SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K/A
AMENDMENT TO CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_________________________
Date of Report
(Date of earliest
event reported): October 2, 1997
_____________Gehl Company________________
(Exact name of registrant as specified in its charter)
Wisconsin 0-18110 39-0300430
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
143 Water Street, West Bend, Wisconsin 53095
(Address of principal executive offices, including zip code)
(414) 334-9461
(Registrant s telephone number)
<PAGE>
The undersigned registrant hereby amends the following item of its Current
Report on Form 8-K filed October 17, 1997.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
The following financial statements of Brunel America, Inc. are
attached hereto as Appendix A:
1. Report of Independent Accountants
2. Consolidated Balance Sheet at June 30, 1997
3. Consolidated Statement of Income for the year ended June 30, 1997
4. Consolidated Statement of Stockholder's Equity for the year
ended June 30, 1997
5. Consolidated Statement of Cash Flows for the year ended June
30, 1997
6. Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information.
The following combined pro forma financial information is attached
hereto as Appendix B:
1. Unaudited Pro Forma Combined Statement of Operations for the year
ended December 31, 1996
2. Unaudited Pro Forma Combined Statement of Operations for the six
months ended June 28, 1997
3. Unaudited Pro Forma Combined Balance Sheet at June 28, 1997
4. Notes to Unaudited Pro Forma Combined Financial Statements
(c) Exhibits. The following exhibits are being filed herewith:
(2) Stock Purchase Agreement, dated as of September 12, 1997,
between Gehl Company and Brunel Holdings, plc. Schedules to the
Stock Purchase Agreement have not been filed herewith. Gehl
agrees to furnish a copy of any omitted schedule to the
Commission upon request. *
(4.1) Amendment to Amended and Restated Loan and Security Agreement
by and between Deutsche Financial Services Corporation, f/k/a
ITT Commercial Finance Corp., Deutsche Financial Services
Canada Corporation and Gehl Company and its subsidiaries,
dated October 2, 1997. *
(23) Consent of Price Waterhouse LLP
______________________________________
* The schedules/exhibits to this document are not being filed herewith.
They were previously filed in the Form 8-K originally filed on
October 17, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on behalf
by the undersigned hereunto duly authorized.
GEHL COMPANY
By: /s/William D. Gehl
William D. Gehl
Chairman of the Board,
President And Chief
Executive Officer
DATE: December 16, 1997
<PAGE>
BRUNEL AMERICA, INC.
(A wholly-owned subsidiary of Brunel Holdings plc)
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
<PAGE>
Report of Independent Accountants
November 7, 1997
To the Board of Directors
and Stockholder of
Brunel America, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of stockholder's equity and of cash
flows present fairly, in all material respects, the financial position of
Brunel America, Inc. and its subsidiaries at June 30, 1997, and the results
of their operations and their cash flows for the year then ended in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Minneapolis, Minnesota
<PAGE>
BRUNEL AMERICA, INC.
CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
ASSETS
Current assets:
Cash and equivalents $3,136,259
Accounts receivable, net of allowance of $162,000 10,556,159
Due from Parent and other affiliates 3,765,032
Inventories 4,589,145
Prepaid expenses 94,102
----------
Total current assets 22,140,697
Property, plant and equipment:
Land, buildings and improvements 907,530
Machinery and equipment 4,877,309
Furniture and fixtures 745,080
----------
6,529,919
Less accumulated depreciation (2,947,348)
----------
Net property, plant and equipment 3,582,571
Notes receivable from Parent 456,000
Deferred tax asset 1,015,429
Net assets of discontinued operations 1,120,112
Other assets 22,895
-----------
$ 28,337,704
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current installments of capital lease obligations $ 41,887
Current portion of long-term debt 331,159
Accounts payable 7,387,720
Accrued expenses:
Wages, commissions and profit sharing 678,427
Product warranties 642,000
Other 1,267,956
Deferred income taxes 153,123
----------
Total current liabilities 10,502,272
Long-term liabilities:
Capital lease obligations 28,236
Long-term debt 1,124,810
Notes payable to affiliates 6,760,000
----------
Total long-term liabilities 7,913,046
----------
Total liabilities 18,415,318
Commitments and contingent liabilities
Stockholder's equity:
Common stock - par value $ 1.00 per share;
3,000 shares authorized;
1,529 shares issued and outstanding 1,529
Paid-in capital 35,198,471
Accumulated deficit (25,277,614)
-----------
Total stockholder's equity 9,922,386
-----------
$ 28,337,704
============
See notes to consolidated financial statements.
<PAGE>
BRUNEL AMERICA, INC.
CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED JUNE 30, 1997
Net sales $ 57,493,530
Cost of sales 43,973,284
------------
Gross profit 13,520,246
------------
Selling, general and administrative expenses 9,548,377
------------
Income from operations 3,971,869
------------
Other income (expense):
Discount on sale of accounts receivable (1,012,333)
Other interest expense (964,883)
Management fee paid to affiliate (240,000)
Other income 123,562
------------
Total other expense (2,093,654)
------------
Income from continuing operations before income taxes 1,878,215
Provision for income taxes attributable to
continuing operations (609,915)
------------
Income from continuing operations 1,268,300
------------
Discontinued operations:
Loss from discontinued operations,
net of income taxes (including
$316,579 related to income taxes on disposition
of subsidiaries) (123,561)
------------
Net income $ 1,144,739
============
See notes to consolidated financial statements.
<PAGE>
BRUNEL AMERICA, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
YEAR ENDED JUNE 30, 1997
Common Paid-in Accumulated
Stock Capital Deficit Total
Balance at June 30, 1996 $ 1,529 $ 35,198,471 $(25,127,768) $10,072,232
Dividend to Parent from
continuing operations (1,174,585) (1,174,585)
Dividend to Parent from
discontinued operations (120,000) (120,000)
Net income for the year 1,144,739 1,144,739
-------- ------------- ------------ ----------
Balance at June 30, 1997 $ 1,529 $ 35,198,471 $(25,277,614) $9,922,386
======== ============= ============ ==========
See notes to consolidated financial statements.
<PAGE>
BRUNEL AMERICA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 1997
Cash flows from operating activities:
Net income $ 1,144,739
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 706,615
Deferred income taxes 609,915
Change in the net assets of discontinued operations 95,241
Changes in current assets and liabilities:
Accounts receivable 808,251
Inventories (43,204)
Prepaid expenses 19,595
Due from affiliate (818,777)
Other current assets 2,564
Accounts payable 400,349
Accrued expenses 334,170
Affiliated payables 6,148
------------
Total adjustments 2,120,867
------------
Net cash provided by operating activities 3,265,606
------------
Cash flows from investing activities:
Additions to property and equipment (866,737)
------------
Net cash used in investing activities (866,737)
------------
Cash flows from financing activities:
Proceeds from notes payable 176,550
Payments on notes payable (304,976)
Affiliated notes payable 700,000
Capital lease obligations (38,417)
Dividend paid to Parent (1,294,585)
------------
Net cash used in financing activities (761,428)
------------
Net increase in cash and equivalents 1,637,441
Cash and equivalents at beginning of year 1,498,818
------------
Cash and equivalents at end of year $ 3,136,259
============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 987,678
Income taxes $ 18,936
See notes to consolidated financial statements
<PAGE>
BRUNEL AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Brunel America, Inc. (the Company) is a wholly-owned subsidiary of Brunel
Holdings plc (the Parent). The Company's primary operations consist of the
manufacture and distribution of skid steer loaders through its wholly-owned
subsidiary Mustang America, Inc. (Mustang). The Company's other
subsidiaries have been engaged in other lines of business primarily related
to the web processing industry.
Pursuant to a Stock Purchase Agreement dated September 12, 1997, Brunel
Holdings plc entered into an agreement to sell all outstanding common stock
of the Company to Gehl Company (Gehl). At the date of this transaction,
the common stock of all non-Mustang subsidiaries of the Company was
distributed to Brunel Holdings plc. In accordance with Emerging Issues
Task Force Statement 95-18 (EITF 95-18), the assets and results of
operations of all non-Mustang subsidiaries of the Company have been
reported as discontinued operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from
those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of Brunel
America, Inc. and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash, trade
receivables and payables for which the current carrying amounts approximate
fair market value. Additionally, the borrowing rates currently available
to the Company approximate current rates for debt agreements with similar
terms and average maturities.
Revenue Recognition
Sales of skid steers and replacement parts by Mustang are generally
unconditional sales that are recorded once product is shipped and invoiced
to independently owned and operated dealers.
Accounts receivable from dealers have been classified as current assets in
accordance with industry practice. Credit may be granted to a dealer for a
period of up to twelve months; credit extended beyond six months is
generally interest bearing. Mustang is a secured creditor and holds a
first priority secured interest in a majority of the equipment until the
sale of the related equipment by the dealer. Payment is required upon the
sale of such equipment by the dealer. Accounts receivable also includes
$446,991 of notes receivable financed by Mustang through its retail
financing program.
Cash Equivalents
The Company considers cash on hand and demand deposits to be cash
equivalents.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to credit risk
consist primarily of accounts receivable. The Company grants credit to
customers in the ordinary course of business. No single dealer, customer
or region represents a significant concentration of credit risk.
Inventories
The Company values its inventories at the lower of cost or market.
Inventory cost is determined by the last-in, first-out (LIFO) method for
manufactured inventory and service parts.
Property, Plant and Equipment
Property, plant and equipment is stated at cost or, in the case of
capitalized leases, at the present value of the future lease payments.
Depreciation and amortization are computed by the straight-line method over
the estimated useful lives of the assets and, in the case of capitalized
leases, the shorter of the lease term or estimated useful life of the
asset. Maintenance and repair costs are expensed as incurred.
Depreciation and amortization are computed using the following estimated
useful lives:
Useful Lives
Buildings and improvements 5 to 25 years
Machinery and equipment 3 to 10 years
Furniture and fixtures 3 to 5 years
Product Warranties
Under the Company's product warranty program, the Company provides a
warranty of one year under certain conditions. Costs associated with this
program are recorded at the date of the related sale and determined on the
basis of estimated future costs.
Income Taxes
The Company accounts for income taxes in accordance with Financial
Accounting Standard No. 109 (FAS 109), "Accounting for Income Taxes."
Under FAS 109, deferred income taxes are recognized based on the difference
between financial statement amounts and the tax basis of assets and
liabilities.
NOTE 3 - INVENTORIES
The Company has the following inventories at June 30, 1997:
Finished machines - manufactured $ 1,514,795
Work-in-process 110,217
Raw materials 2,635,055
Service parts 1,147,667
-----------
5,407,734
LIFO reserve (818,589)
-----------
$ 4,589,145
===========
NOTE 4 - NOTES PAYABLE
Mustang has a $5,000,000 conditional revolving line of credit with a
financial institution with interest payable monthly at the prime rate plus
1%. The line is secured by Mustang's inventory, and borrowings are due on
demand. The agreement includes certain financial covenants with which
Mustang has complied as of June 30, 1997. The agreement expires on
December 31, 1999. There were no borrowings outstanding under this credit
facility at June 30, 1997.
NOTE 5 - LEASES
Mustang is obligated under several noncancellable capital leases that
expire through various dates to 1999. At June 30, 1997, the amount of
leased capital equipment is as follows:
Equipment cost $108,540
Less accumulated amortization (38,417)
--------
$ 70,123
========
Mustang also is obligated under operating leases for certain equipment
expiring through 2002.
Future minimum lease payments under capital and operating leases at
June 30, 1997 are as follows:
Operating Capital
Leases Leases
Year Ending June 30,
1998 $ 118,196 $46,332
1999 89,339 29,118
2000 63,209
2001 45,950
2002 15,558
----------- -------
Total minimum lease payments $ 332,252 75,450
Less amount representing interest =========== (5,327)
-------
Present value of net minimum capital
lease payments 70,123
Less current installments (41,887)
-------
$28,236
=======
Rental expense for the year ended June 30, 1997 was $211,113.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of notes payable of $1,455,969 by Mustang to
financial institutions. The notes bear interest from 7.75% to 8.75% and
are due in equal monthly installments through July 1, 2001. The notes are
secured by various equipment of Mustang. The notes include certain
financial covenants with which Mustang has complied at June 30, 1997.
Maturities of long-term debt are as follows:
1998 $ 467,659
1999 467,659
2000 467,659
2001 232,542
2002 44,749
Thereafter 7,180
----------
1,687,448
Less amount representing interest (231,479)
----------
1,455,969
Less current portion (331,159)
----------
$ 1,124,810
==========
NOTE 7 - RELATED-PARTY TRANSACTIONS AND BALANCES
A summary of notes payable, notes receivable and due from affiliates at
June 30, 1997 is as follows:
Note receivable from the Parent, payable on demand.
Interest at LIBOR plus 1.875% (5.69% at June 30, 1997). $ 456,000
===========
Due from Parent and other affiliates:
Brunel Holdings plc (Parent) $ 822,739
Receivable from operations classified as
discontinued operations
Cameron Converting Inc. 2,442,293
Spooner Inc. 500,000
-----------
$ 3,765,032
===========
Note payable to the Parent, payable on demand.
Interest at prime rate plus 2% (8.5% at June 30, 1997). $ 6,060,000
Note payable with the Parent, payable on demand.
No stated interest rate. 700,000
-----------
Total affiliated notes payable $ 6,760,000
===========
The Company paid $240,000 in management fees to the Parent during the year
ended June 30, 1997.
NOTE 8 - DISCONTINUED OPERATIONS
Effective October 1, 1997, the Parent sold all outstanding shares of common
stock of the Company to Gehl. Immediately prior to the sale, the Company
spun-off all the common stock of non-Mustang subsidiaries engaged in the
web processing industry, which consisted primarily of three wholly-owned
subsidiaries, Wadkin North America, Spooner Industries, Inc. and Cameron
Converting, Inc., to Brunel Holdings plc (Parent).
In accordance with APB Opinion No. 30, "Reporting the Results of
Operations," and EITF 95-18, all non-Mustang subsidiaries have been
reported as discontinued operations. At June 30, 1997, assets of
discontinued operations are comprised as follows:
Cash $ 733,995
Accounts receivable 1,525,267
Due from Parent and other affiliates 1,581,000
Inventory 2,895,882
Property, plant and equipment, net 415,420
Goodwill, net 1,217,000
Other assets 529,507
Accounts payable and accrued liabilities (1,817,959)
Due to affiliates (including notes payable) (5,880,000)
Other liabilities (80,000)
-----------
Net assets of discontinued operations $ 1,120,112
===========
Net assets of discontinued operations are presented with consideration of
$1,200,000 of intercompany indebtedness which was contributed to capital of
these subsidiaries in the period subsequent to June 30, 1997.
Summarized income statement information relating to discontinued operations
for the year ended June 30, 1997 is as follows:
Sales $ 13,224,727
Operating income $ 415,420
Net loss $ (123,561)
Results of operations in the period from July 1, 1997 to the date of
disposal are not material. Income taxes resulting from the disposal of
these operations are included in the tax provision at June 30, 1997.
NOTE 9 - INCOME TAXES
The Company files a consolidated federal income tax return. The provision
for income taxes was calculated on a consolidated level and allocated to
income before taxes from continuing operations and income before taxes from
discontinued operations as follows:
Continuing Discontinued
Operations Operations Total
Income before taxes $1,878,215 $ 236,193 $2,114,408
Income tax expense (609,915) (359,754) (969,669)
---------- -------- ----------
Net income (loss) $1,268,300 $(123,561) $1,144,739
========== ========= ==========
The provision for income taxes differs from the amounts computed by
applying the U.S. federal income tax rate of 34% to income before income
taxes as a result of the following at June 30, 1997:
Continuing Discontinued
Operations Operations Total
Taxes provided as U.S. statutory rate $ 639,093 $80,306 $719,399
State tax expense, net of federal benefit 41,000 41,000
FSC benefit (82,000) (82,000)
Non-deductible meals and entertainment 11,822 7,000 18,822
Capital gains tax incurred upon spin-off of
discontinued operations 316,579 316,579
Other, net (44,131) (44,131)
----------- -------- ----------
Provision for income taxes $ 609,915 $359,754 $ 969,669
=========== ======== =========
The approximate effect of temporary differences and carryforwards that give
rise to deferred tax assets and liabilities is as follows at June 30, 1997:
Tax loss carryforward $1,192,429
Plant and equipment (177,000)
----------
Non-current deferred tax asset $1,015,429
==========
Inventory $ (587,000)
Accounts receivable 96,000
Accrued expenses 456,000
Other, net (118,125)
----------
Current deferred tax liability $ (153,125)
==========
Net assets of discontinued operations includes approximately $374,136 of
net deferred tax assets (included in other assets). Pursuant to a
provision of the purchase agreement with Gehl, the Parent has agreed that
it will consent to any permissible tax election that would allow the
Company to retain the benefit of any net operating losses which have been
allocated to discontinued operations. As no such election has yet been made
by Gehl, all related deferred tax benefits related to discontinued operations
have been included as assets of discontinued operations. In accordance with
terms of the purchase agreement, Gehl has up to six months after closing
to make the tax elections related to the carryforwards attributable to the
discontinued operations.
NOTE 10 - PROFIT SHARING PLAN
Mustang has a 401(k) profit sharing plan and trust. Under provisions of
the plan, Mustang contributes to the trust a discretionary matching
contribution equal to 50% of the employees' contribution up to 6% of
qualifying salary. Mustang may also contribute additional amounts to the
plan at the discretion of the board of directors. All employees of Mustang
are eligible and become participants upon attaining age 21 and completing
one year of service, as defined, except those employees whose employment is
governed by a collective bargaining agreement. Mustang's contribution for
the year ended June 30, 1997 was $224,000.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
Mustang assists in providing retail financing through its dealers in the
form of conditional sales contracts and lease purchase agreements. Mustang
sold $9,635,023 of contracts and lease purchase agreements during the years
ended June 30, 1997 to various third parties with recourse limited to $1
million per year. The assigned receivables are collateralized by Uniform
Commercial Code filings on the related equipment. The outstanding
receivable on such transactions was $6,452,398 at June 30, 1997. The
agreements also contain provisions for recourse to the selling dealer.
Mustang entered into an agreement in fiscal 1996 to sell a specified amount
of accounts receivable to a financial institution. The accounts receivable
were sold with recourse and are collateralized by the related equipment.
Recourse is limited to $1,000,000 each calendar year. Mustang sold
$56,793,234 of accounts receivable and notes during the year ended June 30,
1997. The net outstanding receivable at June 30, 1997 related to sales of
account and notes receivable during the year was $12,423,974.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give effect
to the acquisition by Gehl Company (the "Company") of Brunel America, Inc.
("Brunel") in a transaction whereby the Company acquired all of the issued
and outstanding stock of Brunel on October 2, 1997. The Unaudited Pro
Forma Combined Balance Sheet is based on the individual balance sheets of
the Company (as of June 28, 1997) and Brunel (as of June 30, 1997) and has
been prepared to reflect the acquisition by the Company of Brunel as of
June 28, 1997. The Unaudited Pro Forma Combined Statement of Operations is
based on the individual statements of operations of the Company and Brunel
as if the acquisition had been consummated on January 1, 1996. These
unaudited pro forma financial statements are presented for informational
purposes only and should be read in conjunction with the historical
financial statements and notes thereto included in the Company's 1996
Annual Report. The unaudited pro forma data is not necessarily indicative
of the operating results or financial position that would have occurred had
the acquisition been consummated on the dates indicated, nor is such data
necessarily indicative of future operating results or financial position.
There is no assurance that similar results will be achieved in the future.
The acquisition will be accounted for by the Company as a purchase whereby
the basis of accounting for Brunel's assets will be based upon their fair
values at the date of the acquisition. Pro forma adjustments, including
the preliminary purchase price allocation resulting from the acquisition as
described in Note 1 of the Notes to Unaudited Pro Forma Combined Financial
Statements, represent the Company's initial determination of these
adjustments and are based upon preliminary information, assumptions and
operating decisions which the Company considers reasonable under the
circumstances.
<PAGE>
<TABLE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
BRUNEL
AMERICA, PRO FORMA PRO FORMA
GEHL INC. ADJUSTMENTS COMBINED
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C>
Net sales $159,662 $55,759 ($1,297)(a) $214,124
Cost of goods sold 111,902 43,218 215 (b) 155,335
-------- ------- ------- --------
Gross profit 47,760 12,541 (1,512) 58,789
Selling, general and
administrative expenses 32,213 9,432 (744)(c) 40,901
-------- ------- ------- --------
Income from operations 15,547 3,109 (768) 17,888
Interest expense (3,443) (1,329) (1,733)(d) (6,505) <PAGE>
Interest income 1,542 - - 1,542
Management fee - (245) 245 (e) -
Other income (expense), net (1,152) (360) 207 (f) (1,305)
-------- ------- ------- --------
Income from continuing
operations before income taxes 12,494 1,175 (2,049) 11,620
Provision for income taxes 2,929 382 (597)(g) 2,714
-------- ------- ------- --------
Income from continuing operations $9,565 $793 ($1,452) $8,906
======== ======= ======= ========
Income per common share $1.54 $1.43
======== ========
Weighted average common
shares and common equivalent
shares outstanding 6,227 6,227
======== ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
<PAGE>
<TABLE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 28, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<CAPTION>
BRUNEL
AMERICA, PRO FORMA PRO FORMA
GEHL INC. ADJUSTMENTS COMBINED
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C>
Net sales $95,267 $32,865 ($957)(a) $127,175
Cost of goods sold 66,737 25,372 108 (b) 92,217
------- ------- ------ --------
Gross profit 28,530 7,493 (1,065) 34,958
Selling, general and
administrative expenses 17,783 4,986 (640)(c) 22,129
------- ------- ------- --------
Income from operations 10,747 2,507 (425) 12,829
Interest expense (927) (470) (909)(d) (2,306)
Interest income 661 - - 661
Management fee - (120) 120 (e) -
Other income (expense), net (459) (468) 89 (f) (838)
------- ------- ------- --------
Income from continuing
operations before income taxes 10,022 1,449 (1,125) 10,346
Provision for income taxes 3,608 471 (337)(g) 3,742
------- ------- ------- --------
Income from continuing
operations $6,414 $978 ($788) $6,604
======= ======= ======= ========
Income per common share $1.00 $1.03
======= ========
Weighted average common shares
and common equivalent shares
outstanding 6,442 6,442
======= ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
<PAGE>
<TABLE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
JUNE 28, 1997
(IN THOUSANDS)
<CAPTION>
BRUNEL
AMERICA, PRO FORMA PRO FORMA
GEHL INC. ADJUSTMENTS COMBINED
ASSETS:
<S> <C> <C> <C> <C>
Cash $6,576 $3,136 - $9,712
Accounts receivable - net 64,317 10,556 (647)(h) 74,226
Finance contracts receivable
- net 6,918 - 195 (a) 7,113
Inventories 17,579 4,589 719 (h) 22,887
Prepaid income taxes 4,385 - - 4,385
Due from Parent and other
affiliate - 3,765 (3,765)(i) 0
Prepaid expenses and other
assets 1,391 94 - 1,485
------- ------ ------- -------
Total current assets 101,166 22,140 (3,498) 119,808
Property, plant and equipment
- net 23,521 3,583 3,491 (h) 30,595
Finance contracts receivable
net, non-current 4,101 - 252 (a) 4,353
Note receivable from Parent - 456 (456)(i) 0
Deferred tax assets - 1,016 (1,016)(a) 0
Net assets of discontinued
operations - 1,120 (1,120)(k) 0
Other assets 5,424 23 15,307 (j) 20,754
-------- ------- ------- -------
Total assets $134,212 $28,338 $12,960 $175,510
======== ======= ======= ========
LIABILITIES:
Current portion of long-term
debt obligations $186 $331 - $517
Current portion of capital
lease obligations - 42 (42)(a) 0
Accounts payable 18,917 7,388 - 26,305
Deferred income taxes - 153 1,208 (h) 1,361
Accrued liabilities 19,781 2,589 1,792 (h) 24,162
-------- ------- ------- -------
Total current liabilities 38,884 10,503 2,958 52,345
Line of credit facility 11,344 - 27,700 (l) 39,044
Long-term debt obligations 8,645 1,125 - 9,770
Deferred income taxes 2,369 - (1,016)(a) 1,353
Notes payable to affiliates - 6,760 (6,760)(i) 0
Other long-term liabilities 1,678 28 - 1,706
------- ------- ------- -------
Total long-term liabilities 24,036 7,913 19,924 51,873
Common stock 620 2 (2) 620
Preferred stock - - - 0
Capital in excess of par 26,197 35,198 (35,198) 26,197
Retained earnings (deficit) 44,475 (25,278) 25,278 44,475
------- ------- ------- -------
Total shareholders' equity 71,292 9,922 (9,922)(j) 71,292
------- ------- ------- -------
Total liabilities and
shareholders' equity $134,212 $28,338 $12,960 $175,510
======== ======= ======= ========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The unaudited pro forma financial statements give effect to the acquisition by
Gehl Company ("Company") of Brunel America, Inc. ("Brunel") in a transaction
to be accounted for as a purchase.
The Company's Unaudited Pro Forma Combined Financial Statements assume the
Brunel acquisition occurred (1) as of January 1, 1996 for purposes of the
Unaudited Pro Forma Combined Statements of Operations and (2) on June 28, 1997
for purposes of the Unaudited Pro Forma Combined Balance Sheet. Adjustments
to the historical financial statements have been made and are described below:
a. Reclassification of amounts to conform to the Company's historical
presentation.
b. Additional depreciation resulting from the increased basis of machinery
and equipment and buildings acquired based on estimated useful lives
of 7 and 25 years, respectively.
c. The pro forma adjustment to selling, general and administrative expenses
assumes:
Year Ended Six Months Ended
December 31, 1996 June 28, 1997
Amortization of goodwill over 30
years $ 478 $ 239
Amortization of noncompetition
agreement over 5 years 200 100
Reclassification of amounts to conform
to the Company's presentation (1,001) (781)
Executive salaries terminated on date
of acquisition (421) (198)
-------- --------
$ (744) $ (640)
======== =========
On the date of acquisition, three executives of Brunel were terminated. The
costs (salaries and respective fringes) are considered nonrecurring by the
Company as the executives will not be replaced.
d. The pro forma adjustment to interest expense assumes:
Year Ended Six Months Ended
December 31, 1996 June 28, 1997
Annual interest charges resulting
from the acquisition $ (2,105) $ (1,052)
Interest rate benefit 90 56
Reclassification of amounts to conform
to the Company's presentation 282 87
---------- ------------
$ (1,733) $ (909)
========== ============
Interest expense is calculated assuming a rate of 7.6% at the date of the
acquisition. A 1/8 percent increase (or decrease) in such rate would increase
(or decrease) annual interest expense by $35.
The interest rate benefit relates to the difference between interest rates
which the Company would have paid on outside debt and that charged to Brunel
from Brunel Holdings plc ("Parent Company") on intercompany debt.
e. Reduction of intercompany charges from Parent Company for which no
specific services were provided.
f. The pro forma adjustment to other income (expense), net assumes:
Year Ended Six Months Ended
December 31, 1996 June 28, 1997
Divestiture costs prior to acquisition $ 193 $ -
Reclassification of amounts to conform
to the Company's presentation 14 89
------- --------
$ 207 $ 89
======= ========
Divestiture costs prior to acquisition relates to nonrecurring costs incurred
by Brunel in connection with a potential divestiture prior to the acquisition
by the Company.
g. Reduction of income taxes relating to the foregoing adjustments.
h. Adjustments to net assets of Brunel to reflect fair value, purchase
accounting adjustments, related tax effects and reclassification of
amounts to conform to the Company's historical presentation. Amounts
reclassified include finance accounts receivable - net ($447) and current
portion of capital lease obligations ($42).
i. Capitalization of net balance of debt due to Parent Company.
j. The excess of cost over fair value of net assets acquired resulting from
the preliminary purchase price allocation is assumed to be as follows:
Pro forma purchase price --
Stated amount in Stock Purchase Agreement $ 27,700
--------------
Pro forma historical net book value of assets acquired -
Book value per historical financial statements 9,922
Capitalization of net balance of debt due to
Parent Company as described above 2,539
Net assets of discontinued operations as
described below (1,120)
--------------
Total pro forma historical net book value
of assets acquired 11,341
--------------
Excess of purchase price over net book value of
assets acquired 16,359
Allocated to:
Accounts receivable 200
Inventories (719)
Property plant and equipment (3,491)
Intangible assets (non-competition agreement) (1,000)
Deferred tax liabilities 1,208
Other liabilities 1,750
--------------
Remaining excess of cost over fair value
of net assets acquired (goodwill) $ 14,307
==============
The foregoing preliminary purchase price allocation is based on available
information and certain assumptions the Company considers reasonable. The
final purchase price allocation will be based upon a determination of the
fair value of the net assets acquired at the date of the acquisition.
The final purchase price allocation may differ from the preliminary
allocation.
k. Under the terms of the Stock Purchase Agreement, Brunel agreed to transfer
all of its right, title and interest of certain subsidiaries to Parent
Company prior to the date of acquisition. As a result, the corresponding
net assets of such subsidiaries have been reported as discontinued
operations at June 28, 1997 ($1,120). Accordingly, the pro forma
adjustment reflects the elimination of net assets of discontinued
operations.
l. Borrowings under the Company's credit facility which reflects the cash
purchase price as stated in the Stock Purchase Agreement.
<PAGE>
GEHL COMPANY
Exhibit Index to Amendment to Current Report on form 8-K
Dated October 2, 1997
Exhibit
Number
(2) Stock Purchase Agreement, dated as of September 12, 1997, between Gehl
Company and Brunel Holdings, plc. Schedules to the Stock Purchase
Agreement have not been filed herewith. Gehl agrees to furnish a copy
of any omitted schedule to the Commission upon request. *
(4.1) Amendment to Amended and Restated Loan and Security Agreement by and
between Deutsche Financial Services Corporation, f/k/a ITT Commercial
Finance Corp., Deutsche Financial Services Canada Corporation and Gehl
Company and its subsidiaries, dated October 2, 1997. *
(23) Consent of Price Waterhouse LLP
- ---------------------------------------
* The schedules/exhibits to this document are not being filed herewith.
They were previously filed in the Form 8-K originally filed on October
17, 1997
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration Statements on Form S-3 and
in the Registration Statements on Form S-8 listed below of Gehl Company of
our report on the consolidated financial statements of Brunel America, Inc.
dated November 7, 1997 which appears in this Current Report on Form 8-K.
1. Registration Statement on Form S-8 (Registration No. 33-38392)
2. Registration Statement on Form S-8 (Registration No. 33-39150)
3. Registration Statement on Form S-8 (Registration No. 333-02195)
4. Registration Statement on Form S-8 (Registration No. 333-04017)
5. Registration Statement on Form S-3 (Registration No. 333-9173)
PRICE WATERHOUSE LLP
Minneapolis, MN
December 15, 1997
