-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FJhAmfC77sYnfk9q0UgEeijwpkjixU9O8VTv0LzFU2x8Ncfx4ImmMx7hH41Rm0su I/HEWedb4xWNAcCOJ4e9hA== 0000856386-95-000030.txt : 19951030 0000856386-95-000030.hdr.sgml : 19951030 ACCESSION NUMBER: 0000856386-95-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951027 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEHL CO CENTRAL INDEX KEY: 0000856386 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 390300430 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18110 FILM NUMBER: 95584781 BUSINESS ADDRESS: STREET 1: 143 WATER STREET CITY: WEST BEND STATE: WI ZIP: 53095 BUSINESS PHONE: 4143349461 MAIL ADDRESS: STREET 1: 143 WATER STREET CITY: WEST BEND STATE: WI ZIP: 53095 10-Q 1 10Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.............. to ................... Commission file number 0-18110 GEHL COMPANY (Exact name of registrant as specified in its charter) Wisconsin 39-0300430 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 143 Water Street, West Bend, WI 53095 (Address of principal executive office) (zip code) (414) 334-9461 (Registrant's telephone number, including area code) 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 the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at September 30, 1995 Common Stock, $.10 Par Value 6,210,767 GEHL COMPANY FORM 10-Q September 30, 1995 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Condensed Consolidated Statements of Income for the Three- and Nine-Month Periods Ended September 30, 1995 and October 1, 1994 . . . . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at September 30, 1995, December 31, 1994, and October 1, 1994 . . . . . . . . . . 4 Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 30, 1995 and October 1, 1994 . . . . . . . . . . . . . . . . . . . . . . . . 5 Notes to Condensed Consolidated Financial Statements . . . . . . . . . 6 Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . . 8 PART II. - OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 12 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 PART I - FINANCIAL INFORMATION GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data; unaudited)
Three Months Ended Nine Months Ended Sept. 30, October 1, Sept. 30, October 1, 1995 1994 1995 1994 NET SALES $ 36,901 $ 37,592 $ 117,899 $ 113,750 Cost of goods sold 26,175 26,335 83,796 79,946 -------- --------- -------- --------- GROSS PROFIT 10,726 11,257 34,103 33,804 Selling, general and administrative expenses 7,346 7,190 22,805 24,267 -------- -------- -------- --------- INCOME FROM OPERATIONS 3,380 4,067 11,298 9,537 Interest expense (1,404) (1,667) (4,592) (5,310) Interest income 462 470 1,409 1,327 Other (expense) income, net (177) (321) (393) (1,437) -------- -------- ------- -------- INCOME BEFORE INCOME TAXES 2,261 2,549 7,722 4,117 Income tax provision 25 38 75 113 -------- -------- ------- -------- NET INCOME $ 2,236 $ 2,511 $ 7,647 $ 4,004 ====== ======== ======= ======== EARNINGS PER SHARE $ .36 $ .41 $ 1.22 $ .65
The accompanying notes are an integral part of the financial statements GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
September 30, December 31, October 1, 1995 1994 1994 (Unaudited) (Unaudited) ASSETS Cash $ 4,439 $ 2,570 $ 4,272 Accounts receivable-net 72,138 72,393 78,441 Finance contracts receivable-net 4,711 3,389 4,227 Inventories 22,631 21,452 19,802 Prepaid expenses and other assets 3,853 2,817 1,871 ---------- ---------- ---------- 107,772 102,621 108,613 Total Current Assets ---------- ---------- ---------- Property, plant and equipment-net 19,979 20,433 20,422 Finance contracts receivable-net, 2,879 2,258 2,459 non-current Other assets 5,343 5,715 5,790 ---------- ---------- ---------- TOTAL ASSETS $ 135,973 $ 131,027 $ 137,284 =========== ========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt $ 210 $ 180 $ 1,368 obligations Accounts payable 13,890 14,477 13,231 Accrued liabilities 14,836 14,053 16,251 ---------- ---------- ---------- Total Current Liabilities 28,936 28,710 30,850 ---------- ---------- ---------- Line of credit facility 42,464 45,879 42,527 Long-term debt obligations 8,851 8,821 17,678 Other long-term liabilities 1,424 1,334 1,147 ---------- ---------- ---------- Total Long-Term Liabilities 52,739 56,034 61,352 ---------- ---------- ---------- Common stock, $.10 par value 25,000,000 shares authorized, 6,210,767, 6,169,523 and 6,145,857 shares outstanding, respectively 621 617 614 Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued - - - Capital in excess of par 26,497 26,133 26,002 Retained earnings 27,180 19,533 18,466 ---------- ---------- ---------- Total Shareholders' Equity 54,298 46,283 45,082 ---------- ---------- ---------- TOTAL LIABILITIES AND $ 135,973 $ 131,027 $ 137,284 SHAREHOLDERS' EQUITY ========= ========= =========
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited)
Nine Months Ended September 30, October 1, 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 7,647 $ 4,004 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,125 2,853 Increase in finance contracts receivable (24,957) (24,477) Proceeds from sales of finance contracts 22,241 23,082 Cost of sales of finance contracts 418 663 Net changes in remaining working capital (1,836) 8,353 items Other 137 179 ---------- ---------- Net cash provided by operating 5,775 14,657 activities ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, (1,443) (1,794) net Other assets 571 837 ---------- ---------- Net cash used for investing activities (872) (957) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in long-term debt obligations 60 217 Increase in long-term liabilities 90 349 Repayments of credit facility (3,415) (11,452) Proceeds from issuance of common stock 231 - ---------- ---------- Net cash used for financing activities (3,034) (10,886) ---------- ---------- Net increase in cash 1,869 2,814 Cash, beginning of period 2,570 1,458 ---------- ---------- Cash, end of period $ 4,439 $ 4,272 ======= ======= Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 4,583 $ 4,344 Income Taxes $ 2,326 $ 41
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 30, 1995 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the information furnished for the three and nine month periods ended September 30, 1995 and October 1, 1994 includes all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results of operations and financial position of the Company. The results of operations for the nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the entire year. It is suggested that these interim financial statements be read in conjunction with the financial statements and notes thereto, included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994 as filed with the Securities and Exchange Commission. NOTE 2 - EARNINGS PER SHARE Earnings per share is computed by dividing net income by the weighted average number of common stock and, if applicable, common stock equivalents which would arise from the exercise of stock options and warrants. The weighted average number of shares used in the computations was 6,298,163 and 6,170,295 for the three months ended September 30, 1995 and October 1, 1994, respectively, and 6,252,373 and 6,170,329 for the nine months ended September 30, 1995 and October 1, 1994, respectively. NOTE 3 - INCOME TAXES The income tax provision is determined by applying an estimated annual effective income tax rate to income before income taxes. The estimated annual effective income tax rate is based on the most recent annualized forecast of pretax income, permanent book/tax differences, tax credits and net operating losses. NOTE 4 - INVENTORIES If all of the Company's inventories had been valued on a current cost basis, which approximated FIFO value, estimated inventories by major classification would have been as follows (in thousands): September 30, December 31, 1995 1994 Raw materials and $ 3,711 $ 3,711 supplies Work-in process 8,527 10,252 Finished machines 27,250 24,346 and parts ---------- ---------- Total current cost 39,488 38,309 value Adjustment to LIFO (16,857) (16,857) basis ---------- ---------- $ 22,631 $ 21,452 ========== ========== NOTE 5 - CONTINGENCIES The Company has received notification from the City of West Bend, Wisconsin that it may have some financial responsibility with respect to the closure of a landfill site used by the City of West Bend from the mid-1960's through 1984. The amount of the Company's potential financial obligation, if any, is not presently determinable. The City of West Bend is currently taking remedial action with respect to the landfill site. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Three Months Ended September 30, 1995 Compared to Three Months Ended October 1, 1994 Net sales for the third quarter of 1995 of $36.9 million were $691,000, or 2%, lower than the $37.6 million in the comparable period of 1994. Gehl Agriculture sales decreased 15% to $19.9 million in the third quarter of 1995 from $23.3 million in the third quarter of 1994. This decrease reflects both the Company's overall strategy to further reduce equipment inventory at agricultural dealers and market conditions less favorable than in comparable 1994. Gehl Construction's net sales increased 19% to $17.0 million in the third quarter of 1995 from $14.3 million in the third quarter of 1994. This increase resulted from strong demand for the Company's products, primarily for skid steer loaders, rough-terrain telescoping boom forklifts and service parts. Gross profit decreased $531,000, or 5%, during the third quarter of 1995 versus the comparable period of 1994, primarily due to reduced sales, lower related production volume, and a change in the product mix of shipments. Gross profit as a percent of net sales decreased to 29.1% for the third quarter of 1995 from 29.9% in the comparable period of 1994. Gross profit as a percent of net sales for Gehl Agriculture decreased to 26.6% in the third quarter of 1995 from 30.2% in the third quarter of 1994. The primary reasons for the lower percentage were: 1) the impact of a change in the mix of products shipped in the third quarter of 1995 versus products shipped in comparable 1994; 2) export sales, typically made at a lower gross margin than domestic sales, constituting a higher portion of third quarter sales in 1995 than in 1994; and 3) the impact of the lower shipment and related production levels at the agricultural equipment manufacturing plants resulting in an increase in unabsorbed overhead. The change in mix included a heavier emphasis on shipments of certain products where over the past twelve months vendor cost increases incurred by the Company exceeded the Company's price increases to its customers. Gross profit as a percent of net sales for Gehl Construction increased to 32.0% in the third quarter of 1995 from 29.5% in the third quarter of 1994. The primary reasons for the percentage improvement were: 1) the impact of a change in the mix of products shipped in the third quarter of 1995 versus products shipped in comparable 1994; 2) export sales, typically made at a lower gross margin than domestic sales, constituting a smaller portion of third quarter sales in 1995 than in 1994; and 3) certain economies of scale associated with the increased level of production at the plants manufacturing construction equipment. Selling, general and administrative expenses increased $156,000, or 2%, during the third quarter of 1995 versus the comparable period of 1994. As a percent of net sales, selling, general and administrative expenses increased to 19.9% during the third quarter of 1995 versus 19.1% in the comparable period of 1994. Income from operations in the third quarter of 1995 was $3.4 million versus $4.1 million in the third quarter of 1994. The decrease was primarily due to reduced sales volume and the reduction in gross margin from 1994 levels. Interest expense decreased $263,000, or 16%, to $1.4 million in the third quarter of 1995 from $1.7 million in the third quarter of 1994. The decrease was the result of a decrease in average debt outstanding to $56.7 million in the third quarter of 1995 versus $65.2 million in the third quarter of 1994, combined with a decrease in the average rate of interest paid by the Company to 9.7% in the third quarter of 1995 from 10.0% in the comparable period of 1994. The decrease in the average debt outstanding was primarily the result of cash flow generated from reduced accounts receivable levels and increased shareholders' equity over the past twelve months. The rate decrease was due to the impact of a decrease in the mark-up over the prime rate on the Company's loans under its line of credit facility, which decrease was effective in October 1994, more than offsetting the increase in the average prime rate during the third quarter of 1995 versus the comparable period of 1994. Other expense, net was $177,000 of expense in the third quarter of 1995 versus $321,000 of expense in the comparable period of 1994. The change was due to a reduction in amortization expense and lower costs associated with sales of retail paper which were offset, in part, by a $44,000 reduction in Canadian foreign exchange income in the third quarter of 1995 versus the comparable period of 1994. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to either its 1995 or 1994 third quarter pre-tax income due to the existence of net operating loss carryforwards. Nine Months Ended September 30, 1995 Compared to Nine Months Ended October 1, 1994 Net sales for the first nine months of 1995 of $117.9 million were $4.1 million, or 4%, higher than the $113.8 million in the comparable period of 1994. Gehl Agriculture's net sales decreased 5% to $70.6 million in the first nine months of 1995 from $74.4 million in the first nine months of 1994. This decrease reflects the Company's overall strategy to further reduce equipment inventory at agricultural dealers and reflects 1995 market conditions less favorable than in comparable 1994. Gehl Construction's net sales increased 20% to $47.3 million in the first nine months of 1995 from $39.4 million in the first nine months of 1994. The sales increase was attributable to strong demand for the Company's products in the residential and non-residential construction markets. Gross profit increased $299,000, or 1%, during the first nine months of 1995 versus the comparable period of 1994. Gross profit as a percent of net sales decreased to 28.9% for the first nine months of 1995 from 29.7% in the comparable period of 1994. Gross profit as a percent of net sales for Gehl Agriculture decreased to 26.6% for the first nine months of 1995 from 30.1% in the comparable period of 1994. The primary reasons for the lower percentage were: 1) the impact of a change in the mix of products shipped in the first nine months of 1995 versus products shipped in comparable 1994; and 2) export sales, typically made at a lower gross margin than domestic sales, constituting a higher portion of shipments in the first nine months of 1995 than in comparable 1994. The change in mix included a heavier emphasis on shipments of certain products where over the past twelve months vendor cost increases incurred by the Company exceeded the Company's price increases to its customers. Gross profit as a percent of net sales for Gehl Construction increased to 32.3% in the first nine months of 1995 from 28.9% in the first nine months of 1994. The primary reasons for the percentage improvement were: 1) the impact of a change in the mix of products shipped in the first nine months of 1995 versus products shipped in comparable 1994; 2) export sales, typically made at a lower gross margin than domestic sales, constituting a smaller portion of the first nine months sales in 1995 than in 1994; 3) the full impact of lowering the overall cost structure of Gehl Construction as a result of the first quarter 1994 transfer of paving products production to the Yankton, South Dakota plant from the Lithonia, Georgia plant, which was closed in January 1994; and 4) certain economies of scale associated with the increased level of production at the plants manufacturing construction equipment. Selling general and administrative expenses decreased $1,462,000, or 6%, during the first nine months of 1995 versus the comparable period of 1994. The decrease related primarily to reductions associated with allowance for doubtful accounts and product liability costs, offset, in part, by increased sales promotion costs. As a percent of net sales, selling, general and administrative expenses decreased to 19.3% for the first nine months of 1995 from 21.3% in the comparable period of 1994. Income from operations was $11.3 million during the first nine months of 1995 versus $9.5 million in the comparable period of 1994. The improvement was due primarily to a reduction in selling, general and administrative expenses from 1994 levels. Interest expense decreased $718,000, or 14%, to $4.6 million in the first nine months of 1995 from $5.3 million in the first nine months of 1994. The decrease was a result of a reduction in average debt outstanding to $59.8 million in the first nine months of 1995 versus $71.9 million in the comparable period of 1994 offset, in part, by an increase in the average rate of interest paid by the Company. The average rate of interest paid rose to 10.1% for the first nine months of 1995 from 9.6% in the first nine months of 1994, due to increases in the prime rate which serves as the base for the Company's interest rate under its line of credit facility. The rate increase was partially offset by the impact of a decrease in the mark-up over the prime rate on the Company's loans under its line of credit facility, which decrease was effective in October 1994. Other expense, net was $393,000 of expense in the first nine months of 1995 versus $1.4 million of expense in the comparable period of 1994. The decrease in expense resulted, in part, from the quarterly revaluation of certain previous sales of finance contracts made under variable interest rate arrangements. Revaluations performed at the end of each quarter of 1995 resulted in $73,000 of income in 1995 due to lower U.S. Treasury bill rates than at December 31, 1994. The quarterly revaluations performed during the first nine months of 1994 had resulted in $401,000 of expense. The decrease in other expense, net was also the result of a $244,000 reduction in costs of selling finance contracts. The remainder of the decrease in other expense, net was the result of Canadian foreign exchange income of $121,000 recorded in the first nine months of 1995 versus Canadian foreign exchange losses of $17,000 occurring in the comparable period of 1994, and a reduction in amortization expense versus the comparable period of 1994. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to the pre-tax income recorded in the first nine months of either 1995 or 1994 due to the existence of net operating loss carryforwards. Financial Condition The Company's working capital was $78.8 million at September 30, 1995, as compared to $73.9 million at December 31, 1994, and $77.8 million at October 1, 1994. The Company's cash flow provided by operating activities in the first nine months of 1995 was $5.8 million versus $14.7 million provided by operating activities in comparable 1994. The third quarter 1995 cash flow provided by operations approximated 1994's third quarter of $9.1 million provided by operations. The 1995 nine month cash flow decreases from 1994 were due primarily to lower year-to-year reductions of accounts receivable, as the levels of accounts receivable have been reduced to more appropriate levels. Capital expenditures for property, plant and equipment during the first nine months of 1995 were approximately $1.4 million. Outstanding commitments as of September 30, 1995 totaled approximately $663,000. The Company expects to make approximately a total of $3.0 million of capital expenditures in 1995. As of September 30, 1995, the weighted average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 9.3%. The Company had available unused borrowing capacity of $27.2 million, $19.2 million, and $24.7 million under the line of credit facility at September 30, 1995, December 31, 1994, and October 1, 1994, respectively. At September 30, 1995, December 31, 1994, and October 1, 1994, the borrowings outstanding under the line of credit facility were $42.5 million, $45.9 million, and $42.5 million, respectively. Total long-term debt outstanding was $51.5 million at September 30, 1995, a $10.1 million, or 16%, reduction from $61.6 million at October 1, 1994. The sale of finance contracts is an important component of the Company's overall liquidity. The Company has arrangements with several financial institutions and financial service companies to sell, with recourse, its finance contracts receivable. The Company continues to service all contracts whether or not sold. At September 30, 1995, the Company serviced $56.1 million of such contracts, of which $47.9 million were owned by other parties. The Company believes that it has sufficient capacity to sell its finance contracts for the foreseeable future. Shareholders' equity at September 30, 1995 was $54.3 million. This was $9.2 million higher than the $45.1 million of shareholders' equity at October 1, 1994, due primarily to income earned from October 2, 1994 through September 30, 1995. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27 Financial Data Schedule [EDGAR version only] (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended September 30, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GEHL COMPANY Date: October 26, 1995 By: /s/ William D. Gehl William D. Gehl President and Chief Executive Officer Date: October 26, 1995 By: /s/ Kenneth F. Kaplan Kenneth F. Kaplan Vice President of Finance and Treasurer (Chief Financial and Accounting Officer) GEHL COMPANY FORM 10-Q September 30, 1995 EXHIBIT INDEX Exhibit Number Document Description 27 Financial Data Schedule [EDGAR version only] EX-27 2 EXHIBIT 27 GEHL COMPANY
5 This schedule contains summary financial information extracted from Gehl Company's consolidated balance sheet at September 30, 1995 and consolidated statements of income for the nine month period ended September 30, 1995 and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-1995 JAN-1-1995 SEP-30-1995 4439 0 76849 0 22631 107772 52824 32845 135973 28936 51315 621 0 0 53677 135973 117899 117899 83796 83796 0 0 4592 7722 75 7647 0 0 0 7647 1.22 0 Company presents receivables on a net basis in compliance with Article 10 of Regulation S-X. Includes all non-current portion of debt obligations Not reported
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