-----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, BcWboQ2xnXs6pMjWNK7ECeMk5sBNswYW8dVVeSfMcf0Mb4rLuHdM3T61XWUoesC4 cJ1KaMKOwQukFN4hLyyJIw== 0000856386-96-000015.txt : 19960729 0000856386-96-000015.hdr.sgml : 19960729 ACCESSION NUMBER: 0000856386-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960629 FILED AS OF DATE: 19960726 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: 96599326 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 GEHL COMPANY 10-Q 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 June 29, 1996 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 June 29, 1996 Common Stock, $.10 Par Value 6,143,289 GEHL COMPANY FORM 10-Q June 29, 1996 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Condensed Consolidated Statements of Income for the Three- and Six-Month Periods Ended June 29, 1996 and July 1, 1995 . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at June 29, 1996, December 31, 1995, and July 1, 1995 . . . . . . . 4 Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 29, 1996 and July 1, 1995 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 4. Submission of Matters to a Vote of Security Holders 11 Item 6. Exhibits and Reports on Form 8-K . . . . . 11 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PART I - FINANCIAL INFORMATION GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data; unaudited)
Three Six Months Ended Months Ended June 29, July 1, June 29, July 1, 1996 1995 1996 1995 NET SALES $ 44,474 $ 42,730 $ 83,639 $ 80,998 Cost of goods sold 31,122 30,033 59,271 57,621 ------- -------- -------- -------- GROSS PROFIT 13,352 12,697 24,368 23,377 Selling, general and administrative expenses 8,608 7,837 16,641 15,459 ------- -------- -------- -------- INCOME FROM OPERATIONS 4,744 4,860 7,727 7,918 Interest expense (1,056) (1,672) (2,097) (3,188) Interest income 399 477 808 947 Other expense, net (409) (42) (461) (216) --------- -------- --------- --------- INCOME BEFORE INCOME TAXES 3,678 3,623 5,977 5,461 Income tax provision 745 25 1,148 50 --------- -------- --------- --------- NET INCOME $ 2,933 $ 3,598 $ 4,829 $ 5,411 ========= ======== ========= ========= EARNINGS PER SHARE $ .47 $ .58 $ .78 $ .87
The accompanying notes are an integral part of the financial statements GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
June 29, December 31, July 1, 1996 1995 1995 (Unaudited) (Unaudited) ASSETS Cash $ 5,255 $ 3,266 $ 5,542 Accounts receivable-net 70,891 69,087 78,373 Finance contracts receivable-net 7,842 4,817 6,229 Inventories 18,791 23,320 21,678 Prepaid expenses and other assets 1,347 1,676 3,541 ---------- ---------- ---------- Total Current Assets 104,126 102,166 115,363 ---------- ---------- ---------- Property, plant and equipment-net 20,620 20,315 19,877 Finance contracts receivable-net, non-current 4,604 2,899 3,665 Other assets 8,387 8,118 5,570 ---------- ---------- ---------- TOTAL ASSETS $ 137,737 $ 133,498 $ 144,475 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt obligations $ 191 $ 197 $ 173 Accounts payable 13,192 14,083 14,875 Accrued liabilities 17,865 15,281 14,938 ---------- --------- ---------- Total Current Liabilities 31,248 29,561 29,986 ---------- --------- ---------- Line of credit facility 36,102 37,848 52,529 Long-term debt obligations 8,832 8,818 8,724 Other long-term liabilities 1,574 1,592 1,393 ---------- --------- ---------- Total Long-Term Liabilities 46,508 48,258 62,646 ---------- --------- ---------- Common stock, $.10 par value, 25,000,000 shares authorized, 6,143,289, 6,216,765 and 6,181,518 shares outstanding, respectively 614 622 618 Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued - - - Capital in excess of par 26,061 26,580 26,281 Retained earnings 33,306 28,477 24,944 ---------- --------- --------- Total Shareholders' Equity 59,981 55,679 51,843 ---------- --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 137,737 $ 133,498 $ 144,475 ========== ========= =========
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited)
Six Months Ended June 29, July 1, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,829 $ 5,411 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Depreciation and amortization 1,346 1,412 Increase in finance contracts receivable (20,038) (17,906) Proceeds from sales of finance contracts 14,651 13,152 Cost of sales of finance contracts 408 199 Net changes in remaining working capital items 3,679 (5,660) Other - 91 --------- -------- Net cash provided by (used for) operating activities 4,875 (3,301) --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (1,579) (709) Other assets 670 312 --------- -------- Net cash used for investing activities (909) (397) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in long-term debt obligations 8 (97) Increase (decrease) in long-term liabilities 288 59 (Repayments of) proceeds from credit facility (1,746) 6,650 Treasury stock repurchase (535) - Proceeds from issuance of common stock 8 58 --------- -------- Net cash (used for) provided by financing activities (1,977) 6,670 --------- -------- Net increase in cash 1,989 2,972 Cash, beginning of period 3,266 2,570 ---------- -------- Cash, end of period $ 5,255 $ 5,542 ========== ======== Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 2,081 $ 3,059 Income Taxes $ 1,122 $ 1,704
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 29, 1996 (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 six month periods ended June 29, 1996 and July 1, 1995 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 six months ended June 29, 1996 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, 1995 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 shares 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 6,228,153 and 6,255,959 for the three months ended June 29, 1996 and July 1, 1995, respectively, and 6,215,599 and 6,229,478 for the six months ended June 29, 1996 and July 1, 1995, 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, and tax credits. 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): June 29, December 31, July 1, 1996 1995 1995 --------- ------------ --------- Raw materials and supplies $ 3,713 $ 4,151 $ 3,516 Work-in-process 7,907 9,893 8,658 Finished machines and parts 26,044 28,149 26,361 --------- ------------- --------- Total current cost value 37,664 42,193 38,535 Adjustments to LIFO basis (18,873) (18,873) (16,857) ---------- ------------- ---------- $ 18,791 $ 23,320 $ 21,678 ========== ============= ========== 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 Company currently believes that its potential financial obligation, if any, with respect to this site will not have a material adverse effect on the Company's results of operations or financial condition. 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 June 29, 1996 Compared to Three Months Ended July 1, 1995 Net sales for the second quarter of 1996 of $44.5 million were 4% higher than the $42.7 million in the comparable period of 1995. Gehl Construction's net sales increased 19% to $19.4 million in the second quarter of 1996 from $16.3 million in the second quarter of 1995. The Gehl Construction increase resulted from increased demand for the Company's products, particularly rough-terrain telescopic forklifts and skid steer loaders. Gehl Agriculture's net sales decreased 5% to $25.1 million in the second quarter of 1996 from $26.4 million in the second quarter of 1995. The decrease was due in part to no new product introductions in the second quarter of 1996, contrasted with the impact on the 1995 second quarter of two redesigned product lines introduced in early 1995. Reduced shipments of service parts and certain purchased finished goods also contributed to the overall Agriculture sales reductions. Partially offsetting the Agricultural shipment reductions was an increase in shipments of forage harvesters and skid steer loaders. Gross profit increased $655,000, or 5%, during the second quarter of 1996 versus the comparable period of 1995, due primarily to increased sales volume. Gross profit as a percent of net sales increased to 30.0% for the second quarter of 1996 from 29.7% in the comparable period of 1995. The shift in product mix of sales to Gehl Construction resulted in the overall Company increase in gross profit as a percent of net sales. Gross profit as a percent of net sales for Gehl Construction decreased to 32.3% in the second quarter of 1996 from 32.7% for the second quarter of 1995. Gross profit as a percent of net sales for Gehl Agriculture increased to 28.3% in the second quarter of 1996 from 27.9% for the second quarter of 1995. Selling, general and administrative expenses increased $771,000, or 10%, during the second quarter of 1996 versus the comparable period of 1995. As a percent of sales, selling, general and administrative expenses increased to 19.4% during the second quarter of 1996 versus 18.3% in the comparable period of 1995. Greater investment in research and development and increased selling expenses accounted for the percentage increase. Income from operations in the second quarter of 1996 of $4.7 million was 2% lower than the $4.9 million in the second quarter of 1995. Interest expense decreased $616,000, or 37%, to $1.1 million in the second quarter of 1996 from $1.7 million in the second quarter of 1995. The decrease was a result of a reduction in average debt outstanding to $49.9 million in the second quarter of 1996 versus $64.6 million in the second quarter of 1995, combined with a decrease in the average rate of interest paid by the Company to 8.3% in the second quarter of 1996 from 10.2% in the comparable period of 1995. The decrease in the average debt outstanding was primarily the result of cash flow generated from reduced accounts receivable and inventory levels and increased shareholders' equity over the past twelve months. The rate decrease was due to the impact of a reduced interest rate structure negotiated by the Company in conjunction with the December 1, 1995 amendment to its line of credit facility. Other expense, net was $409,000 in the second quarter of 1996 versus $42,000 in the second quarter of 1995. This increase was primarily due to higher costs of selling finance contracts receivable in the second quarter of 1996 versus the comparable period of 1995. The increase in the costs of such sales was primarily the result of selling approximately $1.7 million more contracts in the second quarter of 1996, combined with lower weighted average yields on such finance contracts sold due to lower financing rates offered to retail customers. The Company's effective income tax rate was 20.3% for the second quarter of 1996. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to its 1995 second quarter operating income due to the existence of net operating loss carryforwards. The Company has now utilized all of its federal net operating loss carryforwards. Six Months Ended June 29, 1996 Compared to Six Months Ended July 1, 1995 Net sales for the first six months of 1996 of $83.6 million were $2.6 million, or 3%, higher than the $81.0 million in the comparable period of 1995. Gehl Construction's net sales increased 20% to $36.4 million in the first six months of 1996 from $30.3 million in the first six months of 1995. The Gehl Construction increase resulted from increased demand for the Company's products, particularly rough-terrain telescopic forklifts and skid steer loaders. Gehl Agriculture's net sales decreased 7% to $47.2 million in the first six months of 1996 from $50.7 in the first six months of 1995. The decrease was due in part to no new product introductions in the first six months of 1996, contrasted with the introduction of two redesigned product lines in the first six months of 1995. The decrease was also due in part to approximately $1 million of shipments, in the first six months of 1995, of products which have since been discontinued. Partially offsetting the Agricultural shipment reductions was an increase in shipments of forage harvesters and skid steer loaders. Gross profit increased $991,000, or 4%, during the first six months of 1996 versus the comparable period of 1995, primarily due to the increased sales volume. Gross profit as a percent of net sales increased to 29.1% for the first six months of 1996 from 28.9% in the comparable period of 1995. The shift in product mix of sales to Gehl Construction resulted in the overall Company increase in gross profit as a percent of net sales. Gross profit as a percent of net sales for Gehl Construction decreased to 32.0% in the first six months of 1996 from 32.6% in the first six months of 1995, primarily due to the percentage of export sales, typically made at a lower gross margin than domestic sales, constituting a larger portion of the first six months sales in 1996 compared with 1995. Gross profit as a percent of net sales for Gehl Agriculture increased to 26.9% for the first six months of 1996 from 26.7% for the first six months of 1995. Selling, general and administrative expenses increased $1.2 million, or 8%, during the first six months of 1996 versus the comparable period of 1995. The increase related to greater investment in research and development costs and increased selling expenses. As a percent of net sales, selling, general and administrative expenses increased to 19.9% during the first six months of 1996 versus 19.1% in the comparable period of 1995. Income from operations in the first six months of 1996 of $7.7 million was 2% lower than the $7.9 million for the comparable period of 1995. Interest expense decreased $1.1 million, or 34%, to $2.1 million in the first six months of 1996 from $3.2 million in the first six months of 1995. The decrease was a result of a reduction in average debt outstanding to $49.8 million in the first six months of 1996 versus $61.9 million in the comparable period of 1995, combined with a decrease in the average rate of interest paid by the Company to 8.2% in the first six months of 1996 from 10.1% in the comparable period of 1995. 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 reduced interest rate structure negotiated by the Company in conjunction with the December 1, 1995 amendment to its line of credit facility. Other expense, net was $461,000 in the first six months of 1996 versus $216,000 in the comparable period of 1995. The increase was primarily due to higher costs of selling finance contracts receivable in the first six months of 1996 versus the comparable period of 1995. The increase in the costs of such sales was the result of selling approximately $1.6 million more contracts in the first six months of 1996 combined with lower weighted average yields on such finance contracts sold due to lower financing rates offered to retail customers. The Company's effective income tax rate was 19.2% for the first six months of 1996. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to the operating income recorded in the first six months of 1995 due to the existence of net operating loss carryforwards. The Company has utilized, in years prior to 1996, substantially all of its federal net operating loss carryforwards. In years subsequent to 1996, the Company expects to provide for federal income taxes at rates approximating statutory rates. Financial Condition The Company's working capital was $72.9 million at June 29, 1996, as compared to $72.6 million at December 31, 1995, and $85.4 million at July 1, 1995. The decrease since July 1, 1995 was due primarily to a reduction in accounts receivable and inventory levels. The Company's cash flow provided by operating activities in the first six months of 1996 was $4.9 million versus $3.3 million used for operating activities in comparable 1995. The second quarter 1996 cash flow provided by operations was $8.1 million as compared to 1995's second quarter of $4.1 million provided by operations. The cash flows provided by operations for the second quarter and first six months of 1996 were favorably impacted by more stable accounts receivable balances and declining inventory levels. Capital expenditures for property, plant and equipment during the first six months of 1996 were approximately $1.6 million. Outstanding commitments as of June 29, 1996 totaled approximately $420,000. The Company expects to make approximately $4.0 million of capital expenditures during 1996. As of June 29, 1996, the weighted average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 7.4%. The Company had available unused borrowing capacity of $36.6 million, $27.4 million, and $20.2 million under the line of credit facility at June 29, 1996, December 31, 1995, and July 1, 1995, respectively. At June 29, 1996, December 31, 1995, and July 1, 1995, the borrowings outstanding under the line of credit facility were $36.1 million, $37.8 million and $52.5 million, respectively. The sale of finance contracts is an important component of the Company's overall liquidity. Gehl 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 June 29, 1996, Gehl serviced $59.2 million of such contracts, of which $46.0 million were owned by other parties. The Company believes that it has sufficient capacity to sell its retail finance contracts for the foreseeable future. Shareholders' equity at June 29, 1996 was $60.0 million. This was $8.2 million higher than the $51.8 million of shareholders' equity at July 1, 1995, due primarily to income earned from July 2, 1995 through June 29, 1996. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders. At the Company's annual meeting of shareholders held on April 25, 1996, Thomas J. Boldt, William P. Killian and Roger E. Secrist were elected as directors of the Company for terms expiring in 1999. The following table sets forth certain information with respect to the election of directors at the annual meeting: Shares Withholding Name of Nominee Shares Voted For Authority Thomas J. Boldt 5,155,075 391,315 William P. Killian 5,155,865 390,525 Roger E. Secrist 5,133,514 412,876 The following table sets forth the other directors of the Company whose terms of office continued after the 1996 annual meeting: Year in Which Name of Director Term Expires John W. Findley 1997 John W. Gehl 1997 Arthur W. Nesbitt 1997 Fred M. Butler 1998 William D. Gehl 1998 John W. Splude 1998 In addition, at the 1996 annual meeting, shareholders approved the Gehl Company 1995 Stock Option Plan. With respect to such approval, the number of shares voted For and Against were 4,003,438 and 814,077, respectively. The number of shares abstaining and the number of shares subject to broker non- votes were 65,267 and 663,608, respectively. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 10.1 Gehl Company 1995 Stock Option Plan [Incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995] 27 Financial Data Schedule [included in the EDGAR filing only] (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended June 29, 1996. 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: July 26, 1996 By: /s/ William D. Gehl William D. Gehl Chairman of the Board, President and Chief Executive Officer Date: July 26, 1996 By: /s/ Kenneth F. Kaplan Kenneth F. Kaplan Vice President of Finance and Treasurer (Chief Financial and Accounting Officer) GEHL COMPANY FORM 10-Q June 29, 1996 EXHIBIT INDEX Exhibit No. Document Description 10.1 Gehl Company 1995 Stock Option Plan [Incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995] 27 Financial Data Schedule [included in the EDGAR filing only] EX-27 2 EXHIBIT 27 GEHL COMPANY
5 This schedule contains summary financial information extracted from Gehl Company's consolidated balance sheet at June 29, 1996 and consolidated statements of income for the six month period ended June 29, 1996 and is qualified in its entirety by reference to such financial statements. 1000 6-MOS DEC-31-1996 JAN-1-1996 JUN-29-1996 5255 0 78733 0 18791 104126 55127 34507 137737 31248 44934 614 0 0 59367 137737 83639 83639 59271 59271 0 0 2097 5977 1148 4829 0 0 0 4829 .78 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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