NEW PHILADELPHIA, OH (February 3, 2006) — Gradall, a product brand and a company that has been an industrial mainstay in this city as well as the Tuscarawas County area for over 50 years, has been sold to the Alamo Group Inc. The sale was announced at an employee meeting at the plant today and in news announcements distributed by Gradall, Alamo Group and JLG Industries, Inc., which had owned Gradall since 1999.
Alamo Group, which trades under ALG on the New York Stock Exchange, is a leader in the design, manufacture, distribution and service of high quality equipment for right-of-way maintenance and agriculture. Products include tractor and truck mounted mowing and other vegetation maintenance equipment, street sweepers, agricultural implements, front-end loaders, backhoes and related aftermarket parts and service.
Founded in 1969, Alamo Group already has over 1,860 employees and 14 plants in North America and Europe. Corporate offices of Alamo Group Inc. are located in Seguin, Texas, and the headquarters of the company’s European operations are located in Salford Priors, England.
Alamo becomes the ninth owner of Gradall excavators – generally recognized as the world’s first hydraulic excavator and now the only excavator manufactured entirely in the U.S. Distinguished by its telescoping, tilting boom, Gradall excavators are considered premium products known worldwide for their versatile abilities to handle mass excavation, grading and sloping, demolition and waterway cleanup. Gradall virtually dominates the market for highway speed wheeled excavators but models also are available with crawler and on/off highway wheeled undercarriages.
Beyond the construction equipment industry and government applications, Gradall produces models especially for mining, metal mill maintenance, railway construction and components for the firefighting industry.
“This is an exciting development for Alamo and one that will be synergistic to our business,” said Ron Robinson, Alamo Group’s president and CEO. Robinson attended the announcement meeting with employees, held on a loading dock at the plant today.
“Over half of Gradall’s sales are to governmental buyers and related contractors for grading and maintenance along right-of-ways, which makes it an ideal fit with our Industrial Division. This division sells a variety of products including mowing equipment, street sweepers, road patchers, snow removal and other equipment for maintenance along roads and right-of-ways.
“With Alamo and Gradall together, we feel we can expand our market coverage and mutually enhance our sales potential, making this an excellent opportunity for the Alamo Group. Like many of our products, the Gradall excavator, with its telescoping boom arm arrangement, is a high quality product that serves a unique niche in the market.”
Purchase price was $39.4 million, subject to adjustments, according to terms of the Asset Purchase Agreement, and is expected to be accretive to Alamo’s earnings in 2006. The purchase is being funded by Alamo’s expanded line of credit.
The sale includes the 430,000-square-foot manufacturing facility in New Philadelphia, Ohio, and all related equipment, machinery, tooling and intellectual property.
In addition to the purchase agreement, Alamo and JLG have executed a supply agreement covering components for JLG’s telescoping material handler product lines that currently are being manufactured at the New Philadelphia facility.
Gradall’s excavator and related equipment services revenues were approximately $75.6 million at the end of JLG’s fiscal year on July 31, 2005.
As part of the Alamo Group, the New Philadelphia facility will continue its Gradall excavator manufacturing operations as well as, at least on a temporary basis, manufacture certain components for other JLG products which currently are being produced in the plant. A majority of the Gradall workforce – numbering around 400 – will be retained.
Management of the Gradall operation will be assumed by veteran Gradall professionals who are already on site. “We are pleased to announce that Michael Haberman will be president of Gradall,” said Robinson, “Mike has been with Gradall for over 18 years and most recently served as JLG’s vice president of Excavator Products.” Haberman and his family reside in New Philadelphia.
“I am very excited about the future of Gradall with the Alamo Group,” said Haberman. “This transaction represents excellent news for the employees of Gradall and for the economy of Tuscarawas County and beyond. Gradall has been an important corporate citizen in this community for over 55 years, including our use of dozens of local businesses, and it’s great that the positive Gradall impact will continue and grow even stronger again.”
A JLG Industries news release noted that divesting of the Gradall excavator product line “is consistent with our strategy of focusing our efforts on our core access business and the proceeds from the sale will be used to continue implementing our growth strategy.”
“The Gradall excavator is a well known and highly respected niche product line, but it is not a core business for JLG,” said Bill Lasky, JLG’s chairman of the board, president, and chief executive officer. “With this ownership change, the New Philadelphia excavator team will find more opportunities to flourish and grow with a more closely aligned family of products.”
JLG’s core business involves aerial work platforms and telehandlers under the brand names JLG®, Lull®, SkyTrak® and Gradall®. In 1982, the Gradall Company acquired the Loed line of material handlers which were re-branded with the Gradall name. They were produced at the New Philadelphia plant until the late 1990s, when production was moved to Orrville and then to a JLG plant in McConnellsburg, Pa. Telehandler product development, however, continued to be based at the New Philadelphia plant.
As part of the acquisition, Alamo announced that it has entered into an amended and restated revolving credit agreement between the company and its lenders, Bank of America, N.A., JP Morgan Chase Bank and Guaranty Bank to expand the facility from $70 million to $125 million. The company has the ability to request an increase in commitments by $25 million. In addition, the asset coverage ratio was reduced and interest margins were lowered. The final maturity remains the same at August 25, 2009.
Gradall has had a number of owners since the first machine was built in the early 1940s by two Cleveland road contractors, looking for ways to continue their business in spite of the loss of manpower to the military in World War II. The first machines featured a telescoping, tilting boom – still a traditional Gradall versatility advantage – mounted on a variety of undercarriages.
The product was purchased by Warner & Swasey Co. in Cleveland in 1945. Around 1950, a group of civic-minded New Philadelphia executives raised the funds to purchase the former American Sheet & Tin Co. plant in the city. Warner & Swasey acquired the property and established Gradall there as a separate division, buoyed by the need for productive equipment to build the nation’s interstate highway system through the 1950s.
In 1980, Bendix Corporation purchased Gradall, and in 1983, Allied Corp. purchased Bendix, including Gradall. Almost immediately after the Allied acquisition, Gradall was sold to a group of local executives who formed a partnership called GBKS.
ICM Industries, a Chicago consulting firm, purchased Gradall in 1985. The next owner was Morgan, Lewis, Githens & Ahn, a New York City investment firm that took the company public, selling shares but retaining a controlling interest.
JLG Industries acquired Gradall in 1999, marketing branded excavators and telehandlers and reorganizing the plant into separate entities involving sales, marketing and product support; manufacturing; and engineering including both excavator and telehandler product development.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking 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) risks associated with acquisitions; (iv) credit risks from our financing of customer purchases; (v) risks arising from dependence on third-party suppliers; and (vi) costs of raw materials and energy, as well as other risks as detailed in the Company's SEC reports, including the report on Form 10-Q for the quarter ended October 30, 2005.
This document can be downloaded as a Word document at http://www.whitemyer.com/press/gradallsalerelease.doc
| 
