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 April 1, 1995
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 April 1, 1995
Common Stock, $.10 Par Value 6,171,189
GEHL COMPANY
FORM 10-Q
April 1, 1995
REPORT INDEX
Page No.
PART I. - FINANCIAL INFORMATION:
Condensed Consolidated Statements of Income for the
Three-Month Periods Ended April 1, 1995 and
April 2, 1994 . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at April 1, 1995,
December 31, 1994, and April 2, 1994 . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Three-Month Periods Ended April 1, 1995 and
April 2, 1994 . . . . . . . . . . . . . . . . . . . 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 . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data; unaudited)
<CAPTION>
Three Months
Ended
April 1, April 2,
1995 1994
<S> <C> <C>
NET SALES $ 38,268 $ 34,242
Cost of goods sold 27,588 24,549
-------- --------
GROSS PROFIT 10,680 9,693
Selling, general and
administrative expenses 7,622 7,934
-------- --------
INCOME FROM OPERATIONS 3,058 1,759
Interest expense (1,516) (1,753)
Interest income 463 328
Other expense, net (167) (559)
--------- ---------
INCOME (LOSS) BEFORE INCOME TAXES 1,838 (225)
Income tax provision 25 37
-------- ---------
NET INCOME (LOSS) $ 1,813 $ (262)
======== ==========
EARNINGS (LOSS) PER SHARE $ .29 $ (.04)
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
April 1, December 31, April 2,
1995 1994 1994
<S> <C> <C> <C>
ASSETS (Unaudited) (Unaudited)
Cash $ 4,107 $ 2,570 $ 2,274
Accounts receivable-net 78,372 72,393 86,992
Finance contracts receivable-net 5,190 3,389 5,671
Inventories 22,898 21,452 24,146
Prepaid expenses and other assets 2,590 2,817 2,050
-------- -------- --------
Total Current Assets 113,157 102,621 121,133
-------- -------- --------
Property, plant and equipment-net 20,036 20,433 19,359
Finance contracts receivable-net,
non-current 3,081 2,258 3,284
Other assets 5,643 5,715 6,941
--------- -------- --------
TOTAL ASSETS $141,917 $131,027 $150,717
========= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt
obligations $ 179 $ 180 $ 787
Accounts payable 14,377 14,477 15,320
Accrued liabilities 14,153 14,053 14,373
------- -------- --------
Total Current Liabilities 28,709 28,710 30,480
------- -------- --------
Line of credit facility 54,988 45,879 60,749
Long-term debt obligations 8,766 8,821 17,947
Other long-term liabilities 1,306 1,334 831
------- -------- --------
Total Long-Term Liabilities 65,060 56,034 79,527
------- -------- --------
Common stock, $.10 par value,
25,000,000 shares authorized,
6,171,189, 6,169,523 and 6,141,441
shares outstanding, respectively 617 617 614
Preferred stock, $.10 par value,
2,000,000 shares authorized, no
shares issued - - -
Capital in excess of par 26,185 26,133 25,896
Retained earnings 21,346 19,533 14,200
------- -------- --------
Total Shareholders' Equity 48,148 46,283 40,710
------- -------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $141,917 $ 131,027 $150,717
======== ========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<CAPTION>
Three Months Ended
April 1, April 2,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ 1,813 $ (262)
Adjustments to reconcile net income (loss) to net
cash (used for) provided by operating activities:
Depreciation and amortization 718 957
Increase in finance contracts receivable (7,692) (6,136)
Proceeds from sales of finance contracts 4,889 3,763
Cost of sales of finance contracts 123 67
Net changes in remaining working capital items (7,311) (4,570)
Other 50 77
---------- --------
Net cash (used for) provided by operating activities (7,410) (6,104)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (234) 52
Other assets 155 160
---------- --------
Net cash (used for) provided by investing
activities (79) 212
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in long-term debt obligations (55) (95)
Increase (decrease) in long-term liabilities (28) 33
Proceeds from line of credit facility 9,109 6,770
---------- --------
Net cash provided by financing activities 9,026 6,708
---------- --------
Net increase in cash 1,537 816
Cash, beginning of period 2,570 1,458
--------- --------
Cash, end of period $ 4,107 $ 2,274
========= =========
Supplemental disclosure of cash flow information:
Cash paid for the following:
Interest $ 1,393 $ 1,390
Income Taxes $ 939 $ 39
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 1, 1995
(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 April 1, 1995 and April 2, 1994 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 three months ended April 1, 1995
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, 1994 as
filed with the Securities and Exchange Commission.
NOTE 2 - EARNINGS PER SHARE
Earnings per share is computed by dividing net income (loss) 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. The
weighted average number of shares used in the computations was 6,202,996 and
6,135,067 for the three months ended April 1, 1995 and April 2, 1994,
respectively.
NOTE 3 - INCOME TAXES
The income tax provision is determined by applying an estimated annual
effective income tax rate to income (loss) 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, 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):
April 1, December 31,
1995 1994
Raw materials and supplies $ 3,803 $ 3,711
Work-in-process 9,830 10,252
Finished machines and parts 26,122 24,346
------- -------
Total current cost value 39,755 38,309
Adjustment to LIFO basis (16,857) (16,857)
------- -------
$22,898 $21,452
======= =======
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 April 1, 1995 Compared to Three Months Ended April 2, 1994
Net sales for the first quarter of 1995 of $38.3 million were $4.1 million,
or 12%, higher than the $34.2 million in the comparable period of 1994. Gehl
Agriculture sales increased 3% to $24.3 million in the first quarter of 1995
from $23.6 million in the first quarter of 1994. Gehl Construction's net
sales increased 32% to $14.0 million in the first quarter of 1995 from $10.6
million in the first quarter of 1994. The Gehl Construction increase resulted
from strong demand for the Company's products, particularly for skid steer
loaders and rough-terrain telescoping boom forklifts.
Gross profit increased $987,000, or 10%, during the first quarter of 1995
versus the comparable period of 1994, primarily due to increased sales volume.
Gross profit as a percent of net sales decreased to 27.9% for the first
quarter of 1995 from 28.3% in the comparable period of 1994, due primarily to
a change in the product mix of shipments. Gross profit as a percent of net
sales for Gehl Agriculture decreased to 25.3% for the first quarter of 1995
from 28.9% in the first quarter of 1994. The primary reason for the lower
percentage was the impact of a change in the mix of products shipped in the
first quarter of 1995 versus products shipped in comparable 1994. The change
in mix included a heavier emphasis on shipments of certain discontinued
products at little or no gross profit and a higher level of 1995 shipments of
certain products where cost increases incurred by the Company exceeded price
increases over the past twelve months. Gross profit as a percent of net sales
for Gehl Construction increased to 32.4% in the first quarter of 1995 from
27.0% in the first quarter of 1994. The primary reasons for the percentage
improvement were: 1) the impact of a change in the mix of products shipped in
the first quarter of 1995 versus products shipped in comparable 1994, 2) the
percentage of export sales, typically made at a lower gross margin than
domestic sales, constituting a smaller portion of first quarter sales in 1995
than in 1994, 3) the full impact of lowering the overall cost structure of
Gehl Construction as a result of the first quarter 1994 transfer of paving
products production to the Yankton, South Dakota plant from the Lithonia,
Georgia plant, which was closed in January, 1994, and 4) certain economies of
scale associated with the increased level of production at the plants
manufacturing construction equipment.
Selling, general and administrative expenses decreased $312,000, or 4%,
during the first quarter of 1995 versus the comparable period of 1994. The
decrease related primarily to reductions from 1994 first quarter expense
levels associated with allowance for doubtful accounts and product liability
costs, offset, in part, by increased sales promotion costs. As a percent of
net sales, selling, general and administrative expenses decreased to 19.9%
during the first quarter of 1995 versus 23.2% in the comparable period of
1994.
Income from operations in the first quarter of 1995 was $3.1 million versus
$1.8 million in the first quarter of 1994. The improvement was due primarily
to increased sales volume and a reduction in selling, general and
administrative expenses from 1994 levels.
Interest expense decreased $237,000, or 14%, to $1.52 million in the first
quarter of 1995 from $1.75 million in the first quarter of 1994. The
decrease was a result of a decrease in average debt outstanding to $59.6
million in the first quarter of 1995 versus $75.7 million in the first
quarter of 1994 offset, in part, by an increase in the average rate of interest
paid by the Company. The average interest rate paid rose to 9.8% in the
first quarter of 1995 from 9.1% in the first quarter of 1994, due to
increases in the prime rate which serves as the base for the Company's
interest rate under its line of credit facility. The rate increase was
partially offset by the impact of a decrease in the mark-up over the prime
rate on the Company's loans under its line of credit facility, which decrease
was effective October 1994.
Other expense, net was $167,000 in the first quarter of 1995 versus $559,000
in the comparable period of 1994. The decrease resulted, in part, from the
quarterly revaluation of certain previous sales of finance contracts made
under variable interest rate arrangements. Lower U.S. Treasury bill rates at
April 1, 1995 than at December 31, 1994, resulted in $15,000 of income from
this year's first quarter revaluation. The quarterly revaluation one year ago
at April 2, 1994 had resulted in $222,000 of expense. The remainder of the
decrease in other expense, net is a result of Canadian foreign exchange
income of $8,000 recorded in the first quarter of 1995 versus Canadian foreign
exchange losses of $150,000 incurred in the first quarter of 1994.
Under generally accepted accounting principles, the Company was not required
to record a federal income tax provision related to its 1995 first quarter
operating income due to the existence of net operating loss carryforwards,
nor was the Company permitted to record a deferred tax benefit related to its
1994 first quarter net operating loss.
Financial Condition
The Company's working capital was $84.4 million at April 1, 1995, as
compared to $73.9 million at December 31, 1994, and $90.7 million at April 2,
1994. The increase since December 31, 1994 resulted primarily from seasonal
increases in accounts receivable, finance contracts receivables and
inventories financed with borrowings under the Company's line of credit
facility. The decrease from April 2, 1994 primarily relates to a reduction in
accounts receivable.
The Company's first quarter 1995 cash flow used for operating activities was
$7.4 million versus $6.1 million used for operating activities in comparable
1994. The first quarter cash flow from operating activities is normally
negative due to seasonal increases in accounts receivables and inventories.
The Company currently anticipates that cash flow from operations will be
positive for the remaining quarters of 1995, as was the case in 1994.
Capital expenditures for property, plant and equipment during the first
quarter of 1995 were approximately $234,000. Outstanding commitments as of
April 1, 1995 totaled approximately $266,000. The Company plans to make
approximately $3.5 million of capital expenditures during 1995.
As of April 1, 1995, the weighted average interest rate paid by the Company
on outstanding borrowings under its line of credit facility was 9.7%. The
Company had available unused borrowing capacity of $18.0 million, $19.2 million
and $12.7 million under the line of credit facility at April 1, 1995,
December 31, 1994, and April 2, 1994, respectively. At April 1, 1995, December
31, 1994, and April 2, 1994, the borrowings outstanding under the line of
credit facility were $55.0 million, $45.9 million and $60.7 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 financial service companies to sell, with recourse, its finance contracts
receivable. The Company continues to service all contracts whether or not
sold. At April 1, 1995, Gehl serviced $56.9 million of such contracts, of
which $48.1 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 April 1, 1995 was $48.1 million. This was $7.4
million higher than the $40.7 million of shareholders' equity at April 2, 1994,
due primarily to income earned from April 3, 1994 through April 1, 1995.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Amendment to Gehl Company By-laws, dated February 24, 1995
[Incorporated by reference to Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1994]
3.2 By-laws of Gehl Company, as amended [Incorporated by reference to
Exhibit 3.3 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1994]
10.1 Supplemental Retirement Benefit Agreement by and between William D.
Gehl and Gehl Company, as amended [Incorporated by reference to
Exhibit 10.4 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994]
10.2 Supplemental Retirement Benefit Agreement by and between Victor A.
Mancinelli and Gehl Company, as amended [Incorporated by reference
to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994]
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
April 1, 1995.
<PAGE>
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: April 26, 1995 By: /s/ William D. Gehl
William D. Gehl
President and Chief
Executive Officer
Date: April 26, 1995 By: /s/ Kenneth F. Kaplan
Kenneth F. Kaplan
Vice President of
Finance and Treasurer
(Chief Financial and
Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at April 1, 1995 and consolidated
statements of income for the three month period ended April 1, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> APR-1-1995
<CASH> 4107
<SECURITIES> 0
<RECEIVABLES> 83562
<ALLOWANCES> 0<F1>
<INVENTORY> 22898
<CURRENT-ASSETS> 113157
<PP&E> 51706
<DEPRECIATION> 31670
<TOTAL-ASSETS> 141917
<CURRENT-LIABILITIES> 28709
<BONDS> 63754<F2>
<COMMON> 617
0
0
<OTHER-SE> 47531
<TOTAL-LIABILITY-AND-EQUITY> 141917
<SALES> 38268
<TOTAL-REVENUES> 38268
<CGS> 27588
<TOTAL-COSTS> 27588
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1516
<INCOME-PRETAX> 1838
<INCOME-TAX> 25
<INCOME-CONTINUING> 1813
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1813
<EPS-PRIMARY> .29
<EPS-DILUTED> 0<F3>
<FN>
<F1>Company presents receivables on a net basis in compliance with Article 10
of Regulation S-X.
<F2>Includes all non-current portion of debt obligations
<F3>Not reported
</FN>
</TABLE>
