-----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, EIA7XT9umDlvwkXLOq0p5tSDcwWIU3ec8KReI9hAw0ncBhAmdxbE6jU2aUEw78e8 WI8qRXDzp5voPYxcPVEJOQ== 0000856386-96-000017.txt : 19961104 0000856386-96-000017.hdr.sgml : 19961104 ACCESSION NUMBER: 0000856386-96-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961101 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: 96651645 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 September 28, 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 September 28, 1996 Common Stock, $.10 Par Value 6,152,788 GEHL COMPANY FORM 10-Q September 28, 1996 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Condensed Consolidated Statements of Income for the Three- and Nine-Month Periods Ended September 28, 1996 and September 30, 1995 . . . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at September 28, 1996, December 31, 1995, and September 30, 1995 . . . . 4 Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended September 28, 1996 and September 30, 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 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. 28, Sept. 30, Sept. 28, Sept. 30, 1996 1995 1996 1995 NET SALES $ 40,550 $ 36,901 $ 124,189 $ 117,899 Cost of goods sold 28,298 26,175 87,569 83,796 ------- -------- -------- -------- GROSS PROFIT 12,252 10,726 36,620 34,103 Selling, general and administrative expenses 7,726 7,346 24,367 22,805 ------- -------- ------- -------- INCOME FROM OPERATIONS 4,526 3,380 12,253 11,298 Interest expense (827) (1,404) (2,924) (4,592) Interest income 385 462 1,193 1,409 Other expense, net (587) (177) (1,048) (393) ------- ------- ------- ------- INCOME BEFORE INCOME TAXES 3,497 2,261 9,474 7,722 Income tax provision 876 25 2,024 75 ------- ------- ------- ------- NET INCOME $ 2,621 $2,236 $ 7,450 $ 7,647 ========= ======== ======= ======= EARNINGS PER SHARE $.42 $.36 $1.20 $ 1.22
The accompanying notes are an integral part of the financial statements GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
September 28, December 31, September 30, 1996 1995 1995 ASSETS (Unaudited) (Unaudited) Cash $ 5,205 $ 3,266 $ 4,439 Accounts receivable-net 65,995 69,087 72,138 Finance contracts receivable-net 5,887 4,817 4,711 Inventories 16,238 23,320 22,631 Prepaid expenses and other assets 1,184 1,676 3,853 ------- ------- ------- Total Current Assets 94,509 102,166 107,772 ------- -------- -------- Property, plant and equipment-net 20,642 20,315 19,979 Finance contracts receivable-net, non-current 3,579 2,899 2,879 Other assets 8,755 8,118 5,343 -------- -------- ------- TOTAL ASSETS $ 127,485 $ 133,498 $ 135,973 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt $ 174 $ 197 $ 210 obligations Accounts payable 14,571 14,083 13,890 Accrued liabilities 18,300 15,281 14,836 ------- ------- ------- Total Current Liabilities 33,045 29,561 28,936 ------- ------- ------- Line of credit facility 21,333 37,848 42,464 Long-term debt obligations 8,786 8,818 8,851 Other long-term liabilities 1,666 1,592 1,424 ------- ------- ------- Total Long-Term Liabilities 31,785 48,258 52,739 ------- ------- ------- Common stock, $.10 par value 25,000,000 shares authorized, 6,152,788, 6,216,765 and 6,210,767 shares outstanding, respectively 615 622 621 Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued - - - Capital in excess of par 26,113 26,580 26,497 Retained earnings 35,927 28,477 27,180 ------- ------- ------- Total Shareholders' Equity 62,655 55,679 54,298 ------- ------- ------- TOTAL LIABILITIES AND $127,485 $ 133,498 $ 135,973 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 28, September 30, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 7,450 $ 7,647 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,017 2,125 Increase in finance contracts receivable (30,053) (24,957) Proceeds from sales of finance contracts 26,830 22,241 Cost of sales of finance contracts 973 418 Net changes in remaining working capital 12,952 (1,836) items Other - 137 ------- ------- Net cash provided by operating activities 20,169 5,775 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (2,239) (1,443) Other assets 520 571 ------- ------- Net cash used for investing activities (1,719) (872) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in long-term debt obligations 533 60 Increase in long-term liabilities (55) 90 Repayments of credit facility (16,515) (3,415) Treasury stock repurchases (535) - Proceeds from issuance of common stock 61 231 ------- ------- Net cash used for financing activities (16,511) (3,034) -------- ------- Net increase in cash 1,939 1,869 Cash, beginning of period 3,266 2,570 ------- ------- Cash, end of period $ 5,205 $ 4,439 ======== ======= Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 2,920 $ 4,583 Income Taxes $ 1,810 $ 2,326
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 28, 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 nine month periods ended September 28, 1996 and September 30, 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 nine months ended September 28, 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 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 6,221,449 and 6,298,163 for the three months ended September 28, 1996 and September 30, 1995, respectively, and 6,217,549 and 6,252,373 for the nine months ended September 28, 1996 and September 30, 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): September 28, December 31, September 30, 1996 1995 1995 Raw materials and $ 3,683 $ 4,151 $ 3,711 supplies Work-in process 8,152 9,893 8,527 Finished machines 23,276 28,149 27,250 and parts ------ ------ ------ Total current cost 35,111 42,193 39,488 value Adjustment to LIFO (18,873) (18,873) (16,857) basis ------- ------ ------ $ 16,238 $ 23,320 $ 22,631 ======= ====== ====== MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Three Months Ended September 28, 1996 Compared to Three Months Ended September 30, 1995 Net sales for the third quarter of 1996 of $40.6 million were 10% higher than the $36.9 million in the comparable period of 1995. Gehl Construction's net sales increased 9% to $18.5 million in the third quarter of 1996 from $17.0 million in the third quarter of 1995. The Gehl Construction increase resulted from continued strong demand for skid steer loaders and rough-terrain telescopic forklifts. Gehl Agriculture's net sales increased 11% to $22.1 million in the third quarter of 1996 from $19.9 million in the third quarter of 1995. The increase was primarily the result of higher shipment levels of forage harvesting and haytool equipment in the third quarter of 1996 than in the comparable period of 1995. The Company believes that the higher shipment levels were, in part, the result of the impact of near record high milk prices being earned by the Company's dairy farm customers. Gross profit increased $1.5 million, or 14%, during the third 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 30.2% for the third quarter of 1996 from 29.1% in the comparable period of 1995. Gross profit as a percent of net sales for Gehl Construction increased to 32.1% in the third quarter of 1996 from 32.0% in the third quarter of 1995. Gross profit as a percent of net sales for Gehl Agriculture increased to 28.6% in the third quarter of 1996 from 26.6% in the comparable period of 1995. 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 1996 versus products shipped in comparable 1995; 2) export sales, typically made at a lower gross margin than domestic sales, constituting a lower portion of third quarter sales in 1996 than in 1995; and 3) the impact of favorable material purchase prices, especially steel, in the third quarter of 1996. Selling, general and administrative expenses increased $380,000, or 5%, during the third quarter of 1996 versus the comparable period of 1995. As a percent of sales, selling, general and administrative expenses decreased to 19.1% during the third quarter of 1996 versus 19.9% in the comparable period of 1995. Income from operations in the third quarter of 1996 was $4.5 million versus $3.4 million in the third quarter of 1995. The increase was primarily due to increased sales volume, improved gross margin percentage and a decline in selling, general and administrative expenses as a percent of net sales. Interest expense decreased $577,000, or 41%, to $827,000 in the third quarter of 1996 from $1.4 million in the third quarter of 1995. The decrease was a result of a reduction in average debt outstanding to $38.8 million in the third quarter of 1996 versus $56.7 million in the third quarter of 1995, combined with a decrease in the average rate of interest paid by the Company to 8.2% in the third quarter of 1996 versus 9.7% 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 interest 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 $587,000 in the third quarter of 1996 versus $177,000 in the third quarter of 1995. The increase was primarily due to higher costs of selling finance contracts receivable in the third quarter of 1996 versus the comparable period of 1995. The increase in the costs of such sales was primarily the result of selling approximately $3.6 million more contracts in the third quarter of 1996, combined with lower weighted average yields on such contracts sold due to low financing rates offered to retail customers. The Company's effective income tax rate was 25.1% for the third quarter of 1996. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to its 1995 third quarter operating income due to existence of net operating loss carryforwards. The Company has now utilized all of its federal net operating loss carryforwards. Nine Months Ended September 28, 1996 Compared to Nine Months Ended September 30, 1995 Net sales for the first nine months of 1996 of $124.2 million were $6.3 million, or 5%, higher than the $117.9 million in the comparable period of 1995. Gehl Construction's net sales increased 16% to $54.9 million in the first nine months of 1996 from $47.3 million in the first nine 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 2% to $69.3 million in the first nine months of 1996 from $70.6 million in the first nine months of 1995. The decrease was due in part to the introduction of two redesigned product lines in the first nine months of 1995 contrasted to only one such introduction in the first nine months of 1996. The decrease was also due in part to approximately $1.3 million of shipments, in the first nine months of 1995, of products which have since been discontinued. Partially offsetting the Gehl Agricultural shipment reductions was an increase in shipments of forage harvesters and skid steer loaders. Gross profit increased $2.5 million, or 7%, in the first nine months of 1996 versus the comparable period of 1995, primarily due to increased sales volume. Gross profit as a percent of net sales increased to 29.5% for the first nine months of 1996 from 28.9% in the comparable period of 1995. The shift in product mix of sales toward 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 32.1% in the first nine months of 1996 from 32.3% in the first nine months of 1995. Gross profit as a percent of net sales for Gehl Agriculture increased to 27.4% for the first nine months of 1996 from 26.6% for the first nine months of 1995. The primary reasons for the Gehl Agriculture percentage improvement were: 1) the impact of a change in the mix of products shipped in the first nine months of 1996 versus products shipped in comparable 1995, 2) export sales, typically made at a lower gross margin than domestic sales, constituting a lower portion of sales in the first nine months of 1996 than in 1995; and 3) the impact of favorable material purchase prices, especially steel, in the first nine months of 1996. Selling, general and administrative expenses increased $1.6 million, or 7%, during the first nine months of 1996 versus the comparable period of 1995. The increase related to a greater investment in research and development costs and increased selling expenses. As a percent of net sales, selling, general, and administrative expenses increased to 19.6% during the first nine months of 1996 versus 19.3% in the comparable period of 1995. Income from operations in the first nine months of 1996 of $12.3 million was 8% higher than the $11.3 million for the comparable period of 1995. Interest expense decreased $1.7 million, or 36%, to $2.9 million in the first nine months of 1996 from $4.6 million in the first nine months of 1995. The decrease was a result of a reduction in average debt outstanding to $45.9 million in the first nine months of 1996 versus $59.8 million in the comparable period of 1995, combined with a decrease in the average rate of interest paid by the Company to 8.3% in the first nine 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 receivables and inventory levels and increased shareholders' equity over the past twelve months. The interest 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 $1,048,000 in the first nine months of 1996 versus $393,000 in the comparable period of 1995. The increase was primarily due to higher costs of selling finance contracts receivable in the first nine months of 1996 versus the comparable period of 1995. The increase in the costs of such sales was the result of selling approximately $5.3 million more contracts in the first nine 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 21.4% for the first nine 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 nine 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 $61.5 million at September 28, 1996, as compared to $72.6 million at December 31, 1995, and $78.8 million at September 30, 1995. The decrease since September 30, 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 nine months of 1996 was $20.2 million versus $5.8 million provided by operations in comparable 1995. The third quarter 1996 cash flow provided by operations was $15.3 million as compared to 1995's third quarter of $9.1 million. The cash flows provided by operations for the third quarter and first nine months of 1996 were favorably impacted by declining accounts receivable and inventory levels. Capital expenditures for property, plant and equipment during the first nine months of 1996 were approximately $2.2 million. Outstanding commitments as of September 28, 1996 totaled approximately $518,000. The Company expects to make approximately $4.0 million of capital expenditures during 1996. The Company has announced plans to expand its two South Dakota Construction plants, at an aggregate cost of approximately $5.2 million. The majority of the expansion costs will be incurred in 1997. As of September 28, 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 $42.5 million, $27.4 million, and $27.2 million under the line of credit facility at September 28, 1996, December 31, 1995, and September 30, 1995,respectively. At September 28, 1996, December 31, 1995, and September 30,1995, the borrowings outstanding under the line of credit facility were $21.3 million, $37.8 million, and $42.5 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 finance service companies to sell, with recourse, its finance contracts receivable. The Company continues to service all contracts whether or not sold. At September 28,1996, Gehl serviced $61.1 million of such contracts, of which $50.9 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 September 28, 1996 was $62.7 million. This was $8.4 million higher than the $54.3 million of shareholders' equity at September 30, 1995, due primarily to income earned from October 1, 1995 through September 28, 1996. 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 28, 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: November 1, 1996 By: /s/ William D. Gehl William D. Gehl Chairman of the Board, President and Chief Executive Officer Date: November 1, 1996 By: /s/ Kenneth P. Hahn Kenneth P. Hahn Corporate Controller GEHL COMPANY FORM 10-Q September 28, 1996 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 28, 1996 and consolidated statements of income for the nine month period ended September 28, 1996 and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-1996 JAN-1-1996 SEP-28-1996 5205 0 71882 0 16238 94509 55760 35118 127485 33045 30119 615 0 0 62040 127485 124189 124189 87569 87569 0 0 2924 9474 2024 7450 0 0 0 7450 1.20 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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