services segment increased in fiscal 2003
primarily due to an increase in higher
margin service parts sales as a percentage of total segment revenues. This
increase was partially offset by unfavorable
mix impact associated with higher used equipment sales and the deferred profit
recognized during fiscal 2002 from a one-time rental fleet sale-leaseback
transaction.
The gross profit margin of our Access Financial
Solutions segment was 96.8% for fiscal 2003 compared to 94.2% for fiscal 2002. The gross profit margin of
our Access Financial Solutions segment increased in fiscal 2003 primarily due to increased financial product
revenues.
Our selling, administrative and product
development expenses increased $54.1 million in fiscal 2004 compared to fiscal 2003 but as a percent of revenues
decreased to 12.5% for fiscal 2004 compared to 12.7% for fiscal 2003. The following table summarizes the increase by
category in selling, administrative and product development expenses for fiscal 2004 compared to fiscal 2003
(in millions):
Salaries and related benefits
  
  $
  12.1Bonus accruals
  
  
  7.2OmniQuip integration expenses
  
  
  6.6Consulting and legal costs
  
  
  5.2Bad debt provisions
  
  
  4.5Amortization expense
  
  
  2.9Pension and other postretirement benefit costs
  
  
  2.7Advertising and trade shows
  
  
  2.4Accelerated vesting of restricted stock awards
  
  
  1.8Other (includes travel costs and rent expense)
  
  
  8.7$
  54.1Our Machinery segments selling,
administrative and product development expenses increased $17.3 million in fiscal 2004 due primarily to the addition of
OmniQuip, higher payroll and related benefit costs as a result of additional
employees, normal merit compensation increases and increased medical costs,
amortization expense associated with the
acquired OmniQuip intangible assets, increased pension and other postretirement
benefit costs, consulting and legal
costs associated with the outsourcing of research and development projects and
ordinary business activities, product development expenses related to
our European telehandler products, bonus accruals
primarily due to our increased profitability, and bad debt provisions.
Our
Equipment Services segments selling and administrative expenses increased $2.5
million in fiscal 2004 million due
primarily to higher payroll and related benefit costs as a result of additional
employees, normal merit compensation increases and increased medical
costs, and the addition of OmniQuip.

Our
Access Financial Solutions segments selling and administrative expenses
decreased $1.0 million in fiscal 2004
due primarily to a decrease in bad debt provisions as a result of the lower
reserve needed due to a decrease in outstanding finance and pledged
finance receivables and a decrease in software costs.
Our general corporate selling,
administrative and product development expenses increased $35.3 million in
fiscal 2004 primarily due to management bonus accruals arising from our
increased profitability, OmniQuip integration
expenses, increase in bad debt provisions for specific reserves related to
certain European customers as a result
of a deterioration in their current financial position, higher payroll and
related benefit costs as a result of additional employees, normal merit
compensation increases and increased medical costs, higher consulting and legal costs associated with the financial
restatement and related activity, an increase in advertising and trade show expenses and costs associated with the
accelerated vesting of restricted stock awards in January 2004 and February 2004 triggered by our share price
appreciation. Even though in conjunction with our financial restatement the restricted stock awards were restored to
their prior unvested status at the request of our officers and therefore will
be eligible to vest again in the future, pursuant to U.S. generally accepted
accounting principles (GAAP), we
are required to include the cost of the accelerated vesting in our current
period expenses.
15

Our
selling, administrative and product development expenses increased $0.1 million
in fiscal 2003 compared to fiscal 2002 and as a percent of revenues were 12.7%
for fiscal 2003 compared to 12.4% for fiscal 2002.
Our Machinery segments selling,
administrative and product development expenses increased $3.4 million in fiscal 2003 due primarily to increased bad
debt provisions for specific reserves related to certain customers, higher
contract and consulting services, commission costs and incentive-based
accruals, which were partially offset by
lower payroll and related costs and travel expenses due to our cost reduction
initiatives.

Our
Equipment Services segments selling and administrative expenses decreased $1.1
million in fiscal 2003 mainly due to
lower payroll and related costs.
Our
Access Financial Solutions segments selling and administrative expenses
decreased $0.9 million in fiscal 2003
due primarily to decreases in bad debt provisions reflecting lower origination
activity and reduced non-monetized portfolio exposure and lower software costs,
which were partially offset by an increase in contract services expenses.
Our general corporate selling,
administrative and product development expenses decreased $1.3 million in
fiscal 2003 primarily due to reductions in bad debt provisions, consulting
fees, depreciation expense, software costs
and trade show expenses, which were partially offset by higher payroll and
related costs, incentive-based accruals
and legal fees.
During
fiscal 2003, we announced further actions related to our ongoing longer-term
strategy to streamline operations and reduce fixed and variable costs.
As part of our capacity rationalization plan commenced in early 2001, we idled
the 130,000-square-foot Sunnyside facility in Bedford, Pennsylvania, which
produced selected scissor lift models, and
we relocated that production into our Shippensburg, Pennsylvania facility.
Additionally, reductions in selling, administrative and product
development costs resulted from changes in our global organization and from process consolidations. We have
improved our European sales and service operations model by eliminating redundant operations, reducing
headcount and focusing on enhancing the business for increased profitability and growth through ongoing
manufacturing process improvements. As a result, pursuant to the plan we anticipated incurring a pre-tax charge of
$5.9 million and spending approximately $3.5 million on capital requirements.
When these changes and consolidations are fully implemented, we expect to
generate approximately $20 million in annualized savings, representing a payback
of approximately six months.
During
fiscal 2004, we incurred approximately $0.1 million of the pre-tax charge
related to the idling of our Bedford, Pennsylvania facility, discussed
above, consisting of accruals for termination benefit costs and relocation costs and charges related to relocating
certain plant assets and start-up costs. We reported $27 thousand in restructuring
costs and $0.1 million in cost of sales. During fiscal 2003, we incurred
approximately $3.8 million of this pre-tax charge, consisting of accruals for
termination benefit costs and relocation costs and charges related to relocating certain plant assets and start-up
costs and $2.6 million on capital requirements. We reported $2.8 million in restructuring costs and $1.0 million
in cost of sales. In addition, during fiscal 2004, we paid and charged $0.3 million of termination benefits and
relocation costs against the accrued liability.

During
fiscal 2002, we announced the closure of our manufacturing facility in
Orrville, Ohio as part of our capacity
rationalization plan for our Machinery segment. Operations at this facility
have been integrated into our McConnellsburg, Pennsylvania facility. As
a result, pursuant to the plan we anticipated incurring a pre-tax charge of $7.7 million.
We have realized $5.6 million in annual cost savings associated with the closing of our Orrville facility.
During
fiscal 2004 and 2003, we incurred $0 and $0.2 million, respectively, of the
pre-tax charge related to our closure of the Orrville, Ohio facility,
consisting of production relocation costs, which were reported in cost of
sales. Additionally, during fiscal 2004, we paid and charged $0.1 million of
termination benefits and lease termination costs against the accrued liability.
For
additional information related to our capacity rationalization plans, see Note
16 of the Notes to Consolidated Financial
Statements, Item 8 of Part II of this report.
The increase in interest expense of $10.1
million for fiscal 2004 was primarily due to interest associated with our 8 1/4% senior unsecured notes due 2008 that
were sold during the fourth quarter of fiscal 2003 and increased interest expense associated with our limited
recourse debt from finance receivables monetizations. Interest expense
associated with our finance receivables monetizations was $10.1 million and
$7.7 million for fiscal 2004 and fiscal
2003, respectively. The increase in interest expense of $11.7 million for
fiscal 2003 was primarily due to the
interest expense associated with our limited recourse and non-recourse
monetizations of $7.7 million, increased rates on our senior subordinated debt
and higher short-term rates on our senior credit facilities.
16


Our miscellaneous, net category included
currency losses of $2.3 million in fiscal 2004 compared to currency gains of
$5.4 million and $2.9 million in fiscal 2003 and 2002, respectively. We enter into
certain foreign currency contracts, principally forward contracts, to manage
some of our foreign exchange risk. Some natural hedges are also used to
mitigate transaction and forecasted exposures. Through our foreign currency
hedging activities, we seek primarily to
minimize the risk that cash flows resulting from the sales of our products will
be affected by changes in exchange
rates. We do not designate our forward exchange contracts as hedges under SFAS
No. 133, Accounting for Derivative
Instruments and Hedging Activities, and as a result we recognize the mark-to-market
gain or loss on these
contracts in earnings.

For
additional information related to our derivative instruments, see Note 1 of the
Notes to Consolidated Financial Statements, Item 8 of Part II of this report
and the section captioned Market Risk below.
The change in currency for fiscal 2004
compared to fiscal 2003 was primarily attributable to our level of hedging positions as well as the expense associated
with our hedging transactions. The increase in currency gains for fiscal 2003 was primarily attributable to the
significant weakening of the U.S. dollar against the Euro, British pound and
Australian dollar.
Our
effective tax rate in fiscal 2004 was 36% as compared to 18% and 33% in fiscal
2003 and 2002, respectively. The
increase in our effective tax rate from 18% in fiscal 2003 to 36% in fiscal
2004 was primarily attributable to the change in accounting estimate in
the prior year and a change in the source of earnings among various jurisdictions with different tax rates in the current
year. The reduction in our effective tax rate from 33% in fiscal 2002 to 18% in
fiscal 2003 was principally due to a $2.1 million benefit to net income, or
$.05 per diluted share, resulting
from a change in accounting estimate attributable to tax benefits received from
foreign operations partially offset by the creation of a valuation allowance
for certain foreign net operating losses.
We
were affected by the adoption of SFAS No. 142, Goodwill and Other Intangible
Assets. As a result of this
accounting standard, we no longer amortize goodwill. This led to the reduction
of $6.1 million in goodwill amortization during fiscal 2002 compared to fiscal
2001. In addition, during fiscal 2002, we completed our review of our goodwill for impairment as required
by SFAS No. 142 and, as a result, we recorded a transitional impairment loss in
accordance with the transition rules of SFAS No. 142 of $114.5 million, or
$2.65 per share on a diluted basis,
primarily associated with our Gradall acquisition. This write-off was reported
as a cumulative effect of change in accounting principle in our Consolidated
Statements of Income.

CRITICAL ACCOUNTING
POLICIES AND ESTIMATES
Our accounting policies are more fully
described in Note 1 of the Notes to Consolidated Financial Statements, Item 8 of Part II of this report. As disclosed in
Note 1, the preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions about future events that
affect the amounts reported in the financial statements and related notes.
Future events and their effects cannot be determined with absolute certainty. Therefore, the determination
of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and
such differences may be material to the financial statements.
We
believe that of our significant accounting policies, the following may involve
a higher degree of judgment, estimation,
or complexity than other accounting policies.
Allowance for Doubtful Accounts and Reserves for Finance
Receivables:We evaluate the
collectibility of accounts and
finance receivables based on a combination of factors. In circumstances where
we are aware of a specific
customers inability to meet its financial obligations, a specific reserve is
recorded against amounts due to reduce the net recognized receivable to
the amount reasonably expected to be collected. Additional reserves are
established based upon our perception of the quality of the current
receivables, the current financial position of
our customers and past experience of collectibility. If the financial condition
of our customers were to deteriorate resulting in an impairment of their ability
to make payments, additional allowances would be required.
Income Taxes:We
record the estimated future tax effects of temporary differences between the
tax bases of assets and liabilities and amounts reported in the accompanying Consolidated Balance Sheets, as well
as operating loss and tax credit carryforwards. We evaluate the recoverability of any tax assets recorded on
the balance sheet and provide any necessary allowances as required. The carrying value of the net deferred tax
assets assumes that we will be able to generate sufficient future taxable income in certain tax jurisdictions,
based on estimates and assumptions. If these estimates and related assumptions change in the future, we may be
required to record additional valuation allowances against our deferred
tax assets resulting in additional income tax expense in our Consolidated
Statements of Income. In assessing the realizability of deferred tax assets, we
consider whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. We
consider the

17

scheduled reversal of deferred tax
liabilities, projected future taxable income, carry back opportunities, and tax
planning strategies in making
the assessment. We evaluate the ability to realize the deferred tax assets and
assess the need for additional
valuation allowances quarterly. In addition, we are subject to income tax laws
in many countries and judgment is
required in assessing the future tax consequences of events that have been recognized
in our financial statements or tax
returns. The final outcome of these future tax consequences, tax audits, and
changes in regulatory tax laws and rates could materially impact our financial
statements.
Inventory Valuation:Inventories are valued at the lower of cost or market. Certain items in
inventory may be considered
impaired, obsolete or excess, and as such, we may establish an allowance to
reduce the carrying value of these
items to their net realizable value. We also value used equipment taken in
trade from our customers. Based on certain estimates, assumptions and judgments
made from the information available at that time, we determine the
amounts in these inventory allowances. If these estimates and related
assumptions or the market change, we may be required to record additional
reserves.
Goodwill:We
perform a goodwill impairment test on at least an annual basis and more
frequently in certain circumstances.
We cannot predict the occurrence of certain events that might adversely affect
the reported value of goodwill. Such events may include, but are not
limited to, strategic decisions made in response to economic and competitive conditions, the impact of the
economic environment on our customer base, or a material negative change in a relationship with a
significant customer.

Guarantees of the Indebtedness of Others:We enter into agreements with finance companies
whereby our equipment is sold to a finance company, which, in turn,
sells or leases it to a customer. In some instances, we retain a liability in the event the customer defaults on the financing.
Under certain terms and conditions where we are aware of a customers inability
to meet its financial obligations, we establish a specific reserve against the
liability. Additional reserves have been established related to these
guarantees based upon the current financial position of these customers and
based on estimates and judgments made from information available at that time. If the financial condition of our
customers were to deteriorate resulting in an impairment of their ability
to make payments, additional allowances would be required. Although we are
liable for the entire amount under
guarantees, our losses would be mitigated by the value of the underlying
collateral, JLG equipment.
In
addition, we monetize a substantial portion of the receivables originated by
AFS through an ongoing program of
syndications, limited recourse financings and other monetization transactions.
In connection with some of these monetization transactions, we have a loss
exposure associated with our pledged finance receivables related to possible defaults by the obligors
under the terms of the contracts, which comprise these finance receivables. Allowances have been established
related to these monetization transactions based upon the current financial position of these customers and based
on estimates and judgments made from information available at that time. If the financial condition of these
obligors were to deteriorate resulting in an impairment of their ability
to make payments, additional allowances would be required. We discuss our
guarantee agreements in Note 17 of the Notes to Consolidated Financial
Statements, Item 8 of Part II of this report.
Long-Lived Assets:We review our long-lived assets for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may
not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of the assets to the future net cash flows expected to be generated by the assets. If such assets are
considered to be impaired, the impairment to be recognized is measured
by the amount by which the carrying amount of the assets exceeds their fair
value. Judgments made by us related to the expected useful lives of long-lived
assets and our ability to realize any undiscounted cash flows in excess of the carrying amounts of such assets
are affected by factors such as the ongoing maintenance and improvements of the assets, changes in the
expected use of the assets, changes in economic conditions, changes in operating performance and anticipated future
cash flows. Since judgment is involved in determining the fair value of
long-lived assets, there is risk that the carrying value of our long-lived
assets may require adjustment in future periods. If actual fair value is less
than our estimates, long-lived assets may be overstated on the balance sheet
and a charge would need to be taken against earnings.

Pension and Postretirement Benefits:Pension and postretirement benefit costs and
obligations are dependent on
assumptions used in calculation of these amounts. These assumptions, used by
actuaries, include discount rates, expected
return on plan assets for funded plans, rate of salary increases, health care
cost trend rates, mortality rates and other factors. In accordance with GAAP,
actual results that differ from the actuarial assumptions are accumulated
and amortized to future periods and therefore affect recognized expense and
recorded obligations in future periods.
While we believe that the assumptions used are appropriate, differences in
actual experience or changes in assumptions may materially effect our financial
position or results of operations.
18

Product Liability:Our business exposes us to possible claims for personal injury or death
and property damage resulting from
the use of equipment that we rent or sell. We maintain insurance through a
combination of self-insurance
retentions, primary insurance and excess insurance coverage. We monitor claims
and potential claims of which we
become aware and establish liability reserves for the self-insurance amounts
based on our liability estimates for such claims. Our liability estimates with
respect to claims are based on internal evaluations of the merits of
individual claims and the reserves assigned by our independent insurance claims
adjustment firm. The methods of making such
estimates and establishing the resulting accrued liability are reviewed
frequently, and adjustments resulting from our reviews are reflected in
current earnings. If these estimates and related assumptions change, we may be
required to record additional reserves.
Restructuring and Restructuring-Related:As more fully described in Note 16 of the Notes
to Consolidated Financial Statements, Item 8 Part II of this report, we
recognized pre-tax restructuring and restructuring-related charges of
$0.1 million, $4.0 million and $6.7 million during fiscal 2004, fiscal 2003 and
fiscal 2002, respectively. The related reserves reflect estimates, including
those pertaining to separation costs, settlements of contractual obligations, and asset valuations. We reassess
the reserve requirements to complete each individual plan within the program at the end of each reporting period
or as conditions change. Actual experience has been and may continue to be
different from the estimates used to establish the reserves.

Revenue
Recognition:Sales of non-military equipment and service parts are
unconditional sales that are recorded when
product is shipped and invoiced to independently owned and operated
distributors and customers. Normally our sales terms are free-on-board
shipping point (FOB shipping point). However, certain sales, including our
All-Terrain Lifter, Army System (ATLAS) brand of military telehandler
products, may be invoiced prior to
the time customers take physical possession. In such cases, revenue is
recognized only when the customer has
a fixed commitment to purchase the equipment, the equipment has been completed
and made available to the customer
for pickup or delivery, and the customer has requested that we hold the
equipment for pickup or delivery at
a time specified by the customer. In such cases, the equipment is invoiced
under our customary billing terms,
title to the units and risk of ownership passes to the customer upon invoicing,
the equipment is segregated from our inventory and identified as belonging to
the customer and we have no further obligations under the order other than
customary post-sales support activities. During fiscal 2004, less than 2% of
our sales were invoiced and the revenue
recognized prior to customers taking physical possession. In the instances that
our shipping terms are shipping point destination, revenue is recorded
at the time the goods reach our customers.
The
sales terms for our ATLAS brand of military telehandler products are FOB
Origin. In order for us to recognize
revenue, the ATLAS telehandler products must pass inspection by a government
Quality Assurance Representative
(QAR) at the point of production to insure adequate special paint
requirements. The sales terms of our
Millennia Military Vehicle (MMV) brand of military telehandler products are
FOB Destination. In order for us to
recognize revenue, the MMV telehandler products must pass inspection by a
government QAR at the point of
production to insure adequate special paint requirements and by a government
representative at the point of destination to verify delivery without
damage during transportation.
Revenue
from certain equipment lease contracts is accounted for as sales-type leases.
The present value of all payments, net of executory costs (such as legal
fees), is recorded as revenue and the related cost of the equipment is charged to cost of sales. The associated
interest is recorded over the term of the lease using the interest method. In addition, net revenues include rental
revenues earned on the lease of equipment held for rental. Rental
revenues are recognized in the period earned over the lease term.

We
enter into rental purchase guarantee agreements (RPGs) with some of our
customers. These agreements are
normally for a term of no greater than twelve months and provide for rental
payments with a guaranteed purchase
option at the end of the agreement. Under the terms of the RPG, the customer is
obligated to purchase the equipment at the end of the rental period. The
full amount is recorded as revenue and the related cost of the equipment is
charged to cost of sales at the inception of the agreement.
We
ship equipment on a limited basis to certain customers on consignment, which
under GAAP allows recognition of
the revenues only upon final sale of the equipment by the consignee. At July
31, 2004, we had $4.9 million of
inventory on consignment.
Warranty:
Weestablish reserves related to the warranties we provide on our
products. Specific reserves are maintained for programs related to machine
safety and reliability issues. Estimates are made regarding the size of the population, the type of program, costs to
be incurred by us and estimated participation. Additional reserves are
maintained based on the historical percentage relationships of such costs to
machine sales and applied to
19

current equipment sales. If these estimates
and related assumptions change, we may be required to record additional
reserves.
FINANCIAL CONDITION
Cash generated from operating activities
was $11.7 million for fiscal 2004 compared to cash used in operating activities
of $95.2 million in fiscal 2003. The increase in cash generated from operations
in fiscal 2004 primarily resulted from an
increase in accounts payable largely resulting from higher production levels,
fewer originations of finance
receivables as a result of lower demand for customer financing and the program
agreements we entered into during fiscal 2004 to provide financing solutions
for our customers and our increased profitability. Partially offsetting these effects were an
increase in trade receivables resulting from increased sales during fiscal 2004
as compared to fiscal 2003 and higher inventory levels to support the increased
business activity. The operating
cash deficit in fiscal 2003 resulted primarily from our increased investment in
finance receivables resulting from new originations, lower trade account
payables largely resulting from the timing of payments and increased trade receivables resulting from an increase in
the days sales outstanding from 86 days at July 31, 2002 to 103 days at July
31, 2003. The increase in the days sales outstanding resulted primarily from
increases in outstanding RPGs, European markets remaining in recession,
and the relative scarcity of third-party credit to finance equipment
purchases. These circumstances resulted in an increase in our European
receivables coincident with a decline in our overall European sales. Partially
offsetting these effects was a decrease in inventories. Additional information regarding our RPGs is included in the
section captioned Critical Accounting Policies and Estimates Revenue Recognition above.
During fiscal 2004, we used a net of
$114.9 million of cash for investing activities compared to $8.6 million for
fiscal 2003. Our increased use of cash by investing activities for fiscal 2004
was principally due to the OmniQuip acquisition
that we completed during the first quarter of fiscal 2004 and increases in our
rental fleet, partially offset by higher sales of our rental fleet. Our
decreased use of cash by investing activities for fiscal 2003 was principally due to lower expenditures for
equipment held for rental and property, plant and equipment partially offset by a decrease in sales of equipment held
for rental.

We received net cash of $7.8 million from
financing activities for fiscal 2004 compared to net cash received of $228.5 million for fiscal 2003. The decrease in
cash provided by financing activities was largely attributable to the sale in fiscal 2003 of our $125 million 8 1/4% senior
unsecured notes due 2008 and fewer monetizations of our finance receivables due to the impact of prior
monetizations which reduced the marketability of our remaining portfolio and the new program agreements we
entered into during fiscal 2004. The increase in cash provided from financing activities in fiscal 2003 compared
to fiscal 2002 largely resulted from increased debt, which included the
sale of our $125 million 8 1/4% senior unsecured notes due 2008 and the proceeds from
the monetization of our finance
receivables, a portion of which was used to finance working capital
requirements.
Due to our seasonality of sales, during
certain periods we may generate negative cash flows from operations despite reporting profits. Generally, this may
occur in periods in which we are building inventory levels in anticipation of
sales during peak periods as well as other uses of working capital related to
dating terms associated with trade
receivables or other sale arrangements such as the previously described RPGs.
The
following table provides a summary of our contractual obligations (in
thousands) at July 31, 2004:
Payments Due by PeriodTotal
  
  Less than 
  1 Year
  
  1-3 Years
  
  4-5 Years
  
  After
  5 YearsShort- and long-term debt (a)
  
  $
  301,740
  
  $
  1,729
  
  $
  2,152
  
  $
  124,652
  
  $
  173,207Limited recourse debt (b)
  
  
  121,794
  
  
  32,585
  
  
  65,855
  
  
  19,295
  
  
  4,059Operating leases (c)
  
  
  29,396
  
  
  6,270
  
  
  13,903
  
  
  3,719
  
  
  5,504Total contractual obligations (d)
  
  $
  452,930
  
  $
  40,584
  
  $
  81,910
  
  $
  147,666
  
  $
  182,770(a)
  Includes our two note issues and indebtedness under bank
  credit facilities as more fully described in Note 18 of Notes to ConsolidatedFinancial Statements,
  Item 8 of Part II of this report.(b)
  Our limited recourse debt is the result of the sale of
  finance receivables through limited recourse monetization transactions.(c)
  In accordance with SFAS No. 13, Accounting for Leases,
  operating lease obligations are not reflected in the balance sheet.(d)
  We anticipate that funding of our pension and
  postretirement benefit plans in fiscal 2005 will approximate $3.4 million.
  That amountprincipally represents contributions
  either required by regulations or laws or, with respect to unfunded plans,
  necessary to fund current benefits. We have not presented estimated pension
  and postretirement funding in the table above as the funding can vary from
  year toyear based upon changes in the fair value of the
  plan assets and actuarial assumptions.20


The following table provides a summary of
our other commercial commitments (in thousands) at July 31, 2004:

Amount of Commitment Expiration Per PeriodTotal
  Amounts
  Committed
  
  Less than
  1 Year
  
  1-3 Years
  
  4-5 Years
  
  Over
  5 YearsStandby letters of credit
  
  $
  10,749
  
  $
  10,749
  
  $
  
  
  $
  
  
  $
  Guarantees (a)
  
  
  102,188
  
  
  1,770
  
  
  57,744
  
  
  28,007
  
  
  14,667Total commercial commitments
  
  $
  112,937
  
  $
  12,519
  
  $
  57,744
  
  $
  28,007
  
  $
  14,667(a)
  We
  discuss our guarantee agreements in Note 17 of the Notes to Consolidated
  Financial Statements, Item 8 of Part II of this report.On April 30, 2004, we completed the
purchase of Delta for $9.9 million, which included transaction expenses of $0.9 million. See Note 2 of the Notes to
Consolidated Financial Statements, Item 8 of Part II of this report. Headquartered in Tonneins, France, Delta has two
facilities that manufacture the Toucan Manlift brand of vertical mast lifts, a
line of aerial work platforms distributed throughout Europe for use principally
in industrial and maintenance operations. In addition, we purchased certain
intellectual property and related assets of Manitowocs discontinued product
lines, which will permit us to re-launch selected Liftlux models. We funded the purchase price with cash generated from
operations.

On
August 1, 2003, we completed the OmniQuip acquisition, which includes all
operations relating to the SkyTrak
and Lull brand telehandler products. See Note 2 of the Notes to Consolidated
Financial Statements, Item 8 of Part
II of this report. The purchase price was $100 million, with $90 million paid
in cash at closing and $10 million paid in the form of an unsecured
subordinated promissory note due on the second anniversary of the
closing date. On February 4, 2004, we paid off the $10 million unsecured
subordinated promissory note payable to a
subsidiary of Textron related to the acquisition of OmniQuip and post-closing
purchase price adjustments in favor of Textron totaling $1.5 million. In
addition, we incurred $5.6 million in transaction expenses. We funded the cash
portion of the purchase price and the transaction expenses with remaining
unallocated proceeds from the sale of our $125 million senior unsecured notes
due 2008 and anticipate funding approximately $45.9 million in integration
expenses over a four-year period with cash generated from operations and borrowings under our credit facilities.
Our
principle sources of liquidity for fiscal 2005 will be cash generated from
operations and borrowings under our credit facilities. Availability of funds
under our credit facilities and monetizations of finance receivables depend on
a variety of factors described below. As of July 31, 2004, we had an unused
credit commitment totaling $190 million.
We
have a three-year $175 million senior secured revolving credit facility that
expires September 2006 and a paripassu,one-year $15 million cash management facility that
expires September 23, 2005. Both facilities are secured by a lien on substantially all of our assets.
Availability of credit requires compliance with financial and other covenants,
including a requirement that we maintain (i) leverage ratios during fiscal 2005
of Net Funded Debt to EBITDA measured on a
rolling four quarters and Net Funded Senior Debt to EBITDA measured on a
rolling four quarters not to exceed
5.00 to 1.00 and 2.00 to 1.00, respectively, (ii) a fixed charge coverage ratio
of not less than 1.75 to 1.00
through October 31, 2004 and 2.00 to 1.00 through July 31, 2005, and (iii) a
Tangible Net Worth of at least $194 million, plus 50% of Consolidated
Net Income on a cumulative basis for each preceding fiscal quarter, commencing with the quarter ended July 31, 2003.
Availability of credit also will be limited by a borrowing base determined
on a monthly basis by reference to 85% of eligible domestic accounts receivable
and percentages ranging between 25% and 70%
of various categories of domestic inventory. Accordingly, credit available to
us under these facilities will vary with seasonal and other changes in the
borrowing base and leverage ratios. We do not expect to have full
availability of the stated maximum amount of credit at all times. However,
based on our current business plan, we
expect to have sufficient credit availability that combined with cash to be
generated from operations will meet
our expected seasonal requirements for working capital and planned capital and integration expenditures for fiscal 2005.

With the commencement of our Access
Financial Solutions segment in fiscal 2002, we initially relied on cash
generated from operations and borrowings under our credit facilities to fund
our originations of customer finance receivables.
Through this approach, we generated a diverse portfolio of financial assets
which we seasoned and began to
monetize principally through limited recourse syndications. Our ability to
continue originations of finance receivables to be held by us as
financial assets depends on the availability of monetizations, which, in turn, depends on the credit quality of our
customers, the degree of credit enhancement or recourse that we are able to offer, and market demand among third-party
financial institutions for our finance receivables. During
21


fiscal 2004 and fiscal 2003, we monetized
$13.4 million and $112.8 million, respectively, in finance receivables through
syndications. Although monetizations generate cash, under SFAS No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities, the monetized portion of our finance receivables portfolio remains recorded on our balance sheet
as limited recourse debt.

We
expect that our originations and monetizations of finance receivables will
continue and that our limited recourse
debt balance will continue to decline. In September 2003, we entered into a
program agreement with General Electric Capital Corporation (GECC) to
provide private label financing solutions for our customers in North America and, in March 2004, we entered into
an Operating Agreement with GECC to provide financing solutions for our customers in Europe. In
addition, in April, June and July 2004, we entered into additional program agreements with other finance companies to
provide private label financing solutions for our customers in the United States and Canada. The terms of
these additional agreements are similar to those under the GECC agreements. Under all of these agreements, our
customers will continue to have direct interaction with our Access Financial Solutions personnel, but with
the finance companies providing direct funding for transactions that meet
agreed credit criteria subject to limited recourse to us. Transactions funded
by the finance companies will not be held by us as financial assets, and
therefore their subsequent monetization will not be recorded on our balance sheet as limited recourse debt.
Transactions not funded by the finance companies may still be funded by us to the extent of our liquidity sources and
subsequently monetized or they may be funded directly by other credit providers. During fiscal 2004, $21.2
million of sales to our customers were funded through these programs.
As discussed in Note 17 of the Notes to
Consolidated Financial Statements, Item 8 of Part II of this report, we are a party to multiple agreements whereby we
guarantee $102.2 million in indebtedness of others. If the financial condition
of our customers were to deteriorate resulting in an impairment of their
ability to make payments, additional allowances would be required. Also as
discussed in Note 17 of the Notes to Consolidated Financial Statements our future results of operations,
financial condition and liquidity may be affected to the extent that our
ultimate exposure with respect to product liability varies from current
estimates. And as reported in Item 3 of
Part I of this report, the SEC has commenced an informal inquiry relating to
our accounting and financial reporting following our February 18, 2004
announcement that we would be restating our audited financial statements for the fiscal year ended July 31, 2003
and for the first fiscal quarter ended October 31, 2003. Although the SECs
notification advised that the existence of the inquiry should not be construed
as an expression or opinion of the SEC that any violation of law has
occurred, nor should it reflect adversely on the character or reliability of
any person or entity or on the merits of our securities, until this inquiry is
resolved it may have an adverse effect on
our ability to undertake additional financing or capital markets transactions.
OUTLOOK

This
Outlook section and other parts of this Managements Discussion and Analysis
contain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are
identified by words such as may, believes, expects, plans and similar
terminology. These statements are not
guarantees of future performance and involve a number of risks and
uncertainties that could cause actual results to differ materially from
those indicated by the forward-looking statements. Important factors that could cause actual results to differ
materially from those suggested by the forward-looking statements include, but are not limited to, the following:
(i) general economic and market conditions, including political and economic uncertainty in areas of the world
where we do business; (ii) varying and seasonal levels of demand for our
products and services; (iii) limitations on customer access to credit for
purchases; (iv) credit risks from our financing
of customer purchases; (v) interest and foreign currency exchange rates; and
(vi) costs of raw materials and energy, as well as other risks as
described in Cautionary Statements Pursuant to the Securities Litigation Reform Act which is an exhibit to this report.
We undertake no obligation to publicly update or revise any forward-looking
statements.

Absent
any major economic or geopolitical disruptions, we are optimistic regarding the
overall outlook for our Company in
fiscal 2005.
Regarding
our Machinery segment, our customers willingness and ability to refresh their
fleets primarily depend on three factors: (i) positive economic signals,
(ii) a healthy used equipment market and (iii) our customers ability to finance significant new
purchases. These factors are trending favorably.
22

In
North America, we expect a low inflation and a low interest rate environment
that will be favorable for construction
spending. In addition to a healthy economy, we anticipate increased demand for
our products due to new construction techniques and practices that are driving
faster project turnaround and creating new applications for our AWPs and telehandlers. This increased demand is coupled
with an increase in the number of providers of access equipment to
end-users as the overall structure of our distribution channels has changed
from primarily independent rental companies
and large consolidators to a mixed customer base that includes new channels
such as industrial, do-it-yourself demand and military. We expect that the
overall increase in demand for access
equipment coupled with our new distribution channels will result in a healthy
used equipment market for fiscal
2005. Lastly, with the anticipated low interest rates and more favorable
lending terms available from banks, we also expect that our customers
will be able to finance new purchases of access equipment at a lower cost of
capital.
Lagging
behind the North American economic recovery, international economies are
improving slowly, albeit at differing
rates in different regions. In Europe, many of the access equipment specialists
are beginning to expand their
offerings and cross multi-country rental markets. While this expansion lacks
the consolidation that was experienced in the U.S., more rental
companies are expanding into new territories. Europe is also emerging from a significant economic recession and continues to
be the driving force of international revenues. In Asia, more affordable
used equipment is aiding in that regions adoption of access equipment and
providing an exit strategy for fleet
replacement in other more mature markets.

Turning
to our Equipment Services segment, the major factors that drive demand for parts
and services are trending favorably
as we are observing (i) higher fleet utilization, (ii) growing demand for
remanufactured, reconditioned and
refurbished equipment as an equipment life cycle extension, and (iii) a limited
servicing capability currently
available in the marketplace. Current conditions afford ample opportunity to
grow our existing services and
expand into new arenas. For example, we expanded our after-market services in
Europe by establishing an equipment services remanufacturing operation in
Tonneins, France, bringing this successful North American business model to the international marketplace.
Additionally, as the population and age of access equipment increases, we are positioned to take advantage of
servicing growth opportunities through our new ServicePlus initiative, launched
in Houston, Texas during the fourth quarter of fiscal 2004.
In our
Access Financial Solutions segment, the outlook for capital equipment financing
is improving. Accordingly, we expect
stable operations as we continue to reap the benefits of our vendor financing
relationships in North America and focus on developing similar
relationships in Europe.
Although
demand for access equipment worldwide is growing and we believe that we have
the right products and services to
meet those demands, our business is not without challenges. The most
challenging element in the new
fiscal year will be the high costs of raw materials, supplier capacity
constraints, and manufacturing inefficiencies associated with the steep ramp up of production. As in prior
years, the first half of the fiscal year is marked by seasonally lower sales,
and the first half of fiscal 2005 will be further challenged by a near-term
weighted average cost of steel anticipated to be considerably higher than that
expected for the full year. Our response to the higher costs of raw
materials included initiating a steel surcharge of 2.8% in March 2004, and more
recently, instituting a base price increase averaging 3%.
Our five-year strategic plan is designed
to reach our $2 billion revenue goal. Demand for access equipment worldwide is growing, and we believe that we have
the right products and services, and manufacturing flexibility to meet those
demands. Despite the current challenges, we will maintain fiscal discipline and
focus on what is important to our stakeholders: sales growth, quality of
earnings, asset intensity and risk management.

MARKET RISK
We
are exposed to market risk from changes in interest rates and foreign currency
exchange rates, which could affect our future results of operations and
financial condition. We manage exposure to these risks principally through our regular operating and financing
activities.
23

We are exposed to changes in interest
rates as a result of our outstanding debt. In June 2003, we entered into a $70
million fixed-to-variable interest rate swap agreement with a fixed-rate
receipt of 8 3/8% in order to mitigate our
interest rate exposure. The basis of the variable rate paid is the London
Interbank Offered Rate (LIBOR) plus 4.51%. In July 2003, we entered into
a $62.5 million fixed-to-variable interest rate swap agreement with a fixed-rate receipt of 8 1/4%
in order to mitigate our interest rate exposure. The basis of the
variable rate paid is the London
Interbank Offered Rate (LIBOR) plus 5.15%. During fiscal 2003, we terminated
our $87.5 million notional fixed-to-variable
interest rate swap agreement with a fixed-rate receipt of 8 3/8% that we
entered into during June 2002, which
resulted in a deferred gain of $6.2 million. This $6.2 million deferred gain
will offset interest expense over the remaining life of the debt. At
July 31, 2004, we had $132.5 million of interest rate swap agreements
outstanding. These swap agreements are designated as hedges of the fixed-rate
borrowings which are outstanding and are structured as perfect hedges in
accordance with SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. Total interest bearing liabilities at July 31, 2004
consisted of $123.7 million in variable-rate
borrowing and $299.8 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 $0.9
million on an annual basis. A hypothetical 10% change in interest rates would
not result in a material change in
the fair value of our fixed-rate debt.
We manufacture our products in the United
States, Belgium and France and sell these products in North America and Europe as well as other international
markets. As a result of the sales of our products in foreign markets,
our earnings are affected by fluctuations in the value of the U.S. dollar, as
compared to foreign currencies resulting
from transactions in foreign markets. At July 31, 2004, the result of a uniform
10% strengthening in the value of the
dollar relative to the currencies in which our transactions are denominated
would have the effect of reducing gross profits for the year ended July
31, 2004 by approximately $21.1 million. This calculation assumes that each
exchange rate would change in the same direction relative to the U.S. dollar.

In
addition to the direct effects of changes in exchange rates, such changes also
affect the volume of sales or the foreign currency sales price as competitors
products become more or less attractive. Our sensitivity analysis of the
effects of changes in foreign currency exchange rates does not factor in
potential changes in sales levels or
local currency prices.
We
enter into certain foreign currency contracts, principally forward exchanges,
to manage some of our foreign exchange risk. We enter into certain currency
forward contracts to mitigate our economic risk to foreign exchange risk that qualify as derivative instruments under
SFAS No. 133. However, we have not designated these instruments as hedge
transactions under SFAS No. 133 and, accordingly, the mark-to-market impact of
these derivatives is recorded each period
to current earnings. Some natural hedges are also used to mitigate transaction
and forecasted exposures. At July
31, 2004, we were managing $194.6 million of foreign currency contracts.
Through our foreign currency hedging
activities, we seek primarily to minimize the risk that cash flows resulting
from the sales of our products will be affected by changes in exchange
rates. These foreign currency contracts have not historically been material to our financial position and results of
operations.
Additional
information regarding our management of exposure to market risks is included in
Note 1 of the Notes to Consolidated Financial Statements, Item 8 of Part
II of this report.
RECENT ACCOUNTING
PRONOUNCEMENTS

Information regarding recent accounting
pronouncements is included in Note 1 of the Notes to Consolidated Financial Statements, Item 8 of Part II of this
report.

OFF-BALANCE SHEET
ARRANGEMENTS
Information
regarding off-balance sheet arrangements is included in our Contractual
Obligations and Other Commercial
Commitments tables, Item 7 of Part II of this report and in Note 3 and Note 17
of the Notes to Consolidated Financial Statements, Item 8 of Part II of
this report.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information regarding this item is
included under the heading Market Risk in Managements Discussion and Analysis
of Financial Condition and Results of Operations, Item 7 of Part II of this
report.
24

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED STATEMENTS OF
INCOME
Years Ended July 31(in thousands, except per
  share data)
  
  2004
  
  2003
  
  2002RevenuesNet sales
  
  $
  1,170,186
  
  $
  724,819
  
  $
  745,870Financial products
  
  
  15,203
  
  
  19,184
  
  
  14,227Rentals
  
  
  8,573
  
  
  7,125
  
  
  9,9731,193,962
  
  
  751,128
  
  
  770,070Cost of sales
  
  
  968,562
  
  
  616,686
  
  
  637,983Gross profit
  
  
  225,400
  
  
  134,442
  
  
  132,087Selling and administrative expenses
  
  
  128,465
  
  
  79,225
  
  
  79,693Product development expenses
  
  
  21,002
  
  
  16,142
  
  
  15,586Restructuring charges
  
  
  27
  
  
  2,754
  
  
  6,091Income from operations
  
  
  75,906
  
  
  36,321
  
  
  30,717Interest
  expense
  
  
  (38,098
  )
  
  (27,985
  )
  
  (16,255
  )Miscellaneous, net
  
  
  4,073
  
  
  6,691
  
  
  4,759Income
  before taxes and cumulative effect of change in accounting principle
  
  
  41,881
  
  
  15,027
  
  
  19,221Income tax provision
  
  
  15,232
  
  
  2,635
  
  
  6,343Income
  before cumulative effect of change in accounting principle
  
  
  26,649
  
  
  12,392
  
  
  12,878Cumulative effect of change in accounting
  principle
  
  
  
  
  
  
  
  
  (114,470
  )Net income (loss)
  
  $
  26,649
  
  $
  12,392
  
  $
  (101,592
  )Earnings (loss) per common share:Earnings
  per common share before cumulative effect of change in accounting
  principle
  
  $
  .62
  
  $
  .29
  
  $
  .31Cumulative
  effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.72
  )Earnings (loss) per common share
  
  $
  .62
  
  $
  .29
  
  $
  (2.41
  )Earnings
  (loss) per common shareassuming dilution:Earnings
  per common shareassuming dilution before cumulative effect of
  change in accounting principle
  
  $
  .61
  
  $
  .29
  
  $
  .30Cumulative
  effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.65
  )Earnings
  (loss) per common shareassuming dilution
  
  $
  .61
  
  $
  .29
  
  $
  (2.35
  )Cash dividends per share
  
  $
  .02
  
  $
  .02
  
  $
  .025Weighted
  average shares outstanding
  
  
  42,860
  
  
  42,601
  
  
  42,082Weighted
  average shares outstandingassuming dilution
  
  
  44,032
  
  
  42,866
  
  
  43,170The accompanying notes are
an integral part of these financial statements.
25


CONSOLIDATED BALANCE SHEETS

July 31(in thousands, except per share data)
  
  2004
  
  2003ASSETSCurrent AssetsCash and cash equivalents
  
  $
  37,656
  
  $
  132,809Accounts receivable, less allowance for doubtful accounts of $7,814 in 2004 and $7,363 in 2003
  
  
  362,819
  
  
  257,519Finance receivables, less provision for losses of $1,350 in 2004 and $529 in 2003
  
  
  5,920
  
  
  3,168Pledged finance receivables, less provision for losses of $2,642 in
  2004 and $2,656 in 2003
  
  
  31,858
  
  
  41,334Inventories
  
  
  154,405
  
  
  122,675Other current assets
  
  
  41,058
  
  
  46,474Total Current Assets
  
  
  633,716
  
  
  603,979Property, plant and equipment, net
  
  
  91,504
  
  
  79,699Equipment held for rental, net of accumulated depreciation of $9,055 in 2004 and $7,821 in 2003
  
  
  21,190
  
  
  19,651Finance receivables, less current portion
  
  
  33,747
  
  
  31,156Pledged finance receivables, less current portion
  
  
  86,559
  
  
  119,073Goodwill
  
  
  62,885
  
  
  29,509Intangible assets, net of accumulated amortization of $3,181 in 2004
  
  
  35,240
  
  
  Other assets
  
  
  62,603
  
  
  53,135$
  1,027,444
  
  $
  936,202LIABILITIES AND SHAREHOLDERS EQUITYCurrent
  LiabilitiesShort-term debt
  
  $
  679
  
  $
  635Current
  portion of long-term debt
  
  
  1,050
  
  
  837Current portion of limited recourse debt from finance receivables
  monetizations
  
  
  32,585
  
  
  45,279Accounts payable
  
  
  139,990
  
  
  83,408Accrued expenses
  
  
  118,860
  
  
  91,057Total Current Liabilities
  
  
  293,164
  
  
  221,216Long-term debt, less current portion
  
  
  300,011
  
  
  294,158Limited recourse debt from finance receivables monetizations, less current portion
  
  
  89,209
  
  
  119,661Accrued post-retirement benefits
  
  
  29,666
  
  
  26,179Other long-term liabilities
  
  
  20,542
  
  
  15,160Provisions for contingencies
  
  
  13,582
  
  
  12,114Shareholders EquityCapital stock:Authorized shares: 100,000 at $.20 par valueIssued and outstanding shares: 2004  43,903 shares; 2003  43,367 shares
  
  
  8,781
  
  
  8,673Additional paid-in capital
  
  
  29,571
  
  
  23,597Retained earnings
  
  
  254,268
  
  
  228,490Unearned compensation
  
  
  (5,333
  )
  
  (5,428
  )Accumulated other comprehensive loss
  
  
  (6,017
  )
  
  (7,618
  )Total Shareholders Equity
  
  
  281,270
  
  
  247,714$
  1,027,444
  
  $
  936,202The accompanying notes are an integral
part of these financial statements.
26


CONSOLIDATED STATEMENTS OF
SHAREHOLDERS EQUITY

AdditionalPaid-inCapital
  
  RetainedEarnings
  
  UnearnedCompensation
  
  AccumulatedOtherComprehensive(Loss) Income
  
  TotalShareholdersEquityCapitalStock(In thousands, except
      per share data)Shares
  
  Par ValueBalances at July 31, 2001
  
  
  42,144
  
  
  $
  8,429
  
  
  
  $
  14,256
  
  
  $
  319,607
  
  
  $
  (3,377
  )
  
  
  $
  (5,474
  )
  
  
  $
  333,441Comprehensive
  loss:Net loss for the year
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (101,592
  )Aggregate translation
  adjustment
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (753
  )Minimum pension liability
  adjustment, net of deferred tax benefit of $232
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (431
  )Total
  comprehensive loss
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (102,776
  )Dividends
  paid: $.025 per share
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (1,058
  )
  
  
  
  
  
  
  
  
  
  
  
  
  (1,058
  )Shares
  issued under stock plans
  
  
  584
  
  
  
  117
  
  
  
  
  1,876
  
  
  
  
  
  
  
  29
  
  
  
  
  
  
  
  
  
  2,022Tax
  benefit related to exercise ofnonqualified stock options
  
  
  
  
  
  
  
  
  
  
  
  2,714
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  2,714Amortization
  of unearnedcompensation
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  1,699
  
  
  
  
  
  
  
  
  
  1,699Balances
  at July 31, 2002
  
  
  42,728
  
  
  
  8,546
  
  
  
  
  18,846
  
  
  
  216,957
  
  
  
  (1,649
  )
  
  
  
  (6,658
  )
  
  
  
  236,042Comprehensive
  income:Net income for the year
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  12,392Aggregate translation
  adjustment
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  1,276Minimum pension liability
  adjustment, net of deferred tax benefit of $1,201
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (2,236
  )Total
  comprehensive income
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  11,432Dividends
  paid: $.02 per share
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (859
  )
  
  
  
  
  
  
  
  
  
  
  
  
  (859
  )Shares
  issued under stock plans
  
  
  639
  
  
  
  127
  
  
  
  
  4,585
  
  
  
  
  
  
  
  (4,613
  )
  
  
  
  
  
  
  
  
  99Tax
  benefit related to exercise ofnonqualified stock options
  
  
  
  
  
  
  
  
  
  
  
  166
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  166Amortization
  of unearnedcompensation
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  834
  
  
  
  
  
  
  
  
  
  834Balances
  at July 31, 2003
  
  
  43,367
  
  
  
  8,673
  
  
  
  
  23,597
  
  
  
  228,490
  
  
  
  (5,428
  )
  
  
  
  (7,618
  )
  
  
  
  247,714Comprehensive
  income:Net income
  for the year
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  26,649Aggregate
  translation adjustment
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  154Minimum
  pension liability adjustment, net of deferred taxes of $695
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  1,447Total
  comprehensive income
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  28,250Dividends paid: $.02 per share
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  (871
  )
  
  
  
  
  
  
  
  
  
  
  
  
  (871
  )Shares issued under incentive plan
  
  
  536
  
  
  
  108
  
  
  
  
  5,269
  
  
  
  
  
  
  
  (2,963
  )
  
  
  
  
  
  
  
  
  2,414Tax benefit related to exercise ofnonqualified stock options
  
  
  
  
  
  
  
  
  
  
  
  705
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  705Amortization of unearnedcompensation
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  3,058
  
  
  
  
  
  
  
  
  
  3,058Balances at July 31, 2004
  
  
  43,903
  
  
  $
  8,781
  
  
  
  $
  29,571
  
  
  $
  254,268
  
  
  $
  (5,333
  )
  
  
  $
  (6,017
  )
  
  
  $
  281,270The accompanying notes are an integral
part of these financial statements.
27

CONSOLIDATED STATEMENTS OF CASH
FLOWS
Years
  Ended July 31(in thousands)
  
  2004
  
  2003
  
  2002OPERATIONSNet income (loss)
  
  $
  26,649
  
  $
  12,392
  
  $
  (101,592
  )Adjustments to reconcile
  net income to cash flow from operating activities:Loss on sale of property,
  plant and equipment
  
  
  319
  
  
  266
  
  
  392Gain on sale of equipment
  held for rental
  
  
  (12,451
  )
  
  (6,794
  )
  
  (8,049
  )Non-cash charges and
  credits:Cumulative effect of
  change in accounting principle
  
  
  
  
  
  
  
  
  114,470Depreciation and
  amortization
  
  
  25,681
  
  
  19,937
  
  
  20,959Provision for self-insured
  losses
  
  
  10,295
  
  
  6,344
  
  
  7,943Deferred income taxes
  
  
  (7,869
  )
  
  (6,336
  )
  
  (4,635
  )Other
  
  
  11,522
  
  
  7,027
  
  
  3,689Changes in selected
  working capital items:Accounts receivable
  
  
  (66,296
  )
  
  (35,324
  )
  
  (40,110
  )Inventories
  
  
  9,188
  
  
  43,137
  
  
  24,462Accounts payable
  
  
  33,207
  
  
  (46,026
  )
  
  52,685Other operating assets and
  liabilities
  
  
  13,506
  
  
  (12,706
  )
  
  15,194Changes in finance
  receivables
  
  
  (6,112
  )
  
  40,487
  
  
  57,154Changes in pledged finance
  receivables
  
  
  (14,866
  )
  
  (114,271
  )
  
  (91,331
  )Changes in other assets
  and liabilities
  
  
  (11,090
  )
  
  (3,295
  )
  
  (28,136
  )Cash flow from operating
  activities
  
  
  11,683
  
  
  (95,162
  )
  
  23,095INVESTMENTSPurchases of property,
  plant and equipment
  
  
  (12,387
  )
  
  (10,806
  )
  
  (12,954
  )Proceeds from the sale of
  property, plant and equipment
  
  
  90
  
  
  216
  
  
  172Purchases of equipment
  held for rental
  
  
  (26,689
  )
  
  (16,342
  )
  
  (26,429
  )Proceeds from the sale of
  equipment held for rental
  
  
  33,269
  
  
  19,063
  
  
  28,924Cash portion of
  acquisitions
  
  
  (109,557
  )
  
  
  
  
  Other
  
  
  333
  
  
  (689
  )
  
  405Cash flow from investing
  activities
  
  
  (114,941
  )
  
  (8,558
  )
  
  (9,882
  )FINANCINGNet increase (decrease) in
  short-term debt
  
  
  27
  
  
  (13,497
  )
  
  (7,771
  )Issuance of long-term debt
  
  
  351,999
  
  
  404,283
  
  
  617,000Repayment of long-term
  debt
  
  
  (362,506
  )
  
  (279,647
  )
  
  (717,572
  )Issuance of limited
  recourse debt
  
  
  13,979
  
  
  117,383
  
  
  90,214Repayment of limited
  recourse debt
  
  
  (253
  )
  
  (118
  )
  
  Payment of dividends
  
  
  (871
  )
  
  (859
  )
  
  (1,058
  )Exercise of stock options
  and issuance of restricted awards
  
  
  5,472
  
  
  927
  
  
  3,732Cash flow from financing
  activities
  
  
  7,847
  
  
  228,472
  
  
  (15,455
  )CURRENCY ADJUSTMENTSEffect of exchange rate
  changes on cash
  
  
  258
  
  
  1,852
  
  
  (807
  )CASH AND CASH EQUIVALENTSNet change in cash and
  cash equivalents
  
  
  (95,153
  )
  
  126,604
  
  
  (3,049
  )Beginning balance
  
  
  132,809
  
  
  6,205
  
  
  9,254Ending balance
  
  $
  37,656
  
  $
  132,809
  
  $
  6,205The accompanying
notes are an integral part of these financial statements.
28


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS(in thousands,
except per share data and unless otherwise indicated)

NOTE 1SUMMARY OF
SIGNIFICANT ACCOUNTING POLICES

Principles of Consolidation and Statement Presentation

The
consolidated financial statements include our accounts and our subsidiaries.
Significant intercompany accounts and transactions have been eliminated in
consolidation.

Reclassifications
Where
appropriate, we have reclassified certain prior year amounts in the
consolidated financial statements to conform to the fiscal 2004 presentation.
Use of Estimates
The preparation
of financial statements in conformity with U.S. generally accepted accounting
principles requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and related notes. Actual results inevitably will differ
from those estimates, and such differences may be material to the financial statements.
Revenue Recognition
Sales of
non-military equipment and service parts are unconditional sales that are
recorded when product is shipped
and invoiced to independently owned and operated distributors and customers.
Normally our sales terms are
free-on-board shipping point (FOB shipping point). However, certain
sales, including our All-Terrain Lifter, Army System (ATLAS) brand of military telehandler products,
may be invoiced prior to the time customers take physical possession. In such cases, revenue is recognized only when the
customer has a fixed commitment to pur­chase
the equipment, the equipment has been completed and made available to the
customer for pickup or delivery, and
the customer has requested that we hold the equipment for pickup or delivery at
a time specified by the customer. In
such cases, the equipment is invoiced under our customary billing terms, title
to the units and risk of ownership
passes to the customer upon invoicing, the equipment is segregated from our
inventory and identified as belonging
to the customer and we have no further obligations under the order other than
customary post-sales support
activities. In the instances that our shipping terms are shipping point
destination, revenue is
recorded at the time the goods reach our customers.
The sales terms
for our ATLAS brand of military telehandler products are FOB Origin. In order
for us to recognize revenue,
the ATLAS telehandler products must pass inspection by a government
Quality  Assurance Representative (QAR) at the point of production to
insure adequate special paint requirements. The sales terms of our Millennia Military Vehicle (MMV) brand of
military telehandler products are FOB Destination. In order for us to recognize
revenue, the MMV telehandler
products must pass inspection by a government QAR at the point of production to
insure adequate special paint requirements and by a government representative
at the point of destination to verify delivery without damage during
transportation.
Revenue from
certain equipment lease contracts is accounted for as sales-type leases. The
present value of all payments,
net of executory costs (such as legal fees), is recorded as revenue and the
related cost of the equip­ment is
charged to cost of sales. The associated interest is recorded over the term of
the lease using the interest method.
In addition, net revenues include rental revenues earned on the lease of
equipment held for rental. Rental
revenues are recognized in the period earned over the lease term. Provisions
for warranty are estimated and
accrued at the time of sale. Actual warranty costs do not materially differ
from estimates.
We enter into
rental purchase guarantee agreements (RPGs) with some of our
customers. These agreements are
normally for a term of no greater than twelve months and provide for rental
payments with a guaranteed purchase
option at the end of the agreement. Under the terms of the RPG, the customer is
obligated to purchase the equipment
at the end of the rental period. The full amount is recorded as revenue and the
related cost of the equipment is
charged to cost of sales at the inception of the agreement.
We
ship equipment on a limited basis to certain customers on consignment, which
under U.S. generally accepted accounting
principles allows recognition of the revenues only upon final sale of the
equipment by the consignee. At July
31, 2004 we had $4.9 million of inventory on consignment.
29

We
adopted Staff Accounting Bulletin No. 101 (SAB 101) on revenue recognition
effective at the beginning of our
fourth quarter of fiscal 2001. The adoption of SAB 101 did not have a material
impact on our consolidated financial
statements.
We adopted the
provisions of Emerging Issue Task Force (EITF) No. 00-10, Accounting for
Shipping and Handling Fees
and Costs as required at the same time we adopted SAB 101 noted above. As a
result of this adoption of EITF
00-10, we reflect shipping and handling fees billed to customers as sales while
the related ship­ping and handling costs are included in cost of sales. Prior
to adoption, some fees and costs were netted in cost of goods sold and selling expenses. The amount of
such shipping and handling costs were not material to the financial statements.
Cash and Cash
Equivalents
We consider all
highly liquid investments with a maturity of three months or less when
purchased to be cash equivalents and classify such amounts as
cash and cash equivalents.
Inventories
Inventories are
stated at the lower of cost or market. The cost of United States inventories is
based primarily on the LIFO
(last-in, first-out) method. All other inventories are based on the FIFO
(first-in, first-out) method.
Our inventories
consist of the following at July 31:
2004
  
  2003Finished goods
  
  $
  66,586
  
  $
  77,852Raw materials and work in process
  
  
  93,695
  
  
  51,267160,281
  
  
  129,119Less LIFO provision
  
  
  5,876
  
  
  6,444$
  154,405
  
  $
  122,675The cost of
inventories stated under the LIFO method was 62% and 51% at July 31, 2004 and
2003, respectively, of our total
inventory.
Property, Plant and Equipment and Equipment
Held for Rental

Property, plant
and equipment and equipment held for rental are stated at cost, net of
accumulated depreciation. Depreciation is computed using the straight-line method,
based on useful lives of 15 years for land improvements, 10 to 20 years for buildings and
improvements, three to 10 years for machinery and equipment, and three to seven years for equipment held for
rental. Depreciation expense was $22.7 million, $19.8 million and $20.9 million for the fiscal years 2004, 2003
and 2002, respectively.

Long-Lived Assets
We review our
long-lived assets for impairment whenever events or changes in circumstances
indicate the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and
used is measured by a comparison of
the carrying amount of the assets to the future net cash flows expected to be
generated by the assets. If such
assets are considered to be impaired, the impairment to be recognized is
measured by the amount by which the
carrying amount of the assets exceeds their fair value. Judgments made by us
related to the expected useful lives of long-lived assets and our ability to
realize any undiscounted cash flows in excess of the carrying amounts of such assets are affected by factors such as the
ongoing maintenance and improvements of the assets, changes in the expected use
of the assets, changes in economic conditions, changes in operating performance and anticipated future cash flows.
Since judgment is involved in determining the fair value of long-lived assets, there is risk that the
carrying value of our long-lived assets may require adjustment in future periods. If actual fair value is less than our
estimates, long-lived assets may be overstated on the balance sheet and a
charge would need to be taken against earnings.
Goodwill
Goodwill
represents the difference between the total purchase price and the fair value
of identifiable assets and
liabilities acquired in business acquisitions.
On August 1,
2001, we elected early adoption of Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill
and Other Intangible Assets. Under SFAS No. 142, goodwill and intangible
assets deemed to have

30

indefinite
lives will no longer be amortized but will be subject to annual impairment
tests. Other intangible assets will continue
to be amortized over their useful lives. Accordingly, we ceased amortization of
all goodwill.
Annually, we
test the impairment of our goodwill in the fourth quarter of our fiscal year by
assessing the fair value of
our reporting units based upon a discounted cash flow methodology. The cash
flows are based on managements
projection of future financial results, including revenues, costs, working
capital changes and capital expenditures and are discounted at a rate
corresponding to a market rate. Actual results will differ from those estimates.
In accordance
with SFAS No. 142, we determined our reporting units to be our Machinery operating
segment and our European
equipment services remanufacturing and reconditioning operations. We use our
Machinery segment as our reporting unit because no component of the operating
segment meet the criteria established in SFAS No. 142 for use as a reporting unit in determination of goodwill
impairment.
If the carrying
amount of the reporting unit exceeds the estimated fair value determined
through that discounted cash flow methodology, goodwill
impairment would be present. We would measure the goodwill impairment loss based upon the fair value of the
underlying assets and liabilities of the reporting unit, including any unrecognized intangible assets, and estimate
the implied fair value of goodwill. An impairment loss would be recognized to the extent that a reporting units
recorded goodwill exceeded the implied fair value of goodwill.
Income
Taxes
Deferred income
tax assets and liabilities arise from differences between the tax basis of
assets or liabilities and their reported amounts in the financial statements.
Deferred tax balances are determined by using the tax rate expected to be in effect when the taxes are
paid or refunds received.

Product
Development
We incurred
product development costs of $20.2 million, $16.1 million and $15.6 million in
2004, 2003 and 2002, respectively,
which were charged to expense as incurred.
Product Warranty
Most of our
products carry a product warranty. That product warranty generally provides
that we repair or replace most
parts or parts of the product found to be defective in material or workmanship
during the specified warranty period
following purchase at no cost to the customer. In addition, we provide a
one-year warranty on replacement or
service parts that we sell. We establish reserves related to warranties we
provide on our products. Specific reserves are maintained for programs related
to machine safety and reliability issues. Estimates are made regarding the size of the population, the type of
program, costs to be incurred by us and estimated participation. Additional
reserves are maintained based on the historical percentage relationships of
such costs to machine sales and applied to current equipment sales.
This table
presents our reconciliation of accrued product warranty during the period from
August 1, 2002 to July 31,
2004:
Balance as of August 1, 2002
  
  $
  9,375Payments
  
  
  (5,338
  )Accruals
  
  
  4,548Balance as of July 31, 2003
  
  
  8,585Additions due to acquisition of OmniQuip
  
  
  5,683Payments
  
  
  (7,547
  )Accruals
  
  
  5,108Balance as of July 31, 2004
  
  $
  11,829Concentrations of Credit Risk
Financial
instruments, which potentially expose us to concentrations of credit risk,
consist primarily of trade and
finance receivables. As of July 31, 2004, approximately 16% of our trade
receivables were due from two customers
and approximately 46% of our finance receivables were due from three customers.
In addition, one customer accounted
for approximately 9% of our trade receivables and that same customer accounted
for approximately 11% of our finance
receivables. We routinely evaluate the creditworthiness of our customers and
secure transactions with letters of credit or other forms of security where we
believe the risk warrants it. Finance receivables are collateralized by a
security interest in the underlying assets.

31

Advertising and Promotion
All costs
associated with advertising and promoting products are expensed in the year
incurred. Advertising has
been incurred when the services have been rendered or provided. Advertising and
promotion expense was $6.0 million,
$3.4 million and $3.4 million in 2004, 2003 and 2002, respectively.
Foreign
Currency Translation
The financial
statements of our foreign operations are measured in their local currency and
then translated into U.S. dollars. All balance sheet accounts have been
translated using the current rate of exchange at the balance sheet date. Results of operations have
been translated using the average rates prevailing throughout the year. Translation gains or losses resulting
from the changes in the exchange rates from year to year are accumulated in a
separate component of shareholders equity.
We
are exposed to risks arising from changes in foreign currency rates, primarily
the British pound, Euro and Australian
dollar. The aggregate foreign currency transactions included in the results of
operations were losses of $2.3 million in 2004, and gains of $5.4 million and
$2.9 million in 2003 and 2002, respectively.
Derivative Instruments

We are exposed
to market risks from changes in interest rates and foreign currency exchange
rates. With respect to
interest rate swaps, during fiscal 2003 and 2002, we entered into interest rate
swap agreements to manage our
interest rate exposure in order to achieve a cost-effective mix of fixed- and
variable-rate indebtedness. We do not utilize derivatives that contain
leverage features. On the date on which we enter into a derivative, the derivative is designated as a hedge of
the identified exposure. We formally document all relationships between hedging instruments and hedged items, as
well as our risk management objective and strategy for undertaking hedge transactions. In this
documentation, we specifically identify the hedged item and state how the hedging instrument is expected to reduce the
risks related to the hedged item.

We have
designated our outstanding interest rate swap agreements as fair value hedges
of the underlying fixed-rate
obligations. The objective of our hedges is to protect the debt against changes
in fair value due to changes in the
benchmark interest rate. The fair value of interest rate swap agreements is
recorded in other assets or other long-term liabilities with a corresponding
increase or decrease in the fixed-rate obligation. The changes in the fair value of interest rate swap
agreements and the underlying fixed-rate obligations are recorded as equal and offsetting unrealized gains and
losses in interest expense in the Consolidated Statements of Income. We have structured our interest rate swap
agreements to be 100% effective. As a result, there is no current impact on earnings resulting from hedge
ineffectiveness.
Our outstanding
interest rate swap instruments at July 31, 2004, consisted of a $70 million notional
fixed-to-variable rate swap with a fixed-rate receipt of 8 3/8% and a
$62.5 million notional fixed-to-variable rate swap with a fixed-rate receipt of 8 1/4%. The basis of the variable rates paid related to our $70
million and $62.5 million interest
rate swap instruments are the London Interbank Offered Rate (LIBOR) plus 4.51%
and 5.15%, respectively. The fair
value of our interest rate hedges were a negative $9.1 million at July 31, 2004
and reflect the estimated amount
that we would owe to terminate the contracts at the reporting date.
With respect to
foreign currency market risk, we enter into certain foreign currency contracts,
principally forward exchanges,
to manage some of our foreign currency exchange risk. Some natural hedges are
also used to mitigate transaction
and forecasted exposures. Through our foreign currency hedging activities, we
seek primarily to mini­mize the risk
that cash flows resulting from the sales of our products will be affected by
changes in exchange rates.

We enter into
certain currency forward contracts to mitigate our economic risk to foreign
exchange risk that qualify as
derivative instruments under SFAS No. 133. However, we have not designated
these instruments as hedge
transactions under SFAS No. 133 and, accordingly, the mark-to-market impact of
these derivatives is recorded each period in current earnings. The fair value
of foreign currency related derivatives are included in the Consolidated Balance Sheet in other current
assets and other current liabilities. The mark-to-market impact related to the above forwards were gains of
approximately $0.2 million and $0.2 million in the years ended July 31, 2004 and 2003, respectively, and a charge
of approximately $2.4 million in the year ended July 31, 2002 and are included in Miscellaneous, net in the
Consolidated Statements of Income.
32

Sales
Incentives
We recognize
volume discounts and sales incentives at the time we recognize a sale based
upon the contractual terms of
our arrangement with the customer and, where applicable, our estimate of that
customers annual sales volume. These
programs are reflected in our Consolidated Statements of Income as a reduction
of revenue. If the actual sales to
the customer differ significantly from the projections, we may be required to
adjust the estimates.
Employee
Retirement Plans
We have
discretionary, defined contribution retirement plans covering our eligible U.S.
employees. Our Board of
Directors annually evaluates and determines the level of contributions to the plans.
The contributions to the plans are
based on a calendar year while our fiscal year ends July 31. Accordingly, we
estimate our financial per­formance
on a fiscal basis which could turn out significantly different on a calendar
basis. We estimate contribu­tions to
these plans based upon our projected profitability and we accrue the
contributions as a percent of payroll
each pay period. We review the amount accrued on a quarterly basis. If our
actual financial performance or the
percent of payroll differs significantly from the projections, we may be
required to adjust the accruals.
Stock-Based
Compensation

We have elected
to apply Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees and related interpretations in accounting for our
stock options. See Note 12 of the Notes to Consolidated Financial Statements for information regarding our
stock-based incentive plan, options outstand­ing and options exercisable. Under this opinion, we do not recognize
compensation expense arising from such grants
because the exercise price of our stock options equals the market price of the
underlying stock on the date of
grant. Pro forma information regarding net income and earnings per share has
been determined as if we had accounted for our employee stock options under the
fair value method. The fair value for these options was estimated at the date of grant using a
Black-Scholes option-pricing model with the following assumptions:

2004
  
  2003
  
  2002Volatility factor
  
  
  .591
  
  
  .546
  
  
  .571Expected life in years
  
  
  5.0
  
  
  4.9
  
  
  3.0Dividend yield
  
  
  .14
  %
  
  .24
  %
  
  .18
  %Interest rate
  
  
  3.68
  %
  
  3.0
  %
  
  3.06
  %Weighted average fair market value at date of grant
  
  $
  7.35
  
  $
  4.12
  
  $
  4.56For purposes of
pro forma disclosures, the estimated fair value of the options is amortized
over the options vesting
period. Our pro forma information follows for the years ended July 31:
2004
  
  2003
  
  2002Net income (loss), as reported
  
  $
  26,649
  
  $
  12,392
  
  $
  (101,592
  )Less: Total stock-based employee compensation
  expense determined  under fair value
  based method for all awards, net of related tax effects
  
  
  (2,916
  )
  
  (3,476
  )
  
  (2,863
  )Pro forma net income (loss)
  
  $
  23,733
  
  $
  8,916
  
  $
  (104,455
  )Earnings per share:Earnings (loss) per common shareas reported
  
  $
  .62
  
  $
  .29
  
  $
  (2.41
  )Earnings (loss) per common sharepro forma  
  $
  .55
  
  $
  .21
  
  $
  (2.48
  )Earnings (loss) per common shareassuming dilutionas reported
  
  $
  .61
  
  $
  .29
  
  $
  (2.35
  )Earnings (loss) per common shareassuming dilutionpro forma
  
  $
  .54
  
  $
  .21
  
  $
  (2.42
  )Recent
Accounting Pronouncements
Effective June
1, 2002, we elected early adoption of SFAS No. 145, Rescission of FASB
Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections. This
statement requires, among other
things, that gains and losses on the early extinguishment of debt be classified
as extraordinary only if they meet
the criteria for extraordinary treatment set forth in APB Opinion No. 30. As a
result, $0.5 million of deferred financing costs related to the
reduction in the maximum borrowing available under our former revolving credit facility from $250 million to
$150 million that was expensed during fiscal 2003 and $0.1 million of deferred
financing costs related to our former $83 million senior credit facility that
was expensed during fiscal 2002 are
included in interest expense on our Consolidated Statements of Income.

33

In January
2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation No. 46 (FIN 46), Consolidation of Variable Interest
Entities. This interpretation of Accounting Research Bulletin No. 51,
Consolidated Financial
Statements, addresses consolidation of variable interest entities. FIN 46
requires certain variable interest
entities (VIEs) to be consolidated by the primary beneficiary if the
entity does not effectively disperse risks
among the parties involved. The provisions are effective for the first annual
or interim period beginning after
December 15, 2003. We have determined that our only joint venture is deemed to
be a business under the definition
of FIN 46 and that in accordance with the interpretation, the joint venture
need not be evaluated to determine if
the entity is a VIE under the requirements of FIN 46. Additionally, we have
concluded that we do not participate
in any other structures that qualify as VIEs as defined by FIN 46.
On December 8,
2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) was
signed into law which introduced a prescription drug benefit under Medicare
(Medicare Part D) as well as a federal
subsidy to sponsors of retiree health care benefit plans that provide a benefit
that is at least actuarially equivalent
to Medicare Part D. In January 2004, the FASB issued FASB Staff Position
(FSP) No. FAS 106-1, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modern­ization Act of 2003. As provided under FSP
No. FAS 106-1, we elected to defer accounting for the effects of the Act until authoritative guidance on the accounting
for the federal subsidy is issued or until a significant event occurs that ordinarily would call for us to
remeasure our plans assets and obligations.
In May 2004,
the FASB issued FSP No. FAS 106-2, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and Modernization Act of
2003. FSP No. FAS 106-2 provides guidance on accounting for the effects of the Act for
employers that sponsor postretirement health care plans that provide drug
benefits. We adopted FSP No. FAS 106-2 during the fourth quarter of fiscal
2004, which reduced our accu­mulated
postretirement benefit obligation (APBO) by $4.3 million at July
31, 2004 and will reduce our fiscal 2005
expense by $0.8 million. Of the $0.8 million reduction in fiscal 2005 expense,
$0.3 million is associated with the
amortization of the actuarial experience gain, $0.3 million is the resulting
reduction in interest costs on the APBO
and $0.2 million is the reduction in the current period service costs. The
adoption of FSP No. FAS 106-2 did not
require us to change previously reported information since we elected to defer
accounting for the effects of the
Act until authoritative guidance on the accounting for the federal subsidy was
issued under FSP No. FAS 106-2. Additionally,
the net periodic postretirement benefit cost included in our consolidated
financial statements does not
reflect the effects of the Act on our plan since we elected prospective
application of FSP No. FAS 106-2 and due to the use of an April 30, 2004
measurement date for the plan pursuant to the provisions of FSP No. FAS 106-2.

NOTE 2ACQUISITIONS
We completed
several acquisitions of existing businesses during the year ended July 31,
2004. These acquisi­tions have
been completed because of their strategic fit and adherence to our growth
strategy and acquisition criteria.
The acquisitions during this time period have predominately been additions to
our Machinery segment, have been
accounted for as purchases and have resulted in the recognition of goodwill in
our financial statements. Goodwill
arising from the purchase price reflects a number of factors including the
future earnings and cash flow potential
of the acquired business and complimentary strategic fit and resulting
synergies these acquisitions bring to existing operations.
We make an
initial allocation of the purchase price at the date of acquisition based upon
our understanding of the fair
market value of the acquired assets and liabilities. We obtain this information
during due diligence and through other sources. In the months after closing, as
we obtain additional information about these assets and liabilities and learn
more about the newly acquired business, we are able to refine the estimates of
fair market value and more accurately
allocate the purchase price. Examples of factors and information that we use to
refine the allocations include:
tangible and intangible asset appraisals; cost data related to redundant
facilities; employee/personnel data
related to redundant functions; product line integration and rationalization
informa­tion; management capabilities; and information systems compatibilities.
On April 30,
2004, we completed the purchase of Delta Manlift SAS (Delta), a
subsidiary of The Manitowoc Company
(Manitowoc) for $9.9 million, which included transaction expenses
of $0.9 million. Headquartered in
Tonneins, France, Delta has two facilities that manufacture the Toucan Manlift
brand of vertical mast lifts, a line
of aerial work platforms distributed throughout Europe for use principally in
industrial and maintenance operations.
In addition, we purchased certain intellectual property and related assets of
Manitowocs discontinued product
lines, which will permit us to re-launch selected models of the Liftlux brand
scissor lifts. We funded the purchase
price with cash generated from operations.

34

The
following table summarizes our estimated fair values of the Delta assets
acquired and liabilities assumed on April 30, 2004:
Accounts receivable
  
  $
  8,517Inventory
  
  
  3,154Property, plant and equipment
  
  
  1,427Goodwill
  
  
  712Other intangible assets, trademarks
  
  
  2,867Accounts payable
  
  
  (3,867
  )Other assets and liabilities, net
  
  
  (2,841
  )Assumed debt
  
  
  (103
  )Net cash consideration
  
  $
  9,866Of the $2.9 million of
acquired intangible assets, $1.4 million was assigned to registered trademarks
that are not subject to
amortization. The remaining $1.5 million of acquired intangible assets was
assigned to a registered trademark
that has a useful life of 10 years.
The
operating results of Delta are included in our consolidated results from
operations beginning April 30, 2004.

On August 1, 2003, we acquired the
OmniQuip business unit (OmniQuip) of Textron Inc., which includes all operations relating to the SkyTrak and Lull brand
commercial telehandler products and the ATLAS and the MMV military telehandler products, for $107.1
million, which included transaction expenses of $5.6 million, with $90 million
paid in cash at closing and $10 million paid in the form of an unsecured
subordinated promissory note due on
the second anniversary of the closing date. On February 4, 2004, we paid off
this $10 million unse­cured subordinated promissory note payable and
post-closing purchase price adjustments in favor of Textron totaling $1.5 million. In addition, we will incur
estimated expenditures totaling $45.9 million over a four-year period related to our integration plan. Through
July 31, 2004, we have incurred expenditures of $27.7 million related to our OmniQuip integration plan. The
integration plan expenditures are associated with personnel reductions, facility closings, plant start-up
costs and facility operating expenses. We funded the cash portion of the purchase price and the transaction expenses
with the remaining unallocated proceeds from the sale of our $125 million senior unsecured notes due 2008, and
we anticipate funding integration expenses with cash gener­ated from operations and borrowings under our
credit facilities.
The following
table summarizes our fair values of the OmniQuip assets acquired and
liabilities assumed on August
1, 2003:
Accounts receivable
  
  $
  33,938Inventory
  
  
  37,360Property, plant and equipment
  
  
  9,673Goodwill
  
  
  31,265Other intangible assets, primarily trademarks and patents
  
  
  34,210Accounts payable
  
  
  (19,563
  )Other assets and liabilities, net (a)
  
  
  (16,196
  )Assumed debt
  
  
  (3,630
  )Net cash consideration
  
  $
  107,057(a) Includes $13.5 million
related to personnel reductions and facility closings or restructuring.
Of the $34.2
million of acquired intangible assets, $23.6 million was assigned to registered
trademarks that are not
subject to amortization. The remaining $10.6 million of acquired intangible
assets has a weighted-average useful
life of approximately 8 years. The intangible assets that make up that amount
include distributor and customer relations of $1.0 million (20-year
weighted-average useful life), patents of $5.8 million (9-year weighted-average useful life), and contracts of
$3.8 million (2-year weighted-average useful life). The entire amount of intangible assets and goodwill is
expected to be deductible for tax purposes.

The operating
results of OmniQuip are included in our consolidated results from operations
beginning August 1, 2003.
35

In compliance
with U.S. generally accepted accounting principles, the following unaudited pro
forma financial information
for fiscal year 2003 reflects our consolidated results of operations as if the
OmniQuip acquisition had taken place on August 1, 2002. The unaudited pro forma
financial information is not necessarily indicative of the results of
operations had the transaction been effected on the assumed date.
Year Ended July 31, 2003JLG
  
  OmniQuip (a)
  
  TotalRevenues
  
  
  $
  751,128
  
  
  
  $
  213,781
  
  
  
  $
  964,909Net income (loss)
  
  
  
  12,392
  
  
  
  
  (34,640
  )
  
  
  
  (22,248
  )Net income (loss) per common share
  
  
  
  .29
  
  
  
  
  (.81
  )
  
  
  
  (.52
  )Net income (loss) per common shareassuming dilution
  
  
  
  .29
  
  
  
  
  (.81
  )
  
  
  
  (.52
  )(a) Includes a goodwill and
intangible asset impairment charge of $30 million.
In connection
with our acquisitions, we assess and formulate plans related to their future
integration. This process
begins during the due diligence process and is concluded within twelve months
of the acquisition. We accrue
estimates for certain costs, related primarily to personnel reductions and
facility closures or restructurings, anticipated
at the date of acquisition, in accordance with EITF No. 95-3, Recognition
of Liabilities in Connection with a
Purchase Business Combination. Adjustments to these estimates are made as
plans are finalized, but in no event
beyond one year from the acquisition date. To the extent these accruals are not
utilized for the intended purpose,
the excess is recorded as a reduction of the purchase price, typically by
reducing recorded goodwill balances.
Costs incurred in excess of the recorded accruals are expensed as incurred.

As part of our
OmniQuip integration plan, we permanently closed five facilities of the
acquired business and relocated
that production into our existing facilities. Additionally, we will reduce the
employment and incur costs associated
with the involuntary termination benefits and relocation costs. These costs are
incremental to our combined enterprise and are incurred as a direct result of
our exit plan. Accrued liabilities associated with these integration activities include the following
(in thousands, except headcount):

Planned Headcount Reduction:Number of employees related to OmniQuip acquisition
  
  
  350Reductions
  
  
  (332
  )Balance at July 31, 2004
  
  
  18Involuntary Employee Termination Benefits:Accrual related to OmniQuip acquisition
  
  $
  10,030Adjustment to initial accrual
  
  
  (2,404
  )Costs incurred
  
  
  (4,843
  )Balance at July 31, 2004
  
  $
  2,783Facility Closure and Restructuring Costs:Accrual related to OmniQuip acquisition
  
  $
  13,601Adjustment to initial accrual
  
  
  (7,680
  )Costs incurred
  
  
  (1,656
  )Balance at July 31, 2004
  
  $
  4,265The adjustments to the
initial accruals represent decreases to these accruals and an associated
decrease to good­will as a result of
the finalization of our plan of integrating the OmniQuip business with our
existing business. In accordance with
EITF No. 95-3, costs expended which are less than the amount recorded as a
liability assumed in a purchase
business combination reduce the cost of the acquired company.
NOTE 3FINANCE AND PLEDGED FINANCE
RECEIVABLES

Finance
receivables represent sales-type leases resulting from the sale of our
products. Our sales-type leases may
have a component of residual value which anticipates that a piece of equipment
will have a minimum fair market value at a future point in time and the
residual value accrues to us at the end of the lease. We use our experience and
knowledge as an original equipment manufacturer and participant in end markets
for our prod­ucts along with third-party studies to provide us with values for
our products in the used equipment market and

36

to estimate residual values. We monitor these
values for impairment and reflect any resulting adjustments in current
earnings.
Our net
investment in finance and pledged finance receivables was as follows at July
31:
2004
  
  2003Gross finance and pledged finance receivables
  
  $
  169,472
  
  $
  205,390Estimated residual value
  
  
  21,899
  
  
  35,337191,371
  
  
  240,727Unearned income
  
  
  (29,295
  )
  
  (42,811
  )Net finance and pledged finance receivables
  
  
  162,076
  
  
  197,916Provision for losses
  
  
  (3,992
  )
  
  (3,185
  )$
  158,084
  
  $
  194,731Of the total finance and
pledged finance receivables balances at July 31, 2004 and 2003, $118.4 million
and $160.4 million, respectively, are
pledged finance receivables resulting from the monetization of finance
receivables. In compliance with SFAS No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishment of Liabilities, these transactions are
accounted for as debt on our Consolidated Balance Sheets. The maximum loss exposure associated with these transactions
was $25.2 million as of July 31, 2004. As of July 31, 2004, our provision for losses related to these transactions
was $2.6 million.
The following
table displays the contractual maturity of our finance and pledged finance
receivables. It does not
necessarily reflect the timing of future cash collections because of various
factors including the possible refinancing
or sale of finance receivables and repayments prior to maturity.

For
the twelve-month periods ended July 31:
2005
  
  $
  49,1602006
  
  
  52,0732007
  
  
  37,0162008
  
  
  18,7822009
  
  
  7,668Thereafter
  
  
  4,773Residual value in equipment at lease end
  
  
  21,899Less: unearned finance income
  
  
  (29,295
  )Net investment in leases
  
  $
  162,076Provisions for losses on
finance and pledged finance receivables are charged to income in amounts
sufficient to maintain the allowance
at a level considered adequate to cover losses in the existing receivable
portfolio.
NOTE
4PROPERTY, PLANT AND EQUIPMENT

Our property,
plant and equipment consists of the following at July 31:

2004
  
  2003Land and improvements
  
  $
  8,801
  
  $
  7,119Buildings and improvements
  
  
  63,334
  
  
  51,420Machinery and equipment
  
  
  132,190
  
  
  117,564204,325
  
  
  176,103Less allowance for depreciation and amortization
  
  
  112,821
  
  
  96,404$
  91,504
  
  $
  79,699At July 31, 2004, assets
under capital leases totaled approximately $3.5 million and were included in
buildings and improvements in the
table above. Accumulated amortization of assets held under capital leases
totaled approximately $0.6 million at
July 31, 2004.
37


NOTE 5GOODWILL

On August 1,
2001, we elected early adoption of SFAS No. 142, Goodwill and Other
Intangible Assets. Under
SFAS No. 142, goodwill and intangible assets deemed to have indefinite lives
are no longer amortized but subject
to annual impairment tests. Other intangible assets continue to be amortized
over their useful lives.
Accordingly, we ceased amortization of all goodwill.

In the year of
adoption, SFAS No. 142 requires the first step of the goodwill impairment test
to be completed within the
first six months of adoption and the final step to be completed within twelve
months. The first step is to screen
for potential impairment and the second measures the amount of impairment, if
any. During the second quarter of
fiscal 2002, we performed an initial impairment test by reporting unit, which
indicated potential impairment of goodwill attributable to our Gradall
reporting unit, which is part of our Machinery segment, resulting from changing business conditions including consolidation of
the telehandler market, unplanned excess manufacturing capacity costs and eroded margins due to competitive
pricing pressures. During the fourth quarter of fiscal 2002, we calculated the fair value of the Gradall and foreign
reporting units using third-party appraisals and expected future discounted cash flows. As a result of this analysis,
we concluded that goodwill was impaired and recorded an impairment charge of
$114.5 million, or $2.65 per diluted share, which is reflected as a cumula­tive
effect of change in accounting principle in the Consolidated Statements of
Income. There was no income tax effect
on this change in accounting principle.
This table
presents our comparative net income and earnings per common share before the
cumulative effect of accounting change and goodwill amortization under SFAS No.
142 for the years ended July 31:
2004
  
  2003
  
  2002Reported income before cumulative effect of change in accounting principle
  
  $
  26,649
  
  $
  12,392
  
  $
  12,878Add: goodwill amortization
  
  
  
  
  
  
  
  
  Adjusted income before cumulative effect of change in accounting principle
  
  
  26,649
  
  
  12,392
  
  
  12,878Cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  (114,470
  )Adjusted net income (loss)
  
  $
  26,649
  
  $
  12,392
  
  $
  (101,592
  )Earnings (loss) per common share:Reported earnings per common share before cumulative effect of change in
  accounting principle
  
  $
  .62
  
  $
  .29
  
  $
  .31Goodwill amortization
  
  
  
  
  
  
  
  
  Adjusted earnings per common share before cumulative effect
 of change in accounting principle
  
  
  .62
  
  
  .29
  
  
  .31Cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.72
  )Adjusted earnings (loss) per common share
  
  $
  .62
  
  $
  .29
  
  $
  (2.41
  )Earnings (loss) per common shareassuming dilution:Reported earnings per common shareassuming dilution before cumulative effect
  of change in accounting principle
  
  $
  .61
  
  $
  .29
  
  $
  .30Goodwill amortization
  
  
  
  
  
  
  
  
  Adjusted earnings per common shareassuming dilution before cumulative effect
  of change in accounting principle
  
  
  .61
  
  
  .29
  
  
  .30Cumulative effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.65
  )Adjusted earnings (loss) per common shareassuming dilution
  
  $
  .61
  
  $
  .29
  
  $
  (2.35
  )This
table presents our reconciliation of the recorded goodwill during the period from August 1, 2002 to July 31, 2004:
Balance as of August 1, 2002
  
  $
  28,791Additions
  
  
  718Balance as of July 31, 2003
  
  
  29,509Additions
  
  
  33,387Translation
  
  
  (11
  )Balance as of July 31, 2004
  
  $
  62,88538

There were no dispositions of
businesses with related goodwill during fiscal 2004. On August 1, 2003, we acquired
OmniQuip for $107.1 million, which resulted in a $31.3 million increase to
goodwill. Other acquisitions during fiscal 2004 resulted in a $2.1 million
increase to goodwill. Of the acquired goodwill change in the period, $32.1
million related to our Machinery segment and $1.3 million related to our
Equipment Services segment.

NOTE
6INTANGIBLE ASSETS
Intangible
assets consist of the following at July 31, 2004:

Weighted Average
  Amortization Period
  (in years)
  
  Gross Carrying
  Value
  
  Accumulated
  Amortization
  
  Translation
  
  Net Carrying
  ValueFinite LivedPatents
  
  
  9
  
  
  
  $
  5,810
  
  
  
  $
  (786
  )
  
  
  $
  
  
  
  
  $
  5,024Contracts
  
  
  2
  
  
  
  
  3,800
  
  
  
  
  (1,900
  )
  
  
  
  
  
  
  
  
  1,900Trademark
  
  
  10
  
  
  
  
  1,500
  
  
  
  
  (37
  )
  
  
  
  
  
  
  
  
  1,463Other
  
  
  11
  
  
  
  
  2,353
  
  
  
  
  (458
  )
  
  
  
  
  
  
  
  
  1,8958
  
  
  
  
  13,463
  
  
  
  
  (3,181
  )
  
  
  
  
  
  
  
  
  10,282Indefinite LivedTrademarks
  
  
  
  
  
  
  
  24,956
  
  
  
  
  
  
  
  
  
  2
  
  
  
  
  24,958Total Intangible
  Assets
  
  
  
  
  
  
  $
  38,419
  
  
  
  $
  (3,181
  )
  
  
  $
  2
  
  
  
  $
  35,240All of our
acquired intangible assets with finite lives are being amortized on a
straight-line basis. Our amortization
expense on intangible assets was $3.0 million in 2004. Amortization expense for
2005, 2006, 2007, 2008 and 2009 is
estimated at approximately $3.2 million, $1.1 million, $1.0 million, $0.9
million and $0.8 million, respectively.
NOTE 7ACCRUED
EXPENSES

Our accrued
expenses consist of the following at July 31:

2004
  
  2003Accrued payroll and related taxes and benefits
  
  $
  31,088
  
  $
  16,051Provisions for contingencies
  
  
  16,155
  
  
  14,301Accrued income taxes
  
  
  14,497
  
  
  5,734Accrued warranty
  
  
  11,829
  
  
  8,585Accrued sales rebate
  
  
  9,249
  
  
  4,636Accrued value added taxes
  
  
  7,013
  
  
  19,131Accrued interest
  
  
  4,965
  
  
  5,640Accrued dealer costs
  
  
  4,031
  
  
  4,556Accrued restructuring
  
  
  3,145
  
  
  1,211Accrued workmens compensation
  
  
  1,906
  
  
  1,833Accrued professional fees
  
  
  1,516
  
  
  1,062Unearned income
  
  
  1,093
  
  
  1,208Accrued commissions
  
  
  504
  
  
  1,109Other accrued expenses
  
  
  11,869
  
  
  6,000$
  118,860
  
  $
  91,057NOTE
8LEASES
We lease
certain offices, manufacturing facilities, service facilities and equipment.
Generally, the leases carry renewal
provisions and require us to pay maintenance costs. Rental payments may be
adjusted for increases in taxes and
insurance above specified amounts.

Our total
rental expense for operating leases was $9.9 million, $9.2 million and $9.2
million in 2004, 2003 and 2002,
respectively. At July 31, 2004, our future minimum lease payments under
non-cancelable operating leases with
initial or remaining terms of more than one year are $6.3 million, $6.6
million, $7.3 million, $1.9 million, $1.8
million and $5.5 million in 2005, 2006, 2007, 2008, 2009 and thereafter,
respectively.
39

We
lease our Oaks, North Dakota facility and certain equipment pursuant to
a lease agreement dated February 1,
1999 that expires in February 2014. Aggregate minimum annual rentals at July
31, 2004 under this lease are as
follows:
2005
  
  $
  4392006
  
  
  4392007
  
  
  4392008
  
  
  4392009
  
  
  439Thereafter
  
  
  2,428Total minimum lease payments
  
  
  4,623Less amount representing interest
  
  
  (1,221
  )Present value of net minimum lease payments
  
  
  3,402Less obligations under capital lease, current portion
  
  
  (242
  )Obligations under capital lease, less current portion
  
  $
  3,160Our
capital lease obligation is included on the Consolidated Balance Sheets in
current portion of long-term debt
and long-term debt, less current portion.
NOTE
9CHANGES IN ACCOUNTING ESTIMATES

During
the second quarter of fiscal 2003, we determined that we would not make a
discretionary profit sharing contribution
for calendar year 2002. This change resulted in an increase in net income of
$1.5 million, or $.03 per diluted
share, for fiscal 2003.

As more fully
described in Note 11 of the Notes to Consolidated Financial Statements, during
the fourth quarter of fiscal
2003, as a result of a change in accounting estimate attributable to tax
benefits received from foreign operations
partially offset by the creation of a valuation allowance for certain foreign
net operating losses, our fiscal
2003 tax rate included a $2.1 million benefit to net income, or $.05 per
diluted share.
During the
second quarter of fiscal 2002, we determined that certain volume-related
customer incentives would not
be achieved and that we would not make a discretionary profit sharing
contribution for calendar year 2001. The reversal of the accrual related to
volume-related customer incentives resulted in an increase in net income of
$2.3 million, or $.06 per diluted share for fiscal 2002. The reversal of the
accrual related to the discre­tionary
profit sharing contribution for calendar year 2001 resulted in an increase in
net income of $1.8 million, or $.04
per diluted share for fiscal 2002.
NOTE 10SEGMENT INFORMATION
We have
organized our business into three segmentsMachinery, Equipment Services and
Access Financial Solutions.
The Machinery segment contains the design, manufacture and sale of new
equipment. The Equipment Services segment contains after-sales service and
support, including parts sales, equipment rentals, and used and remanufactured
or reconditioned equipment sales. The Access Financial Solutions segment
contains financ­ing and leasing
activities. We evaluate performance of the Machinery and Equipment Services
segments and allocate resources based on operating profit before interest,
miscellaneous income/expense and income taxes. We evaluate performance of the Access Financial Solutions segment and
allocate resources based on its operat­ing
profit less interest expense. Intersegment sales and transfers are not
significant. The accounting policies of the reportable segments are the same as
those described in the summary of significant accounting policies.
40


Our
business segment information consisted of the following for the years ended
July 31:

2004
  
  
  2003
  
  
  2002Revenues:Machinery
  
  $
  973,610
  
  $
  594,484
  
  $
  621,283Equipment Services
  
  
  204,454
  
  
  136,737
  
  
  133,058Access Financial Solutions
  
  
  15,898
  
  
  19,907
  
  
  15,729$
  1,193,962
  
  $
  751,128
  
  $
  770,070Segment profit (loss):Machinery
  
  $
  70,844
  
  $
  25,513
  
  $
  29,039Equipment Services
  
  
  59,760
  
  
  27,119
  
  
  24,686Access Financial Solutions
  
  
  1,695
  
  
  3,990
  
  
  5,288General corporate
  
  
  (67,308
  )
  
  (32,001
  )
  
  (33,347
  )Segment profit
  
  
  64,991
  
  
  24,621
  
  
  25,666Add Access Financial Solutions interest expense
  
  
  10,915
  
  
  11,700
  
  
  5,051Operating income
  
  $
  75,906
  
  $
  36,321
  
  $
  30,717Depreciation and amortization:Machinery
  
  $
  19,695
  
  $
  13,984
  
  $
  14,994Equipment Services
  
  
  3,998
  
  
  3,766
  
  
  3,613Access Financial Solutions
  
  
  659
  
  
  691
  
  
  781General corporate
  
  
  1,329
  
  
  1,496
  
  
  1,571$
  25,681
  
  $
  19,937
  
  $
  20,959Expenditures for long-lived assets:Machinery
  
  $
  18,130
  
  $
  11,200
  
  $
  12,350Equipment Services
  
  
  20,141
  
  
  15,084
  
  
  22,236Access Financial Solutions
  
  
  251
  
  
  579
  
  
  4,661General corporate
  
  
  554
  
  
  285
  
  
  136$
  39,076
  
  $
  27,148
  
  $
  39,383Assets:Machinery
  
  $
  728,151
  
  $
  563,929
  
  $
  462,399Equipment Services
  
  
  39,394
  
  
  36,574
  
  
  45,361Access Financial Solutions
  
  
  191,183
  
  
  237,632
  
  
  187,153General corporate
  
  
  68,716
  
  
  98,067
  
  
  83,328$
  1,027,444
  
  $
  936,202
  
  $
  778,241Our
segment sales by major customers as a percentage of total segment revenues
consisted of the following for
the years ended July 31:
2004
  
  2003
  
  2002MachineryCustomer A
  
  
  14
  %
  
  15
  %
  
  22
  %Customer B
  
  
  
  %
  
  10
  %
  
  
  %Customer C
  
  
  
  %
  
  10
  %
  
  
  %Equipment ServicesCustomer A
  
  
  13
  %
  
  16
  %
  
  12
  %Access Financial SolutionsCustomer A
  
  
  10
  %
  
  21
  %
  
  30
  %Customer D
  
  
  17
  %
  
  
  %
  
  
  %Customer E
  
  
  17
  %
  
  15
  %
  
  34
  %41

Our revenues by
product group consisted of the following for the years ended July 31:

2004
  
  2003
  
  2002Aerial work platforms
  
  $
  562,056
  
  $
  428,564
  
  $
  475,241Telehandlers
  
  
  358,865
  
  
  117,475
  
  
  87,443Excavators
  
  
  52,689
  
  
  48,445
  
  
  58,599After-sales service and support, including parts sales, and used and
  reconditioned equipment sales
  
  
  196,576
  
  
  130,335
  
  
  124,587Financial products
  
  
  15,203
  
  
  19,184
  
  
  14,227Rentals
  
  
  8,573
  
  
  7,125
  
  
  9,973$
  1,193,962
  
  $
  751,128
  
  $
  770,070We
manufacture our products in the United States, Belgium and France and sell
these products globally, but principally in North America, Europe, Australia
and South America. No single foreign country is significant to the consolidated
operations.
Our
revenues by geographic area consisted of the following for the years ended July
31:

2004
  
  2003
  
  2002United States
  
  $
  923,696
  
  $
  546,494
  
  $
  556,252Europe
  
  
  178,392
  
  
  145,038
  
  
  167,940Other
  
  
  91,874
  
  
  59,596
  
  
  45,878$
  1,193,962
  
  $
  751,128
  
  $
  770,070Our long-lived
assets by geographic area were as follows at July 31:
2004
  
  2003
  
  2002United States
  
  $
  121,706
  
  $
  82,048
  
  $
  93,086Europe
  
  
  24,458
  
  
  15,807
  
  
  10,760Other
  
  
  1,770
  
  
  1,495
  
  
  1,503$
  147,934
  
  $
  99,350
  
  $
  105,349NOTE
11INCOME TAXES
Our
foreign and domestic pre-tax accounting income consisted of the following for
the years ended July 31:

2004
  
  2003
  
  2002Pre-tax income:United States
  
  $
  34,369
  
  $
  20,497
  
  $
  22,622Other countries
  
  
  7,512
  
  
  (5,470
  )
  
  (3,401
  )$
  41,881
  
  $
  15,027
  
  $
  19,221Our income tax
provision consisted of the following for the years ended July 31:
2004
  
  2003
  
  2002United States:Current
  
  $
  19,949
  
  $
  4,163
  
  $
  10,611Deferred
  
  
  (8,566
  )
  
  (4,218
  )
  
  (4,635
  )11,383
  
  
  (55
  )
  
  5,976Other countries:Current
  
  
  4,192
  
  
  2,690
  
  
  367Deferred
  
  
  (343
  )
  
  
  
  
  3,849
  
  
  2,690
  
  
  367$
  15,232
  
  $
  2,635
  
  $
  6,343We made income
tax payments of $14.7 million, $8.5 million and $0.9 million in 2004, 2003 and
2002, respec­tively. Income
tax benefits recorded directly as an adjustment to equity as a result of
employee stock options were $0.7
million, $0.2 million and $2.7 million in 2004, 2003 and 2002, respectively.
42


The
difference between the U.S. federal statutory income tax rate and our effective
tax rate is as follows for the
years ended July 31:

2004
  
  2003
  
  2002Statutory U.S. federal income tax rate
  
  
  35
  %
  
  
  35
  %
  
  
  35
  %Change in estimate
  
  
  
  
  
  
  (14
  )
  
  
  Effect of export profits taxed at lower rates
  
  
  (3
  )
  
  
  (2
  )
  
  
  (5
  )Effect of earnings sourced in various jurisdictions
  
  
  3
  
  
  
  (2
  )
  
  
  4Other
  
  
  1
  
  
  
  1
  
  
  
  (1
  )Effective tax rate
  
  
  36
  %
  
  
  18
  %
  
  
  33
  %Our fiscal year
2003 rate included a $2.1 million benefit to net income, or $.05 per diluted
share, resulting from a change
in accounting estimate attributable to tax benefits received from foreign
operations partially offset by the creation of a valuation allowance for
certain foreign net operating losses. We have foreign operations for which net operating losses from start-up
activities exist for financial reporting purposes. Accordingly, we deter­mined that recognition of the deferred tax asset
was inappropriate and we recorded a valuation reserve as reported in our disclosure regarding components of
deferred tax assets and liabilities. The benefits from foreign operations consisted primarily of refunds relating
to increased foreign tax credits from amended return filings. We underwent tax
examinations in various foreign countries that resulted in the payment of
additional foreign taxes in prior
years. We amended our United States income tax returns to adjust for the
benefit of the increased foreign tax
credits associated with the additional foreign taxes paid in fiscal 2003. These
credits offset amounts for which we
had previously provided tax expense.
Deferred income
taxes arise because there are certain items that are treated differently for
financial accounting than for income tax purposes. Our components of deferred
tax assets and liabilities were as follows at July 31:

2004
  
  
  2003Future income tax benefits:Warranty, inventory and product liability reserves
  
  $
  18,050
  
  $
  14,096Accrued payroll and employee-related benefits
  
  
  11,898
  
  
  10,977Postretirement benefits
  
  
  11,333
  
  
  9,998Loss carryforwards
  
  
  7,356
  
  
  7,850Bad debt provisions
  
  
  7,409
  
  
  7,249Accrual for sales allowances
  
  
  5,432
  
  
  1,668Unrealized currency gains/(losses)
  
  
  2,566
  
  
  (4,701
  )Other items
  
  
  4,861
  
  
  3,968Valuation allowance
  
  
  (5,732
  )
  
  (3,994
  )63,173
  
  
  47,111Deferred tax liabilities:Depreciation and asset basis differences
  
  
  (12,194
  )
  
  (12,361
  )Net deferred tax assets
  
  $
  50,979
  
  $
  34,750The current and
long-term deferred tax asset amounts are included in other current assets and
other asset balances on the
Consolidated Balance Sheets.
At July 31,
2004, we had foreign tax loss carryforwards of $15.2 million, which may be
carried forward indefinitely. The
valuation allowance increased by $1.7 million due to the uncertainty
surrounding our ability to recognize certain
of the tax benefits associated with these foreign losses. We also have state
loss carryforwards of approxi­mately
$49.1 million, which will expire between 2011 and 2014.

NOTE 12STOCK-BASED INCENTIVE PLAN
At our Annual
Meeting of Shareholders on November 20, 2003, shareholders approved our Long
Term Incentive Plan (the
Plan), which replaced our Amended and Restated Stock Incentive Plan
and our Directors Stock Option Plan (the Prior Plans). This
allowed us to combine the Prior Plans into a single integrated plan that will provide greater flexibility for
additional types of awards, including performance-based cash awards. Our Plan has reserved 2.4 million shares of
capital stock that may be awarded to key employees and directors in the form of options to purchase capital stock,
restricted shares or bonus shares. Our Board of Directors sets the option price and vesting terms of options and
restricted shares in accordance with the terms of our Plan. The expense related to the award of restricted shares
was $3.1 million, $0.8 million and $1.7 million in 2004, 2003
43

and 2002,
respectively. For all options currently outstanding, the option price is the
fair market value of the shares on their date of grant.

Our
equity compensation plan in effect as of July 31, 2004 is as follows:
Plan Category
  
  Number of Securities
  to Be Issued
  Upon Exercise of
  Outstanding Options
  
  Weighted
  Average
  Exercise Price of
  Outstanding
  Options
  
  Number of Securities
  Remaining Available
  for Future Issuance
  Under Equity
  Compensation PlansEquity compensation plans approved by security holders
  
  
  
  4,807
  
  
  
  $
  11.73
  
  
  
  
  2,400Equity compensation plans not approved by security holders
  
  
  
  
  
  
  
  
  
  
  
  
  
  Total
  
  
  
  4,807
  
  
  
  $
  11.73
  
  
  
  
  2,400Our
outstanding options and transactions involving the plans are summarized as
follows:
2004
  
  2003
  
  2002Options
  
  Weighted
  Average
  Exercise
  Price
  
  Options
  
  Weighted
  Average
  Exercise
  Price
  
  Options
  
  Weighted
  Average
  Exercise
  PriceOutstanding
  options at the beginning of the year
  
  
  4,679
  
  $
  11.16
  
  
  3,335
  
  $
  12.40
  
  
  4,260
  
  $
  11.13Options
  granted
  
  
  576
  
  
  13.92
  
  
  1,729
  
  
  8.45
  
  
  42
  
  
  11.30Options
  canceled
  
  
  (117
  )
  
  11.34
  
  
  (295
  )
  
  12.18
  
  
  (336
  )
  
  11.60Options
  exercised
  
  
  (331
  )
  
  7.60
  
  
  (90
  )
  
  1.77
  
  
  (631
  )
  
  4.16Outstanding
  options at the end of the year
  
  
  4,807
  
  $
  11.73
  
  
  4,679
  
  $
  11.16
  
  
  3,335
  
  $
  12.40Exercisable
  options at the end of the year
  
  
  3,137
  
  $
  12.43
  
  
  2,538
  
  $
  12.95
  
  
  2,174
  
  $
  13.03Our
information with respect to stock options outstanding at July 31, 2004 is as
follows:
Options Outstanding
  
  Options ExercisableRange of
  Exercise Prices
  
  Number
  Outstanding
  
  Weighted
  Average
  Remaining Life
  
  Weighted
  Average
  Exercise Price
  
  Number
  Exercisable
  
  Weighted
  Average
  Exercise Price$5.64 to
  $10.91
  
  
  
  3,061
  
  
  
  
  7
  
  
  
  $
  9.43
  
  
  
  
  1,996
  
  
  
  $
  9.9611.30 to
  14.75
  
  
  
  1,140
  
  
  
  
  7
  
  
  
  
  13.63
  
  
  
  
  535
  
  
  
  
  13.2917.31 to
  21.94
  
  
  
  606
  
  
  
  
  5
  
  
  
  
  19.79
  
  
  
  
  606
  
  
  
  
  19.79NOTE 13BASIC AND DILUTED EARNINGS PER SHARE
This table presents our computation of
basic and diluted earnings per share for the years ended July 31:

2004
  
  2003
  
  2002Income before
  cumulative effect of change in accounting principle
  
  $
  26,649
  
  $
  12,392
  
  $
  12,878Cumulative
  effect of change in accounting
  
  
  
  
  
  
  
  
  (114,470
  )Net income
  (loss)
  
  $
  26,649
  
  $
  12,392
  
  $
  (101,592
  )Denominator
  for basic earnings per shareweighted average shares
  
  
  42,860
  
  
  42,601
  
  
  42,082Effect of
  dilutive securitiesemployee stock options and unvested restricted shares
  
  
  1,172
  
  
  265
  
  
  1,088Denominator
  for diluted earning per shareweighted average shares adjusted for dilutive
  securities
  
  
  44,032
  
  
  42,866
  
  
  43,170Earnings per
  common share before cumulative effect of change in accounting principle
  
  $
  .62
  
  $
  .29
  
  $
  .31Cumulative
  effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.72
  )Earnings
  (loss) per common share
  
  $
  .62
  
  $
  .29
  
  $
  (2.41
  )Earnings per
  common shareassuming dilution before cumulative effect of change in
  accounting principle
  
  $
  .61
  
  $
  .29
  
  $
  .30Cumulative
  effect of change in accounting principle
  
  
  
  
  
  
  
  
  (2.65
  )Earnings
  (loss) per common shareassuming dilution
  
  $
  .61
  
  $
  .29
  
  $
  (2.35
  )44

During
fiscal 2004, options to purchase 1.3 million shares of capital stock at a range
of $10.91 to $21.94 per share were not included in the computation of diluted
earnings per share because exercise prices for the options were more than the
average market price of the capital stock.

NOTE 14SHAREHOLDER RIGHTS PLAN

We declared a distribution of one Right
for each outstanding share of capital stock to shareholders of record at the
close of business on June 15, 2000. Each Right entitles the registered holder
to purchase from us one-tenth of a share of our capital stock at a purchase
price of $40 per whole share of our capital stock. The Rights will expire on
May 24, 2010 unless redeemed earlier by us or exchanged for capital stock.

Separate certificates for Rights will not
be distributed, nor will the Rights be exercisable unless a person or group (an
Acquiring Person) acquires 15% or more, or announces an offer that could
result in acquiring 15% or more of our capital shares unless such acquisition
or offer is pursuant to a Permitted Offer approved by a majority of directors who
are not our officers or affiliates of the Acquiring Person. Following an
acquisition of 15% or more of our capital shares (a Stock Acquisition), each
Rightholder, except the 15% or more stockholder, has the right to receive, upon
exercise, capital shares valued at twice the then applicable exercise price of
the Right (or, under certain circumstances, cash, property or other of our
securities.)
Similarly, unless certain conditions are
met, if we engage in a merger or other business combination following a Stock
Acquisition where we do not survive or where part of our capital shares are
exchanged or converted into securities, cash or property of another person, or
if 50% or more of our assets or earning power is sold or trans­ferred, the
Rights become exercisable for shares of the acquirers stock having a value of
twice the exercise price (or, under certain circumstances, cash or property.)
The Rights are not exercisable, however, until our right of redemption
described below has expired.
At any time until 10 business days
following public announcement that a 15% or greater position has been acquired
in our stock, a majority of our Board of Directors may redeem the Rights in
whole, but not in part, at a price of $0.001 per Right, payable, at the election
of such majority of our Board of Directors in cash or shares of our capital
stock. Immediately upon the action of a majority of our Board of Directors
ordering the redemption of the Rights, the Rights will terminate and the only
right of the holders of Rights will be to receive the redemption price.

NOTE 15EMPLOYEE RETIREMENT PLANS
Substantially all of our employees
participate in defined contribution or non-contributory defined benefit plans.
As of July 31, 2004, approximately 8% of our employees were covered by
union-sponsored, collectively bargained multi-employer pension plans and a
union employment contract which expires April 2006. The expense related to
funding the multi-employer plan was $0.3 million, $0.2 million and $0.2 million
in 2004, 2003 and 2002, respectively.
We have discretionary, defined
contribution retirement plans covering our eligible U.S. employees. Our policy
is to fund the cost as accrued. Plan assets are invested in mutual funds and
our capital stock. The aggregate expense relating to these plans was $4.6
million, $0.8 million and $0.8 million in 2004, 2003 and 2002, respectively. We
also have non-qualified defined benefit plans that provide senior management
with supplemental retirement, medical, disability and death benefits.
45

The following table presents our defined
benefit pension and postretirement plans funded status and amounts recognized
in our consolidated financial statements. We use a measurement date of April 30
for the majority of our defined benefit pension and postretirement plans.
Pension Benefits
  
  Postretirement
  Benefits2004
  
  2003
  
  2004
  
  2003Change in benefit obligation:Benefit obligation at beginning of year
  
  $
  32,796
  
  $
  25,310
  
  $
  39,043
  
  $
  28,085Service cost
  
  
  2,052
  
  
  1,514
  
  
  1,982
  
  
  1,177Interest cost
  
  
  1,998
  
  
  1,759
  
  
  2,423
  
  
  2,012Change in assumptions
  
  
  
  
  
  3,503
  
  
  
  
  
  65Change in participation
  
  
  
  
  
  2
  
  
  
  
  
  43Actuarial (gain)/loss
  
  
  (2,013
  )
  
  2,156
  
  
  (5,647
  )
  
  9,239Benefits paid
  
  
  (1,614
  )
  
  (1,448
  )
  
  (1,660
  )
  
  (1,578
  )Assumed in OmniQuip acquisition
  
  
  
  
  
  
  
  
  150
  
  
  Benefit obligation at end of year
  
  $
  33,219
  
  $
  32,796
  
  $
  36,291
  
  $
  39,043Change in plan assets:Fair value of plan assets at beginning of
  year
  
  $
  10,966
  
  $
  12,131
  
  $
  
  
  $
  Actual return on plan assets
  
  
  2,143
  
  
  (1,268
  )
  
  
  
  
  Contributions
  
  
  3,193
  
  
  1,551
  
  
  1,660
  
  
  1,578Benefits paid
  
  
  (1,614
  )
  
  (1,448
  )
  
  (1,660
  )
  
  (1,578
  )Fair value of plan assets at end of year
  
  $
  14,688
  
  $
  10,966
  
  $
  
  
  $
  Funded status
  
  $
  (18,531
  )
  $
  (21,830
  )
  $
  (36,291
  )
  $
  (39,043
  )Unrecognized net actuarial (gain)/loss
  
  
  6,811
  
  
  10,660
  
  
  7,897
  
  
  14,531Unrecognized transition obligation
  
  
  
  
  
  28
  
  
  73
  
  
  99Unrecognized prior service cost
  
  
  511
  
  
  767
  
  
  (1,345
  )
  
  (1,766
  )Accrued benefit cost
  
  $
  (11,209
  )
  $
  (10,375
  )
  $
  (29,666
  )
  $
  (26,179
  )Amounts recognized in the consolidated
  balance sheet:Accrued benefit cost
  
  $
  (13,633
  )
  $
  (14,919
  )
  $
  (29,666
  )
  $
  (26,179
  )Accumulated other comprehensive (gain)/loss
  
  
  2,424
  
  
  4,544
  
  
  
  
  
  Net amount recognized
  
  $
  (11,209
  )
  $
  (10,375
  )
  $
  (29,666
  )
  $
  (26,179
  )Our defined benefit pension plans
weighted-average asset allocations by asset category consist of the following
at July 31:
2004
  
  2003Equity securities
  
  
  60
  %
  
  66
  %Debt securities
  
  
  37
  
  
  31Cash
  
  
  3
  
  
  3100
  %
  
  100
  %Our Administrative Committee (the
Committee) manages the operations and administration of all benefit plans and
related trusts. The Committee has an investment policy for the assets of
defined benefit pension plans that establishes target asset allocations for the
above listed asset classes as follows: equity securities 70% and fixed income
securities 30%. The Committee establishes its estimated long-term return on plan
assets considering various factors, which include the targeted asset
allocation percentages, historic returns, and expected future returns. On a
quarterly basis, the Committee reviews progress towards achieving the defined
benefit pension plans and individual managers performance objectives.
46


The funded status of our defined benefit
pension plans at July 31, 2004 reflects the effects of negative returns
experienced in the global capital markets over the past several years and a
decline in the discount rate used to estimate the pension liability. As a
result, the accumulated benefit obligation exceeded the fair value of plan
assets. As required by U.S. generally accepted accounting principles, the
Consolidated Balance Sheet reflected a minimum pension liability of $2.4
million at July 31, 2004. The effect of the funded status of the plan resulted
in a decrease in accrued benefit costs by $2.1 million and a decrease in
accumulated other comprehensive loss by $1.4 million, net of tax.

Our accumulated benefit obligation
related to all defined benefit pension plans and information related to
unfunded and underfunded defined benefit pension plans consist of the following
at July 31:
2004
  
  2003All defined benefit pension plans:Accumulated benefit obligation
  
  $
  26,222
  
  $
  25,688Unfunded defined benefit pension plans:Projected benefit obligation
  
  
  12,594
  
  
  12,595Accumulated benefit obligation
  
  
  8,392
  
  
  8,224Defined benefit pension plans with an
  accumulated benefit obligation in excess of the fair value of plan assets:Projected benefit obligation
  
  
  20,625
  
  
  20,200Accumulated benefit obligation
  
  
  17,830
  
  
  17,464Fair value of plan assets
  
  
  14,688
  
  
  10,966Our
components of pension and postretirement expense were as follows for the years
ended July 31:
Pension Benefits
  
  Postretirement Benefits2004
  
  2003
  
  2002
  
  2004
  
  2003
  
  2002Service cost
  
  $
  2,052
  
  $
  1,514
  
  $
  1,203
  
  $
  1,982
  
  $
  1,177
  
  $
  1,083Interest cost
  
  
  1,998
  
  
  1,759
  
  
  1,574
  
  
  2,423
  
  
  2,012
  
  
  1,788Expected return
  
  
  (887
  )
  
  (1,012
  )
  
  (1,065
  )
  
  
  
  
  
  
  
  Amortization of prior service cost
  
  
  256
  
  
  256
  
  
  256
  
  
  (421
  )
  
  (421
  )
  
  (421
  )Amortization of transition obligation
  
  
  32
  
  
  32
  
  
  32
  
  
  26
  
  
  26
  
  
  26Amortization of net (gain)/loss
  
  
  577
  
  
  87
  
  
  (37
  )
  
  911
  
  
  203
  
  
  90$
  4,028
  
  $
  2,636
  
  $
  1,963
  
  $
  4,921
  
  $
  2,997
  
  $
  2,566Our
weighted average actuarial assumptions as of July 31 were as follows:
Pension Benefits
  
  Postretirement Benefits2004
  
  2003
  
  2002
  
  2004
  
  2003
  
  2002Discount rate
  
  
  6.25
  %
  
  6.25
  %
  
  7.25
  %
  
  6.25
  %
  
  6.25
  %
  
  7.25
  %Expected return on plan assets
  
  
  8.0
  %
  
  8.0
  %
  
  8.5
  %
  
  
  
  
  
  
  
  Rate of compensation increase
  
  
  4.25
  %
  
  4.25
  %
  
  4.5
  %
  
  
  
  
  
  
  
  The
health care cost trend rate used to determine the postretirement benefit
obligation was 12.5% for 2004. This rate decreases gradually to an ultimate
rate of 5.3% in 2016, and remains at that level thereafter. The trend rate is a
significant factor in determining the amounts reported. A one-percentage-point
change in these assumed health care cost trend rates would have the following
effects:
One-Percentage-PointIncrease
  
  DecreasePostretirement benefit obligation
  
  $
  4,306
  
  $
  4,099Service and interest cost components
  
  $
  809
  
  $
  64947

In fiscal 2005, we expect to make cash
contributions of approximately $1.6 million to our defined benefit pen­sion
plans. In addition, we expect to continue to make contributions in fiscal 2005
sufficient to fund benefits paid under our other postretirement benefit plans
during that year, net of contributions by plan participants. Such contributions
totaled $1.7 million in 2004. The amounts principally represent contributions
required by funding regulations or laws or those related to unfunded plans
necessary to fund current benefits.

Based on the same assumptions used to
measure our benefit obligations at July 31, 2004, the following table displays
the benefits expected to be paid under our defined benefit pension plans and
our other postretirement benefit plans for the years ended July 31:
Pension
  Benefits
  
  Post retirement
  Benefits2005
  
  $
  1,543
  
  
  $
  1,7532006
  
  
  1,546
  
  
  
  1,7912007
  
  
  1,560
  
  
  
  1,7952008
  
  
  1,999
  
  
  
  1,9332009
  
  
  11,700
  
  
  
  2,0882010-2014
  
  
  16,129
  
  
  
  13,001NOTE
16REPOSITIONING AND RESTRUCTURING COSTS
During the second quarter of fiscal 2003,
we announced further actions related to our ongoing longer-term strategy to
streamline operations and reduce fixed and variable costs. As part of our
capacity rationalization plan for our Machinery segment that commenced in early
2001, we idled the 130,000-square-foot Sunnyside facility in Bedford,
Pennsylvania, which produced selected scissor lift models, and relocated that
production into our Shippensburg, Pennsylvania facility. Additionally,
reductions in selling, administrative and product development costs resulted
from improvements in our global organizations and from process consolidations.
We have improved our European sales and service operations model by eliminating
redundant operations, reducing headcount and focusing on enhancing the business
for increased profitability and growth through ongoing manufacturing process
improvements.

The announced plan contemplates that we
will reduce a total of 189 people globally and transfer 99 production jobs from
the Sunnyside facility to the Shippensburg facility. As a result, pursuant to
the plan we anticipated incurring a pre-tax charge of $5.9 million, consisting
of $3.5 million in restructuring costs associated with personnel reductions and
employee relocation and lease and contract terminations and $2.4 million in
restructuring-related charges which include costs related to relocating certain
plant assets and start-up costs with the move of the Sunnyside operations to
the Shippensburg facility. In addition, we anticipated spending approximately
$3.5 mil­lion on capital requirements. Almost all of these expenses will be
cash charges.
As noted above, the continuing
streamlining of our operations will result in $3.5 million in personnel
reductions and relocation and lease and contract terminations and will be
recorded as a restructuring cost. In accordance with accounting requirements,
through July 31, 2004, we recognized $2.8 million of the pre-tax restructuring
charge, consisting of an accrual for termination benefit costs and employee
relocation costs. In addition, we incurred $1.2 million of
restructuring-related costs, which include costs related to relocating certain
plant assets and start-up costs, which was recorded as a cost of sales. Also,
through July 31, 2004, we spent approximately $3.9 million on capital
requirements. We do not anticipate recording any additional restructuring and
restructuring-related costs relating to these plans.
48


The following table presents a
rollforward of our activity in the restructuring accrual associated with the
move of the Bedford operations to the Shippensburg facility and costs related
to our process consolidations:

Termination
  Benefits
  
  Other
  Restructuring
  Costs
  
  TotalRestructuring
  charge recorded during second quarter of fiscal 2003
  
  
  $
  1,183
  
  
  
  $
  
  
  
  $
  1,183Utilization
  of reserves during the second quarter of fiscal 2003cash
  
  
  
  (114
  )
  
  
  
  
  
  
  
  (114
  )Balance at
  January 31, 2003
  
  
  
  1,069
  
  
  
  
  
  
  
  
  1,069Restructuring
  charge recorded during the third quarter of fiscal 2003
  
  
  
  1,175
  
  
  
  
  258
  
  
  
  1,433Utilization
  of reserves during the third quarter of fiscal 2003cash
  
  
  
  (626
  )
  
  
  
  (38
  )
  
  
  (664
  )Balance at
  April 30, 2003
  
  
  
  1,618
  
  
  
  
  220
  
  
  
  1,838Restructuring
  charge recorded during the fourth quarter of fiscal 2003
  
  
  
  45
  
  
  
  
  93
  
  
  
  138Utilization
  of reserves during the fourth quarter of fiscal 2003cash
  
  
  
  (1,316
  )
  
  
  
  (89
  )
  
  
  (1,405
  )Balance at
  July 31, 2003
  
  
  
  347
  
  
  
  
  224
  
  
  
  571Restructuring charge recorded during the first quarter of fiscal 2004
  
  
  
  3
  
  
  
  
  8
  
  
  
  11Utilization of reserves during the first quarter of fiscal 2004cash
  
  
  
  (127
  )
  
  
  
  
  
  
  
  (127
  )Balance at October 31, 2003
  
  
  
  223
  
  
  
  
  232
  
  
  
  455Restructuring charge recorded during the second quarter of fiscal
  2004
  
  
  
  
  
  
  
  
  
  
  
  
  Utilization of reserves during the second quarter of fiscal 2004cash
  
  
  
  (64
  )
  
  
  
  (46
  )
  
  
  (110
  )Balance at January 31, 2004
  
  
  
  159
  
  
  
  
  186
  
  
  
  345Restructuring charge recorded during the third quarter of fiscal 2004
  
  
  
  
  
  
  
  
  
  
  
  
  Utilization of reserves during the third quarter of fiscal 2004cash
  
  
  
  
  
  
  
  
  (6
  )
  
  
  (6
  )Balance at April 30, 2004
  
  
  
  159
  
  
  
  
  180
  
  
  
  339Restructuring charge recorded during the fourth quarter of fiscal
  2004
  
  
  
  16
  
  
  
  
  
  
  
  
  16Utilization of reserves during the fourth quarter of fiscal 2004cash
  
  
  
  (16
  )
  
  
  
  (36
  )
  
  
  (52
  )Balance at July 31, 2004
  
  
  $
  159
  
  
  
  $
  144
  
  
  $
  303During the third quarter of fiscal 2002,
we announced the closure of our manufacturing facility in Orrville, Ohio as
part of our capacity rationalization plan for our Machinery segment. Operations
at that facility have been integrated into our McConnellsburg, Pennsylvania
facility. As a result, through July 31, 2004, we have incurred a pre-tax charge
of $6.9 million, consisting of $1.2 million for termination benefits and lease
termination costs, a $4.9 million asset write-down and $0.9 million in
restructuring-related charges which include costs related to relocating certain
plant assets and start-up costs associated with the move of the Orrville
operations to the McConnellsburg facility. We do not anticipate recording any
additional restructuring and restructuring-related costs.
The following table presents a
rollforward of our activity in the restructuring accrual associated with the
move of the Orrville operations to McConnellsburg:

Termination
  Benefits
  
  Impairment
  of Assets
  
  Other
  Restructuring
  Costs
  
  TotalTotal
  restructuring charge
  
  
  $
  1,120
  
  
  
  $
  4,613
  
  
  
  $
  358
  
  
  $
  6,091Fiscal 2002
  utilization of reservescash
  
  
  
  (135
  )
  
  
  
  
  
  
  
  
  (86
  )
  
  
  (221
  )Fiscal 2002
  utilization of reservesnon-cash
  
  
  
  
  
  
  
  
  (4,613
  )
  
  
  
  
  
  
  
  (4,613
  )Balance at
  July 31, 2002
  
  
  
  985
  
  
  
  
  
  
  
  
  
  272
  
  
  
  1,257Fiscal 2003
  utilization of reservescash
  
  
  
  (985
  )
  
  
  
  
  
  
  
  
  (88
  )
  
  
  (1,073
  )Balance at
  July 31, 2003
  
  
  
  
  
  
  
  
  
  
  
  
  
  184
  
  
  
  184Fiscal 2004 utilization of reservescash
  
  
  
  
  
  
  
  
  
  
  
  
  
  (125
  )
  
  
  (125
  )Balance at July 31, 2004
  
  
  $
  
  
  
  
  $
  
  
  
  
  $
  59
  
  
  $
  59Our accrued liabilities associated with
the acquisition of OmniQuip are discussed in Note 2 of the Notes to
Consolidated Financial Statements.
49


NOTE 17COMMITMENTS AND CONTINGENCIES

We are a party to personal injury and
property damage litigation arising out of incidents involving the use of our
products. Our insurance program for fiscal 2004 was comprised of a self-insured
retention of $3 million for domestic claims, insurance coverage of $2 million
for international claims and catastrophic coverage for domestic and
international claims of $100 million in excess of the retention and primary
coverage. We contract with an independent firm to provide claims handling and
adjustment services. Our estimates with respect to claims are based on internal
evaluations of the merits of individual claims and the reserves assigned by our
independent insurance claims adjustment firm. We frequently review the methods
of making such estimates and establishing the resulting accrued liability, and
any resulting adjustments 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 we are aware, we established accrued liabilities of $21.9
million and $19.0 million at July 31, 2004 and 2003, respectively. These
amounts are included in accrued expenses and provisions for contingencies on
our Consolidated Balance Sheets. While our ultimate liability may exceed or be
less than the amounts accrued, we believe that it is unlikely we would
experience losses that are materially in excess of such reserve amounts. The
provisions for self-insured losses are included within cost of sales in our
Consolidated Statements of Income. As of July 31, 2004 and 2003, there were no insurance
recoverables or offset implications and there were no claims by us being
contested by insurers.
At July 31, 2004, we were a party to
multiple agreements whereby we guarantee $102.2 million in indebtedness of
others, including the $25.2 million maximum loss exposure associated with our
pledged finance receivables. As of July 31, 2004, one customer whose debt is
undergoing restructure owed approximately 24% of the guaran­teed indebtedness.
Under the terms of these and various related agreements and upon the occurrence
of certain events, we generally have the ability, among other things, to take
possession of the underlying collateral and/or make demand for reimbursement
from other parties for any payments made by us under these agreements. At July
31, 2004, we had $6.7 million reserved related to these agreements, including a
provision for losses of $2.6 million related to our pledged finance
receivables. If the financial condition of our customers were to deteriorate
resulting in an impairment of their ability to make payments, additional
allowances may be required. While we believe it is unlikely that we would
experience losses under these agreements that are materially in excess of the
amounts reserved, we can provide no assurance that the financial condition of
the third parties will not deteriorate resulting in the customers inability to
meet their obligations and, in the event that occurs, we cannot guarantee that
the collateral underlying the agreements will be sufficient to avoid losses materially
in excess of those reserved.
We have received notices of audit
adjustments from the Pennsylvania Department of Revenue (PA) in con­nection
with audits of the tax years 1999 through 2001. The principal adjustments
proposed by PA consist of the disallowance of a royalty deduction taken in our
income tax returns and the denial of the manufacturing exemption taken in our
capital stock tax returns. We believe that PA has acted contrary to applicable
law, and we are vigorously disputing its position. Should PA prevail in its
disallowance of the royalty deduction and denial of the manufacturing
exemption, it would result in a cash outflow by us of approximately $11.5
million. Although unlikely, we believe that any such cash outflow would not
occur until some time after 2005.

There can be no assurance that
unanticipated events will not require us to increase the amount we have accrued
for any matter or accrue for a matter that has not been previously accrued
because it was not consid­ered probable.
NOTE 18BANK CREDIT LINES AND LONG-TERM DEBT
At July 31, 2004, we had a $175 million
senior secured revolving credit facility with a maturity of September 23, 2006
and a pari passu,one-year $15
million cash management facility that expires September 23, 2005. Both
facilities are secured by a lien on substantially all of our assets.
Availability of credit requires compliance with financial and other covenants,
including a requirement that we maintain (i) leverage ratios during fiscal 2005
of Net Funded Debt to EBITDA measured on a rolling four quarters and Net Funded
Senior Debt to EBITDA measured on a rolling four quarters not to exceed 5.00 to
1.00 and 2.00 to 1.00, respectively, (ii) a fixed charge coverage ratio of not
less than 1.75 to 1.00 through October 31, 2004 and 2.00 to 1.00 through July
31, 2005, and (iii) a Tangible Net Worth of at least $194 million, plus 50% of
Consolidated Net Income on a cumulative basis for each preced­ing fiscal
quarter, commencing with the quarter ended July 31, 2003. Availability of
credit also will be limited by a borrowing base determined on a monthly basis
by reference to 85% of eligible domestic accounts receivable and percentages
ranging between 25% and 70% of various categories of domestic inventory. While
no amounts
50


were outstanding under our senior secured revolving facility or our
cash management facility at July 31, 2004, average borrowings outstanding under
these facilities during 2004 were $18.1 million. At July 31, 2004, we were in
compliance with all terms and conditions of our credit facilities.

In May 2003, we sold $125 million
principal amount of our 8 1/4% senior unsecured notes due 2008. The net proceeds of the
offering were used to repay outstanding debt under our revolving credit
facility with the balance used for the OmniQuip acquisition. Interest accrued
from May 5, 2003, and we pay interest twice a year, beginning November 1, 2003.
The notes are guaranteed on a senior unsecured basis by all of our existing and
any future material domestic restricted subsidiaries.
In June 2002, we sold $175 million
principal amount of our 8 3/8% senior subordinated notes due 2012. The net
proceeds of the offering were used to repay outstanding debt under our
revolving credit facility and to terminate a working capital facility.
Interest on the notes accrued from June 15, 2002 and we pay interest twice a
year, beginning December 15, 2002. The notes are unconditionally guaranteed on
a general unsecured senior subordinated basis by all of our existing and future
material domestic restricted subsidiaries.
Our long-term debt was as follows at July
31:
2004
  
  20038 3/8%
  senior subordinated notes due 2012
  
  $
  175,000
  
  $
  175,0008 1/4% senior
  unsecured notes due 2008
  
  
  125,000
  
  
  125,000Fair value hedging
  adjustment
  
  
  (3,496
  )
  
  (6,353
  )Other
  
  
  4,557
  
  
  1,348301,061
  
  
  294,995Less current portion
  
  
  1,050
  
  
  837$
  300,011
  
  $
  294,158Interest paid on all borrowings was $24.5
million, $15.8 million and $12.7 million in 2004, 2003 and 2002, respectively.
The aggregate amounts of long-term debt outstanding at July 31, 2004 which will
become due in 2005 through 2009 are: $1.1 million, $1.1 million, $1.1 million,
$123.5 million and $1.1 million, respectively.
At July 31, 2004, the fair values of our
$175 million 8 3/8% senior subordinated notes due 2012 and our $125
million 8 1/4% senior unsecured
notes due 2008 were $180.3 million and $131.3 million, respectively, based on
quoted market values. At July 31, 2003, the fair values of our $175 million
8 3/8% senior subordinated notes due 2012 and our $125 million 8 1/4% senior unsecured notes due 2008 were
$158.5 million and $126.3 million, respectively, based on quoted market values.
The fair value of our remaining long-term debt at July 31, 2004 and at July 31,
2003 is estimated to approximate the carrying amount reported in the
Consolidated Balance Sheets based on current interest rates for similar types
of borrowings.

NOTE 19LIMITED RECOURSE DEBT FROM FINANCE
RECEIVABLES MONETIZATIONS
As a result of the sale of finance
receivables through limited recourse monetization transactions during fiscal
2004, 2003 and fiscal 2002, we have $121.8 million of limited recourse debt
outstanding as of July 31, 2004. The aggregate amounts of limited recourse debt
outstanding at July 31, 2004, which will become due in 2005 through 2009 are:
$32.6 million, $35.9 million, $30.0 million, $13.8 million and $5.5 million,
respectively.
NOTE 20COMPREHENSIVE INCOME
SFAS No. 130, Reporting Comprehensive Income, defines comprehensive
income as non-stockholder changes in equity. Our accumulated other
comprehensive income (loss) consists of the following at July 31:
2004
  
  2003Aggregate translation
  adjustments
  
  $
  (4,536
  )
  $
  (4,689
  )Minimum pension liability
  adjustment, net of deferred tax benefit
  
  
  (1,481
  )
  
  (2,929
  )$
  (6,017
  )
  $
  (7,618
  )Translation adjustments are not generally
adjusted for income taxes as they relate to indefinite investments in foreign
subsidiaries. The minimum pension liability adjustment as of July 31, 2004, is
net of deferred tax benefits of $0.9 million.
51


NOTE 21CONDENSED CONSOLIDATING FINANCIAL
INFORMATION OF GUARANTOR SUBSIDIARIES

Certain of our indebtedness is guaranteed
by our significant subsidiaries (the guarantor subsidiaries), but is not guaranteed by our other subsidiaries (the
non-guarantor subsidiaries). The guarantor subsidiaries are all wholly owned,
and the guarantees are made on a joint and several basis and are full and
unconditional subject to a standard limitation which provides that the
maximum amount guaranteed by each guarantor will not exceed the maximum amount
guaranteed without making the guarantee void under fraudulent conveyance laws.
Separate financial statements of the
guarantor subsidiaries have not been presented because management believes it would not be material to investors. The principal
elimination entries eliminate investment in subsidiaries, inter­company
balances and transactions and certain other eliminations to properly eliminate
significant transactions in accordance with
our accounting policy for the principles of consolidated and statement
presentation. The condensed consolidating financial information of the Company
and its subsidiaries are as follows:

CONDENSED CONSOLIDATED BALANCE
SHEETAs of July 31, 2004
Parent
  
  Guarantor
  Subsidiaries
  
  Non-GuarantorSubsidiaries
  
  Other and
  Eliminations
  
  ConsolidatedTotalASSETSAccounts receivablenet
  
  $
  239,874
  
  $
  30,844
  
  
  $
  92,470
  
  
  
  $
  (369
  )
  
  
  $
  362,819Finance
  receivablesnet
  
  
  171
  
  
  31,290
  
  
  
  5,396
  
  
  
  
  2,810
  
  
  
  
  39,667Pledged finance
  receivablesnet
  
  
  
  
  
  118,418
  
  
  
  (1
  )
  
  
  
  
  
  
  
  
  118,417Inventories
  
  
  111,362
  
  
  11,429
  
  
  
  31,190
  
  
  
  
  424
  
  
  
  
  154,405Property,
  plant and equipmentnet
  
  
  56,380
  
  
  20,987
  
  
  
  14,621
  
  
  
  
  (484
  )
  
  
  
  91,504Equipment
  held for rentalnet
  
  
  577
  
  
  10,746
  
  
  
  9,867
  
  
  
  
  
  
  
  
  
  21,190Investment in subsidiaries
  
  
  289,985
  
  
  
  
  
  
  16,201
  
  
  
  
  (306,186
  )
  
  
  
  Other
  assets
  
  
  157,465
  
  
  39,019
  
  
  
  42,924
  
  
  
  
  34
  
  
  
  
  239,442$
  855,814
  
  $
  262,733
  
  
  $
  212,668
  
  
  
  $
  (303,771
  )
  
  
  $
  1,027,444LIABILITIES AND SHAREHOLDERS EQUITYAccounts
  payable and accrued expenses
  
  $
  225,662
  
  $
  31,417
  
  
  $
  32,441
  
  
  
  $
  (30,670
  )
  
  
  $
  258,850Long-term debt, less
  current portion
  
  
  296,851
  
  
  3,160
  
  
  
  
  
  
  
  
  
  
  
  
  
  300,011Limited recourse debt from
  finance receivables monetizations, less current portion
  
  
  
  
  
  89,209
  
  
  
  
  
  
  
  
  
  
  
  
  
  89,209Other
  liabilities
  
  
  (84,117
  )
  
  (18,034
  )
  
  
  167,038
  
  
  
  
  33,217
  
  
  
  
  98,104Total
  liabilities
  
  
  438,396
  
  
  105,752
  
  
  
  199,479
  
  
  
  
  2,547
  
  
  
  
  746,174Shareholders
  equity
  
  
  417,418
  
  
  156,981
  
  
  
  13,189
  
  
  
  
  (306,318
  )
  
  
  
  281,270$
  855,814
  
  $
  262,733
  
  
  $
  212,668
  
  
  
  $
  (303,771
  )
  
  
  $
  1,027,44452

CONDENSED CONSOLIDATED BALANCE
SHEETAs of July 31, 2003

Parent
  
  Guarantor
  Subsidiaries
  
  Non-GuarantorSubsidiaries
  
  Other and
  Eliminations
  
  Consolidated
  TotalASSETSAccounts receivablenet
  
  $
  142,552
  
  $
  40,059
  
  
  $
  74,977
  
  
  
  $
  (69
  )
  
  
  $
  257,519Finance
  receivablesnet
  
  
  5,992
  
  
  24,956
  
  
  
  (1,596
  )
  
  
  
  4,972
  
  
  
  
  34,324Pledged finance
  receivablesnet
  
  
  
  
  
  160,411
  
  
  
  (4
  )
  
  
  
  
  
  
  
  
  160,407Inventories
  
  
  52,091
  
  
  31,326
  
  
  
  39,651
  
  
  
  
  (393
  )
  
  
  
  122,675Property,
  plant and equipmentnet
  
  
  24,749
  
  
  42,234
  
  
  
  13,152
  
  
  
  
  (436
  )
  
  
  
  79,699Equipment
  held for rentalnet
  
  
  919
  
  
  16,130
  
  
  
  2,602
  
  
  
  
  
  
  
  
  
  19,651Investment in subsidiaries
  
  
  244,788
  
  
  
  
  
  
  4,977
  
  
  
  
  (249,765
  )
  
  
  
  Other
  assets
  
  
  197,275
  
  
  30,357
  
  
  
  34,234
  
  
  
  
  61
  
  
  
  
  261,927$
  668,366
  
  $
  345,473
  
  
  $
  167,993
  
  
  
  $
  (245,630
  )
  
  
  $
  936,202LIABILITIES AND SHAREHOLDERS EQUITYAccounts
  payable and accrued expenses
  
  $
  118,539
  
  $
  24,497
  
  
  $
  50,580
  
  
  
  $
  (19,151
  )
  
  
  $
  174,465Long-term
  debt, less current portion
  
  
  294,158
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  294,158Limited
  recourse debt from finance receivables monetizations, less current portion
  
  
  
  
  
  119,661
  
  
  
  
  
  
  
  
  
  
  
  
  
  119,661Other
  liabilities
  
  
  (250,124
  )
  
  232,883
  
  
  
  95,583
  
  
  
  
  21,862
  
  
  
  
  100,204Total
  liabilities
  
  
  162,573
  
  
  377,041
  
  
  
  146,163
  
  
  
  
  2,711
  
  
  
  
  688,488Shareholders
  equity
  
  
  505,793
  
  
  (31,568
  )
  
  
  21,830
  
  
  
  
  (248,341
  )
  
  
  
  247,714$
  668,366
  
  $
  345,473
  
  
  $
  167,993
  
  
  
  $
  (245,630
  )
  
  
  $
  936,202CONDENSED CONSOLIDATED STATEMENT
OF INCOMEFor the Year Ended July 31, 2004
Parent
  
  Guarantor
  Subsidiaries
  
  Non-GuarantorSubsidiaries
  
  Other and
  Eliminations
  
  ConsolidatedTotalRevenues
  
  $
  806,446
  
  $
  216,760
  
  
  $
  174,748
  
  
  
  $
  (3,992
  )
  
  
  $
  1,193,962Gross profit (loss)
  
  
  184,515
  
  
  14,487
  
  
  
  28,560
  
  
  
  
  (2,162
  )
  
  
  
  225,400Other expenses (income)
  
  
  16,315
  
  
  35,190
  
  
  
  22,384
  
  
  
  
  124,862
  
  
  
  
  198,751Net income (loss)
  
  $
  168,200
  
  $
  (20,703
  )
  
  $
  6,176
  
  
  
  $
  (127,024
  )
  
  
  $
  26,649CONDENSED CONSOLIDATED STATEMENT
OF INCOMEFor the Year Ended July 31, 2003
Parent
  
  Guarantor
  Subsidiaries
  
  Non-GuarantorSubsidiaries
  
  Other and
  Eliminations
  
  ConsolidatedTotalRevenues
  
  $
  492,328
  
  $
  150,843
  
  
  $
  114,180
  
  
  
  $
  (6,223
  )
  
  
  $
  751,128Gross profit (loss)
  
  
  128,642
  
  
  (11,018
  )
  
  
  13,416
  
  
  
  
  3,402
  
  
  
  
  134,442Other expenses (income)
  
  
  83,959
  
  
  22,548
  
  
  
  14,883
  
  
  
  
  660
  
  
  
  
  122,050Net income (loss)
  
  $
  44,683
  
  $
  (33,566
  )
  
  $
  (1,467
  )
  
  
  $
  2,742
  
  
  
  $
  12,392CONDENSED CONSOLIDATED STATEMENT
OF INCOMEFor the Year Ended July 31, 2002
Parent
  
  Guarantor
  Subsidiaries
  
  Non-GuarantorSubsidiaries
  
  Other and
  Eliminations
  
  ConsolidatedTotalRevenues
  
  $
  520,349
  
  $
  231,624
  
  
  $
  101,169
  
  
  
  $
  (83,072
  )
  
  
  $
  770,070Gross profit (loss)
  
  
  125,928
  
  
  (853
  )
  
  
  5,867
  
  
  
  
  1,145
  
  
  
  
  132,087Other expenses (income)
  
  
  87,539
  
  
  139,084
  
  
  
  8,374
  
  
  
  
  (1,318
  )
  
  
  
  233,679Net income (loss)
  
  $
  38,389
  
  $
  (139,937
  )
  
  $
  (2,507
  )
  
  
  $
  2,463
  
  
  
  $
  (101,592
  )53

CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWSFor the Year
Ended July 31, 2004

Parent
  
  Guarantor
  Subsidiaries
  
  Non-Guarantor
  Subsidiaries
  
  Other and
  Eliminations
  
  Consolidated
  TotalCash
  flow from operating activities
  
  $
  (4,942
  )
  
  $
  (15,498
  )
  
  
  $
  32,542
  
  
  
  $
  (419
  )
  
  
  $
  11,683Cash
  flow from investing activities
  
  
  (107,087
  )
  
  
  12,018
  
  
  
  
  (22,167
  )
  
  
  
  2,295
  
  
  
  
  (114,941
  )Cash
  flow from financing activities
  
  
  4,432
  
  
  
  3,474
  
  
  
  
  2,236
  
  
  
  
  (2,295
  )
  
  
  
  7,847Effect
  of exchange rate changes on cash
  
  
  1,749
  
  
  
  

  

  
  
  
  (1,892

  )
  
  
  
  401

  
  
  
  
  258Net
  change in cash and cash equivalents
  
  
  (105,848
  )
  
  
  (6
  )
  
  
  
  10,719
  
  
  
  
  (18
  )
  
  
  
  (95,153
  )Beginning
  balance
  
  
  127,197
  
  
  
  26
  
  
  
  
  5,570
  
  
  
  
  16
  
  
  
  
  132,809Ending
  balance
  
  $
  21,349
  
  
  $
  20
  
  
  
  $
  16,289
  
  
  
  $
  (2
  )
  
  
  $
  37,656CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWSFor the Year Ended July 31, 2003
Parent
  
  Guarantor
  Subsidiaries
  
  Non-Guarantor
  Subsidiaries
  
  Other and
  Eliminations
  
  Consolidated
  TotalCash
  flow from operating activities
  
  $
  (1,644
  )
  
  $
  (99,572
  )
  
  
  $
  6,683
  
  
  
  $
  (629
  )
  
  
  $
  (95,162
  )Cash
  flow from investing activities
  
  
  (6,563
  )
  
  
  2,087
  
  
  
  
  (6,814
  )
  
  
  
  2,732
  
  
  
  
  (8,558
  )Cash
  flow from financing activities
  
  
  110,782
  
  
  
  117,056
  
  
  
  
  3,426
  
  
  
  
  (2,792
  )
  
  
  
  228,472Effect
  of exchange rate changes on cash
  
  
  1,673
  
  
  
  
  
  
  
  
  (818
  )
  
  
  
  997
  
  
  
  
  1,852Net
  change in cash and cash equivalents
  
  
  104,248
  
  
  
  19,571
  
  
  
  
  2,477
  
  
  
  
  308
  
  
  
  
  126,604Beginning
  balance
  
  
  22,949
  
  
  
  (19,545
  )
  
  
  
  3,093
  
  
  
  
  (292
  )
  
  
  $
  6,205Ending
  balance
  
  $
  127,197
  
  
  $
  26
  
  
  
  $
  5,570
  
  
  
  $
  16
  
  
  
  $
  132,809CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWSFor the Year Ended July 31, 2002
Parent
  
  Guarantor
  Subsidiaries
  
  Non-Guarantor
  Subsidiaries
  
  Other and
  Eliminations
  
  Consolidated
  TotalCash
  flow from operating activities
  
  $
  150,568
  
  
  $
  (134,013
  )
  
  
  $
  2,138
  
  
  
  $
  4,402
  
  
  
  $
  23,095Cash
  flow from investing activities
  
  
  (31,138
  )
  
  
  (3,260
  )
  
  
  
  (5,181
  )
  
  
  
  29,697
  
  
  
  
  (9,882
  )Cash
  flow from financing activities
  
  
  (103,573
  )
  
  
  119,873
  
  
  
  
  1,609
  
  
  
  
  (33,364
  )
  
  
  
  (15,455
  )Effect
  of exchange rate changes on cash
  
  
  1,058
  
  
  
  (431
  )
  
  
  
  (109
  )
  
  
  
  (1,325
  )
  
  
  
  (807
  )Net
  change in cash and cash equivalents
  
  
  16,915
  
  
  
  (17,831
  )
  
  
  
  (1,543
  )
  
  
  
  (590
  )
  
  
  
  (3,049
  )Beginning
  balance
  
  
  6,034
  
  
  
  (1,714
  )
  
  
  
  4,636
  
  
  
  
  298
  
  
  
  
  9,254Ending
  balance
  
  $
  22,949
  
  
  $
  (19,545
  )
  
  
  $
  3,093
  
  
  
  $
  (292
  )
  
  
  
  6,20554

NOTE 22UNAUDITED QUARTERLY FINANCIAL INFORMATION

Our
unaudited financial information was as follows for the fiscal quarters within
the years ended July 31:

Revenues
  
  Gross Profit
  
  Net Income
  
  Earnings
  Per Common
  Share
  
  Earnings Per
  Common Share
  Assuming Dilution2004October 31
  
  $
  213,585
  
  
  $
  38,266
  
  
  
  $
  533
  
  
  
  $
  .01
  
  
  
  $
  .01January 31
  
  
  236,530
  
  
  
  43,447
  
  
  
  
  2,158
  
  
  
  
  .05
  
  
  
  
  .05April 30
  
  
  318,687
  
  
  
  63,637
  
  
  
  
  8,687
  
  
  
  
  .20
  
  
  
  
  .20July 31
  
  
  425,160
  
  
  
  80,050
  
  
  
  
  15,271
  
  
  
  
  .36
  
  
  
  
  .35$
  1,193,962
  
  
  $
  225,400
  
  
  
  $
  26,649
  
  
  
  $
  .62
  
  
  
  $
  .612003October 31
  
  $
  160,487
  
  
  $
  29,116
  
  
  
  $
  329
  
  
  
  $
  .01
  
  
  
  $
  .01January 31
  
  
  151,313
  
  
  
  26,098
  
  
  
  
  4,226
  
  
  
  
  .10
  
  
  
  
  .10April 30
  
  
  205,770
  
  
  
  34,645
  
  
  
  
  2,165
  
  
  
  
  .05
  
  
  
  
  .05July 31
  
  
  233,558
  
  
  
  44,583
  
  
  
  
  5,672
  
  
  
  
  .13
  
  
  
  
  .13$
  751,128
  
  
  $
  134,442
  
  
  
  $
  12,392
  
  
  
  $
  .29
  
  
  
  $
  .29Results
for the first and fourth quarters of 2004 included restructuring charges of $11
thousand ($7 thousand net of tax) and
$16 thousand ($10 thousand net of tax), respectively. Results for the second,
third and fourth quarters of 2003
included restructuring charges of $1.2 million ($1.0 million net of tax), $1.4
million ($1.2 million net of tax)
and $0.1 million ($0.1 million net of tax), respectively. In addition, refer to
Note 9 of the Notes to Consolidated
Financial Statements for information related to changes in accounting
estimates.
55


REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To
the Board of Directors and ShareholdersJLG Industries, Inc.McConnellsburg, Pennsylvania

We
have audited the accompanying consolidated balance sheets of JLG Industries,
Inc. as of July 31, 2004 and 2003,
and the related consolidated statements of income, shareholders equity, and
cash flows for each of the three
years in the period ended July 31, 2004. These financial statements are the
responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall finan­cial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial
position of JLG Industries, Inc. at July 31, 2004 and 2003, and the
consolidated results of its operations and
its cash flows for each of the three years in the period ended July 31, 2004,
in conformity with U. S. generally accepted accounting principles.
As
discussed in Note 5 of the Notes to Consolidated Financial Statements, the
Company adopted Statement No. 142,
Goodwill and Other Intangible Assets, as of August 1, 2001.
messageBaltimore,
MarylandSeptember 19, 2004

56

ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL
DISCLOSURE
None.
ITEM 9A. CONTROLS AND
PROCEDURES
Evaluation of Disclosure Controls and
Procedures
Our
Chief Executive Officer and Chief Financial Officer, with participation of
other management, evaluated the
effectiveness of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934) as of the end of the period covered by
this report. Based on their evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures are, to the best of their knowledge,
effective to ensure that information required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.
Changes
in Internal Controls
As
previously disclosed in our third quarter Form 10-Q, in February 2004 our
disclosure controls and procedures were
found to be ineffective in identifying an accounting error related to the
timing of the recording of revenue in conformity with U.S. generally accepted
accounting principles arising from our improper accounting for a single consignment sale. In response to the matter
identified, we have taken significant steps to strengthen control processes and procedures in order to
identify and rectify the accounting error and prevent the recurrence of the
circumstances that resulted in the need to restate prior period financial
statements. Since March 2004, we corrected the identified weaknesses in our
disclosure controls and procedures that led to the above error by taking the following steps, among others:

  Strengthening our
  documentation and formal process to review and approve proposed revenue
  transactions prior to their
  occurrence.
  Supplementing our revenue
  recognition policy to include a clearly understandable summary of key
  elements of the policy to better
  ensure broader understanding of the policy among our personnel.
  Conducting training sessions
  for affected employees on applicable policies and procedures.
  Implementing additional
  detection controls to identify and correct accounting errors on a timely
  basis before such errors reach our financial statements.We
continue to improve upon our disclosure controls and procedures and have, in
addition to the foregoing, named a
Sales/Operations Compliance Officer to assure compliance with our procedures
and policies relating to proper
documentation of domestic and international sales transactions, expanded the
scope of our quarterly internal audit activities, implemented additional
controls and procedures and conducted additional training sessions for employees on applicable policies and
procedures.
While
we believe that our system of internal controls and our disclosure controls and
procedures are now adequate to provide reasonable assurance that the
objectives of these control systems have been and will be met, we will continue to improve these controls
principally through additional modifications to our information systems to automate and provide redundancies for
some of these processes. We expect to continue evaluating and refining this improvement process as part of our
ongoing plan to prepare for compliance with the reporting and attestation requirements under Section 404 of the
Sarbanes-Oxley Act. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues, if any, within the Company
have been detected. These inherent limitations include the realities that
judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake.

ITEM 9B. OTHER INFORMATION
None.
57

PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT
The
information required by this Item 10 relating to identification of directors is
set forth under the caption Proposal 1. Election
of Directors in our Proxy Statement and is incorporated herein by reference.
Identification of officers is
presented in Item 1 of this report under the caption Executive Officers of the
Registrant.
Information
regarding audit committee financial experts serving on the Audit Committee of
our Board of Directors appears under
the caption The Board of Directors and Corporate Governance in our Proxy
Statement and is incorporated herein
by reference.
Information
regarding delinquent filers appears under the caption Section 16(a) Beneficial
Ownership Reporting Compliance in
our Proxy Statement and is incorporated herein by reference.
We
have adopted a Code of Ethics and Business Conduct that applies to all Company
personnel including our Board of
Directors, chief executive officer, chief financial officer and principal
accounting officer. In addition, certain
Company policies and other information regarding the Board of Directors,
including director qualifications
and responsibilities, responsibilities of key board committees and director
compensation, is set forth in our Principles
of Corporate Governance and the written charters of our five standing
committees. The Code of Ethics and Business Conduct, the Principles of
Corporate Governance, and the charters for each of these five standing committeesAudit, Compensation, Directors and
Corporate Governance, Finance and Executivemay be viewed on the Companys website: www.jlg.com. A
copy of each of these documents is also available, free of charge, upon request.

ITEM 11. EXECUTIVE COMPENSATION
The
information required by this Item 11 relating to executive compensation is set
forth under the captions Report of
the Compensation Committee and Executive Compensation in our Proxy Statement
and is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
information required by this Item 12 relating to security ownership of certain
beneficial owners and management is set forth in Item 5 of this report and
under the caption Voting Securities and Principal Shareholders in our Proxy Statement and is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
information required by this Item 14 relating to principal accountant fees and
services is set forth under the caption
Proposal 2. Ratification of Independent Auditors in our Proxy Statement and is
incorporated herein by reference.
PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K

(a) (1) Financial Statements

The
consolidated financial statements of the registrant and its subsidiaries are
set forth in Item 8 of Part II of this
report.
(2) Financial Statement Schedules
The
schedules for which provision is made in the applicable accounting regulation
of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable
and, therefore, have been omitted.
58

(3) Exhibits
2
  Purchase
  and Sale Agreement, dated as of July 7, 2003, by and among TRAK
  International, Inc., Textron Inc., JLG Acquisition Corporation, and JLG
  Industries, Inc., which appears as Exhibit 2 to the Companys Form S-4 (File No.
  333-107468filed July 30, 2003), is hereby incorporated by reference.3.1
  Articles
  of Incorporation of JLG Industries, Inc., which appears as Exhibit 3 to the
  Companys Form 10-Q (File No. 1-12123filed December 13, 1996), is hereby
  incorporated by reference.3.2
  By-laws of JLG Industries,
  Inc., which appear as Exhibit 3 to the Companys Form 10-Q (File No. 1-12123
  filed March 4, 2003), is hereby
  incorporated by reference.4.1
  Rights
  Agreement, dated as of May 24, 2000, between JLG Industries, Inc. and
  American Stock Transfer and Trust Company, which appears as Exhibit 1 to the
  Companys Form 8-A12B (File No. 1-12123filed May 31, 2000), is hereby
  incorporated by reference.4.2
  Purchase
  Agreement, dated June 12, 2002, among JLG Industries, Inc., the Note
  Guarantors, Wachovia Securities, Inc., Credit Suisse First Boston
  Corporation, J.P. Morgan Securities, Inc., Banc One Capital Markets, Inc., BMO
  Nesbitt Burns Corp., BNY Capital Markets, Inc., and Credit Lyonnais
  Securities (USA)
  Inc., which appears as Exhibit 1 to the Companys Form S-4 (File No.
  333-99217filed September 6, 2002), is hereby incorporated by reference.4.3
  Indenture
  dated June 17, 2002, by and among JLG Industries, Inc., the Note Guarantors,
  and The Bank of New York, as Trustee, which appears as Exhibit 4.1 to
  the Companys Form S-4 (File No. 333-99217filed September 6, 2002), is
  hereby incorporated by reference.4.4
  Registration
  Rights Agreement, dated June 17, 2002, by and among JLG Industries, Inc., the
  Note Guarantors,
  and Wachovia Securities, Inc., Credit Suisse First Boston Corporation, J.P.
  Morgan Securities Inc., Banc One Capital Markets, Inc., BMO Nesbitt Burns Corp., BNY
  Capital Markets, Inc., and Credit Lyonnais Securities (USA) Inc., which appears as
  Exhibit 4.2 to the Companys Form S-4 (File No. 333-99217 filed September 6,
  2002), is hereby incorporated by reference.4.5
  Purchase
  Agreement, dated April 30, 2003, among JLG Industries, Inc., the Note
  Guarantors (as defined therein), the Initial Purchasers (as defined therein)
  and The Bank of New York, as Trustee, which appears as Exhibit 1 to the
  Companys Form S-4 (File No. 333-107468filed July 30, 2003), is hereby
  incorporated by reference.4.6
  Indenture
  dated as of May 5, 2003, by and among JLG Industries, Inc., the Note
  Guarantors party thereto, and The Bank of New York, as Trustee, which
  appears as Exhibit 4 to the Companys Form 10-Q (File No. 1-12123filed
  May 29, 2003), is hereby incorporated by reference.4.7
  Registration
  Rights Agreement, dated May 5, 2003, by and among JLG Industries, Inc., the
  Note Guarantors,
  and Credit Suisse First Boston LLC, Deutsche Bank Securities, Inc., Banc One
  Capital Markets,
  Inc., BMO Nesbitt Burns Corp., Credit Lyonnais Securities (USA) Inc., NatCity
  Investments, Inc., and SunTrust Capital Markets, Inc., as Initial Purchasers,
  which appears as Exhibit 4.2 to the Companys Form S-4 (File No. 333-107468filed July 30,
  2003), is hereby incorporated by reference.10.1
  Amended
  and Restated Credit Agreement, dated June 17, 2002, by and among, JLG
  Industries, Inc., Fulton International, Inc., JLG Equipment Services,
  Inc., JLG Manufacturing, LLC, Gradall Industries, Inc., The Gradall Company,
  The Gradall Orrville Company, Access Financial Solutions, Inc. as Borrowers,
  the Lenders
  (as defined therein), Wachovia Bank, National Association, as Administrative
  Agent and Documentation Agent, and Bank One, Michigan, as Syndication
  Agent, which appears as Exhibit 10.1 to the Companys Form S-4 (File No. 333-99217filed
  September 6, 2002), is hereby incorporated by reference.10.2
  Amendment
  No. 1 to Amended and Restated Credit Agreement, dated August 30, 2002, by and
  among, JLG Industries, Inc., JLG Equipment Services, Inc., JLG Manufacturing,
  LLC, Fulton International, Inc., Gradall Industries, Inc., The Gradall Company, Access
  Financial Solutions, Inc. as Borrowers, the Lenders (as defined therein),
  Wachovia Bank, National Association, as Administrative Agent and
  Documentation Agent, and Bank One, Michigan, as Syndication Agent, which
  appears as Exhibit 10.2 to the Companys Form S-4 (File No. 333-99217filed September 6,
  2002), is hereby incorporated by reference.10.3
  Amendment
  No. 2 and Waiver Under Amended and Restated Credit Agreement, dated February
  21, 2003, by and among, JLG Industries, Inc., JLG Equipment Services, Inc., JLG
  Manufacturing, LLC, Fulton International, Inc., Gradall Industries, Inc., The
  Gradall Company, Access Financial Solutions, Inc., JLG Europe BV, JLG
  Manufacturing Europe BVBA as Borrowers, the Lenders (as defined therein),
  Wachovia Bank, National Association, as Administrative Agent and
  Documentation Agent, and Bank One, Michigan, as Syndication Agent, which appears as Exhibit 10
  to the Companys Form 10-Q (File No. 1-12123filed March 4, 2003), is
  hereby incorporated by reference.59

10.4
  Amendment
  No. 3 Under Amended and Restated Credit Agreement, dated April 28, 2003, by
  and among,
  JLG Industries, Inc., JLG Equipment Services, Inc., JLG Manufacturing, LLC,
  Fulton International, Inc., Gradall Industries, Inc., The Gradall Company,
  Access Financial Solutions, Inc., JLG Europe BV, JLG Manufacturing Europe
  BVBA as Borrowers, the Lenders (as defined therein), Wachovia Bank, National Association, as
  Administrative Agent and Documentation Agent, and Bank One, Michigan, as
  Syndication Agent,
  which appears as Exhibit 10 to the Companys Form 10-Q (File No.
  1-12123filed May 29, 2003), is hereby incorporated by reference.10.5
  Amendment
  No. 4 and Waiver Under Amended and Restated Credit Agreement, dated July 8,
  2003, by and among, JLG Industries, Inc., JLG Equipment Services, Inc., JLG
  Manufacturing, LLC, Fulton International, Inc., Gradall Industries, Inc., The
  Gradall Company, Access Financial Solutions, Inc., JLG Europe BV, JLG
  Manufacturing Europe BVBA as Borrowers, the Lenders (as defined herein),
  Wachovia Bank, National Association, as Administrative Agent and
  Documentation Agent, and Bank One, Michigan, as Syndication Agent, which appears as Exhibit 10
  to the Companys Form S-4 (File No. 333-107468filed July 30, 2003), is
  hereby incorporated by reference.10.6
  JLG
  Industries, Inc. Directors Deferred Compensation Plan as amended and
  restated effective November 1, 2003, which appears as Exhibit 10.2 to the
  Companys Form 10-Q (File No. 1-12123filed March 16, 2004), is hereby incorporated
  by reference.10.7
  JLG
  Industries, Inc. Long Term Incentive Plan, which appears as Exhibit 10.1 to
  the Companys Form 10-Q (File No. 1-12123filed March 16, 2004), is hereby
  incorporated by reference.10.8
  JLG
  Industries, Inc. Supplemental Executive Retirement Plan effective September
  6, 2000, which appears as Exhibit 10.1 to the Companys Form 10-Q (File No.
  1-12123filed June 14, 2001), is hereby incorporated by reference.10.9
  JLG
  Industries, Inc. Executive Retiree Medical Benefits Plan effective June 1,
  1995, which appears as Exhibit 10.9 to the Companys Form 10-K (File No.
  1-12123filed October 17, 1996), is hereby incorporated by reference.10.10
  JLG
  Industries, Inc. Executive Severance Plan effective February 16, 2000, which
  appears as Exhibit 10.1 to the Companys Form 10-Q (File No. 1-12123filed
  June 5, 2000), is hereby incorporated by reference.10.11
  The
  Gradall Company Amended and Restated Supplemental Executive Retirement Plan
  effective March 1, 1988, which appears as Exhibit 10.11 to the Companys
  Form 10-K (File No. 1-12123filed October 12, 1999), is hereby incorporated by reference.10.12
  The
  Gradall Company Benefit Restoration Plan, which appears as Exhibit 10.12 to
  the Companys Form 10-K (File No. 1-12123filed October 12, 1999), is hereby
  incorporated by reference.10.13
  Employment
  Agreement dated November 1, 1999 between JLG Industries, Inc. and William M.
  Lasky, which appears as Exhibit 10.2 to the Companys Form 10-Q (File No.
  1-12123filed December 14, 1999), is hereby incorporated by reference.10.14
  Employment
  Agreement dated July 18, 2000 between JLG Industries, Inc. and James H.
  Woodward, Jr., which appears as Exhibit 10.14 to the Companys Form
  10-K (File No. 1-12123filed October 6, 2000), is hereby incorporated by
  reference.10.15
  JLG
  Industries, Inc. Executive Deferred Compensation Plan as amended and restated
  effective November 1, 2003, which appears as Exhibit 10.3 to the Companys
  Form 10-Q (File No. 1-12123filed March 16, 2004), is hereby incorporated
  by reference.10.16
  Revolving
  Credit Agreement dated as of September 23, 2003 among JLG Industries, Inc.,
  the several banks and other financial institutions and lenders from time to time
  party hereto, SunTrust Bank, as Administrative Agent, Manufacturers and Traders Trust
  Company, as Syndication Agent, and Standard Federal Bank N.A., as Documentation Agent, which
  appears as Exhibit 10.17 to the Companys Form 10-K (File No. 1-12123filed
  October 6, 2003), is hereby incorporated by reference.60

10.17
  First
  Amendment and Waiver to Revolving Credit Agreement dated February 4, 2004
  among JLG Industries, Inc., the several banks and other financial
  institutions and lenders from time to time party hereto, SunTrust Bank, as Administrative Agent, Manufacturers
  and Traders Trust Company, as Syndication Agent, and Standard Federal Bank
  N.A., as Documentation Agent which appears as Exhibit 10.4 to the Companys Form 10-Q (File No. 1-12123filed March 16,
  2004), is hereby incorporated by reference.10.18
  Form of Employee Stock
  Option Agreement under the Long Term Incentive Plan10.19
  Form of Employee Restricted
  Stock Agreement under the Long Term Incentive Plan10.20
  Form
  of Director Stock Option Agreement under the Long Term Incentive Plan10.21
  Form
  of Director Restricted Stock Agreement under the Long Term Incentive Plan12
  Statement Regarding
  Computation of Ratios21
  Subsidiaries
  of the Registrant23
  Consent of Independent
  Auditors31.1
  Section
  302 Certification of Chief Executive Officer31.2
  Section
  302 Certification of Chief Financial Officer32.1
  Section
  906 Certification of Chief Executive Officer32.2
  Section
  906 Certification of Chief Financial Officer99
  Cautionary Statements
  Pursuant to the Securities Litigation Reform Act of 1995(b) Reports
on Form 8-K
We furnished a Current
Report on Form 8-K on May 20, 2004, which included our Press Release dated May
20, 2004. The item reported on such Form 8-K was Item 9. (Regulation FD
Disclosure). We filed a Current Report on Form 8-K on May 20, 2004, which
included our Press Release dated May 20, 2004. The items reported on such Form
8-K were Item 5. (Other Events) and Item 7. (Financial Statements, Pro Forma
Financial Statements and Exhibits). We filed an amended Current Report on Form
8-K on May 28, 2004. The items reported on such Form 8-K were Item 2.
(Acquisition or Disposition of Assets), Item 5. (Other Events and Regulation FD
Disclosure) and Item 7. (Financial Statements, Pro Forma Financial Statements
and Exhibits).

61

SIGNATURES
Pursuant to the
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on October 6, 2004.
JLG
  INDUSTRIES, INC.(Registrant)/s/William
  M. LaskyWilliam
  M. Lasky, Chairman of the Board,President and Chief
  Executive OfficerPursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on
behalf of the registrant and in the capacities indicated as of October 6, 2004.
/s/James H. Woodward, Jr.James
  H. Woodward, Jr., Executive Vice Presidentand
  Chief Financial Officer/s/John
  W. CookJohn W. Cook, Chief
  Accounting Officer/s/Roy V. ArmesRoy
  V. Armes, Director/s/James A. MezeraJames
  A. Mezera, Director/s/David L. PughDavid
  L. Pugh, Director/s/Stephen RabinowitzStephen
  Rabinowitz, Director/s/Raymond C. StarkRaymond
  C. Stark, Director/s/Charles O. Wood, IIICharles O. Wood, III, Director62