-----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, PbIXPoxWAbOoReXnviLC1h7YJybkB19R/7QzLRwWyzXHkRfUhjgNwStTJIBxjOUn 6C+rMrgaUrrR8opfRwhYGg== 0000856386-98-000011.txt : 19980513 0000856386-98-000011.hdr.sgml : 19980513 ACCESSION NUMBER: 0000856386-98-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980328 FILED AS OF DATE: 19980512 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: SEC FILE NUMBER: 000-18110 FILM NUMBER: 98616245 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 March 28, 1998 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 March 28, 1998 Common Stock, $.10 Par Value 6,392,929 GEHL COMPANY FORM 10-Q March 28, 1998 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Statements of Income for the Three-Month Periods Ended March 28, 1998 and March 29, 1997 . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at March 28, 1998, December 31, 1997, and March 29, 1997 . . . . . . 4 Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 28, 1998 and March 29, 1997 . . . . . . . . . . . . . . . . . . 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. Quantitive and Qualitative Disclosures about Market Risk 9 PART II. - OTHER INFORMATION: Item 2. Changes in Securities and Use of Proceeds . . 10 Item 5. Other Information . . . . . . . . . . . . . . 10 Item 6. Exhibits and Reports on Form 8-K . . . . . . . 10 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 11 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 March 28, March 29, 1998 1997 NET SALES $ 61,288 $ 43,675 Cost of goods sold 45,437 30,692 -------- --------- GROSS PROFIT 15,851 12,983 Selling, general and administrative expenses 10,873 8,832 -------- --------- INCOME FROM OPERATIONS 4,978 4,151 Interest expense (1,176) (468) Interest income 346 322 Other expense, net (18) (53) -------- --------- INCOME BEFORE INCOME TAXES 4,130 3,952 Income tax provision 1,466 1,423 -------- --------- NET INCOME $ 2,664 $ 2,529 ======== ========= EARNINGS PER SHARE Diluted $ .40 $ .39 Basic $ .42 $ .41 The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) March 28, December 31, March 29, 1998 1997 1997 ASSETS (Unaudited) (Unaudited) Cash $ 3,049 $ 1,239 $ 3,137 Accounts receivable-net 86,602 72,190 64,420 Finance contracts receivable-net 9,670 8,210 5,763 Inventories 32,793 30,340 17,483 Deferred tax assets 4,217 4,217 5,035 Prepaid expenses and other assets 1,584 1,645 1,821 ----------- ----------- ----------- Total Current Assets 137,915 117,841 97,659 ----------- ----------- ----------- Property, plant and equipment-net 34,941 35,082 22,487 Finance contracts receivable-net, non-current 3,531 3,031 3,446 Intangible assets 14,650 14,816 - Other assets 5,546 5,453 5,666 ----------- ----------- ----------- TOTAL ASSETS $ 196,583 $ 176,223 $ 129,258 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt obligations $ 689 $ 672 $ 181 Accounts payable 26,555 22,212 16,142 Accrued liabilities 23,695 21,444 18,934 ----------- ----------- ----------- Total Current Liabilities 50,939 44,328 35,257 ----------- ----------- ----------- Line of credit facility 49,252 39,357 13,717 Long-term debt obligations 9,515 9,689 8,697 Other long-term liabilities 1,929 1,855 1,671 Deferred income taxes 3,421 3,421 2,369 ----------- ----------- ----------- Total Long-Term Liabilities 64,117 54,322 26,454 ----------- ----------- ----------- Common stock, $.10 par value, 25,000,000 shares authorized, 6,392,929, 6,212,686 and 6,188,685 shares issued, respectively 640 621 619 Preferred stock, $.10 par value, 2,000,000 shares authorized, 250,000 shares designated as Series A Preferred Stock, no shares issued - - - Capital in excess of par 27,590 26,319 26,338 Retained earnings 53,297 50,633 40,590 ----------- ----------- ----------- Total Shareholders' Equity 81,527 77,573 67,547 ----------- ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 196,583 $ 176,223 $ 129,258 =========== =========== =========== The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited) Three Months Ended March 28, March 29, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 2,664 $ 2,529 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Depreciation and amortization 1,232 697 Increase in finance contracts receivable (7,784) (6,254) Proceeds from sales of finance contracts 5,745 5,127 Cost of sales of finance contracts 79 79 Net changes in remaining working capital items (10,210) (5,299) ---------- ----------- Net cash used for operating activities (8,274) (3,121) ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (918) (1,482) Other assets (100) 46 ---------- ----------- Net cash used for investing activities (1,018) (1,436) ---------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit facility 9,895 3,263 Proceeds from issuance of common stock 1,290 186 Decrease in long-term debt obligations (157) (40) Increase in long-term liabilities 74 77 ---------- ----------- Net cash provided by financing activities 11,102 3,486 ---------- ----------- Net increase (decrease) in cash 1,810 (1,071) Cash, beginning of period 1,239 4,208 ---------- ----------- Cash, end of period $ 3,049 $ 3,137 ========== =========== Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 1,057 $ 444 Income Taxes $ 65 $ 23 The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 28, 1998 (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- month periods ended March 28, 1998 and March 29, 1997 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. Due in part to the seasonal nature of the Company's business, the results of operations for the three months ended March 28, 1998 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, 1997 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): March 28, December 31 March 29, 1998 1997 1997 --------- ----------- -------- Raw materials and supplies $15,934 $14,830 $ 8,935 Work in process 5,768 5,182 5,150 Finished machines and parts 30,341 29,578 22,193 ---------- ----------- --------- Total current cost value 52,043 49,590 36,278 Adjustment to LIFO basis (19,250) (19,250) (18,795) ---------- ----------- ---------- $32,793 $30,340 $17,483 ========== =========== ========== NOTE 4 - ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards (SFAS) No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits: an amendment of FASB Statements No. 87, 88 and 106" which is effective for financial statements beginning after December 15, 1997. The adoption of this statement is not expected to effect the Company's financial condition or results of operations as it is a disclosure only pronouncement. Effective January 1, 1998, the Company adopted SFAS No. 130 "Reporting Comprehensive Income", the effect of which was immaterial to the financial statements. SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", was adopted effective January 1, 1998. The related footnote disclosures will be incorporated into the Company's Form 10-K filing for the year ended December 31, 1998 as required. 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): March 28, 1998 March 29, 1997 -------------- --------------- Basic shares 6,274 6,185 Effect of warrants and options 393 219 -------------- --------------- Diluted shares 6,667 6,404 ============== =============== Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Three Months Ended March 28, 1998 Compared to Three Months Ended March 29, 1997 Net sales for the first quarter of 1998 of $61.3 million were $17.6 million, or 40%, higher than the $43.7 million in the comparable period of 1997 due, in part, to the shipment of Mustang skid loaders in 1998 as a result of the fourth quarter 1997 acquisition of this product line. Construction equipment net sales increased 64% to $34.1 million in the first quarter of 1998 from $20.7 million in the first quarter of 1997. The increase in sales of construction equipment was due primarily to higher telescopic handler shipments and the aforementioned Mustang skid loader shipments. Agriculture equipment sales increased 19% to $27.2 million in the first quarter of 1998 from $23.0 million in the first quarter of 1997. The increase was due primarily to increased shipments of skid loaders and shipments of a new, larger model of disc mower conditioner. Of the Company's total net sales reported for the first quarter of 1998, $9.7 million were made outside of the United States. Gross profit increased $2.9 million, or 22%, during the first quarter of 1998 versus the comparable period of 1997 due primarily to increased sales volume. Gross profit as a percent of net sales decreased to 25.9% for the first quarter of 1998 from 29.7% in the comparable period of 1997. Gross profit as a percent of net sales for construction equipment decreased to 24.4% in the first quarter of 1998 from 30.7% in the first quarter of 1997. This decrease was due primarily to: 1) shipments of Mustang skid loaders which have lower gross margins than other Company sales of construction equipment; 2) competitive pressures restricting price increases to lower levels than the cost increases incurred by the Company; and 3) certain inefficiencies related to the start-up manufacturing of the new telescopic handler product. Gross profit as a percent of net sales for agriculture equipment decreased to 27.7% in the first quarter of 1998 from 28.8% for the first quarter of 1997. The primary reason for the decrease was the impact of a change in the mix of products shipped in the first quarter of 1998 versus products shipped in comparable 1997. Selling, general and administrative expenses increased $2 million, or 23%, during the first quarter of 1998 versus the comparable period of 1997 due primarily to operating costs related to Mustang skid loader operations. As a percent of net sales, selling, general and administrative expenses decreased to 17.7% of net sales during the first quarter of 1998 versus 20.2% in the comparable period of 1997. First quarter 1998 income from operations of $5.0 million was 20% higher than the $4.2 million for the first quarter of 1997. Interest expense increased $708,000, to $1,176,000 in the first quarter of 1998 from $468,000 in the first quarter of 1997. The increase was a result of an increase in average debt outstanding to $56.1 million in the first quarter of 1998 versus $21.3 million in the first quarter of 1997. The average rate of interest paid by the Company in the first quarter of 1998 remained constant at 8.1% in relation to the comparable period of 1997. The increase in the average debt outstanding was primarily the result of the indebtedness related to the Mustang acquisition. Financial Condition The Company's working capital was $87.0 million at March 28, 1998, as compared to $73.5 million at December 31, 1997, and $62.4 million at March 29, 1997. The increase since December 31, 1997 resulted primarily from seasonal increases in accounts receivable. The working capital increase from March 29, 1997 was due primarily to the working capital associated with the acquired Mustang operations. Capital expenditures for property, plant and equipment during the first quarter of 1998 were approximately $918,000. The Company plans to make a total of approximately $5.3 million of capital expenditures in 1998. Outstanding commitments as of March 28, 1998 totaled approximately $400,000. As of March 28, 1998, the weighted average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 7.7%. The Company had available unused borrowing capacity of $24.1 million, $28.3 million and $50.6 million under the line of credit facility at March 28, 1998, December 31, 1997, and March 29, 1997, respectively. At March 28, 1998, December 31, 1997, and March 29, 1997, the borrowings outstanding under the line of credit facility were $49.3 million, $39.4 million and $13.7 million, respectively. The sale of finance contracts is an important component of the Company's overall liquidity. The Company has arrangements with several financial institutions and financial service companies to sell, with recourse, its finance contracts receivable. The Company continues to service substantially all contracts whether or not sold. At March 28, 1998, the Company serviced $66.3 million of such contracts, of which $53.2 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 March 28, 1998 was $81.5 million. This was $14.0 million higher than the $67.5 million of shareholders' equity at March 29, 1997, due primarily to income earned from March 30, 1997 through March 28, 1998. Certain matters discussed in the Quarterly Report on Form 10-Q are "forward-looking statements" intended to qualify for the safe harbor 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 statement will include such words as the Company "believes," "anticipates" or "expects," or words of similar import. Similarly, statements that described 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, general economic conditions, interest and foreign currency fluctuations, and the ability of the Company to successfully integrate the Mustang operations. 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 Not Applicable PART II - OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds On March 3, 1998, the Company issued an aggregate of 130,000 shares of common stock to entities controlled by James H. Dahl pursuant to the exercise of Common Stock Purchase Warrants (the "Warrants"). The Warrants, which were originally issued to the State of Wisconsin Investment Board in March 1993, had a per share exercise price of $7.00. The Company realized an aggregate of $910,000 upon exercise of the Warrants. The shares of common stock issued upon exercise of the Warrants were issued in a private placement exempt from registration under Section 4(2) of the Securities Act of 1933, as amended. Item 5. Other Information On April 29, 1998, John W. Findley resigned as a director of the Company in order to devote more time to his philanthropic activities. 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 March 28, 1998. 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: May 11, 1998 By: /s/ William D. Gehl William D. Gehl Chairman, President and Chief Executive Officer Date: May 11, 1998 By: /s/ Kenneth P. Hahn Kenneth P. Hahn Vice President of Finance and Treasurer (Principal Financial and Accounting Officer) GEHL COMPANY FORM 10-Q March 28, 1998 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 condensed consolidated balance sheet at March 28, 1998 and condensed consolidated statements of income for the three-month period ended March 28, 1998 and is qualified in its entirety by reference to such financial statements. 1000 3-MOS DEC-31-1998 JAN-1-1998 MAR-28-1998 3049 0 96272 0 32793 137915 73654 38713 196583 50939 58767 640 0 0 80887 196583 61288 61288 45437 45437 0 0 1176 4130 1466 2664 0 0 0 2664 .42 .40 The Company presents receivables on a net basis in compliance with Article 10 of Regulation S-X. Includes all non-current portion of debt obligations. The EPS under the "EPS-Primary" tag represents Basic Earnings Per Share.
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