-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tCqB/IzPXrjO8YnjRPAB0OzgB7n9BSEaRAi8RtUGopypg73RXRhg3EkDTYA8g9Zc +puxWSFRsP5o107m1YxHiA== 0000856386-94-000018.txt : 19941031 0000856386-94-000018.hdr.sgml : 19941031 ACCESSION NUMBER: 0000856386-94-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941001 FILED AS OF DATE: 19941027 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEHL CO CENTRAL INDEX KEY: 0000856386 STANDARD INDUSTRIAL CLASSIFICATION: 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: 94555527 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-GEHL COMPANY 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 October 1, 1994 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 October 1, 1994 Common Stock, $.10 Par Value 6,145,857 GEHL COMPANY FORM 10-Q October 1, 1994 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Condensed Consolidated Statements of Income for the Three- and Nine-Month Periods Ended October 1, 1994 and October 2, 1993 . . . . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at October 1, 1994, December 31, 1993, and October 2, 1993 . . . . . . 4 Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended October 1, 1994 and October 2, 1993 . . . . . . . . . . . . . . . . . 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 October 1, October 2, October 1, October 2, 1994 1993 1994 1993 NET SALES $ 37,592 $ 35,860 $113,750 $103,146 Cost of goods sold 26,335 25,747 79,946 74,438 -------- -------- -------- -------- GROSS PROFIT 11,257 10,113 33,804 28,708 Selling, general and administrative expenses 7,190 8,118 24,267 23,151 -------- -------- -------- -------- INCOME FROM OPERATIONS 4,067 1,995 9,537 5,557 Interest expense (1,667) (2,048) (5,310) (6,620) Interest income 470 400 1,327 1,233 Other (expense) income, net (321) 263 (1,437) (82) --------- -------- --------- ------- INCOME BEFORE INCOME TAXES 2,549 610 4,117 88 Income tax provision 38 13 113 38 -------- -------- --------- ------- NET INCOME $ 2,511 $ 597 $ 4,004 $ 50 ======== ======= ======== ======== EARNINGS PER SHARE $ .41 $ .10 $ .65 $ .01
The accompanying notes are an integral part of the financial statements GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
October 1, December 31, October 2, 1994 1993 1993 (Unaudited) (Unaudited) ASSETS Cash $ 4,272 $ 1,458 $ 2,633 Accounts receivable-net 78,441 84,969 87,074 Finance contracts receivable-net 4,227 4,223 4,805 Refundable income taxes - - 40 Inventories 19,802 21,633 22,882 Prepaid expenses and other assets 1,871 2,072 824 --------- -------- --------- Total Current Assets 108,613 114,355 118,258 --------- -------- --------- Property, plant and equipment-net 20,422 20,088 20,280 Finance contracts receivable-net, non-current 2,459 2,624 2,821 Other assets 5,790 7,213 6,876 --------- -------- --------- TOTAL ASSETS $ 137,284 $ 144,280 $ 148,235 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt obligations $ 1,368 $ 549 $ 76,468 Accounts payable 13,231 15,784 14,730 Accrued liabilities 16,251 13,995 15,867 --------- --------- --------- Total Current Liabilities $ 30,850 $ 30,328 $ 107,065 --------- --------- --------- Line of credit facility 42,527 53,979 - Long-term debt obligations 17,678 18,280 195 Other long-term liabilities 1,147 798 259 Common stock, $.10 par value 25,000,000 shares authorized, 6,145,857, 6,132,443 and 6,098,773 shares outstanding, respectively 614 613 610 Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued - - - Capital in excess of par 26,002 25,820 25,656 Retained earnings 18,466 14,462 14,450 --------- --------- -------- Total Shareholders' Equity 45,082 40,895 40,716 --------- --------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 137,284 $ 144,280 $ 148,235 ========= ========= =========
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 October 1, 1994 October 2, 1993 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,004 $ 50 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,853 3,214 Increase in finance contracts receivable (24,477) (28,727) Cost of sales of finance contracts 663 266 Proceeds from sales of finance contracts 23,082 30,628 Net changes in remaining working capital items 8,353 18,113 Other 179 261 -------- --------- Net cash provided by operating activities 14,657 23,805 -------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (1,794) (359) Other assets 837 (1,435) --------- ---------- Net cash used for investing activities (957) (1,794) --------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in long-term debt obligations 217 (8,161) Increase in long-term liabilities 349 - Repayments of credit facility (11,452) (12,852) --------- ---------- Net cash used for financing activities (10,886) (21,013) --------- ---------- Net increase in cash 2,814 998 Cash, beginning of period 1,458 1,635 --------- ---------- Cash, end of period $ 4,272 $ 2,633 ========== ========== Supplemental disclosure of cash flow information: Cash paid (received) for the following: Interest $ 4,344 $ 5,518 Income Taxes $ 41 $ (2,538)
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS October 1, 1994 (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 October 1, 1994 and October 2, 1993 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 October 1, 1994 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, 1993 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 6,170,295 and 6,138,909 for the three months ended October 1, 1994 and October 2, 1993, respectively, and 6,170,329 and 6,075,020 for the nine months ended October 1, 1994 and October 2, 1993, 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 (loss), permanent book/tax differences, tax credits and utilization of 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): October 1, December 31, 1994 1993 Raw materials and supplies $ 3,386 $ 3,598 Work-in-process 9,212 10,091 Finished machines and parts 23,195 23,935 --------- -------- Total current cost value 35,793 37,624 Adjustment to LIFO basis (15,991) (15,991) ---------- --------- $ 19,802 $ 21,633 ========== ========= NOTE 5 - CONTINGENCIES The Company has received informal 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 October 1, 1994 Compared to Three Months Ended October 2, 1993 Net sales for the third quarter of 1994 of $37.6 million were $1.7 million, or 5%, higher than the $35.9 million in the comparable period of 1993. Gehl Agriculture sales decreased to $23.3 million in the third quarter of 1994 from $24.5 million in the third quarter of 1993, or 5%. While Gehl Agriculture's retail sales continued to be good in the third quarter of 1994, shipments by the Company were held below comparable 1993 levels to reduce dealer inventory levels. Gehl Construction's net sales increased to $14.3 million in the third quarter of 1994 from $11.4 in the third quarter of 1993, or 26%. The increase resulted from increased shipments due to strong residential construction and non-residential construction markets. Gross profit increased $1.1 million, or 11%, during the third quarter of 1994 versus the comparable period of 1993, primarily due to increased sales volume, a change in the product mix of shipments, and a reduction in the Company's overall cost structure. Gross profit as a percent of net sales increased to 29.9% for the third quarter of 1994 from 28.2% in the comparable period of 1993. Gross profit as a percent of net sales for Gehl Agriculture increased to 30.2% in the third quarter of 1994 from 30.0% in the third quarter of 1993. Gross profit as a percent of net sales for Gehl Construction increased to 29.5% in the third quarter of 1994 from 24.4% in the third quarter of 1993. The primary reasons for Gehl Construction's percentage increase include export sales, typically made at a lower gross margin than domestic sales, constituting a smaller portion of third quarter sales in 1994 than in 1993, and the impact of lowering the overall cost structure of Gehl Construction as a result of transferring production of paving products to the Yankton, South Dakota plant from the Lithonia, Georgia plant, which was closed in January 1994. Selling, general and administrative expenses decreased $928,000, or 11%, during the third quarter of 1994 versus the comparable period of 1993. The decease resulted from general cost control with reductions from 1993 third quarter expense levels associated with compensation, allowance for doubtful accounts, product liability, warranty and promotional costs. As a percent of net sales, selling, general and administrative expenses decreased to 19.1% during the third quarter of 1994 versus 22.6% in the comparable period of 1993. Income from operations in the third quarter of 1994 was $4.1 million versus $2.0 million in the third quarter of 1993. The improvement was primarily due to a reduction in selling, general and administrative expenses, increased sales volume and the improvement in gross margin from 1993 levels. Interest expense decreased $381,000, or 19%, to $1.7 million in the third quarter of 1994 from $2.0 million in the third quarter of 1993. The decrease was a result of a decrease in average debt outstanding to $65.2 million in the third quarter of 1994 versus $83.2 million in the third quarter of 1993 offset, in part, by an increase in the average rate of interest paid by the Company to 10.0% in the third quarter of 1994 from 9.7% in the comparable period of 1993. The decrease in the average debt outstanding was primarily the result of reduced accounts receivable and inventory levels. The increased interest rate is a reflection of a higher bank prime rate, which increased several times during the first nine months of 1994. Other (expense) income, net was $321,000 of expense in the third quarter of 1994 versus $263,000 of income in the comparable period of 1993. The change is primarily the result of two 1993 third quarter non-recurring items: 1) a gain of $505,000 associated with the Company granting, in exchange for a lump sum amount, a paid up patent license agreement on one of its products in July, 1993, and 2) a gain of $253,000 on a favorable lawsuit settlement in September, 1993. Additionally, the costs of selling finance contracts increased in the third quarter of 1994 due to increases in U.S. Treasury bill rates used to determine the yield to the purchaser. Partially offsetting the aforementioned items was Canadian foreign exchange income of $126,000 recorded in the third quarter of 1994 versus Canadian foreign exchange losses of $139,000 incurred in the third quarter of 1993. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to either its 1994 or 1993 third quarter net operating income due to the existence of net operating loss carryforwards. Nine Months Ended October 1, 1994 Compared to Nine Months Ended October 2, 1993 Net sales for the first nine months of 1994 of $113.8 million were $10.6 million, or 10%, higher than the $103.2 million in the comparable period of 1993. Gehl Agriculture's net sales increased to $74.4 million in the first nine months of 1994 from $69.5 million in the first nine months of 1993, or 7%. In general, sales of agricultural equipment in North America benefitted from improved demand due to factors including generally attractive interest rates, reasonably good commodity prices in the markets served by the Company and relatively stable farm income. While Gehl Agriculture's retail sales continued to be good in the first nine months of 1994, shipments by the Company of certain products were held below comparable 1993 levels to reduce dealer inventory levels. Gehl Construction's net sales increased to $39.4 million in the first nine months of 1994 from $33.7 million in the first nine months of 1993, or 17%. The sales increase was attributable to strong residential and non-residential construction markets. Gross profit increased $5.1 million, or 18%, during the first nine months of 1994 versus the comparable period of 1993, primarily due to the increased sales volume, changes in the product mix of shipments, and a reduction in the Company's overall cost structure. Gross profit as a percent of net sales increased to 29.7% for the first nine months of 1994 from 27.8% in the comparable period of 1993. Gross profit as a percent of net sales for Gehl Agriculture increased to 30.1% for the first nine months of 1994 from 29.4% in the comparable period of 1993. The primary reasons for the percentage improvement was the impact of a change in the mix of products shipped in the first nine months of 1994 versus products shipped in comparable 1993. Gross profit as a percent of net sales for Gehl Construction increased to 28.9% in the first nine months of 1994 from 24.5% in the first nine months of 1993. The primary reasons for Gehl Construction's percentage increase include export sales, typically made at a lower gross margin than domestic sales, constituting a smaller portion of sales in the first nine months of 1994 than in the comparable period of 1993, service parts sales, typically made at higher gross margin than wholegood sales, constituting a higher portion of sales in the first nine months of 1994 than in the comparable period of 1993, and the impact of lowering the overall cost structure of Gehl Construction as a result of transferring production of paving products to the Yankton, South Dakota plant from the Lithonia, Georgia plant, which was closed in January 1994. Selling general and administrative expenses increased $1,116,000, or 5%, during the first nine months of 1994 versus the comparable period of 1993. This increase was due primarily to charges in excess of historic levels associated with two accruals which totaled $1.3 million. These charges were for specific product liability exposures identified during the period and for increased allowances for doubtful accounts relating to a European distributor. A partial offset to the increases was a reduction in sales promotional expense required to stimulate retail sales. As a result of improved market conditions and reduction of older units in dealers' inventories from 1993 levels, lower promotional expenses were incurred in support of retail sales activity. As a percent of net sales, selling, general and administrative expenses approximated 21.3% for the first nine months of 1994 versus 22.4% in the comparable period of 1993. Income from operations was $9.5 million in the first nine months of 1994 versus $5.6 million in the comparable period of 1993. The improvement was due primarily to increased sales volume and the improvement in gross margin from 1993 levels. Interest expense decreased $1.3 million, or 20%, to $5.3 million in the first nine months of 1994 from $6.6 million in the first nine months of 1993. The decrease was a result of a reduction in average debt outstanding to $71.9 million in the first nine months of 1994 versus $91.2 million in the comparable period of 1993. The average rate of interest paid by the Company was 9.6% in the first nine months of both 1994 and 1993. The decrease in average debt outstanding was primarily the result of reduced accounts receivable and inventory levels. Other (expense) income, net was $1.4 million of expense in the first nine months of 1994 versus $82,000 of expense in the comparable period of 1993. The increase in expense is partially due to two 1993 third quarter non- recurring items: 1) a gain of $505,000 associated with the Company granting, in exchange for a lump sum amount, a paid-up patent license agreement on one of its products in July, 1993, and 2) a gain of $253,000 on a favorable lawsuit settlement in September, 1993. Additionally, a portion of the increase in expense for the first nine months of 1994 was due to increased costs of selling finance contracts resulting from increases in the U.S. Treasury bill rates, which are used to determine the yield to the purchasers, and due to quarterly revaluations required on previous sales of finance contracts made under variable interest rate arrangements. Partially offsetting the aforementioned items was a decrease in Canadian foreign exchange expense in the first nine months of 1994 to $17,000 from $195,000 recorded in the comparable period of 1993. Under generally accepted accounting principles, the Company was not required to record a federal income tax provision related to either its 1994 or 1993 first nine months net operating income, due to the existence of net operating loss carryforwards. Financial Condition The Company's working capital was $77.8 million at October 1, 1994, as compared to $84.0 million at December 31, 1993, and $11.2 million at October 2, 1993. At October 2, 1993, the Company was required to classify certain debt as current due to uncertainties at that date associated with the Company's ability to comply with certain financial covenants; if this debt had been classified in accordance with its scheduled payment terms, working capital at October 2, 1993 would have been $76.4 million. Since these uncertainties no longer exist, the Company's debt at October 1, 1994 and December 31, 1993, has been classified according to its scheduled repayment terms. The Company's third quarter 1994 cash flow provided by operating activities was $9.1 million versus $11.5 million provided by operating activities in comparable 1993. Due to dealer inventories being at a more appropriate lower level in 1994 than in 1993, the decrease in accounts receivable in 1994's third quarter was less than in the comparable 1993 period, accounting for the reduction in cash flow provided by operating activities. For the first nine months of 1994, cash flow provided by operations was $14.7 million versus $23.8 million in the comparable 1993 period. The reduction in positive cash flow was due primarily to less cash provided in 1994 by accounts receivable reductions. Capital expenditures for property, plant and equipment during the first nine months of 1994 were approximately $1.8 million, including $900,000 spent in June 1994 to exercise the Company's option to purchase its previously leased Yankton, South Dakota manufacturing facility. Outstanding capital commitments as of October 1, 1994 totaled approximately $212,000. The Company plans to make approximately $2.7 million in capital expenditures in 1994. As of October 1, 1994, the weighted average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 9.4%. The Company had available unused borrowing capacity of $24.7 million, $14.5 million, and $9.9 million under the line of credit facility at October 1, 1994, December 31, 1993, and October 2, 1993, respectively. At October 1, 1994, December 31, 1993, and October 2, 1993, the borrowings outstanding under the line of credit facility were $42.5 million; $54.0 million, and $45.0 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 October 1, 1994, Gehl serviced $57.5 million of such contracts, of which $50.5 million were owned by other parties. The Company believes that it has sufficient capacity to sell its finance contracts through 1995. Shareholders' equity at October 1, 1994 was $45.1 million or $4.4 million higher than the $40.7 million of shareholders' equity at October 2, 1993. The increase was primarily the result of income earned from October 3, 1993 through October 1, 1994. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Exhibit 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended October 1, 1994. 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 25, 1994 By: /s/ William D. Gehl William D. Gehl President and Chief Executive Officer Date: October 25, 1994 By: /s/ Kenneth F. Kaplan Kenneth F. Kaplan Vice President of Finance and Treasurer (Chief Financial and Accounting Officer) GEHL COMPANY FORM 10-Q October 1, 1994 EXHIBIT INDEX Exhibit Number Document Description 27 Financial Data Schedule EX-27 2 EXHIBIT 27 THE GEHL COMPANY
5 This schedule contains summary financial information extracted from Gehl Company's consolidated balance sheet at October 1, 1994 and consolidated statements of income for the nine month period ended October 1, 1994 and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-1994 JAN-1-1994 OCT-1-1994 4272 0 82668 0 19802 108613 51178 30756 137284 30850 60205 614 0 0 44468 137284 113750 113750 79946 79946 0 0 5310 4117 113 4004 0 0 0 4004 .65 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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