-----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, LQfBu+nb4h5/aS0zQMDy8KmsVMvqrubK649b7HN8GD+/Uzbh8lsczxgb2Pswanet 3YWA6tF7lhfAr+YZa7DffA== 0000856386-99-000011.txt : 19990817 0000856386-99-000011.hdr.sgml : 19990817 ACCESSION NUMBER: 0000856386-99-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990703 FILED AS OF DATE: 19990816 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: SEC FILE NUMBER: 000-18110 FILM NUMBER: 99690372 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 July 3, 1999 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 August 1, 1999 Common Stock, $.10 Par Value 5,817,344 GEHL COMPANY FORM 10-Q July 3, 1999 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Statements of Income for the Three- and Six-Month Periods Ended July 3, 1999 and June 27, 1998 . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at July 3, 1999, December 31, 1998 and June 27, 1998 . . . 4 Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended July 3, 1999 and June 27, 1998 . . . . . . . . . . . . . . 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . 12 PART II. - OTHER INFORMATION: Item 4. Submission of Matters to a Vote of Security Holders 12 Item 6. Exhibits and Reports on Form 8-K . . . . 13 SIGNATURES . . . . . . . . . . . . . . . . . . . 14 PART I - FINANCIAL INFORMATION Item 1. Financial Statements GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data; unaudited)
Three Months Ended Six Months Ended July 3, June 27, July 3, June 27, 1999 1998 1999 1998 -------- -------- -------- -------- NET SALES $ 83,848 $ 75,231 $152,811 $136,519 Cost of goods sold 59,733 54,056 109,920 99,493 -------- -------- -------- -------- GROSS PROFIT 24,115 21,175 42,891 37,026 Selling, general and administrative expenses 12,487 11,676 25,026 22,549 -------- -------- -------- -------- INCOME FROM OPERATIONS 11,628 9,499 17,865 14,477 Interest expense (777) (1,251) (1,554) (2,427) Interest income 425 407 838 753 Other expense, net (777) (578) (1,217) (596) -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 10,499 8,077 15,932 12,207 Income tax provision 3,727 2,867 5,656 4,333 -------- -------- -------- -------- NET INCOME $ 6,772 $ 5,210 $ 10,276 $ 7,874 ======== ======== ======== ======== EARNINGS PER SHARE Diluted $ 1.01 $ .78 $ 1.53 $ 1.18 Basic $ 1.05 $ .81 $ 1.59 $ 1.24
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
July 3, December 31, June 27, 1999 1998 1998 -------- ----------- -------- ASSETS (Unaudited) (Unaudited) Cash $ 3,446 $ 887 $ 6,380 Accounts receivable-net 79,873 70,806 85,084 Finance contracts receivable-net 10,270 9,786 10,766 Inventories 28,764 32,093 26,953 Deferred tax asset 7,138 7,138 4,217 Prepaid expenses and other assets 1,077 1,184 1,422 -------- -------- -------- Total Current Assets 130,568 121,894 134,822 -------- -------- -------- Property, plant and equipment-net 33,681 34,142 34,552 Finance contracts receivable-net, non-current 6,169 5,804 3,924 Intangible assets 16,080 16,451 14,484 Other assets 8,683 6,256 5,482 -------- -------- -------- TOTAL ASSETS $ 195,181 $ 184,547 $ 193,264 LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt obligations $ 556 $ 597 $ 661 Accounts payable 25,312 23,562 27,219 Accrued liabilities 32,906 27,993 25,880 -------- -------- -------- Total Current Liabilities 58,774 52,152 53,760 -------- -------- -------- Line of credit facility 13,399 19,359 37,732 Long-term debt obligations 9,300 9,588 9,623 Other long-term liabilities 5,233 5,400 1,947 Deferred income taxes 3,943 3,943 3,421 -------- -------- -------- Total Long-Term Liabilities 31,875 38,290 52,723 -------- -------- -------- Common stock, $.10 par value, 25,000,000 shares authorized, 6,483,244, 6,438,945 and 6,401,824 shares outstanding, respectively 650 644 640 Preferred stock, $.10 par value, 2,000,000 shares authorized, 250,000 shares designated as Series A Preferred Stock, no shares issued - - - Treasury stock (314) - - Capital in excess of par 28,789 28,330 27,634 Retained earnings 76,559 66,283 58,889 Accumulated other comprehensive loss (1,152) (1,152) (382) -------- -------- -------- Total Shareholders' Equity 104,532 94,105 86,781 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $195,181 $184,547 $193,264 ======== ======== ========
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 July 3, June 27, 1999 1998 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 10,276 $ 7,874 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,148 2,118 Amortization 393 351 Proceeds from sales of finance contracts 36,770 20,994 Increase in finance contracts receivable (39,033) (25,031) Cost of sales of finance contracts 1,414 588 Net change in working capital items 1,032 159 -------- -------- Net cash provided by operating activities 13,000 7,053 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (1,687) (1,598) Other assets (2,449) (38) -------- -------- Net cash used for investing activities (4,136) (1,636) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in long-term debt obligations (329) (77) (Decrease) increase in long-term liabilities (167) 92 Repayments of credit facility (5,960) (1,625) Proceeds from issuance of common stock 465 1,334 Purchase of treasury stock (314) - -------- -------- Net cash used for financing activities (6,305) (276) -------- -------- Net increase in cash 2,559 5,141 Cash, beginning of period 887 1,239 -------- -------- Cash, end of period $ 3,446 $ 6,380 ======== ======== Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 1,517 $ 2,329 Income taxes $ 4,574 $ 2,449
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS July 3, 1999 (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 July 3, 1999 and June 27, 1998 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 July 3, 1999 are not necessarily indicative of the results to be expected for the entire year due, in part, to the seasonal nature of the Company's operation. 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, 1998 as filed with the Securities and Exchange Commission. NOTE 2 - 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 3 - 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): July 3, December 31, June 27, 1999 1998 1998 --------- ----------- ---------- Raw materials and supplies $ 17,068 $ 15,656 $ 13,217 Work-in-process 5,430 5,863 5,522 Finished machines and parts 25,662 29,970 27,464 --------- --------- ---------- Total current cost value 48,160 51,489 46,203 Adjustment to LIFO basis (19,396) (19,396) (19,250) --------- --------- ---------- $ 28,764 $ 32,093 $ 26,953 ========= ========= ========== NOTE 4 - ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities" which was originally effective for fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the effective date was delayed one year and will be effective January 1, 2001 for the Company. Due to the Company's current limited use of derivative instruments, the adoption of this statement is not expected to have a material effect on the Company's financial condition or results of operations. NOTE 5 - EARNINGS PER SHARE Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and, if applicable, common stock equivalents which would arise from the exercise of stock options and warrants. A reconciliation of the shares used in the computation of earnings per share follows (in thousands): For the second quarter ended: July 3, 1999 June 27, 1998 ------------ ------------- Basic shares 6,467 6,399 Effect of options 262 290 ------------ ------------- Diluted shares 6,729 6,689 ============ ============= For the six months ended: July 3, 1999 June 27, 1998 ------------ ------------- Basic shares 6,461 6,336 Effect of warrants and options 248 342 ------------ ------------- Diluted shares 6,709 6,678 ============ ============= NOTE 6 - BUSINESS SEGMENTS The Company operates in two business segments: Construction equipment and Agriculture equipment. The long-term financial performance of the Company's reportable segments are affected by separate economic conditions and cycles. The segments are managed separately based on the fundamental differences in their operations. Effective December 31, 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Statement requires the Company to disclose selected segment information on an interim basis; this information is set forth below (in thousands): Three Months Ended Six Months Ended July 3, 1999 June 27, 1998 July 3, 1999 June 27, 1998 Net Sales: Construction $ 51,355 $ 45,427 $ 91,601 $ 79,481 Agriculture 32,493 29,804 61,210 57,038 -------- -------- -------- -------- Consoldated $ 83,848 $ 75,231 $152,811 $136,519 Income from Operations: Construction $ 7,599 $ 6,720 $ 12,393 $ 9,760 Agriculture 4,029 2,779 5,472 4,717 -------- -------- -------- -------- Consolidated $ 11,628 $ 9,499 $ 17,865 $ 14,477 NOTE 7 - STOCK REPURCHASE In March 1999, the Company's Board of Directors authorized the repurchase of up to 325,000 shares of the Company's outstanding common stock. As of July 3, 1999, 18,000 shares had been repurchased in the open market under this authorization at an aggregate cost of $314,000. NOTE 8 - SUBSEQUENT EVENT On July 9, 1999, the Company repurchased 725,900 shares of its common stock, at a per share purchase price of $20.50, from a shareholder (and affiliates) in a privately negotiated transaction. The aggregate purchase price of $14.9 million was financed with borrowings under the Company's existing revolving credit facility. In connection with the repurchase, the shareholder agreed not to acquire shares of the Company's stock or take certain other actions until after July 9, 2009. This repurchase does not impact the stock repurchase plan discussed in Note 7. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Three Months Ended July 3, 1999 Compared to Three Months Ended June 27, 1998 Net sales for the second quarter of 1999 of $83.8 million were 11% higher than the $75.2 million of net sales in the comparable period of 1998. Construction equipment net sales increased 13% to $51.3 million in the second quarter of 1999 from $45.4 million in the second quarter of 1998. The Construction equipment increase resulted from continued strong demand for telescopic handlers and service parts shipments. Agriculture equipment net sales increased 9% to $32.5 million in the second quarter of 1999 from $29.8 million in the second quarter of 1998, due primarily to increased shipments of skid loaders and forage harvesting equipment. Of the Company's total net sales reported for the second quarter of 1999, $11.8 million represented sales made outside the United States compared with $12.3 million in the comparable period of 1998. The decrease in international sales was due to economic disruption in the Far East and Australia. Gross profit increased $2.9 million, or 14%, during the second quarter of 1999 versus the comparable period of 1998, due primarily to increased sales volume. Gross profit as a percent of net sales increased to 28.8% for the second quarter of 1999 from 28.1% in the comparable period of 1998. Gross profit as a percent of net sales for Construction equipment increased to 27.5% in the second quarter of 1999 from 26.3% in the second quarter of 1998. The increase in Construction equipment gross margin was a function of increased telescopic handler and service parts sales, which sales are at higher gross margins than other construction equipment, and improved efficiencies at the manufacturing plants. Gross profit as a percent of net sales for Agriculture equipment decreased slightly to 30.8% in the second quarter of 1999 from 31.0% in the comparable period of 1998. Selling, general and administrative expenses increased $811,000, or 7%, during the second quarter of 1999 versus the comparable period of 1998 due primarily to sales volume increases and continued investment in engineering activities. As a percent of net sales, selling, general and administrative expenses decreased to 14.9% during the second quarter of 1999 versus 15.5% in the comparable period of 1998. Income from operations in the second quarter of 1999 was $11.6 million versus $9.5 million in the second quarter of 1998. Interest expense decreased $474,000 to $777,000 in the second quarter of 1999 from $1,251,000 in the second quarter of 1998. This resulted from a decrease in average debt outstanding to $36.2 million in the second quarter of 1999 versus $59.0 million in the second quarter of 1998, and a decrease in the average rate of interest paid by the Company to 7.6% in the second quarter of 1999 versus 7.8% in the comparable period of 1998. Other expense increased $199,000 to $777,000 in the second quarter of 1999 from $578,000 in the second quarter of 1998. This was due primarily to selling $6.6 million more retail finance contracts to third parties in the second quarter of 1999 versus the comparable period of 1998, resulting in an increase in the cost of sales of finance contracts. Second quarter 1999 net income of $6.8 million was a 30% increase from $5.2 million in the second quarter of 1998. Diluted earnings were $1.01 per share for the second quarter of 1999 versus $.78 per share in 1998. Six Months Ended July 3, 1999 Compared to Six Months Ended June 27, 1998 Net sales for the first six months of 1999 of $152.8 million were $16.3 million, or 12%, higher than the $136.5 million of net sales in the comparable period of 1998. Construction equipment net sales increased 15% to $91.6 million in the first six months of 1999 from $79.5 million in the first six months of 1998. The Construction equipment increase resulted from continued strong demand for telescopic handlers and service parts shipments. Agriculture equipment net sales increased 7% to $61.2 million in the first six months of 1999 from $57.0 million in the first six months of 1998. The increase was due to increased shipments of forage harvesting equipment, skid loaders and disc mower conditioners offset by reduced shipments of haytools, feedmaking and manure handling equipment. Of the Company's total net sales reported for the first six months of 1999, $20.3 million represented sales made outside the United States compared with $22.0 million in the comparative period of 1998. The decrease in international sales was due to economic disruption in the Far East and Australia. As the Company has increased its sale of Construction equipment products, the Company has been successful in reducing the seasonality of its sales. However, some sales seasonality still remains, primarily in the Company's second quarter which historically has tended to be its strongest quarter for sales, while sales levels have historically tended to be lower in the first and fourth quarters. Gross profit increased $5.9 million, or 16%, in the first six months of 1999 versus the comparable period of 1998, due primarily to increased sales volume. Gross profit as a percent of net sales increased to 28.1% for the first six months of 1999 from 27.1% in the comparable period of 1998. Gross profit as a percent of net sales for Construction equipment increased to 27.1% in the first six months of 1999 from 25.5% in the first six months of 1998. The increase in Construction gross margin was a function of increased telescopic handler and service parts sales, which sales are at higher gross margins than other construction equipment, and improved efficiencies at the manufacturing plants. Gross profit as a percent of net sales for Agriculture equipment increased to 29.5% for the first six months of 1999 from 29.4% for the first six months of 1998. Selling, general and administrative expenses increased $2.5 million, or 11%, during the first six months of 1999 versus the comparable period of 1998 due primarily to sales volume increases and continued investment in engineering activities. As a percent of net sales, selling, general and administrative expenses decreased to 16.4% during the first six months of 1999 versus 16.5% in the comparable period of 1998. Income from operations in the first six months of 1999 of $17.9 million was 23% higher than the $14.5 million for the comparable period of 1998. Interest expense decreased $873,000 to $1.5 million in the first six months of 1999 from $2.4 million in the first six months of 1998. The decrease was a result of a decrease in average debt outstanding to $35.7 million in the first six months of 1999 versus $57.5 million in the comparable period of 1998 combined with a decrease in the average rate of interest paid by the Company to approximately 7.7% in the first six months of 1999 versus 7.9% in the comparable period of 1998. Other expense increased $621,000 to $1,217,000 as of July 3, 1999 from $596,000 at June 27, 1998. This was primarily a result of selling $15.8 million more retail finance contracts to third parties during the six months ended July 3, 1999 versus the comparable period of 1998, resulting in an increase in the cost of sales of finance contracts. Net income of $10.3 million for the six months ended July 3, 1999 was a 31% increase from $7.9 million for the six months ended June 27, 1998. Diluted earnings were $1.53 per share for the six months ended July 3, 1999 versus $1.18 per share for the six months ended June 27, 1998. Financial Condition The Company's working capital was $71.8 million at July 3, 1999 as compared to $69.7 million at December 31, 1998 and $81.1 million at June 27, 1998. The decrease since June 27, 1998 was due primarily to decreases in accounts receivable. The Company's cash flow provided by operating activities in the first six months of 1999 was $13.0 million versus $7.1 million in comparable 1998. Capital expenditures for property, plant and equipment during the first six months of 1999 were approximately $1.7 million. The Company expects to make approximately $11.0 million of capital expenditures during 1999, which includes approximately $5 million related to plant expansion activities at its two South Dakota construction equipment manufacturing facilities. The capital expenditures are expected to be funded with borrowings under the Company's existing line of credit facility. Outstanding capital expenditure commitments as of July 3, 1999 totaled approximately $1.2 million. As of July 3, 1999, the weighted average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 7.2%. The Company had available unused borrowing capacity of $60.2 million, $53.1 million and $35.8 million under the line of credit facility at July 3, 1999, December 31, 1998 and June 27, 1998, respectively. At July 3, 1999, December 31, 1998 and June 27, 1998, the borrowings outstanding under the line of credit facility were $13.4 million, $19.4 million and $37.7 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 substantially all contracts whether or not sold. At July 3, 1999, Gehl serviced $97.9 million of such contracts, of which $81.4 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 July 3, 1999 was $104.5 million. This amount was $17.7 million higher than the $86.8 million of shareholders' equity at June 27, 1998, due primarily to income earned from June 28, 1998 through July 3, 1999. On July 9, 1999, the Company repurchased 725,900 shares of its common stock, at a per share purchase price of $20.50, from a shareholder (and affiliates) in a privately negotiated transaction. The aggregate purchase price of $14.9 million was financed with borrowings under the Company's existing revolving credit facility. Accounting Pronouncements The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities" which was originally effective for fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the effective date was delayed by one year and will be effective January 1, 2001 for the Company. Due to the Company's current limited use of derivative instruments, the adoption of this statement is not expected to have a material effect on the Company's financial condition or results of operations. Year 2000 The Year 2000 issue refers to computer systems which use two digits rather than four to define a given year and which therefore might read a date using "00" as the year 1900 rather than the Year 2000. As the Year 2000 approaches, such systems may be unable to process certain date-based information. This could result in system failure or miscalculations causing disruptions of operations and the potential inability to engage in normal business activities. In 1995, a Company-wide program was initiated to prepare its Information Technology (IT) systems and applications for the Year 2000. The initial focus of the Company's program contained the following steps: assessment of the relevant issues; planning the conversion; implementing the conversion; and testing. Those systems determined to be at risk were prioritized and plans were put in place to upgrade systems by remediation, replacement or outsourcing. By the end of June 1999, the assessment and planning phases have been completed for all IT systems and applications. The Company's objective to become Year 2000 compliant with its mission critical IT activities and systems by mid-1999 has been met, allowing substantial time for further testing, verification and the final completion of less important systems in the second half of 1999. In addition to the IT systems review noted above, the Company has initiated processes to review and to modify, where appropriate, other areas impacted by Year 2000. These areas include, but are not limited to, personal computer hardware and software, remote location access to IT systems, facility management and certain non-IT issues, such as the extent to which embedded chips are used in machinery and equipment used in operations. The Company has completed assessments and testing in all of the above areas. The Company is in the process of communicating with its significant vendors to determine the extent to which the Company is vulnerable to those third parties failure to remediate their own Year 2000 compliance issues. The Company cannot guarantee that the failure of another company to be Year 2000 compliant will not have an adverse effect on the Company. The Company believes that it has no exposure to contingencies related to the Year 2000 issue for products it has sold. The Company has evaluated its major customers and believes that the failure of these companies to adequately prepare for Year 2000 issues will not have a material adverse effect on the Company. The Company expects to incur consulting and other expenses related to its Year 2000 program. The cost of testing and the conversion of existing and replacement system applications are not expected to exceed $400,000, the majority of which expense has already been incurred. These costs have been and will continue to be treated as period costs and expensed as incurred. Based upon the progress to date, the Company does not believe that either future costs of modifications or the consequences of any unsuccessful modifications being implemented by the Company will have a material adverse effect on its financial position or results of operations. Nevertheless, since it is not possible to anticipate all possible future situations, especially when third parties are involved, the Company believes that the most reasonably likely worst case Year 2000 scenario could result in circumstances in which the Company may be unable to take customer orders, manufacture and ship products, invoice customers or collect payments. The Company continues to evaluate whether a contingency plan to deal with any expected Year 2000 related failures is warranted. No assurances can be given that Year 2000 compliance failures, if any, particularly as they relate to third parties, will not have a material adverse effect on the Company's financial position or results of operations. Forward-Looking Statements Certain matters discussed in this Quarterly Report on Form 10-Q are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include such words as the Company "believes," "anticipates" or "expects," or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include competitive conditions in the markets served by the Company, changes in the Company's plans regarding capital expenditures, general economic conditions, unanticipated events related to resolving Year 2000 issues, market acceptance of existing and new products manufactured by the Company, changes in the cost of raw materials and component parts purchased by the Company, and interest and foreign currency fluctuations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward- looking statements. Item 3. Quantitative and Qualitative Disclosures about Market Risk There are no material changes to the information provided in response to this item as set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 as filed with the Securities and Exchange Commission. 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 21, 1999, Nicholas C. Babson, Thomas J. Boldt and William P. Killian were elected as directors of the Company for terms expiring in 2002 and Hermann Viets was elected for a term expiring in 2000. The following table sets forth certain information with respect to the election of directors at the annual meeting: Name of Nominee Shares Shares Withholding Voted For Authority Hermann Viets 5,477,738 201,667 Nicholas C. Babson 5,469,538 209,967 Thomas J. Boldt 5,039,164 640,241 William P. Killian 5,481,036 198,369 The following table sets forth the other directors of the Company whose terms of office continued after the 1999 annual meeting: Name of Director Year in Which Term Expires John W. Gehl 2000* Arthur W. Nesbitt 2000 Fred M. Butler 2001 William D. Gehl 2001 John W. Splude 2001 *Mr. J.W. Gehl retired as a director on July 19, 1999. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 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 July 3, 1999. 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: August 13, 1999 By: /s/ William D. Gehl William D. Gehl Chairman of the Board, President and Chief Executive Officer Date: August 13, 1999 By: /s/ Kenneth P. Hahn Kenneth P. Hahn Vice President of Finance, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) GEHL COMPANY FORM 10-Q July 3, 1999 EXHIBIT INDEX Exhibit Number Document Description 27 Financial Data Schedule [EDGAR version only] EX-27 2
5 This schedule contains summary financial information extracted from Gehl Company's consolidated balance sheet at July 3, 1999 and consolidated statement of income for the six-month period ended July 3, 1999 and is qualified in its entirety by reference to such financial statements. 1000 6-MOS DEC-31-1999 JAN-1-1999 JUL-03-1999 3446 0 90143 0 28764 130568 77026 43345 195181 58774 22699 650 0 0 103882 195181 152811 152811 109920 109920 0 0 1554 15932 5656 10276 0 0 0 10276 1.59 1.53 Company presents receivables on a net basis in compliance with Article 10 of Regulation S-X. Includes all non-current portion of debt obligations.
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