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 30, 1996
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 30, 1996
Common Stock, $.10 Par Value 6,142,372
<PAGE>
GEHL COMPANY
FORM 10-Q
March 30, 1996
REPORT INDEX
Page No.
PART I. - FINANCIAL INFORMATION:
Condensed Consolidated Statements of Income for the
Three-Month Periods Ended March 30, 1996 and
April 1, 1995 . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at March 30, 1996,
December 31, 1995, and April 1, 1995 . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Three-Month Periods Ended March 30, 1996 and
April 1, 1995 . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . 10
<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 Ended
March 30, April 1,
1996 1995
<S> <C> <C>
NET SALES $ 39,165 $ 38,268
Cost of goods sold 28,149 27,588
-------- --------
GROSS PROFIT 11,016 10,680
Selling, general and
administrative expenses 8,033 7,622
-------- ---------
INCOME FROM OPERATIONS 2,983 3,058
Interest expense (1,041) (1,516)
Interest income 409 463
Other expense, net (52) (167)
--------- ---------
INCOME BEFORE INCOME TAXES 2,299 1,838
Income tax provision 403 25
--------- ---------
NET INCOME $ 1,896 $ 1,813
======== =======
EARNINGS PER SHARE $ .31 $ .29
</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>
March 30, December 31, April 1,
1996 1995 1995
(Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C>
Cash $ 3,740 $ 3,266 $ 4,107
Accounts receivable-net 71,951 69,087 78,372
Finance contracts receivable-net 7,214 4,817 5,190
Inventories 22,856 23,320 22,898
Prepaid expenses and other assets 1,401 1,676 2,590
--------- --------- ---------
Total Current Assets 107,162 102,166 113,157
--------- --------- ---------
Property, plant and equipment-net 20,438 20,315 20,036
Finance contracts receivable-net, non-
current 4,228 2,899 3,081
Other assets 8,337 8,118 5,643
---------- -------- ---------
TOTAL ASSETS $ 140,165 $ 133,498 $ 141,917
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt
obligations $ 167 $ 197 $ 179
Accounts payable 14,191 14,083 14,377
Accrued liabilities 16,126 15,281 14,153
--------- --------- ---------
Total Current Liabilities 30,484 29,561 28,709
--------- --------- ---------
Line of credit facility 42,365 37,848 54,988
Long-term debt obligations 8,785 8,818 8,766
Other long-term liabilities 1,485 1,592 1,306
--------- --------- ---------
Total Long-Term Liabilities 52,635 48,258 65,060
--------- --------- ---------
Common stock, $.10 par value,
25,000,000 shares authorized,
6,218,765, 6,216,765 and
6,171,189 shares issued,
respectively 622 622 617
Preferred stock, $.10 par value,
2,000,000 shares authorized, no
shares issued - - -
Capital in excess of par 26,586 26,580 26,185
Retained earnings 30,373 28,477 21,346
--------- --------- ---------
57,581 55,679 48,148
Less: Treasury stock (76,393 shares-
at March 30, 1996) at cost (535) - -
--------- --------- ---------
Total Shareholders' Equity 57,046 55,679 48,148
--------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 140,165 $ 133,498 $ 141,917
========== ========== ==========
</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
March 30, April 1,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 1,896 $ 1,813
Adjustments to reconcile net income to net cash
(used for) provided by operating activities:
Depreciation and amortization 675 718
Increase in finance contracts receivable (8,765) (7,692)
Proceeds from sales of finance contracts 5,028 4,889
Cost of sales of finance contracts 11 123
Net changes in remaining working capital items (2,087) (7,311)
Other - 50
--------- ---------
Net cash (used for) provided by operating
activities (3,242) (7,410)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (760) (234)
Other assets 505 155
--------- ---------
Net cash (used for) provided by investing
activities (255) (79)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in long-term debt obligations (63) (55)
Increase (decrease) in long-term liabilities 46 (28)
Proceeds from line of credit facility 4,517 9,109
Treasury stock purchase (535) -
Proceeds from issuance of common stock 6 -
--------- ---------
Net cash provided by financing activities 3,971 9,026
--------- ---------
Net increase in cash 474 1,537
Cash, beginning of period 3,266 2,570
--------- ---------
Cash, end of period $ 3,740 $ 4,107
=========== ===========
Supplemental disclosure of cash flow
information:
Cash paid for the following:
Interest $ 1,007 $ 1,393
Income Taxes $ 299 $ 939
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 30, 1996
(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 30, 1996 and April 1, 1995 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 March 30, 1996
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, 1995 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 shares outstanding 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 6,203,045
and 6,202,996 for the three months ended March 30, 1996 and April 1, 1995,
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.
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):
March 30, December 31, April 1,
1996 1995 1995
--------- ------------ ---------
Raw materials and supplies $ 3,898 $ 4,151 $ 3,803
Work in process 9,292 9,893 9,830
Finished machines and parts 28,539 28,149 26,122
------- ------ -------
Total current cost value 41,729 42,193 39,755
Adustment to LIFO basis (18,873) (18,873) (16,857)
------- --------- --------
$22,856 $23,320 $22,898
======== ========= =========
NOTE 5 - CONTINGENCIES
The Company has received notification from the City of West Bend,
Wisconsin that it may have some financial responsibility with respect to the
closure of a landfill site operated 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 March 30, 1996 Compared to Three Months Ended April 1, 1995
Net sales for the first quarter of 1996 of $39.2 million were $897,000,
or 2%, higher than the $38.3 million in the comparable period of 1995. Gehl
Construction's net sales increased 22% to $17.1 million in the first quarter
of 1996 from $14.0 million in the first quarter of 1995. The Gehl
Construction increase resulted from increased demand for the Company's
products, particularly rough-terrain telescopic forklifts and skid steer
loaders. Gehl Agriculture sales decreased 9% to $22.1 million in the first
quarter of 1996 from $24.3 million in the first quarter of 1995. The decrease
was due in part to no new product introductions in the first quarter of 1996,
contrasted with the 1995 first quarter introduction of two redesigned product
lines. The decrease was also due in part to 1995's first quarter containing
approximately $1 million of sales of products which have since been
discontinued.
Gross profit increased $336,000, or 3%, during the first quarter of 1996
versus the comparable period of 1995, due primarily to increased sales volume.
Gross profit as a percent of net sales increased slightly to 28.1% for the
first quarter of 1996 from 27.9% in the comparable period of 1995. The shift
in product mix of sales to Gehl Construction resulted in the overall Company
increase in gross profit as a percent of net sales. Gross profit as a percent
of net sales for Gehl Construction decreased to 32.0% in the first quarter of
1996 from 32.4% in the first quarter of 1995. Gross profit as a percent of net
sales for Gehl Agriculture decreased to 24.4% in the first quarter of 1996
from 25.3% for the first quarter of 1995. The primary reason for the lower
Gehl Agriculture percentage was increased unit costs due to lower overhead
absorption associated with reduced levels of production.
Selling, general and administrative expenses increased $411,000, or 5%,
during the first quarter of 1996 versus the comparable period of 1995. As a
percent of net sales, selling, general and administrative expenses increased
to 20.5% during the first quarter of 1996 versus 19.9% in the comparable
period of 1995. Greater investment in research and development and in selling
expenses accounted for the percentage increase.
Income from operations in the first quarter of 1996 of $3.0 million was
2% lower than the $3.1 million for the first quarter of 1995.
Interest expense decreased $475,000, or 31%, to $1.0 million in the first
quarter of 1996 from $1.5 million in the first quarter of 1995. The decrease
was a result of a reduction in average debt outstanding to $50.0 million in
the first quarter of 1996 versus $59.6 million in the first quarter of 1995,
combined with a decrease in the average rate of interest paid by the Company
to 8.1% in the first quarter of 1996 from 9.8% in the comparable period of
1995. The decrease in the average debt outstanding was primarily the result
of cash flow generated from reduced accounts receivable levels and increased
shareholders' equity over the past twelve months. The rate decrease was due
to the impact of a reduced interest rate structure negotiated by the Company
in conjunction with the December 1, 1995 amendment to its line of credit
facility.
Other expense, net was $52,000 in the first quarter of 1996 versus
$167,000 in the first quarter of 1995. The reduction was primarily due to
lower costs of selling finance contracts receivable in the first quarter of
1996 versus the comparable period of 1995. The reduction in the costs of such
sales was primarily the result of lower yields negotiated by the Company with
the third party purchasers.
The Company's effective income tax rate was 17.5% for the first quarter
of 1996. 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. The Company has now utilized substantially all of its federal
net operating loss carryforwards.
Financial Condition
The Company's working capital was $76.7 million at March 30, 1996, as
compared to $72.6 million at December 31, 1995, and $84.4 million at April 1,
1995. The increase since December 31, 1995 resulted primarily from seasonal
increases in accounts receivable and finance contracts receivables. The
decrease from April 1, 1995 was due primarily to a reduction in accounts
receivable.
The Company's first quarter 1996 cash flow used for operating activities
was $3.2 million versus $7.4 million used for operating activities in
comparable 1995. The first quarter cash flow from operating activities is
normally negative due to seasonal increases in accounts receivables and
inventories.
Capital expenditures for property, plant and equipment during the first
quarter of 1996 were approximately $760,000. Outstanding commitments as of
March 30, 1996 totaled approximately $468,000. The Company plans to make
approximately $4.0 million of capital expenditures during 1996.
As of March 30, 1996, the weighted average interest rate paid by the
Company on outstanding borrowings under its line of credit facility was 7.5%.
The Company had available unused borrowing capacity of $28.9 million, $27.4
million and $18.0 million under the line of credit facility at March 30, 1996,
December 31, 1995, and April 1, 1995, respectively. At March 30, 1996,
December 31, 1995, and April 1, 1995, the borrowings outstanding under the
line of credit facility were $42.4 million, $37.8 million and $55.0 million,
respectively.
The sale of finance contracts is an important component of the Company's
overall liquidity. Gehl has arrangements with several financial institutions
and financial service companies to sell, with recourse, its finance contracts
receivable. The Company continues to service all contracts whether or not
sold. At March 30, 1996, Gehl serviced $56.2 million of such contracts, of
which $44.2 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 30, 1996 was $57.0 million. This was $8.9
million higher than the $48.1 million of shareholders' equity at April 1,
1995, due primarily to income earned from April 2, 1995 through March 30,
1996.
<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 23, 1996
[Incorporated by reference to Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1995]
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, 1995]
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 30, 1996.
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 24, 1996 By: /s/ William D. Gehl
William D. Gehl
President and Chief
Executive Officer
Date: April 24, 1996 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
March 30, 1996
EXHIBIT INDEX
Exhibit
Number Document Description
3.1 Amendment to Gehl Company By-laws, dated February 23, 1996
[Incorporated by reference to Exhibit 3.2 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995]
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, 1995]
27 Financial Data Schedule [EDGAR version only]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at March 30, 1996 and consolidated
statements of income for the three month period ended March 30, 1996 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-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> MAR-30-1996
<CASH> 3740
<SECURITIES> 0
<RECEIVABLES> 79165
<ALLOWANCES> 0<F1>
<INVENTORY> 22856
<CURRENT-ASSETS> 107162
<PP&E> 54368
<DEPRECIATION> 33930
<TOTAL-ASSETS> 140165
<CURRENT-LIABILITIES> 30484
<BONDS> 51150<F2>
<COMMON> 622
0
0
<OTHER-SE> 56424
<TOTAL-LIABILITY-AND-EQUITY> 140165
<SALES> 39165
<TOTAL-REVENUES> 39165
<CGS> 28149
<TOTAL-COSTS> 28149
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1041
<INCOME-PRETAX> 2299
<INCOME-TAX> 403
<INCOME-CONTINUING> 1896
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1896
<EPS-PRIMARY> .31
<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>
