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 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 July 1, 1995
Common Stock, $.10 Par Value 6,181,518
<PAGE>
GEHL COMPANY
FORM 10-Q
July 1, 1995
REPORT INDEX
Page No.
PART I. - FINANCIAL INFORMATION:
Condensed Consolidated Statements of Income for the
Three- and Six-Month Periods Ended July 1, 1995
and July 2, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at July 1, 1995,
December 31, 1994, and July 2, 1994 . . . . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Six-Month Periods Ended July 1, 1995 and July 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 4. Submission of Matters to a Vote of Security Holders . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data; unaudited)
<CAPTION>
Three Months Six Months
Ended Ended
July 1, July 2, July 1, July 2,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
NET SALES $42,730 $41,916 $80,998 $76,158
Cost of goods sold 30,033 29,062 57,621 53,611
------- -------- ------- --------
GROSS PROFIT 12,697 12,854 23,377 22,547
Selling, general and
administrative expenses 7,837 9,143 15,459 17,077
------- -------- ------- --------
INCOME FROM OPERATIONS 4,860 3,711 7,918 5,470
Interest expense (1,672) (1,890) (3,188) (3,643)
Interest income 477 529 947 857
Other (expense) income, net (42) (557) (216) (1,116)
-------- -------- ------- --------
INCOME BEFORE INCOME TAXES 3,623 1,793 5,461 1,568
Income tax provision 25 38 50 75
------- -------- ------- --------
NET INCOME $3,598 $1,755 $5,411 $1,493
======= ======== ======= ========
EARNINGS PER SHARE $.58 $.28 $.87 $.24
</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>
July 1, December 31, July 2,
1995 1994 1994
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash $ 5,542 $ 2,570 $ 4,566
Accounts receivable-net 78,373 72,393 81,885
Finance contracts receivable-net 6,229 3,389 5,707
Inventories 21,678 21,452 21,239
Prepaid expenses and other assets 3,541 2,817 1,609
---------- ----------- ----------
Total Current Assets 115,363 102,621 115,006
---------- ----------- ----------
Property, plant and equipment-net 19,877 20,433 20,843
Finance contracts receivable-net, 3,665 2,258 3,259
non-current
Other assets 5,570 5,715 6,398
---------- ----------- ----------
TOTAL ASSETS $ 144,475 $ 131,027 $ 145,506
========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt $ 173 $ 180 $1,114
obligations
Accounts payable 14,875 14,477 14,589
Accrued liabilities 14,938 14,053 15,869
---------- ----------- ----------
Total Current Liabilities 29,986 28,710 31,572
---------- ----------- ----------
Line of credit facility 52,529 45,879 52,300
Long-term debt obligations 8,724 8,821 18,016
Other long-term liabilities 1,393 1,334 1,107
---------- ----------- ----------
Total Long-Term Liabilities 62,646 56,034 71,423
---------- ----------- ---------
Common stock, $.10 par value,
25,000,000 shares authorized,
6,181,518, 6,169,523 and 6,142,691
shares outstanding,
respectively 618 617 614
Preferred stock, $.10 par value,
2,000,000 shares authorized, no
shares issued - - -
Capital in excess of par 26,281 26,133 25,942
Retained earnings 24,944 19,533 15,955
---------- ----------- ----------
Total Shareholders' Equity 51,843 46,283 42,511
---------- ----------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' $ 144,475 $ 131,027 $ 145,506
EQUITY ========== =========== ==========
</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>
Six Months Ended
July 1, July 2,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $5,411 $1,493
Adjustments to reconcile net income to net
cash (used for) provided by operating
activities:
Depreciation and amortization 1,412 1,898
Increase in finance contracts receivable (17,906) (16,785)
Proceeds from sales of finance contracts 13,152 13,727
Cost of sales of finance contracts 199 389
Net changes in remaining working capital (5,660) 4,620
items
Other 91 183
--------- --------
Net cash (used for) provided by operating (3,301) 5,525
activities --------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (709) (1,525)
Other assets 312 177
--------- --------
Net cash used for investing activities (397) (1,348)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in long-term debt (97) 301
obligations
Increase (decrease) in long-term liabilities 59 309
Proceeds from (repayments of) credit
facility 6,650 (1,679)
Proceeds from issuance of common stock 58 -
--------- --------
Net cash provided by (used for) financing 6,670 (1,069)
activities --------- --------
Net increase in cash 2,972 3,108
Cash, beginning of period 2,570 1,458
--------- --------
Cash, end of period $5,542 $4,566
========= ========
Supplemental disclosure of cash flow information:
Cash paid for the following:
Interest $3,059 $ 2,903
Income Taxes $1,704 $ 33
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 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 and six month periods ended July 1, 1995 and July 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 six months ended July 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 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 6,255,959 and 6,170,707 for the three months ended July 1, 1995 and July
2, 1994, respectively, and 6,229,478 and 6,170,346 for the six months ended
July 1, 1995 and July 2, 1994, respectively.
NOTE 3 - INCOME TAXES
The income tax provision is determined by applying an estimated
annual effective income tax rate to income before income taxes. The
estimated annual effective income tax rate is based on the most recent
annualized forecast of pretax income, permanent book/tax differences, and
tax credits 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):
July 1, December 31,
1995 1994
----------- -----------
Raw materials and supplies $ 3,516 $ 3,711
Work-in-process 8,658 10,252
Finished machines and parts 26,361 24,346
---------- ----------
Total current cost value 38,535 38,309
Adjustment to LIFO basis (16,857) (16,857)
---------- ----------
$ 21,678 $ 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 July 1, 1995 Compared to Three Months Ended July 2, 1994
Net sales for the second quarter of 1995 of $42.7 million were
$814,000, or 2%, higher than the $41.9 million in the comparable period of
1994. Gehl Agriculture sales decreased 4% to $26.4 million in the second
quarter of 1995 from $27.4 million in the second quarter of 1994. This
decrease is reflective of the Company's overall strategy to further reduce
equipment inventory at agricultural dealers and reflects market conditions
slightly less strong than in comparable 1994. Gehl Construction's net sales
increased 13% to $16.3 million in the second quarter of 1995 from $14.5
million in the second quarter of 1994. The Gehl Construction increase
primarily resulted from strong demand for the Company's rough-terrain
telescoping boom forklift and service parts.
Gross profit decreased $157,000, or 1%, during the second quarter of
1995 versus the comparable period of 1994, primarily due to a change in the
product mix of shipments. Gross profit as a percent of net sales decreased
to 29.7% for the second quarter of 1995 from 30.7% in the comparable period
of 1994. Gross profit as a percent of net sales for Gehl Agriculture
decreased to 27.9% for the second quarter of 1995 from 31.2% in the second
quarter of 1994. The primary reasons for the lower percentage were the
impact of a change in the mix of products shipped in the second quarter of
1995 versus products shipped in comparable 1994 and the percentage of export
sales, typically made at a lower gross margin than domestic sales,
constituting a higher portion of second quarter sales in 1995 than in 1994.
The change in mix included a heavier emphasis on shipments of certain
products where vendor cost increases incurred by the Company exceeded price
increases to the Company's customers over the past twelve months. Gross
profit as a percent of net sales for Gehl Construction increased to 32.7% in
the second quarter of 1995 from 29.7% in the second 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 second 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 second 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 $1.3 million, or
14%, during the second quarter of 1995 versus the comparable period of 1994.
The decrease related primarily to reductions from 1994 second quarter
expense levels associated with allowance for doubtful accounts and product
liability costs. As a percent of net sales, selling, general and
administrative expenses decreased to 18.3% during the second quarter of 1995
versus 21.8% in the comparable period of 1994.
Income from operations in the second quarter of 1995 was $4.9 million
versus $3.7 million in the second quarter of 1994. The improvement was due
primarily to a reduction in selling, general and administrative expenses
from 1994 levels.
Interest expense decreased $218,000, or 12%, to $1.7 million in the
second quarter of 1995 from $1.9 million in the second quarter of 1994. The
decrease was a result of a decrease in average debt outstanding to $64.6
million in the second quarter of 1995 versus $76.7 million in the second
quarter of 1994. The impact of the decrease in average debt outstanding was
offset, in part, by an increase in the average rate of interest paid by the
Company. The average interest rate paid rose to 10.2% in the second quarter
of 1995 from 9.6% in the second 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 in
October 1994.
Other expense, net was $42,000 in the second quarter of 1995 versus
$557,000 in the comparable period of 1994. The decrease in expense was
primarily due to a reduction in the costs of selling finance contracts and
from the quarterly revaluation of certain previous sales of finance
contracts made under variable interest rate arrangements, resulting in
income in the second quarter of 1995 versus expense in 1994's second
quarter.
Under generally accepted accounting principles, the Company was not
required to record a federal income tax provision related to either its 1995
or 1994 second quarter operating income due to the existence of net
operating loss carryforwards.
Six Months Ended July 1, 1995 Compared to Six Months Ended July 2, 1994
Net sales for the first six months of 1995 of $81.0 million were $4.8
million, or 6%, higher than the $76.2 million in the comparable period of
1994. Gehl Agriculture's net sales decreased slightly to $50.7 million in
the first six months of 1995 from $51.1 million in the first six months of
1994. Gehl Construction's net sales increased 21% to $30.3 million in the
first six months of 1995 from $25.1 million in the first six months of 1994.
The Gehl Construction increase resulted from strong demand for the Company's
products, particularly for skid steer loaders, rough-terrain telescoping
boom forklifts and service parts.
Gross profit increased $830,000, or 4%, during the first six months of
1995 versus the comparable period of 1994, primarily due to the increased
sales volume. Gross profit as a percent of net sales decreased to 28.9% for
the first six months of 1995 from 29.6% 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 26.7% for the first
six months of 1995 from 30.1% in the comparable period of 1994. The primary
reason for the lower percentage was the impact of a change in the mix of
products shipped in the first six months of 1995 versus products shipped in
comparable 1994. The change in mix included a higher level of 1995
shipments of certain products where cost increases incurred by the Company
exceeded price increases over the past twelve months and a heavier emphasis
on shipments of certain discontinued products at little or no gross profit.
Gross profit as a percent of net sales for Gehl Construction increased to
32.6% in the first six months of 1995 from 28.6% in the first six months 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 six months 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 the first six months 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 $1.6 million, or
9%, during the first six months of 1995 versus the comparable period of
1994. The decrease related primarily to reductions, from 1994 first six
month 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 19.1% during the first six months of 1995 versus 22.4%
in the comparable period of 1994.
Income from operations in the first six months of 1995 was $7.9 million
versus $5.5 million in the comparable period of 1994. The improvement was
due primarily to a reduction in selling, general and administrative expenses
and increased sales volume from 1994 levels.
Interest expense decreased $455,000, or 12%, to $3.2 million in the
first six months of 1995 from $3.6 million in the first six months of 1994.
The decrease was a result of a decrease in average debt outstanding to $61.9
million in the first six months of 1995 versus $75.7 million in the
comparable period 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 10.1% for the first six months of 1995 from 9.4% in the first six months
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 in October 1994.
Other expense, net was $216,000 in the first six months of 1995 versus
$1.1 million in the comparable period of 1994. The decrease in expense
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 July 1, 1995 than at December 31, 1994, resulted
in $73,000 of income from revaluations performed in the first six months of
1995. The quarterly revaluations performed during the first six months of
1994 had resulted in $420,000 of expense. The decrease in other expense,
net was also the result of a $190,000 reduction in costs of selling finance
contracts. The remainder of the decrease in other expense, net was the
result of Canadian foreign exchange income of $39,000 recorded in the first
six months of 1995 versus Canadian foreign exchange losses of $143,000
occurring in the comparable period of 1994.
Under generally accepted accounting principles, the Company was not
required to record a federal income tax provision related to the net
operating income recorded in the first six months of either 1995 or 1994 due
to the existence of net operating loss carryforwards.
Financial Condition
The Company's working capital was $85.4 million at July 1, 1995, as
compared to $73.9 million at December 31, 1994, and $83.4 million at July 2,
1994. The increase since December 31, 1994 resulted primarily from seasonal
increases in accounts receivable and finance contracts receivable financed
with borrowings under the Company's line of credit facility.
The Company's cash flow used for operating activities in the first six
months of 1995 was $3.3 million versus $5.5 million provided by operating
activities in comparable 1994. The second quarter 1995 cash flow provided
by operations was $4.1 million as compared to 1994's second quarter of $11.6
million provided by operations. The 1995 second quarter and six month cash
flow decreases from 1994 were due primarily to lower year-to-year reductions
of accounts receivable, as the levels of accounts receivable have been
reduced to more appropriate levels.
Capital expenditures for property, plant and equipment during the first
six months of 1995 were approximately $709,000. Outstanding commitments as
of July 1, 1995 totaled approximately $517,000. The Company expects to make
approximately $3.0 million of capital expenditures during 1995.
As of July 1, 1995, the weighted average interest rate paid by the
Company on outstanding borrowings under its line of credit facility was
9.6%. The Company had available unused borrowing capacity of $20.2 million,
$19.2 million, and $18.1 million under the line of credit facility at July
1, 1995, December 31, 1994, and July 2, 1994, respectively. At July 1,
1995, December 31, 1994, and July 2, 1994, the borrowings outstanding under
the line of credit facility were $52.5 million, $45.9 million and $52.3
million, respectively. Total long-term debt outstanding was $61.4 million
at July 1, 1995, a $10.0 million, or 14%, reduction from $71.4 million at
July 2, 1994.
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 July 1, 1995, Gehl serviced $58.3 million
of such contracts, of which $47.8 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 1, 1995 was $51.8 million. This was $9.3
million higher than the $42.5 million of shareholders' equity at July 2,
1994, due primarily to income earned from July 3, 1994 through July 1, 1995.
<PAGE>
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 27, 1995,
Fred M. Butler, William D. Gehl and John W. Splude were elected as directors
of the Company for terms expiring in 1998. The following table sets forth
certain information with respect to the election of directors at the annual
meeting:
Shares Withholding
Name of Nominee Shares Voted For Authority
Fred M. Butler 5,146,179 44,660
William D. Gehl 5,141,611 49,228
John W. Splude 5,145,954 44,885
The following table sets forth the other directors of the Company whose
terms of office continued after the 1995 annual meeting:
Year in Which
Name of Director Term Expires
Roger E. Secrist 1996
Richard G. Sim 1996
John W. Findley 1997
John W. Gehl 1997
Arthur W. Nesbitt 1997
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 First Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
(formerly known as ITT Commercial Finance Corp.) and Gehl
Company and its subsidiaries, dated May 10, 1995
27 Financial Data Schedule [included in the EDGAR filing only]
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended July 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: July 31, 1995 By: /s/ William D. Gehl
William D. Gehl
President and Chief
Executive Officer
Date: July 31, 1995 By: /s/ Kenneth F.Kaplan
Kenneth F. Kaplan
Vice President of Finance and
Treasurer (Chief Financial
and Accounting Officer)
<PAGE>
GEHL COMPANY
FORM 10-Q
July 1, 1995
EXHIBIT INDEX
Exhibit
No. Document Description
4.1 First Amendment to Amended and Restated Loan and Security Agreement by
and between Deutsche Financial Services (formerly known as ITT
Commercial Finance Corp.) and Gehl Company and its subsidiaries, dated
May 10, 1995.
27 Financial Data Schedule [included in the EDGAR filing only]
<PAGE>
FIRST AMENDMENT TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
This Amendment is made to that certain Amended and Restated
Loan and Security Agreement between Gehl Company and its
subsidiaries/divisions including but not limited to Hedlund
Martin, Inc. and Gehl Power Products, Inc. (individually and
collectively, "Gehl Company") and Deutsche Financial Services
Corporation (formerly known as ITT Commercial Finance Corp.)
("DFS") dated as of October 1, 1994, as amended ("Agreement").
FOR VALUE RECEIVED, DFS and Gehl Company agree as follows:
1. All references in the Agreement to "ITT: will be deemed
to be references to "DFS".
2. Section 2.1(a) of the Agreement is hereby restated in
its entirety to read as follows:
"(a) `Maximum Line of Credit': In consideration of
Gehl Company's performance of its Obligations and
subject to Sections 3 and 4, DFS grants to Gehl
Company separate lines of credit of (a) SIXTY-
EIGHT MILLION FIVE HUNDRED THOUSAND UNITED STATES
DOLLARS ($68,500,000.00 U.S.) (the `U.S. Line'),
and (b) that fluctuating amount of Canadian
Dollars which, from day-to-day, shall equal, based
on the daily noon spot exchange rate of the Royal
Bank of Canada (the `Exchange Rate') SIX MILLION
FIVE HUNDRED THOUSAND UNITED STATES DOLLARS
($6,500,000.00 U.S.) (the `Canadian line') for the
period commencing on the execution of this
Agreement until December 31, 1997. Such lines of
credit are collectively called the `Maximum Line
of Credit'; loans under the U.S. Line are called
`U.S. Loans'; and loans under the Canadian Line
are called `Canadian Loans'. U.S. Loans shall be
repayable only in United States Dollars and
Canadian Loans shall be repayable only in Canadian
Dollars. Gehl Company agrees that for purposes of
determining loan availability and over-advance
positions, all outstanding Canadian Loans shall be
valued daily, at the then current Exchange Rate
(for example: if on January 1, Gehl Company
borrowed $8,500,000 Canadian which at the time was
equivalent to $6,500,000 U.S., and on January 3,
the Exchange Rate changed such that $8,500,000
Canadian was then valued at $7,000,000 U.S., Gehl
Company will be deemed over-advanced by $500,000).
Any over-advance will be immediately repayable by
Gehl Company upon demand by DFS. In determining
credit available at any given time for U.S. Loans
pursuant to the provisions of Sections 3.2 and 4.2
or Canadian Loans pursuant to the provisions of
Section 3.2, Canadian Loans may be made only with
respect to Eligible Accounts arising from sales
payable in Canadian Dollars, and U.S. Loans may be
made only with respect to Eligible Accounts,
including, but not limited to, Eligible Retail
Accounts, arising from sale payable in United
States dollars and Eligible Inventory. Gehl
Company agrees that all reports, agings, records
and other information provided by it pursuant to
this Agreement, including without limitation,
those provided pursuant to Section 3.1, shall, in
form and detail reasonably satisfactory to DFS,
separately identify Gehl Company's Accounts
payable in Canadian Dollars from those payable in
United States Dollars."
3. Section 2.1(b) of the Agreement is hereby restated in
its entirety to read as follows:
"(b) Supplemental Line of Credit. DFS grants to Gehl
Company a Supplemental Line of Credit in an amount
not to exceed Twenty Five Million Dollars
($25,000,000.00) of the U.S. Line."
4. The first sentence of Section 2.3 of the Agreement is
hereby restated in its entirety to read as follows:
"Gehl Company acknowledges that DFS may, in its sole
discretion, make any Canadian Loan by causing its
Canadian affiliate, Deutsche Financial Services Canada
Corporation, or any other affiliate of DFS ("DFS
Canada") to fund or make advances of such loans on DFS'
behalf, or to make or continue such Canadian Loans
directly."
All references in the Agreement to "ITT Canada" will be
deemed to be references to "DFS Canada".
5. Section 4.2 of the Agreement is hereby restated in its
entirety to read as follows:
"4.2 Available Credit. On receipt of each Inventory
Schedule and Retail Account Schedule, DFS will
credit Gehl Company at the following percentages
of the net amount of the Eligible Inventory and
Eligible Retail Accounts, respectively, listed in
such Schedule:
Finished Goods 75%
Service Parts 25%
Eligible Retail Accounts (except Eligible
Repurchased Retail Accounts) 75%
Eligible Repurchased Retail Accounts 50%
DFS will loan Gehl Company, on request, such
amounts so credited or a part thereof as provided
by the terms of Section 2.1 and this section;
provided, however, that (i) the outstanding
principal balance of all advances or loans made on
Eligible Repurchased Retail Accounts will at no
time exceed One Million Dollars ($1,000,000.00),
(ii) the aggregate outstanding principal balance
of all advances or loans made on Finished Goods
and Service Parts will at no time exceed Fourteen
Million Dollars ($14,000,000.00), and (iii) the
outstanding principal balance of all advances or
loans made on Eligible Retail Accounts (except
Eligible Repurchased Retail Accounts) will at no
time exceed Ten Million Dollars ($10,000,000.00).
No advances or loans need be made by DFS if Gehl
Company is in Default."
6. All other terms and provisions of the Agreement, to the
extent not inconsistent with the foregoing, are ratified and
remain unchanged and in full force and effect.
IN WITNESS WHEREOF, Gehl Company and DFS have executed this
Amendment on this 10th day of May, 1995.
GEHL COMPANY
ATTEST: M. Mulcahy/s/ By: K.F. Kaplan/s/
Secretary Title: Vice President
HEDLUND MARTIN, INC.
ATTEST: M. Mulcahy/s/ By: K.F. Kaplan/s/
Secretary Title: Treasurer
GEHL POWER PRODUCTS, INC.
ATTEST: M. Mulcahy/s/ By: K.F. Kaplan/s/
Secretary Title: Treasurer
DEUTSCHE FINANCIAL SERVICES
CORPORATION
By: Thomas R. Meredith/s/
Title: Regional Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at July 1, 1995 and consolidated
statements of income for the six month period ended July 1, 1995 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> JUL-1-1995
<CASH> 5542
<SECURITIES> 0
<RECEIVABLES> 84602
<ALLOWANCES> 0<F1>
<INVENTORY> 21678
<CURRENT-ASSETS> 115363
<PP&E> 52157
<DEPRECIATION> 32280
<TOTAL-ASSETS> 144475
<CURRENT-LIABILITIES> 29986
<BONDS> 61253<F2>
<COMMON> 618
0
0
<OTHER-SE> 51225
<TOTAL-LIABILITY-AND-EQUITY> 144475
<SALES> 80998
<TOTAL-REVENUES> 80998
<CGS> 57621
<TOTAL-COSTS> 57621
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3188
<INCOME-PRETAX> 5461
<INCOME-TAX> 50
<INCOME-CONTINUING> 5411
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5411
<EPS-PRIMARY> .87
<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>
