FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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 or organization) (I.R.S. Employer Identification No.)
143 Water Street, West Bend, WI 53095
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (414) 334-9461
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
(Title of class)
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]
Aggregate market value of voting stock held by non-affiliates of the
registrant: $62,982,805 at February 17, 1997.
Number of shares outstanding of each of the registrant's classes of
common stock, as of February 17, 1997:
Class Shares Outstanding
Common Stock, $.10 Par Value 6,182,852
DOCUMENTS INCORPORATED BY REFERENCE
Gehl Company 1996 Annual Report to Shareholders (Parts I and II)
Gehl Company Proxy Statement for the 1997 Annual Meeting of Shareholders
(to be filed with the Commission under Regulation 14A within 120
days after the end of the registrant's fiscal year and, upon such
filing, to be incorporated by reference into Part III)
<PAGE>
GEHL COMPANY
_________________
INDEX TO
ANNUAL REPORT ON FORM 10-K
For The Year Ended December 31, 1996
Page
Part I
Item 1 Business . . . . . . . . 1
Item 2 Properties . . . . . . . . 7
Item 3 Legal Proceedings . . . . . 7
Item 4 Submission of Matters to a Vote of Security Holders 7
Executive Officers of the Registrant . . . 8
Part II
Item 5 Market for Registrant's Common Equity and Related
Shareholder Matters . . . 10
Item 6 Selected Financial Data . 10
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 8 Financial Statements and Supplementary Data 10
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 10
Part III
Item 10 Directors and Executive Officers of the Registrant 11
Item 11 Executive Compensation . . 11
Item 12 Security Ownership of Certain Beneficial Owners
and Management 11
Item 13 Certain Relationships and Related Transactions 11
Part IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . 12
Signatures. . . . . . . . . . . . . . . . . . 13
<PAGE>
Part I
Item 1. Business
Overview
Gehl Company (the "Company" or "Gehl") designs, manufactures,
distributes, sells and finances equipment used in the light construction
equipment and the agricultural equipment industries. The Company's
construction segment ("Gehl Construction") manufactures and markets skid steer
loaders, rough-terrain telescopic forklifts, and asphalt pavers used by
contractors, sub-contractors, owner operators and municipalities. The
Company's agricultural segment ("Gehl Agriculture") has manufactured
agricultural implements for 138 years, and today markets a broad range of
equipment used primarily in the dairy and livestock industries, including
haymaking, forage harvesting, materials handling (skid steer loaders and
attachments), manure handling and feedmaking equipment. The Company believes
that it is currently the largest non-tractor agricultural equipment
manufacturer in North America.
Equipment for Gehl Construction is manufactured in two South Dakota
facilities and equipment for Gehl Agriculture is manufactured in plants in
Wisconsin, Pennsylvania and South Dakota. The Company was founded in 1859 and
was incorporated in the State of Wisconsin in 1890.
Business Segments
The Company operates in two business segments, construction and
agriculture. The following table shows certain information relating to the
Company's operations by industry segment (dollars in thousands):
Year Ended December 31,
1994 1995 1996
Amount % Amount % Amount %
Net sales:
Gehl
Construction $ 51,796 35.3% $ 64,381 42.0% $ 70,826 44.4%
Gehl
Agriculture 94,824 64.7 89,071 58.0 88,836 55.6
------- ---- --------- ------ ------- ------
Total . $146,620 100% $153,452 100% $159,662 100%
Income from
operations:
Gehl
Construction $ 8,542 65.9% $ 13,164 96.7% $ 12,967 83.4%
Gehl
Agriculture 4,419 34.1 449 3.3 2,580 16.6
------ ----- ------ ----- ------ -----
Total . $12,961 100% $ 13,613 100% $ 15,547 100%
The Company had no intersegment sales or transfers during the years set
forth above. For segment information with respect to identifiable assets,
depreciation/amortization and capital expenditures for the construction and
agriculture markets, see Note 12 of "Notes to Consolidated Financial
Statements", included on Pages 22 and 23 of the Gehl Company 1996 Annual
Report to Shareholders, which pages are incorporated by reference herein.
Gehl Construction
Products:
Gehl Construction markets equipment in the following three product areas:
1. Skid Steer Loaders - Gehl Construction offers six models of skid
steer loaders which feature a choice of hand-operated controls
or hand and foot controls. The skid steer loader, with its
fixed-wheel four-wheel drive, is used principally for materials
handling duties. The skid steer loader may also be used with a
variety of attachments, including dirt, snow and cement buckets,
pallet forks and hydraulically-operated devices such as cold
planers, backhoes, brooms, trenchers, snowblowers, industrial
grapples, tree diggers, concrete breakers, augers and many more.
2. Rough-Terrain Forklifts - Gehl markets five models of Dynalift[R]
rough-terrain telescopic forklifts and one model of the Dyna-
Handler[R] , a rough-terrain telescopic forklift with digging
capabilities. These forklifts are designed to handle heavy
loads (up to 10,000 pounds) reaching horizontally and vertically
for use by a variety of customers, including masons, roofers and
building contractors.
3. Asphalt Pavers - Four models of Power Box[R] pavers are marketed
by Gehl. These pavers allow variable paving widths from 4 1/2
to 13 feet and are used for both commercial and municipal jobs
such as county and municipal road, sidewalk, golf cart path,
jogging trail, parking lot, driveway, trailer court and tennis
court preparation.
Marketing and Distribution:
The Company maintains a separate distribution system for Gehl
Construction. The Company markets its equipment in North America through 116
independent dealers (with 261 outlets) and worldwide through 23 distributors.
The top ten dealers and distributors in Gehl Construction accounted for
approximately 13% of the Company's sales for the year ended December 31, 1996;
however, no single dealer or distributor accounted for more than 4% of the
Company's sales for that period. Sales of the skid steer loader and rough-
terrain forklift product lines by Gehl Construction each accounted for more
than 10% of the Company's net sales in 1994, 1995 and 1996.
The Company believes that maintenance and expansion of its dealer network
is important to its success in the light construction equipment market. Gehl
Construction provides various forms of support for its dealers, including
sales and service training, and, in the United States and Canada, floor plan
financing for its dealers and retail financing for both its dealers and their
customers. The light construction equipment dealers in North America are also
supported by district sales managers who provide a variety of services,
including training, equipment demonstrations and sales, warranty and service
assistance.
Industry and Competition:
Gehl Construction's product lines face competition in each of their
markets. In general, each line competes with a small group of from seven to
twelve different companies. No one company competes directly with Gehl
Construction across all of its product lines. In the compact asphalt paving
equipment market niche Gehl serves, the Company believes it is first or second
in terms of market share. In the rough-terrain telescopic forklift market,
the Company believes it and four other competitors share at least 75% of the
market among them. In the skid steer loader product market, three other
companies share over 80% of the market. The Company believes that it shares a
greater portion of the balance of the skid steer loader market than does any
of its remaining competitors. The Company competes within the light
construction equipment markets based primarily on price, quality, service and
distribution.
Gehl Construction's primary markets outside of North America are in
Europe, Latin America, the Middle East and the Pacific Rim. The Company
believes it is a significant competitor in the skid steer loader market in
Western Europe.
Gehl Agriculture
Products:
Gehl Agriculture markets equipment in five product areas.
1. Haymaking - Gehl's haymaking line includes a broad range of
products used to harvest and process hay crops for livestock
feed. The Company offers disc mowers, a wide range of pull-type
disc and sickle mower conditioners, hay rakes and variable-
chamber round balers.
2. Forage Harvesting - The Company believes that it currently
manufactures and sells one of the industry's most complete lines
of forage harvesting equipment, including forage harvesters,
wagons and blowers.
3. Materials Handling - Gehl Agriculture's materials handling line
consists of six different models of skid steer loaders and the
Dyna-Handler[R] forklift. The skid steer loader is a compact,
fixed-wheel four-wheel drive unit typically equipped with a
bucket or fork and is used for moving a variety of material.
The Dyna-Handler[R] is a rough-terrain telescopic forklift with
digging capabilities. The skid steer loader and Dyna-Handler[R]
forklift are marketed by both Gehl Agriculture and Gehl
Construction.
4. Manure Handling - Gehl offers a broad range of manure spreaders,
including the Scavenger[R]. The Scavenger[R] "V-Tank" side-
discharge manure spreader incorporates a hydraulically
controlled auger which allows the spreader to handle a wide
range of semi-liquid waste products, including municipal sludge.
For handling mostly solid manure, the Company also markets four
models of rear-discharge box spreaders.
5. Feedmaking - The Company believes that it offers the broadest
line of portable feedmaking equipment in the industry. Gehl
Agriculture offers the Gehl Mix-All[R] line of grinder mixers and
a line of mixer feeders and a feeder wagon for both mixing feed
rations and delivery to livestock feeders.
Marketing and Distribution:
In North America, Gehl's agricultural equipment is sold through
approximately 557 geographically dispersed dealers (with 615 outlets).
Eighty-one of these dealers are located in Canada. Gehl Agriculture also
markets products through 22 distributors in Europe, the Middle East, the
Pacific Rim and Latin America. The Company has no Company-owned dealers and
its dealers may sell equipment produced by other agricultural equipment
manufacturers.
It has been and remains the Company's objective to increase the share of
Gehl products sold by a Gehl dealer. Gehl Agriculture is not dependent for
its sales on any specific dealer or group of dealers. The top ten dealers and
distributors in Gehl Agriculture accounted for approximately 7% of the
Company's sales for the year ended December 31, 1996 and no one dealer or
distributor accounted for over 1.5% of the Company's sales during that period.
Sales of the skid steer loader product line by Gehl Agriculture accounted for
more than 10% of the Company's net sales in 1994, 1995 and 1996.
The Company provides various forms of support for its dealer network,
including sales and service training. The Company also provides floor plan
and retail finance support for products sold by its dealers in the United
States and Canada.
The Company employs district sales managers to assist its agricultural
dealers by providing training, equipment demonstrations and assistance with
sales, warranty and servicing matters. The Company currently operates three
service parts distribution centers located in: Memphis, Tennessee; Syracuse,
New York; and Minneapolis, Minnesota. The Company also contracts for two
service parts distribution locations in Rockwood, Ontario and Saskatoon,
Saskatchewan.
Industry and Competition:
The agricultural equipment industry has seen significant consolidation
and retrenchment since 1980. This has served to reduce the total number of
competitors, to strengthen certain major competitors, and to reduce the
strength of certain other companies in the industry. The Company competes
within the agricultural equipment industry based primarily on price, quality,
service and distribution.
The agricultural equipment markets in North America are highly
competitive and require substantial capital outlays. The Company has four
major competitors as well as numerous other limited line manufacturers and
importers. The largest manufacturers in the agricultural equipment industry,
the Company's major competitors, generally produce tractors and combines as
well as a full line of tillage and planting equipment. Such manufacturers
also market, to varying degrees, haymaking, forage harvesting, materials
handling, manure handling and/or feedmaking equipment, the areas in which the
Company's agricultural products are concentrated. Except for one competitor,
no other single competitor competes with the Company in each of its product
lines. The Company believes that it is the only non-tractor manufacturer in
the industry that produces equipment in each of these product lines. Smaller
manufacturers which compete with the Company produce only a limited line of
specialty items and often compete only in regional markets.
Gehl Agriculture primarily serves the dairy and livestock industries.
Compared to a more volatile period in the late 1980's through 1992, milk
prices, cash income, land values, and the general economy were more favorable
and stable for the dairy farmer in 1993 through 1996. These more favorable
conditions and lower debt to equity ratios than generally experienced in most
of the 1980's led to increased buying by farmers of agriculture equipment in
1993 and 1994. In 1995 and 1996 industry market demand varied, with demand
for the Company's products generally lower than in 1994.
Approximately 80% of the Company's agricultural dealers also carry the
tractor and combine product lines of a major manufacturer. In addition to
selling the tractors and combines of a major manufacturer, many of these
dealers carry the major manufacturer's entire line of products, some of which
directly compete with the products offered by Gehl Agriculture. Gehl
Agriculture's dealers also market equipment manufactured by limited line
manufacturers which compete with specific product lines offered by the
Company.
Gehl Agriculture's primary markets outside of North America are in Europe
and the Pacific Rim. In these markets the Company competes with both
agricultural manufacturers from the United States, some of which have
manufacturing facilities in foreign countries, and foreign manufacturers. The
Company does not believe, however, that it is presently a significant
competitor in any of these foreign markets.
Backlog
The backlog of unfilled equipment orders (which orders are subject to
cancellation in certain circumstances) as of December 31, 1996 was $42.7
million versus $47.5 million at December 31, 1995. Virtually all orders in
the backlog at December 31, 1996 should be shipped in 1997. The decreased
backlog at December 31, 1996 was due to somewhat larger percentage decreases
in Gehl Construction compared to Gehl Agriculture orders. Order backlog is
lower in Gehl Construction due to a reduced rate of sales growth and in Gehl
Agriculture due to reduced market demand for certain products.
As the Company has increased its sales of Gehl Construction products, the
Company has been successful in reducing the seasonality of its sales.
However, some sales seasonality still remains, primarily in April through
June, the Company's second fiscal quarter. The Company's first and fourth
fiscal quarters in January through March and October through December,
respectively, have traditionally been its weakest. Because the haymaking and
forage equipment products are primarily retailed by the Company's dealers in
the Spring, Summer, and early Fall, the Company's floor plan financed accounts
receivable generally reach a seasonal peak in early Summer and a post-seasonal
low in late Fall.
Floor Plan and Retail Financing
Floor Plan Financing:
The Company, as is typical in the industry, generally provides floor plan
financing for its dealers. Products shipped to dealers under the Company's
floor plan financing program are recorded by the Company as sales and the
dealers' obligations to the Company are reflected as accounts receivable.
The Company provides interest-free floor plan financing to its dealers,
in Gehl Construction for varying periods of time generally up to six months
and in Gehl Agriculture generally for up to one year. Gehl dealers who sell
products utilizing floor plan financing are required to make immediate payment
for those products to the Company upon sale or delivery to the retail
customer. At the end of the interest-free period, if the equipment remains
unsold to retail customers, the Company generally charges interest to the
dealer at a rate of between 1.5% to 3.0% above the prime rate or on occasion
provides interest-free extensions of up to six months upon payment by the
dealer of curtailments generally between 10% to 20% of the original invoice
price to the dealer. This type of floor plan equipment financing accounts for
approximately 90% of Gehl's accounts receivable, with all such floor planned
receivables required to be secured by a first priority security interest in
the equipment sold.
Retail Financing:
The Company also provides retail financing primarily to facilitate the
sale of Gehl equipment to end users. Additionally, a number of Gehl dealers
purchase equipment which is held for rental to the public. The Company also
provides retail financing to such dealers in connection with these purchases.
Retail financing in the United States is provided by the Company through Gehl
Finance[R], the Company's finance division. Retail financing is provided in
Canada by third parties at rates subsidized by the Company. The Company does
not offer or sponsor retail financing outside of North America.
The Company maintains arrangements with third parties pursuant to which
the Company sells with recourse certain of the Company's finance contracts.
The finance contracts require periodic installments of principal and interest
over periods of up to 60 months; interest rates are based on market
conditions. The majority of these contracts have maturities of 36 to 48
months. The Company continues to service the finance contracts it sells,
including cash collections. See Note 2 of "Notes to Consolidated Financial
Statements," Page 18, and "Management's Discussion and Analysis," Page 13 of
the Gehl Company 1996 Annual Report to Shareholders, which pages are
incorporated by reference herein.
Employees
As of December 31, 1996, the Company had 832 employees, of which 538 were
hourly employees and 294 were salaried employees. At the production
facilities in West Bend, Wisconsin, one of four Gehl production facilities,
226 hourly employees are covered by a collective bargaining agreement with the
United Paperworkers International Union (formerly the Allied Industrial
Workers) which expires December 31, 1999. None of the remaining employees of
the Company are represented by unions. There have been no labor-related work
stoppages at the Company's facilities during the past twenty-three years.
Manufacturing
The Company is currently expanding its two South Dakota manufacturing
facilities and believes that its present manufacturing facilities, as
expanded, will be sufficient to provide adequate capacity for its operations
in 1997.
Component parts needed in the manufacture of the Company's equipment are
primarily produced by the Company. The Company obtains raw materials
(principally steel), component parts that it does not manufacture, most
notably engines and hydraulics, and supplies from third party suppliers. All
such materials and components used are available from a number of sources.
The Company is not dependent on any supplier that cannot be readily replaced
and has not experienced difficulty in obtaining necessary purchased materials.
In addition to the equipment it manufacturers, the Company markets
equipment acquired from third party suppliers. Products acquired from these
suppliers accounted for less than 10% of the Company's sales in 1996.
Research and Development
The Company attempts to maintain and strengthen its market position
through internal new product development and incremental improvement to
existing products. Products obtained through acquisition have generally
undergone redesign by the Company to enhance their marketability. This
redesign was in some cases major.
The Company's research and development is devoted to developing new
products that meet specific customer needs and to devising incremental
improvements to existing products. Research and development performed by the
Company includes the designing and testing of new and improved products as
well as the fabrication of prototypes. The Company expended approximately
$2.2 million, $1.4 million and $1.2 million on research and development for
the years ended December 31, 1996, 1995 and 1994, respectively.
Patents and Trademarks
The Company possesses rights under a number of domestic and foreign
patents and trademarks relating to its products and business. While the
Company considers the patents and trademarks important in the operation of its
business, including the Gehl[R] name and the group of patents relating to the
Scavenger[R] manure spreader, the business of the Company is not dependent on
any single patent or trademark or group of patents or trademarks.
Export Sales
Information regarding the Company's export sales is included in Note 12
of "Notes to Consolidated Financial Statements," Page 23, of the Gehl Company
1996 Annual Report to Shareholders, which page is incorporated by reference
herein.
Item 2. Properties
The following table sets forth certain information as of December 31,
1996, relating to the Company's principal manufacturing facilities. See
"Management's Discussion and Analysis - Liquidity and Capital Resources,
Capital Expenditures," Page 13, of the Gehl Company 1996 Annual Report to
Shareholders, which page is incorporated by reference herein.
Approximate
Floor Area in Owned or
Square Feet Leased(1) Principal Uses
West Bend, WI 450,000 Owned General offices and
engineering, research and
development and manufacture of
products for Gehl Agriculture
Madison, SD 110,000 Owned Manufacture of skid steer
loaders for Gehl Construction
and Gehl Agriculture
Lebanon, PA 170,000 Owned(2) Manufacture of products for
Gehl Agriculture
Yankton, SD 68,000 Owned Manufacture of products for
Gehl Construction
(1) For information regarding collateral pledges and the Company's lease
commitments and options, see Notes 5 and 10 of "Notes to Consolidated
Financial Statements", included on Pages 9 and 22, of the Gehl Company
1996 Annual Report to Shareholders, which pages are incorporated by
reference herein.
(2) This facility is financed with the proceeds from the sale of industrial
development bonds maturing in 2010.
The Company also operates three service parts centers located in:
Memphis, Tennessee; Syracuse, New York; and Minneapolis, Minnesota. The
Company leases these facilities, except for the Minneapolis center which
is owned.
Item 3. Legal Proceedings.
The Company is a defendant from time to time in actions for product
liability and other matters arising out of its ordinary business operations.
The Company believes that the actions presently pending will not have a
material adverse effect on its consolidated financial position or results of
operations. To the Company's knowledge, there are no material legal
proceedings to which any director, officer, affiliate or more than 5%
shareholder of the Company (or any associate of the foregoing persons) is a
party adverse to the Company or any of its subsidiaries or has a material
interest adverse to the Company or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1996.
<PAGE>
Executive Officers of the Registrant.
Set forth below is certain information concerning the executive officers
of the Company as of February 1, 1997:
Name, Age and Position Business Experience
William D. Gehl, 50, Mr. Gehl has served as Chairman of the
Chairman, President, Chief Board of Directors of the Company since
Executive Officer and April, 1996. Mr. Gehl has served as
Director President and Chief Executive Officer of
the Company since November, 1992 and has
served as a director of the Company since
1987. From January, 1990 until joining
the Company, Mr. Gehl served as Executive
Vice President, Chief Operating Officer,
General Counsel and Secretary of The
Ziegler Companies, Inc. (a financial
services holding company). Mr. Gehl held
various senior management positions with
the Ziegler Companies from 1978 to 1990.
Victor A. Mancinelli, 53, Mr. Mancinelli has served as Executive
Executive Vice President Vice President and Chief Operating
and Chief Operating Officer Officer of the Company since November,
1992. From 1990 to 1992, Mr. Mancinelli
served as Group Vice President of W. H.
Brady Co. From 1987 to 1990, Mr.
Mancinelli served as President and Chief
Operating Officer of Syracuse China
Corp., a subsidiary of Canadian Pacific
Ltd. Prior to 1987, Mr. Mancinelli served
in a variety of management positions with
Cummins Engine Company, Inc.
John W. Gehl, 55, Mr. Gehl has served as Vice President,
Vice President, International of the Company since 1992.
International Mr. Gehl joined the Company in 1962 and
has served as a Vice President of the
Company since 1977 and in a variety of
positions in marketing, manufacturing and
strategic planning. Mr. Gehl has been a
director of the Company since 1974.
Kenneth P. Hahn, 39, Mr. Hahn joined the Company as Corporate
Vice President of Finance Controller in April, 1988. Mr. Hahn was
and Treasurer elected as an executive officer of the
Company in April, 1994. Mr. Hahn was
appointed Vice President of Finance and
Treasurer in February, 1997.
Michael J. Mulcahy, 50, Mr. Mulcahy has served as General Counsel
of the Company since 1974 and became
Secretary in 1977 and a Vice President in
1986. Mr. Mulcahy has also served, since
1988, as President of Equipco Insurance
Company, Ltd., which provides liability
insurance coverage for equipment
manufacturers, including the Company.
Richard J. Semler, 57, Mr. Semler joined the Company in May,
Vice President of Data 1960 and has served in his current
Systems position with the Company since January,
1977.
All officers of the Company are elected annually by the Board of
Directors following the Annual Meeting of Shareholders. The 1997 Annual
Meeting of Shareholders is currently scheduled for April 16, 1997. The
Company has employment agreements with William D. Gehl, pursuant to which he
is to serve as President and Chief Executive Officer of the Company through
the expiration of the agreement on December 31, 1998, and Victor A.
Mancinelli, pursuant to which he is to serve as Executive Vice President and
Chief Operating Officer of the Company through the expiration of the agreement
on September 30, 1998.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.
Information required by this item is included on Page 25 of the Gehl
Company 1996 Annual Report to Shareholders, which page is hereby incorporated
herein by reference.
Item 6. Selected Financial Data.
Information required by this item is included on Page 24 of the Gehl
Company 1996 Annual Report to Shareholders, which page is hereby incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Information required by this item is included on Pages 10 through 13 of
the Gehl Company 1996 Annual Report to Shareholders, which pages are hereby
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
Information required by this item is included on Page 9 and Pages 14
through 23 of the Gehl Company 1996 Annual Report to Shareholders, which pages
are hereby incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
There have been no changes in or disagreements with the Company's
accountants regarding accounting and financial disclosure required to be
reported pursuant to this item.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the
Registrant.
Pursuant to Instruction G, the information required by this item with
respect to directors is hereby incorporated herein by reference from the
caption entitled "Election of Directors" set forth in the Company's definitive
Proxy Statement for its 1997 Annual Meeting of Shareholders ("Proxy
Statement")<F1>. Information with respect to executive officers of the Company
appears at the end of Part I, Pages 8 through 9 of this Annual Report on Form
10-K.
Item 11. Executive Compensation.
Pursuant to Instruction G, the information required by this item is
hereby incorporated herein by reference from the captions entitled "Board of
Directors" and "Executive Compensation" set forth in the Proxy Statement;
provided, however, that the subsection entitled "Executive Compensation -
Report on Executive Compensation" shall not be deemed to be incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management.
Pursuant to Instruction G, the information required by this item is
hereby incorporated by reference herein from the caption "Principal
Shareholders" set forth in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
Pursuant to Instruction G, the information required by this item is
hereby incorporated by reference from the caption "Executive Compensation -
Summary Compensation Information" set forth in the Proxy Statement.
<F1> The Proxy Statement will be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's fiscal year.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) 1 and 2. Financial statements and financial statement
schedule.
Reference is made to the separate index to the Company's
consolidated financial statements and schedule contained on
Page 14 hereof.
3. Exhibits.
Reference is made to the separate exhibit index contained
on Pages 17 through 19 hereof.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: February 21, 1997 By /s/ William D. Gehl
William D. Gehl,
Chairman of the Board, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ William D. Gehl Chairman of the Board, President, February 21, 1997
William D. Gehl Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Kenneth P. Hahn Vice President of Finance and Treasurer February 21, 1997
Kenneth P. Hahn (Principal Financial and Accounting Officer)
/s/ Thomas J. Boldt Director February 21, 1997
Thomas J. Boldt
/s/ Fred M. Butler Director February 21, 1997
Fred M. Butler
/s/ John W. Gehl Director February 21, 1997
John W. Gehl
/s/ William P. Killian Director February 21, 1997
William P. Killian
/s/ Arthur W. Nesbitt Director February 21, 1997
Arthur W. Nesbitt
/s/ Roger E. Secrist Director February 21, 1997
Roger E. Secrist
/s/ John W. Splude Director February 21, 1997
John W. Splude
<PAGE>
GEHL COMPANY
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page(s) in
Annual Report*
The following documents are filed as
part of this report:
(1) Financial Statements:
Report of Independent Accountants 9
Consolidated Balance Sheets at
December 31, 1996 and 1995 14
Consolidated Statements of Income
for the three years ended
December 31, 1996 15
Consolidated Statements of
Shareholders' Equity for the
three years ended December 31, 1996 15
Consolidated Statements of Cash
Flows for the three years ended
December 31, 1996 16
Notes to Consolidated Financial
Statements 17-23
* Incorporated by reference from the indicated pages of the Gehl Company 1996
Annual Report to Shareholders.
Page in
Form 10-K
(2) Financial Statement Schedule:
Report of Independent Accountants
on Financial Statement Schedule 15
For the three years ended
December 31, 1996 --
Schedule II - Valuation and Qualifying Accounts 16
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Gehl Company
Our audits of the consolidated financial statements referred to in our report
dated February 10, 1997 appearing in the 1996 Annual Report to Shareholders of
Gehl Company (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
February 10, 1997
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
---------
Balance
at Charged to Charged Balance
Beginning Costs and to Other at End
Period Description of Year Expenses Accounts Deductions of Year
- ------ ----------- --------- ---------- --------- ---------- -------
Year Ended
December 31,
1994 Return &
Allowances $ 115 $ - $ - $ - $ 115
Allowance
for
Doubtful
Accounts-
Trade
Receiv-
ables 1,843 (888) - 316 639
Volume
Discounts 2,108 2,200 - 2,318 1,990
Product
Discontinuance - 1,600 - - 1,600
----- ----- ----- ----- -----
Total $4,066 $2,912 $ - $2,634 $4,344
====== ====== ===== ====== =====
Allowances
for
Doubtful
Accounts -
Retail
Contracts $ 650 $ 424 $ - $ 570 $ 504
===== ===== ==== ===== =====
Inventory
Obsolescence
Reserve $3,881 $1,523 $ - $1,352 $4,052
====== ====== ==== ===== =====
Income Tax
Valuation
Allowance $7,096 $ - $ - $1,409 $5,687
====== ====== ==== ===== =====
Year Ended
December 31,
1995 Return &
Allowances $ 115 $ - $ - $ - $ 115
Allowance
for
Doubtful
Accounts-
Trade
Receiv-
ables 639 165 - 52 752
Volume
Discounts 1,990 2,026 - 2,213 1,803
Product
Discontin-
uance 1,600 - - 265 1,335
------ ------ ----- ------ ------
Total $4,344 $2,191 $ - $2,530 $4,005
====== ====== ===== ====== ======
Allowances
for
Doubtful
Accounts -
Retail
Contracts $ 504 $ 428 $ - $ 365 $567
===== ===== ==== ===== =====
Inventory
Obsolescence
Reserve $4,052 $ 502 $ - $1,777 $2,777
====== ===== ==== ===== =====
Income Tax
Valuation
Allowance $5,687 $ - $ - $3,038 $2,649
====== ====== ==== ===== ======
Year Ended
December 31,
1996 Return &
Allowances $ 115 $ 35 $ - $ - $ 150
Allowance
for
Doubtful
Accounts-
Trade
Receiv-
ables 752 64 - 255 561
Volume
Discounts 1,803 2,389 - 2,463 1,729
Product
Discontin-
uance 1,335 (131) - 429 775
----- ----- --- ----- -----
Total $4,005 $2,357 $ - $3,147 $3,215
====== ====== ==== ====== =====
Allowances
for
Doubtful
Accounts -
Retail
Contracts $ 567 $ 276 $ - $ 252 $591
====== ====== ===== ====== ======
Inventory
Obsolescence
Reserve $2,777 $ 527 $ - $1,564 $1,740
====== ====== ====== ====== ======
Income Tax
Valuation
Allowance $2,649 $ - $ - $1,414 $1,235
====== ====== ====== ====== ======
<PAGE>
GEHL COMPANY
INDEX TO EXHIBITS
Exhibit Number Document Description
(3.1) Restated Articles of Incorporation of Gehl
Company [Incorporated by reference to Exhibit
3.1 to the Company's Form S-1 Registration
Statement (Reg. No. 33-31571)]
(3.2) By-laws of Gehl Company, as amended
[Incorporated by reference to Exhibit 3.3 of the
Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(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 December 1, 1995
[Incorporated by reference to Exhibit 4.1 of the
Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(4.2) Common Stock Purchase Warrant, dated as of March
5, 1993, from Gehl Company to State of Wisconsin
Investment Board [Incorporated by reference to
Exhibit 4.14 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1992]
(4.3) Loan Agreement between Pennsylvania Economic
Development Financing Authority and Gehl
Company, dated as of September 1, 1990
[Incorporated by reference to Exhibit 4.1 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 29, 1990]
(4.4) First Supplemental Loan Agreement between
Pennsylvania Economic Development Financing
Authority and Gehl Company, dated as of April
23, 1993 [Incorporated by reference to Exhibit
4.3 to the Company's Quarterly Report on Form
10-Q for the quarter ended April 3, 1993]
(4.5) Second Supplemental Loan Agreement between
Pennsylvania Economic Development Financing
Authority and Gehl Company, dated as of February
1, 1994 [Incorporated by reference to Exhibit
4.10 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993]
(4.6) Mortgage and Security Agreement by and between
Gehl Company and First Pennsylvania Bank N.A.,
dated as of September 1, 1990 [Incorporated by
reference to Exhibit 4.2 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended September 29, 1990]
(10.1)* Form of Supplemental Retirement Benefit
Agreement between Gehl Company and Messrs. J.W.
Gehl, Hahn, Mulcahy and Semler [Incorporated by
reference to Exhibit 10.4 to the Company's Form
S-1 Registration Statement (Reg. No. 33-31571)].
(10.2)* Employment Agreement between Gehl Company and
William D. Gehl, dated as of July 1, 1995
[Incorporated by reference to Exhibit 10.2 of
the Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(10.3)* Employment Agreement by and between Victor A.
Mancinelli and Gehl Company, dated as of October
1, 1995 [Incorporated by reference to Exhibit
10.3 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1995]
(10.4)* Supplemental Retirement Benefit Agreement by and
between William D. Gehl and Gehl Company
[Incorporated by reference to Exhibit 10.4 of
the Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(10.5)* Supplemental Retirement Benefit Agreement by and
between Victor A. Mancinelli and Gehl Company
[Incorporated by reference to Exhibit 10.5 of
the Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(10.6)* Gehl Company Shareholder Value Added Management
Incentive Compensation Plan [Incorporated by
reference to Exhibit 10.6 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995]
(10.7) Gehl Savings Plan, as amended [Incorporated by
reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended
December 31, 1994]
(10.8)* Gehl Company Retirement Income Plan "B", as
amended [Incorporated by reference to Exhibit
10.7 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994]
(10.9)* Gehl Company 1987 Stock Option Plan, as amended
(10.10)* Form of Stock Option Agreement used in
conjunction with the Gehl Company 1987 Stock
Option Plan [Incorporated by reference to
Exhibit 4.2 to the Company's Form S-8
Registration Statement (Reg. No. 33-38392)]
(10.11)* Gehl Company 1995 Stock Option Plan, as amended
(10.12)* Form of Stock Option Agreement for executive
officers used in conjunction with the Gehl
Company 1995 Stock Option Plan. [Incorporated
by reference to Exhibit 10.12 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995]
(10.13)* Form of Stock Option Agreement for non-employee
directors used in conjunction with the Gehl
Company 1995 Stock Option Plan. [Incorporated
by reference to Exhibit 10.13 of the Company's
Annual Report on Form 10-K for the year ended
December 31, 1995]
(10.14) Technical Assistance and License Agreement by
and between Gehl Company and Rheiner
Maschinenfabrik Windhoff AG, dated as of May 4,
1985, as amended [Incorporated by reference to
Exhibit 10.13 to the Company's Form S-1
Registration Statement (Reg. No. 33-31571)]
(10.15) Distributorship Agreement by and between Gehl
Company and Gehl GmbH, dated as of April 15,
1985 [Incorporated by reference to Exhibit 10.16
to the Company's Form S-1 Registration Statement
(Reg. No. 33-31571)]
(10.16) Trademark Licensing Agreement by and between
Gehl Company and Gehl GmbH, dated as of April
15, 1985 [Incorporated by reference to Exhibit
10.17 to the Company's Form S-1 Registration
Statement (Reg. No. 33-31571)]
(13) Portions of the Gehl Company 1996 Annual Report
to Shareholders that are incorporated by
reference herein
(21) Subsidiaries of Gehl Company [Incorporated by
reference to Exhibit 21 to the Company's Annual
Report on Form 10-K for the year ended December
31, 1994]
(23) Consent of Price Waterhouse LLP
(27) Financial Data Schedule
(99) Proxy Statement for 1997 Annual Meeting of
Shareholders (To be filed with the Securities
and Exchange Commission under Regulation 14A
within 120 days after the end of the Company's
fiscal year; except to the extent incorporated
by reference, the Proxy Statement for the 1997
Annual Meeting of Shareholders shall not be
deemed to be filed with the Securities and
Exchange Commission as part of this Annual
Report or Form 10-K)
* A management contract or compensatory plan or arrangement.
Approved: _______________
________________________
Michael J. Mulcahy, Secretary
GEHL COMPANY
1987 STOCK OPTION PLAN
(AS AMENDED)
1.PURPOSE. The purpose of the Gehl Company 1987 Stock Option Plan (the
"Plan") is to promote the best interests of Gehl Company (the "Company") and
its shareholders by providing key employees of the Company and its
subsidiaries, as defined in Section 3, with an opportunity to acquire a
proprietary interest in the Company and thereby develop a stronger incentive
to put forth maximum effort for the continued success and growth of the
Company. In addition, the opportunity to acquire a proprietary interest in
the Company will aid in attracting and retaining key personnel of outstanding
ability. It is intended that all of the options issued pursuant to the Plan
will constitute nonstatutory stock options.
2.ADMINISTRATION. The Plan shall be administered by the Board of Directors of
the Company (the "Board"). The Board shall appoint a subcommittee of the
Compensation and Benefits Committee to develop recommendations with respect to
Board action hereunder (the "Committee"). The Committee shall consist of not
less than three members of the Compensation and Benefits Committee of the
Board who qualify as non-employee directors for the purposes of Rule 16b-3
under the Securities Exchange Act of 1934, as amended (or any successor
provision thereto).
In accordance with the provisions of the Plan (and except as provided below),
the Board shall select the key employees to whom options shall be granted;
shall select the key employees to whom options shall be granted; shall
determine the number of shares to be embraced in each option, the time at
which the option is to be granted, the option period, the option price and the
manner in which options become exercisable; and shall establish such other
provisions of the option agreements as the Board may deem necessary or
desirable. The Board may adopt such rules and regulations for carrying out
the Plan as it may deem proper and in the best interest of the Company. The
interpretation of any provision of the Plan by the Board and any determination
on the matters referred to in this Section shall be final. Notwithstanding
the above, with respect to any options granted to employees who are also
directors of the Company, such grants, including the number of shares subject
to and the terms and conditions of such options, shall be made only in
accordance with the recommendations of the Committee.
3.ELIGIBILITY. Any key employee ("Employee") of the Company or its present
and future subsidiaries, as defined in Section 425(f) of the Internal Revenue
Code ("Subsidiaries"), including any such Employee who is also an officer or
director of the Company or its Subsidiaries, whose judgment, initiative and
efforts contribute materially to the successful performance of the Company or
its Subsidiaries, shall be eligible to receive options under the Plan. No
option may be granted under the Plan to any pearson who is then a member of
the Committee.
4.SHARES SUBJECT TO THE PLAN. The shares to be subject to options under the
Plan shall be shares of the Company's Common Stock, $2.00 par value ("Stock"),
and may be either authorized and unissued or treasury shares. The total
amount of Stock for which options may be granted and which may be purchased
pursuant to options under the Plan shall not exceed 106,000 shares, subject to
adjustment as provided in Section 14; provided, however, that in the event an
option granted under the Plan expires or is terminated unexercised as to any
shares of Stock covered thereby, such shares shall thereafter be available for
the granting of additional options under the Plan.
5.OPTION PRICE. The option price per share of Stock shall be fixed by the
Board, but shall not be less than 100% of the fair market value, as determined
by the Board, of a share of Stock on the date the option is granted.
6.GRANT OF OPTIONS. Subject to the terms and conditions of the Plan, the
Board may, from time to time prior to the termination of the Plan, grant to
such Employees as the Board may determine options to purchase such number of
shares of Stock and on such terms and conditions as the Board may determine.
More than one option may be granted to the same Employee. The day on which
the Board approves the granting of an option shall be considered as the date
on which such option is granted. Notwithstanding any other provision of the
Plan to the contrary, in the case of any option granted to any Employee who is
also a director of the Company, such grant shall be made and the terms and
conditions of such grant shall be determined only in accordance with the
recommendations of the Committee.
7.OPTION PERIOD. The Board shall determine the expiration date of each
option, but such expiration date shall be not later than seven years after the
date such option is granted.
8.VESTING OF OPTIONS. Subject to the provisions of Section 12 hereof, unless
the Board shall otherwise determine on or prior to the date of grant of an
option, such option may be exercised, in whole or in part, from and after the
date it is granted in accordance with the following schedule:
Elapsed Period of Cumulative Percentage of
Time After Date Shares of Stock Subject to
Option is Granted Option Which May be Exercised
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
The right to purchase shares of Stock pursuant to the exercise of an option
granted under the Plan shall be cumulative so that when the right to purchase
any shares has accrued in accordance with the foregoing schedule, such shares
or any part thereof, may be purchased at any time thereafter until the
expiration or termination of the option.
9.CHANGE OF CONTROL. Notwithstanding the provisions of Section 8 hereof, in
the event there is a "Change in Control of the Company" then from and after
the date of such change of control all outstanding options granted under the
Plan shall be immediately exercisable. For purposes of this Section 9, a
"Change in Control of the Company" occurs when:
(a)securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding voting securities are acquired
pursuant to a tender offer or an exchange offer; or
(b)the shareholders of the Company approve a merger or consolidation of the
Company with any other corporation as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are owned
by the former shareholders of the Company (other than a shareholder who is an
"affiliate", as defined in Rule 501(b) of Regulation D under the Securities
Act of 1933, of any party to such consolidation or merger); or
(c)the shareholders of the Company approve the sale of substantially all of
the Company's assets to a corporation which is not a wholly-owned subsidiary
of the Company; or
(d)any person becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities the effect of which (as
determined by the Board) is to take over control of the Company; or
(e)during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of the Company cease, for any
reason, to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved by the vote of at
least two-thirds of the directors then still in office who were directors at
the beginning of the period.
10.EXERCISE OF OPTIONS. A person entitled to exercise an option may, subject
to its terms and conditions and the terms and conditions of the Plan, exercise
it in full at any time or in part from time to time by delivery to the Company
at its principal office of a written notice of exercise specifying the number
of shares with respect to which the option is being exercised. Any notice of
exercise shall be accompanied by full payment of the option price of the
shares being purchased (a) in cash or its equivalent; (b) with the consent of
the Board, by delivering to the Company shares of Stock (valued at their fair
market value at the date of exercise, as determined by the Board consistent
with the method of valuation set forth in Section 5); or (c) with the consent
of the Board, by any combination of (a) or (b). No shares shall be issued
until full payment therefor has been made, and the granting of an option to an
individual shall give such individual no rights as a shareholder except as to
shares actually issued to him.
11.TRANSFERABILITY OF OPTIONS. No option shall be assignable or transferable
by the optionee other than by will or the laws of descent and distribution and
may be exercised during the life of the optionee only by the optionee.
12.TERMINATION OF OPTIONS. Except as hereinafter provided, an option granted
under the Plan may be exercised only while the optionee is an Employee of the
Company or its Subsidiaries and only if he has been continuously so employed
since the date the option was granted. Subject to the terms of any option
agreement, in the event an optionee ceases to be employed by the Company or a
Subsidiary by reason of death, disability or retirement on or after attaining
age 62, the option, to the extent not theretofore exercised, may be exercised
in full as follows: (a) by the legal representative of the optionee at any
time within one year after the date of termination of employment due to death;
or (b) by the optionee or his legal representative at any time within one year
after termination of the optionee's employment by reason of retirement on or
after attaining age 62 or disability, but in either case no later than ten
years after the date of grant. Subject to the terms of any option agreement,
in the event the optionee is discharged or leaves the employ of the Company
and its Subsidiaries for any reason other than death, disability or retirement
on or after attaining age 62 the option, to the extent not theretofore
exercised, shall immediately terminate and shall not be exercisable following
such termination of employment.
13.RESTRICTIONS UPON TRANSFER OF STOCK.
(a)Shares of Stock acquired pursuant to the exercise of an option by an
Employee under the Plan may not be sold, pledged, encumbered or otherwise
disposed of or transferred in any manner, either voluntarily or by operation
of law (all hereinafter collectively referred to as "transfer") except in
accordance with and subject to Section 13(b), 13(c) and 13(d) hereof.
If the Employee is permitted to transfer his stock pursuant to Section 13(b)
hereof, the Employee shall require the transferee, as a condition of the
transfer of the Stock, to agree, in writing, that the Stock transferred shall
be subject to all of the terms and conditions in Section 13(b) and 13(c)
hereof.
(b)If the Employee should decide to transfer any of the Stock acquired
pursuant to the Plan (other than pursuant to a transfer at death permitted
pursuant to subsection 13(d)), such Employee shall first give written notice
to the Company of such intent to transfer the Stock specifying the date of
transfer, the proposed transferee and the consideration to be received upon
such transfer (hereinafter referred to as "Selling Price"). Any such proposed
transfer must be pursuant to a bona fide written offer from the proposed
transferee.
Such written notice by the Selling Employee shall constitute an offer to sell
the Stock to the Company at the Selling Price and upon the same terms as the
proposed transfer. For a period of fifteen (15) days after the receipt of
such notice, the Company shall have the right to purchase the selling
Employee's stock.
If the Company fails to purchase all or any part of such Stock within fifteen
(15) days after receipt of written notice of the offer of sale from the
Selling Employee, the Selling Employee shall be free to offer, transfer or
otherwise dispose of such Stock not purchased by the Company for a price not
less than that stated in the written notice for a period of thirty (30) days
thereafter without restriction, but after such period expires, the restriction
set forth above shall again apply.
(c)Shares of Stock purchased under the Plan may not be sold or otherwise
disposed of unless registered under the Securities Act of 1933, as amended
(the "1933 Act"), and/or any applicable state securities laws, except in a
transaction which, in the opinion of counsel for the Company, is exempt from
registration under the 1933 Act and any applicable state securities laws.
(d)An Employee shall be permitted to transfer his Stock (i) by bequest or
descent upon the death of the Employee or (ii) by gift to the Employee's
spouse or lineal descendants, provided, however, that the Stock so transferred
shall remain subject to the benefits and restrictions of the Plan, including
the mandatory right of first refusal provisions of subsection 13(b) hereof.
(e)Each certificate representing Stock acquired pursuant to the exercise of an
option or by subsequent transfer under the Plan shall be endorsed on the face
of each such certificate with a legend reading substantially as follows:
"Any sale, assignment, transfer, pledge or any other disposition of the shares
of stock represented by this certificate, whether voluntary, involuntary or by
operation of law, is restricted by, and subject to, the terms and provisions
of a 1987 Stock Option Agreement dated as of ________________, 19 ___. A copy
of such Agreement and of all amendments or supplements thereto is on file in
the office of the Secretary of the Corporation. By acceptance of this
certificate, the holder hereof agrees to be bound by the terms of said
Agreement and all amendments or supplements thereto."
(f) The Board may impose such other restrictions on any shares of Stock
granted pursuant to the Plan as it, in its sole discretion, may deem
advisable.
(g)The restrictions on transfer in this Section 13, other than subsection (c),
shall terminate at such time as the Stock of the Company is offered to the
public pursuant to a registration statement declared effective by the
Securities and Exchange Commission under the 1933 Act.
14.CAPITAL ADJUSTMENTS AFFECTING COMMON STOCK. In the event of a capital
adjustment resulting from a stock dividend, (other than a stock dividend in
lieu of an ordinary cash dividend), stock split, reorganization,
recapitalization, merger, consolidation, combination or exchange of shares or
the like, the number of shares of Stock subject to the Plan and the number of
shares under option in outstanding option agreements shall be adjusted in a
manner consistent with such capital adjustment; provided, however, that no
such adjustment shall require the Company to sell any fractional shares and
the adjustment shall be limited accordingly. The price of any shares under
option shall be adjusted so that there will be no change in the aggregate
purchase price payable upon exercise of any such option. The determination of
the Board as to any adjustment shall be final.
15.CORPORATE MERGERS AND OTHER CONSOLIDATIONS. The Board may also grant
options having terms and provisions which vary from those specified in the
Plan provided that any options granted pursuant to this Section 15 are granted
in substitution for, or in connection with the assumption of, existing options
granted by another corporation and assumed or otherwise agreed to be provided
for by the Company pursuant to, or by reason of, a transaction involving a
corporate merger, consolidation, acquisition or other reorganization to which
the Company is a party.
16.OPTION AGREEMENTS. All options granted under the Plan shall be evidenced
by written agreements (which need not be identical) in such form as the Board
shall determine.
17.POWERS OF COMPANY NOT AFFECTED. The existence of the Plan or any options
granted under the Plan shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issuance of bonds, debentures, preferred or prior preference stock ahead
of or affecting the Stock or the rights thereof, or dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
18.AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board shall have the
right to amend, suspend or terminate the Plan at any time, provided, however,
that no such amendment, suspension or termination shall (a) without the
Employee's consent, alter or impair any of the rights or obligations under any
option previously granted to an Employee and (b) no amendment shall be made to
the Plan, unless approved by the shareholders of the Company, which (i)
materially modifies the eligibility requirements as provided in Section 3,
(ii) increases the total number of shares of Stock (except pursuant to a
capital adjustment as provided in Section 14) or (iii) materially increases
the benefits accruing to participants under the Plan.
19.EFFECTIVE DATE AND TERM OF PLAN. The effective date of the Plan is the
date of its adoption by the Board, April 23, 1987. The Plan shall terminate
on January 1, 1997, or on such earlier date as may be determined by the Board.
Termination of the Plan, however, shall not affect the rights of optionees
under options theretofore granted to them, and all unexpired options shall
continue in force and operation after termination of the Plan except as they
may lapse or be terminated by their own terms and conditions.
20.TAX WITHHOLDING. The Company may deduct and withhold from any cash
otherwise payable to the Employee such amount as may be required for the
purpose of satisfying the Company's obligation to withhold federal, state or
local taxes. Further, in the event the amount so withheld is insufficient for
such purpose, the Company may require as a condition precedent to the issuance
or transfer of any shares of Stock upon exercise of any option that the
Employee pay to the Company upon its demand or otherwise make arrangements
satisfactory to the Company for payment of, such amount as may be requested by
the Company in order to satisfy its obligation to withhold any such taxes. If
the amount so requested is not paid, or if such arrangements are not made, the
Company may refuse to issue or transfer shares of Stock upon exercise of the
option.
With the consent of the Board (or, in the case of any option granted to an
Employee who is also a director of the Company, the Committee), an Employee
may be permitted to satisfy the Company's withholding tax requirements by
electing to have the Company withhold shares of Stock otherwise issuable to
the Employee or to deliver to the Company shares of Stock having a fair market
value on the date income is recognized pursuant to the exercise of an option
equal to the amount required to be withheld. The election shall be made in
writing and shall be made according to such rules and in such form as the
Board (or the Committee) may determine.
21.RIGHTS AS A SHAREHOLDER. An Employee shall have no rights as a shareholder
with respect to shares covered by an option until the date of issuance of
stock certificates to him and only after such shares are fully paid. No
adjustment will be made for dividends or other rights for which the record
date is prior to the date such Stock is issued.
22.REQUIREMENTS OF LAW. The granting of options and the issuance of shares of
Stock upon the exercise of an option shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
GEHL COMPANY
1995 Stock Option Plan
(As Amended)
Section 1. Purpose
The purpose of the Gehl Company 1995 Stock Option Plan (the "Plan") is to
promote the best interests of Gehl Company (together with any successor
thereto, the "Company") and its shareholders by providing key employees of the
Company and its Affiliates (as defined below) and members of the Company's
Board of Directors who are not employees of the Company or its Affiliates with
an opportunity to acquire a proprietary interest in the Company. It is
intended that the Plan will promote continuity of management and increased
incentive and personal interest in the welfare of the Company by those key
employees who are primarily responsible for shaping and carrying out the long-
range plans of the Company and securing the Company's continued growth and
financial success. In addition, by encouraging stock ownership by directors
who are not employees of the Company or its Affiliates, the Company seeks to
attract and retain on its Board of Directors persons of exceptional competence
and to provide a further incentive to serve as a director of the Company.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
(a) "Affiliate" shall mean any entity that, directly or through one or
more intermediaries, is controlled by, controls, or is under common control
with, the Company.
(b) "Award" shall mean any Option granted under the Plan.
(c) "Stock Option Agreement" shall mean any written agreement, contract,
or other instrument or document evidencing any Award under the Plan.
(d) "Change of Control of the Company" shall mean any one of the
following events: (i) securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding voting securities
are acquired pursuant to a tender offer or exchange offer; (ii) the
shareholders of the Company approve a merger or consolidation of the Company
with any other Person as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting Person are owned by the former
shareholders of the Company (other than a shareholder who is an Affiliate of
any party to such consolidation or merger); (iii) the shareholders of the
Company approve the sale of substantially all of the Company's assets to a
Person which is not a wholly-owned subsidiary of the Company; (iv) any person
becomes a beneficial owner (as such term is defined in Rule 13d-3 of the
Exchange Act (or any successor provision thereto)), directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
power of the Company's then outstanding securities the effect of which (as
determined by the Board of Directors of the Company and, in the case of Non-
Qualified Stock Options granted to Non-Employee Directors under the Plan, to
the extent permitted by Rule 16b-3) is to take over control of the Company; or
(v) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds of the directors of the Company then in office who
were directors of the Company at the beginning of the period.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Commission" shall mean the United States Securities and Exchange
Commission or any successor agency.
(g) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan and comprised of not
less than two directors, each of whom is a "non-employee director for purposes
of Section 16 within the meaning of Rule 16b-3 and each of whom is an
"outside director" within the meaning of Section 162(m)(4)(C) of the Code (or
any successor provision thereto).
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee.
(j) "Incentive Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code (or any successor provision thereto).
(k) "Key Employee" shall mean any officer or other key employee of the
Company or of any Affiliate who is responsible for or contributes to the
management, growth or profitability of the business of the Company or any
Affiliate as determined by the Committee.
(l) "Non-Employee Director" shall mean any member of the Company's Board
of Directors who is not an employee of the Company or of any Affiliate.
(m) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option
and shall mean any option granted to a Non-Employee Director under Section
6(b) of the Plan.
(n) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
(o) "Participating Key Employee" shall mean a Key Employee designated to
be granted an Award under the Plan.
(p) "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(q) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission
under the Exchange Act, or any successor rule or regulation thereto.
(r) "Shares" shall mean shares of common stock of the Company, $.10 par
value, and such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(b) of the Plan.
Section 3. Administration
The Plan shall be administered by the Committee; provided, however, that
if at any time the Committee shall not be in existence, the functions of the
Committee as specified in the Plan shall be exercised by a committee
consisting of those members of the Board of Directors of the Company who
qualify as "non-employee directors for purposes of Section 16" under Rule 16b-
3 and as "outside directors" under Section 162(m)(4)(C) of the Code (or any
successor provision thereto).
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section
4(b):
(i) Number of Shares Available. The number of Shares with
respect to which Awards may be granted under the Plan shall be 600,000. If,
after the effective date of the Plan, any Shares covered by an Award granted
under the Plan, or to which any Award relates, are forfeited or if an Award
otherwise terminates, expires or is cancelled prior to the delivery of all of
the Shares or of other consideration issuable or payable pursuant to such
Award, then the number of Shares counted against the number of Shares
available under the Plan in connection with the grant of such Award, to the
extent of any such forfeiture, termination, expiration or cancellation, shall
again be available for granting of additional Awards under the Plan.
(ii) Limitations on Awards to Individual Participants. During any
one calendar year, no Participating Key Employee shall be granted Awards under
the Plan that could result in such Participating Key Employee receiving
Options for more than 100,000 Shares under the Plan. Such number of Shares as
specified in the preceding sentence shall be subject to adjustment in
accordance with the terms of Section 4(b) hereof. In all cases,
determinations under this Section 4(a)(ii) shall be made in a manner that is
consistent with the exemption for performance-based compensation provided by
Section 162(m) of the Code (or any successor provision thereto) and any
regulations promulgated thereunder.
(iii) Accounting for Awards. The number of Shares covered by an
Award under the Plan, or to which such Award relates, shall be counted on the
date of grant of such Award against the number of Shares available for
granting Awards under the Plan.
(iv) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee may, in such
manner as it may deem equitable, adjust any or all of (i) the number and type
of Shares subject to the Plan and which thereafter may be made the subject of
Awards under the Plan, (ii) the number and type of Shares subject to
outstanding Awards, and (ii) the grant, purchase, or exercise price with
respect to any Award, or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, however, in each
case, that with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause
the Plan to violate Section 422(b) of the Code (or any successor provision
thereto); and provided further that the number of Shares subject to an Award
shall always be a whole number. Notwithstanding the foregoing, Non-Qualified
Stock Options subject to grant or previously granted to Non-Employee Directors
under Section 6(b) of the Plan at the time of any event described in the
preceding sentence shall be subject to only such adjustments as shall be
necessary to maintain the relative proportionate interest represented thereby
immediately prior to any such event and to preserve, without exceeding, the
value of such Options.
Section 5. Eligibility
Any Key Employee, including any executive officer or employee-director of
the Company or of any Affiliate, who is not a member of the Committee shall be
eligible to be designated a Participating Key Employee. All Non-Employee
Directors shall receive Awards of Non-Qualified Stock Options as provided in
Section 6(b).
Section 6. Awards
(a) Option Awards to Key Employees. The Committee is hereby authorized
to grant Options to Key Employees with the terms and conditions as set forth
below and with such additional terms and conditions, in either case not
inconsistent with the provisions of the Plan, as the Committee shall
determine.
(i) Exercise Price. The exercise price per Share of an Option
granted pursuant to this Section 6(a) shall be determined by the Committee;
provided, however, that such exercise price shall not be less than 100% of the
Fair Market Value of a Share on the date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee; provided, however, that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
(iii) Exercisability and Method of Exercise. An Option shall
become exercisable in such manner (including, without limitation, accelerated
exercisability in the event of Change of Control of the Company) and within
such period or periods and in such installments or otherwise as shall be
determined by the Committee. Unless the Committee shall otherwise determine
on or prior to the date of grant of an Option, such Option may be exercised,
in whole or in part, from and after the date it was granted in accordance with
the following schedule:
Cumulative Percentage of
Shares Subject
Elapsed Period of Time to Option Which May be
After Date Option is Granted Purchased (which number of
Shares shall be rounded
down to the nearest whole
number)
Less than One (1) Year 0%
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
The Committee also shall determine the method or methods by which, and the
form or forms, including, without limitation, cash, Shares, other securities,
other Awards, or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price, in
which payment of the exercise price with respect to any Option may be made or
deemed to have been made.
(iv) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the provisions
of Section 422 of the Code (or any successor provision thereto) and any
regulations promulgated thereunder. Notwithstanding any provision in the Plan
to the contrary, no Incentive Stock Option may be granted hereunder after the
tenth anniversary of the adoption of the Plan by the Board of Directors of the
Company.
(b) Non-Qualified Stock Option Awards to Non-Employee Directors.
(i) Eligibility. Each Non-Employee Director shall automatically
be granted Non-Qualified Stock Options under the Plan in the manner set forth
in this Section 6(b). A Non-Employee Director may hold more than one Non-
Qualified Stock Option, but only on the terms and subject to any restrictions
set forth herein.
(ii) Annual Option Grants to Non-Employee Directors. Each Non-
Employee Director (if he or she continues to serve in such capacity) shall, on
the day following the annual meeting of shareholders in each year during the
time the Plan is in effect, automatically be granted a Non-Qualified Stock
Option to purchase 2,000 Shares (which number of Shares shall be subject to
adjustment in the manner provided in Section 4(b) hereof).
(iii) Grant Limitation. Notwithstanding the provisions of Section
6(b)(ii) hereof, Non-Qualified Stock Options shall be automatically granted
to Non-Employee Directors under the Plan only for so long as the Plan remains
in effect and a sufficient number of Shares are available hereunder for the
granting of such Options.
(iv) Exercise Price. The exercise price per Share for a Non-
Qualified Stock Option granted to a Non-Employee Director under the Plan shall
be equal to 100% of the "market value" of a Share on the date of grant of such
Option. The "market value" of a Share on the date of grant to the Non-
Employee Director shall be the last sale price per Share for the Shares on The
Nasdaq Stock Market on the trading date next preceding such grant date;
provided, however, that if the principal market for the Shares is then a
national securities exchange, the "market value" shall be the closing price
per Share for the Shares on the principal securities exchange on which the
Shares are traded on the trading date next preceding the date of grant, or, in
either case above, if no trading occurred on the trading date next preceding
the date on which the Non-Qualified Stock Option is granted, then the "market
price" per Share shall be determined with reference to the next preceding date
on which the Shares were traded.
(v) Exercisability of Options. Non-Qualified Stock Options
granted to Non-Employee Directors under the Plan shall become exercisable in
accordance with the following schedule:
Elapsed Period of Time Cumulative Percentage of
After Date Option is Granted Shares Subject
to Option Which May be
Purchased (which number of
Shares shall be rounded
down to the nearest whole
number)
Less than One (1) Year 0%
One (1) Year 33-1/3%
Two (2) Years 66-2/3%
Three (3) Years 100%
Notwithstanding the foregoing schedule, if a Non-Employee Director ceases to
be a director of the Company by reason of death, disability or retirement
within three (3) years after the date of grant or in the event of a Change of
Control of the Company within three (3) years after the date of grant, the
Option shall become immediately exercisable in full.
(vi) Termination of Options. Non-Qualified Stock Options granted
to Non-Employee Directors shall terminate on the earlier of:
(A) ten years after the date of grant; or
(B) twelve months after the Non-Employee Director ceases
to be a director of the Company for any reason, including
as a result of the Non-Employee Director's death,
disability or retirement.
(vii) Exercise of Options. A Non-Qualified Stock Option granted to
a Non-Employee Director may be exercised, subject to its terms and conditions
and the terms and conditions of the Plan, in full at any time or in part from
time to time by delivery to the Secretary of the Company at the Company's
principal office in West Bend, Wisconsin, of a written notice of exercise
specifying the number of shares with respect to which the Option is being
exercised. Any notice of exercise shall be accompanied by full payment of the
exercise price of the Shares being purchased (x) in cash or its equivalent;
(y) by tendering previously acquired Shares (valued at their "market value"
[as determined in accordance with Section 6(b)(iv)] as of the date of
exercise); or (z) by any combination of the means of payment set forth in
subparagraphs (x) and (y). For purposes of subparagraphs (y) and (z) above,
the term "previously acquired Shares" shall only include Shares owned by the
Non-Employee Director prior to the exercise of the Option for which payment is
being made and shall not include Shares which are being acquired pursuant to
the exercise of said Option. No shares will be issued until full payment
therefor has been made.
(c) General.
(i) No Consideration for Awards. Awards shall be granted to
Participating Key Employees without the requirement of cash consideration
unless otherwise determined by the Committee. Awards of Non-Qualified Stock
Options granted to Non-Employee Directors under Section 6(b) of the Plan shall
be granted for no cash consideration unless otherwise required by law.
(ii) Award Agreements. Each Award granted under the Plan shall be
evidenced by a Stock Option Agreement in such form (consistent with the terms
of the Plan) as shall have been approved by the Committee.
(iii) Awards May Be Granted Separately or Together. Awards to
Participating Key Employees under the Plan may be granted either alone or in
addition to, in tandem with, or in substitution for any other Award or any
award granted under any other plan of the Company or any Affiliate. Awards
granted in addition to or in tandem with other Awards, or in addition to or in
tandem with awards granted under any other plan of the Company or any
Affiliate, may be granted either at the same time as or at a different time
from the grant of such other Awards or awards.
(iv) Limits on Transfer of Awards. No Award, and no right under
any such Award, shall be assignable, alienable, salable, or transferable by a
Participating Key Employee or a Non-Employee Director otherwise than by will
or by the laws of descent and distribution; provided, however, that a
Participating Key Employee at the discretion of the Committee may, and a Non-
Employee Director shall, be entitled, in the manner established by the
Committee, to designate a beneficiary or beneficiaries to exercise his or her
rights, and to receive any property distributable, with respect to any Award
upon the death of the Participating Key Employee or the Non-Employee Director,
as the case may be. Each Award, and each right under any Award, shall be
exercisable, during the lifetime of the Participating Key Employee or the Non-
Employee Director, only by such individual or, if permissible under applicable
law, by such individual's guardian or legal representative.
No Award, and no right under any such Award, may be pledged, alienated,
attached, or otherwise encumbered, and any purported pledge, alienation,
attachment, or encumbrance thereof shall be void and unenforceable against the
Company or any Affiliate.
(v) Term of Awards. Except as otherwise provided in the Plan,
the term of each Award shall be for such period as may be determined by the
Committee but the expiration date of an Award shall be not later than ten
years after the date such Award is granted.
(vi) Share Certificates; Representation. All certificates for
Shares delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and
other requirements of the Commission, any stock exchange or other market upon
which such Shares are then listed or traded, and any applicable federal or
state securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions. The Committee may require each Participating Key Employee, Non-
Employee Director or other Person who acquires Shares under the Plan by means
of an Award originally made to a Participating Key Employee or a Non-Employee
Director to represent to the Company in writing that such Participating Key
Employee, Non-Employee Director or other Person is acquiring the Shares
without a view to the distribution thereof.
Section 7. Amendment and Termination of the Plan; Correction of Defects and
Omissions
(a) Amendments to and Termination of the Plan. The Board of Directors
of the Company may at any time amend, alter, suspend, discontinue, or
terminate the Plan; provided, however, that the provisions of Section 6(b) of
the Plan shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act
of 1974, as amended, or the rules promulgated thereunder; and provided further
that shareholder approval of any amendment of the Plan shall also be obtained
if otherwise required by: (i) the rules and/or regulations promulgated under
Section 16 of the Exchange Act (in order for the Plan to remain qualified
under Rule 16b-3), (ii) the Code or any rules promulgated thereunder (in order
to allow for Incentive Stock Options to be granted under the Plan), or (iii)
the quotation or listing requirements of The Nasdaq Stock Market or any
principal securities exchange or market on which the Shares are then traded
(in order to maintain the quotation or listing of the Shares thereon).
Termination of the Plan shall not affect the rights of Participating Key
Employees or Non-Employee Directors with respect to Awards previously granted
to them, and all unexpired Awards shall continue in force and effect after
termination of the Plan except as they may lapse or be terminated by their own
terms and conditions.
(b) Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
any Award or Stock Option Agreement in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Employee, Participating Key Employee or
other Person (other than a Non-Employee Director to the extent provided in
Section 6(b) of the Plan) shall have any claim to be granted an Award under
the Plan, and there is no obligation for uniformity of treatment of Key
Employees, Participating Key Employees, or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be the same with
respect to each Participating Key Employee.
(b) Withholding. No later than the date as to which an amount first
becomes includible in the gross income of a Participating Key Employee for
federal income tax purposes with respect to any Award under the Plan, the
Participating Key Employee shall pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be withheld with respect
to such amount. Unless otherwise determined by the Committee, withholding
obligations arising with respect to Awards to Participating Key Employees
under the Plan may be settled with Shares, including Shares that are part of,
or are received upon exercise of, the Award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be
conditional on such payment or arrangements, and the Company and any Affiliate
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Participating Key Employee. The
Committee may establish such procedures as it deems appropriate for the
settling of withholding obligations with Shares, including, without
limitation, the establishment of such procedures as may be necessary to
satisfy the requirements of Rule 16b-3.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) Rights and Status of Recipients of Awards. The grant of an Award
shall not be construed as giving a Participating Key Employee the right to be
retained in the employ of the Company or any Affiliate. Further, the Company
or any Affiliate may at any time dismiss a Participating Key Employee from
employment, free from any liability, or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Stock Option Agreement.
The grant of an Award to a Non-Employee Director pursuant to Section 6(b) of
the Plan shall confer no right on such Non-Employee Director to continue as a
director of the Company. Except for rights accorded under the Plan and under
any applicable Stock Option Agreement, Participating Key Employees and Non-
Employee Directors shall have no rights as holders of Shares as a result of
the granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participating Key Employee,
any Non-Employee Director or other Person. To the extent any Person holds any
right by virtue of a grant under the Plan, such right (unless otherwise
determined by the Committee) shall be no greater than the right of an unsecured
general creditor of the Company.
(f) Governing Law. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Wisconsin and applicable federal law.
(g) Severability. If any provision of the Plan or any Stock Option
Agreement or any Award is or becomes or is deemed to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any Person or Award, or would
disqualify the Plan, any Stock Option Agreement or any Award under any law
deemed applicable by the Committee, such provision shall be construed or
deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan, any Stock Option Agreement or the Award, such
provision shall be stricken as to such jurisdiction, Person, or Award, and the
remainder of the Plan, any such Stock Option Agreement and any such Award
shall remain in full force and effect.
(h) No Fractional Shares. No fractional Shares or other securities
shall be issued or delivered pursuant to the Plan, any Stock Option Agreement
or any Award, and the Committee shall determine (except as otherwise provided
in the Plan) whether cash, other securities, or other property shall be paid
or transferred in lieu of any fractional Shares or other securities, or
whether such fractional Shares or other securities or any rights thereto shall
be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective on the date of adoption of the Plan by the
Board of Directors of the Company provided that the Plan is approved by the
shareholders of the Company within twelve months following the date of
adoption of the Plan by the Board of Directors. All Awards granted prior to
shareholder approval of the Plan shall be subject to such approval and shall
not be exercisable until after such approval.
[Page 9 of the Annual Report]
Reports of Management and Independent Accountants
Report of Management
The management of Gehl Company is responsible for the preparation and
integrity of all financial statements and other information contained in this
annual report. The financial statements have been prepared by the Company in
conformity with generally accepted accounting principles appropriate in the
circumstances. Such statements necessarily include amounts based on the best
estimates and judgments of management after giving due consideration to
materiality.
The Company maintains an internal control system designed to provide
reasonable assurance that transactions are properly recorded and executed in
accordance with management's authorization and that assets are safeguarded
from loss or unauthorized use. The internal control system is augmented by
careful selection and training of qualified employees, proper division of
responsibilities, and the development and dissemination of written policies
and procedures.
The Board of Directors elects, from among its members, an Audit
Committee, consisting entirely of outside directors, which is responsible for
reviewing and evaluating the overall performance of the Company's financial
reporting and accounting practices and for recommending appointment of the
independent accountants. The Audit Committee meets periodically with
management and the independent accountants to discuss any and all matters
within the Committee's responsibilities. The independent accountants have
free access to the Committee, without the presence of management if so
requested.
The Company's financial statements have been audited by Price Waterhouse
LLP, independent accountants, whose report also appears on this page.
Included in the audit process was a review of the Company's system of internal
controls. Price Waterhouse LLP annually provides to management and the Audit
Committee a supplemental report which includes comments on the adequacy of the
system and recommendations for any improvements.
William D. Gehl
Chairman of the Board of Directors,
President and Chief Executive Officer
Kenneth P. Hahn
Vice President, Finance and Treasurer
Report of Independent Accountants
PRICE WATERHOUSE LLP
To the Board of Directors and Shareholders of Gehl Company
In our opinion, the statements appearing on pages 14 through 23 of this
report present fairly, in all material respects, the financial position of
Gehl Company and its subsidiaries at December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996, 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 audits. We conducted our audits 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 audits provide a
reasonable basis for the opinion expressed above.
Milwaukee, Wisconsin
February 10, 1997
<PAGE>
[Pages 10 through 13 of the Annual Report]
Management's Discussion and Analysis
Overview
The Company's net income in 1996 was $9.6 million, or $1.54 per share, a
6% increase from $9.0 million, or $1.44 per share, earned in 1995. Net sales
in 1996 increased 4% to $159.7 million from $153.5 million in 1995. Gehl
Construction 1996 net sales increased 10% to $70.8 million, while Gehl
Agriculture 1996 net sales decreased .3% to $88.9 million. Gehl Construction
comprised 44% of Company net sales in 1996 versus 42% in 1995 and 35% in 1994.
Gehl Agriculture's sales were 56% of Company net sales in 1996, down from 58%
in 1995.
Operating profit in 1996 increased 14% to $15.5 million. Gehl
Construction accounted for $12.9 million of the operating profit, while Gehl
Agriculture contributed the balance of $2.6 million. Interest expense in 1996
declined $2.3 million, or 40%, to $3.4 million. Other expense, consisting
primarily of the costs of selling finance contracts receivable, which was
$537,000 in 1995, increased in 1996 to $1,152,000.
The Company continued to reduce its Gehl Agriculture accounts receivable
in 1996, from $55.0 million at December 31, 1995 to $43.3 million at December
31, 1996. Cash flow provided by operating activities was $31.8 million, as
compared with $9.7 million in 1995. Cash flow generated in 1996 was used in
part to reduce debt by $27.5 million to $19.4 million at December 31, 1996.
The Company has reduced its debt by $78.3 million during the last four years.
The Company's ratio of debt to total capital was 23.0% at December 31, 1996,
as compared with 45.7% and 54.2% at December 31, 1995 and 1994, respectively.
Results of Operations
1996 vs. 1995
Net Sales
($ millions) 1996 1995 1994 1993 1992
Gehl Construction $70.8 $64.4 $51.8 $43.3 $38.5
Gehl Agriculture 88.9 89.1 94.8 93.9 91.2
------- ------ ------- ------- -------
Total $159.7 $153.5 $146.6 $137.2 $129.7
(% of total)
Gehl Construction 44.4% 42.0% 35.3% 31.5% 29.7%
Gehl Agriculture 55.6% 58.0% 64.7% 68.5% 70.3%
Net sales for 1996 of $159.7 million were 4% greater than the $153.5
million of net sales in 1995. Gehl Construction net sales in 1996 were $70.8
million, 10% higher than sales of $64.4 million in 1995. The increase from
1995 levels was a result of increased demand for rough-terrain telescopic
forklifts and skid loaders due to the favorable construction climate which
prevailed in the United States.
Gehl Agriculture net sales in 1996 decreased .3% to $88.9 million from
$89.1 million in 1995. The decrease was due in part to the introduction of
only one redesigned product line in 1996 contrasted to two such introductions
during 1995. The decrease was also due in part to approximately $1.3 million
of shipments, during 1995, of products which have since been discontinued.
Partially offsetting these shipment reductions was an increase in shipments of
forage harvesters and skid loaders in 1996.
Gross Profit: 1996 gross profit of $47.8 million was 7% higher than
1995's $44.6 million. Gross profit as a percent of net sales increased in
1996 to 29.9% from 29.1% in 1995. The increase was the result of higher sales
volume, the shift in product mix of sales toward Gehl Construction products
and the favorable impact associated with a liquidation of LIFO inventory
quantities (See Note 3 of Notes to Consolidated Financial Statements).
Gehl Construction's gross profit as a percent of net sales for 1996
remained consistent, at 32.2%, with 1995 percent levels.
Gehl Agriculture's 1996 gross profit as a percent of net sales increased
to 28.1% from 26.8% in 1995. This increase was due primarily to: 1) the
favorable impact associated with a liquidation of LIFO inventory quantities;
2) the impact of favorable material purchase prices, especially steel, during
1996; and 3) the impact of a change in the mix of products shipped in 1996
versus products shipped in 1995.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased $1.2 million, or 4%, to $32.2 million in
1996 as compared with $31.0 million in 1995. As a percent of sales, however,
selling, general and administrative expenses in 1996 remained consistent, at
20.2%, with 1995 percent levels. The increased expenses in 1996 resulted
primarily from increased investments in research and development costs and
increased selling expenses.
Income (Loss) from Operations
($ millions) 1996 1995 1994 1993 1992
Gehl Construction $12.9 $13.2 $8.6 $1.8 $(2.5)
Gehl Agriculture 2.6 .4 4.4 5.5 (4.4)
----- ------ ------ ------ ------
Total $15.5 $13.6 $13.0 $7.3 $(6.9)
Due primarily to higher net sales combined with improved gross profit,
income from operations in 1996 increased 14% from 1995 to $15.5 million. Gehl
Construction income from operations decreased 2% in 1996 to $12.9 million from
$13.2 million in 1995. Increased investments in research, development and
selling costs offset the impacts of increased Gehl Construction sales volumes.
Income from operations in Gehl Agriculture increased to $2.6 million in 1996
from $449,000 in 1995, due in part to the favorable impact associated with a
liquidation of LIFO inventory quantities in 1996. The remainder of the
improvement results from favorable material purchase prices and reduced
operating expenses.
Interest Expense: Interest expense decreased $2.3 million, or 40%, to
$3.4 million in 1996. During the last four years, interest expense has
declined $6.7 million, or 66%, from 1992's $10.1 million peak. Reductions in
interest-bearing debt from $97.7 million at the end of 1992 to $19.4 million
at December 31, 1996 and lower borrowing rates have resulted in the
significant reduction in the Company's interest expense. The average rate of
interest paid by the Company in 1996 was 8.2% compared to 9.8% in 1995. The
rate decrease was due to the impact of a reduced interest rate structure
negotiated by the Company with the December 1, 1995 amendment to its line of
credit facility.
Other Income (Expense), Net: Other expense increased $615,000 in 1996 to
$1,152,000 from $537,000 in 1995. The increase in expense was due primarily
to an increase of $673,000 associated with the costs of selling finance
contracts receivable to third parties in 1996 compared with 1995. The
increase in the costs of such sales was the result of selling approximately
$7.4 million more contracts in 1996 than in 1995 combined with lower weighted
average yields on such finance contracts sold due to lower financing rates
offered to the Company's retail customers.
Provision for Income Taxes: The Company's effective income tax rate was
23.4% for 1996. Under generally accepted accounting principles, the Company
was not required to record a federal income tax provision related to its 1995
pre-tax income due to the existence of net operating loss and tax credit
carryforwards. The $150,000 provision for taxes made in 1995 related
primarily to state tax requirements. The Company has utilized, in years prior
to 1996, substantially all of its federal net operating loss carryforwards.
In years subsequent to 1996, the Company expects to provide for federal income
taxes at rates approximating statutory rates.
Net Income: Net income in 1996 of $9.6 million was 6% higher than 1995's
$9.0 million net income. 1996 earnings per common share of $1.54 compares to
earnings of $1.44 per share in 1995. No dividends were declared in 1996 on
the Company's common stock.
1995 vs. 1994
Net Sales: Net sales for 1995 of $153.5 million were 5% greater than the
$146.6 million of net sales in 1994. Gehl Construction net sales in 1995 were
$64.4 million, 24% higher than sales of $51.8 million in 1994. The increase
from 1994 levels was primarily due to increased shipments of rough-terrain
telescopic forklifts and skid loaders, the latter both domestically and
internationally. Continued strong demand in the Company's residential and non-
residential construction markets and ongoing general construction activity
propelled the sales growth.
Gehl Agriculture net sales in 1995 decreased 6% to $89.1 million from
$94.8 million in 1994. The decrease was due in part to weaker industry-wide
demand for agricultural implements during 1995 and in part to the Company's
continuing efforts to ship product to its agricultural dealers at levels below
the dealers' sales to farmers, thereby reducing field inventory levels at its
dealers.
Gross Profit: 1995 gross profit of $44.6 million was 3% higher than
1994's $43.3 million. The increase was due primarily to higher sales volume.
Gross profit as a percent of net sales decreased slightly in 1995 to 29.1%
from 29.5% in 1994.
Gehl Construction's gross profit as a percent of net sales increased to
32.2% in 1995 from 28.6% in 1994. The substantial improvement resulted
primarily from: 1) increased sales of higher margin rough-terrain telescopic
forklifts; and 2) lower unit product costs due to increased overhead
absorption at higher production levels and productivity improvements at both
of the Company's construction plants.
Gehl Agriculture's 1995 gross profit as a percent of net sales decreased
to 26.8% from 30.0% in 1994. This decrease was due primarily to: 1) the
impact of a change in the mix of products shipped in 1995 versus products
shipped in 1994; 2) increased unit costs due to lower overhead absorption
associated with decreases in the levels of production; and 3) increased price
competition due in part to higher inventory levels among the Company's
competitors.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased $688,000, or 2%, to $31.0 million in 1995 as
compared to expenses of $30.3 million in 1994. As a percent of sales,
however, selling, general and administrative expenses decreased to 20.2% in
1995 from 20.7% in 1994. The increased expenses in 1995 resulted primarily
from higher agricultural equipment sales promotion costs which were incurred
to stimulate market demand, partially offset by lower product liability
expenses.
Income from Operations: Due primarily to higher net sales, income from
operations in 1995 increased 5% from 1994 to $13.6 million. Gehl Construction
income from operations increased 54% in 1995 to $13.2 million from $8.6
million in 1994. Increased sales volume and higher gross profit margin were
the major factors for the improvement. Income from operations in Gehl
Agriculture fell from $4.4 million in 1994, including a $2.6 million charge to
operations for discontinued products, to $449,000 in 1995. The decrease was
primarily due to lower sales volume and to reduced gross profit margin.
Interest Expense: Interest expense decreased $978,000, or 15%, to $5.7
million in 1995. Reductions in interest-bearing debt and lower interest rate
mark-ups negotiated with the Company's primary lender and implemented in
October 1994, resulted in the significant reduction in the Company's interest
expense. Despite the lower interest rate mark-ups, the average rate of
interest paid by the Company in 1995 was 9.8% compared to 9.6% in 1994, due to
the prime rate, upon which the Company's interest rates were based, averaging
approximately 8.8% in 1995 versus 7.1% in 1994.
Other Income (Expense), Net: Other expense decreased $2.4 million in
1995 to $537,000 from $2.9 million in 1994. The reduction in expense was due
primarily to: 1) a gain of $142,000 on four variable rate sales of finance
contracts made in 1993 and 1994 versus a loss of $492,000 recorded on these
same sales in 1994, an improvement of $634,000; 2) a reduction of $608,000 in
the costs of selling finance contracts receivable to third parties in 1995 as
compared with 1994; 3) a one-time $400,000 prepayment fee associated with the
subordinated debt retirement in November 1994; 4) a $358,000 reduction in
deferred financing fees amortization; and 5) a $107,000 Canadian foreign
exchange gain recorded in 1995 versus a $181,000 exchange loss in 1994, an
improvement of $288,000.
Provision for Income Taxes: Under generally accepted accounting
principles, the Company was not required to record a federal income tax
provision related to its 1995 pre-tax income due to the existence of net
operating loss and tax credit carryforwards. The $150,000 provision for taxes
made in 1995 related primarily to state tax requirements.
Net Income: Net income in 1995 of $9.0 million was 79% higher than
1994's $5.0 million net income. 1995 earnings per common share of $1.44
compares to earnings of $.82 per share in 1994. No dividends were declared in
1995 on the Company's common stock.
Liquidity and Capital Resources
Working Capital: The Company's working capital decreased 25% to $57.6
million at December 31, 1996 from $77.0 million twelve months earlier
primarily due to reductions in accounts receivable and inventory levels. The
Company's current ratio at December 31, 1996 decreased to 2.8 to 1 from 3.6 to
1 at the same time a year ago. Cash on hand at December 31, 1996 was $4.2
million as compared to $3.3 million a year earlier.
Cash Flow Provided by (Used for) Operating Activities:
($ in thousands) 1996 1995 1994 1993 1992
Cash flow $31,795 $9,701 $19,522 $26,113 $(162)
In 1996 cash flow provided by operating activities was $31.8 million as
compared to $9.7 million in 1995. Net income before depreciation and
amortization, accounts receivable reductions and inventory reductions were
primarily responsible for the positive cash flow. The increase from 1995 was
due to higher cash flow provided by reductions in accounts receivable and
plant inventories in 1996 as compared with 1995. The larger reduction in
accounts receivable was primarily due to retail sales of equipment from Gehl
agricultural dealers to their customers exceeding shipments of equipment from
the Company to its dealers, in 1996, by amounts greater than in 1995. The
inventory reduction in 1996 was the result of planned, lower levels of
finished goods inventory at December 31, 1996 than at the same time in 1995.
The 1996 cash flow was used primarily to repay $27.5 million of debt.
Accounts Receivable: The Company's net accounts receivable decreased
$14.0 million, or 20%, from $69.1 million at December 31, 1995 to $55.1
million at December 31, 1996. During the past four years, the Company has
reduced its accounts receivable by approximately $46 million, or 46%, from
$101.2 million at December 31, 1992. Gehl Agriculture accounts receivable at
year-end 1996 decreased $11.7 million from a year earlier, while Gehl
Construction accounts receivable decreased $2.3 million over the same period.
Finance Contracts Receivable: Finance contracts receivable increased
$445,000 to $8.2 million at December 31, 1996. The combined portfolio of
owned and sold-but-serviced finance contracts receivable was $61.7 million at
December 31, 1996 as compared to $55.5 million at year-end 1995. (See Sales
of Finance Contracts Receivable following.)
Capital Expenditures:
1996 1995 1994 1993 1992
($ thousands)
Capital expenditures $3,837 $2,437 $2,505 $ 809 $1,473
Depreciation $2,438 $2,520 $2,692 $2,940 $3,093
The Company expended $3.8 million for property, plant and equipment in
1996. The majority of 1996 expenditures were incurred to upgrade and maintain
machinery and equipment, to enhance capability, to improve productivity and to
improve product quality. Other than expenditures related to the plant
expansions as described below, the Company had no significant outstanding
commitments for capital items at December 31, 1996. The Company plans to make
approximately $8.0 million in capital expenditures in 1997, including $4.0
million to expand its two South Dakota manufacturing facilities and add
equipment necessary to increase production levels of skid loaders, rough-
terrain telescopic forklifts and paving products. The Company believes its
present facilities, with these expansion projects, will be sufficient to
provide adequate capacity for its operations in 1997.
Debt and Equity:
December 31, 1996 1995 1994 1993 1992
($ millions)
Total Debt $19.4 $46.9 $54.9 $72.8 $97.7
Shareholders' Equity $64.8 $55.7 $46.3 $40.9 $40.4
% Total Debt to
Total Capitalization 23.0% 45.7% 54.2% 64.0% 70.7%
At December 31, 1996, shareholders' equity had increased $9.1 million to
$64.8 million from $55.7 million a year earlier. By reducing its debt $27.5
million to $19.4 million, the Company lowered its capitalization ratio to
23.0% at December 31, 1996.
Borrowing Arrangements (See also Note 5 of Notes to Consolidated
Financial Statements): The Company maintains a $75 million line of credit
facility (the "Facility") which expires December 31, 1998, and is subject to a
borrowing base related to the Company's accounts receivable, finance contracts
receivable and inventories. Under the terms of the Facility, the interest
rate paid on loans denominated in U.S. dollars is 2.00% above the London
Interbank Offered Rate for one-month deposits ("LIBOR"). In Canada, where the
Company may borrow up to $6.5 million, the interest rate is 2.50% above
Canadian one-month bankers' acceptance rates ("BA Rate"). Under the Facility
the base LIBOR and BA Rate are adjusted weekly. At December 31, 1996, the
Company had unused borrowing capacity of $45.4 million under the Facility,
versus $27.4 million a year earlier. Management believes the Facility
provides sufficient borrowing capacity for the Company to finance its
operations for the foreseeable future.
The Company also has outstanding $8.4 million of 9% industrial
development bonds ("IDB") with a 2010 final maturity; repayments commence in
2005.
Sales of Finance Contracts Receivable: The sale of finance contracts is
an important component of the Company's overall liquidity. The Company has
arrangements with several financial institutions and financial service
companies to sell, with recourse, its finance contracts receivable. The
Company continues to service all contracts whether or not sold. At December
31, 1996, the Company serviced $61.7 million of such contracts, of which $53.0
million were owned by third parties. Losses on finance contracts due to
customer nonperformance were $252,000 in 1996 as compared to $365,000 in 1995.
As a percentage of outstanding serviced contracts, the loss ratios were .4%
and .7% in 1996 and 1995, respectively.
The Company incurred $1.2 million of costs in selling $38.8 million of
its finance contracts in 1996, as compared to $534,000 of costs in selling
$31.4 million of such contracts in 1995. The costs arise primarily from the
difference between the weighted average interest rate on the contracts being
sold and the interest rate negotiated with the purchaser of the contracts. In
1996, the Company's cost of selling such contracts increased $674,000 from
1995 due to: 1) selling approximately $7.4 million more of such contracts in
1996 than in 1995; and 2) the lower average interest rate on contracts sold in
1996, versus 1995, due to lower rates offered to retail customers.
Management believes the Company has sufficient capacity to meet its
requirements to sell its finance contracts for the foreseeable future.
<PAGE>
[Pages 14 through 23 of the Annual Report]
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Thousands, Except Share Data - December 31, 1996 1995
Assets
Cash $ 4,208 $ 3,266
Accounts receivable - net 55,141 69,087
Finance contracts receivable - net 5,098 4,817
Inventories 18,642 23,320
Prepaid income taxes 5,035 4,397
Prepaid expenses and other assets 1,624 1,676
________ ________
Total current assets 89,748 106,563
________ ________
Property, plant and equipment - net 21,678 20,315
Finance contracts receivable - net, non-current 3,063 2,899
Other assets 5,636 5,146
________ ________
Total assets $120,125 $134,923
======== ========
Liabilities and Shareholders' Equity
Current portion of long-term debt obligations $ 178 $ 197
Accounts payable 14,384 14,083
Accrued liabilities 17,574 15,281
________ ________
Total current liabilities 32,136 29,561
________ ________
Line of credit facility 10,454 37,848
Long-term debt obligations 8,740 8,818
Deferred income taxes 2,369 1,425
Other long-term liabilities 1,594 1,592
________ ________
Total long-term liabilities 23,157 49,683
________ ________
Common stock, $.10 par value, 25,000,000 shares
authorized, 6,158,720 and 6,216,765 shares
outstanding at December 31, 1996 and 1995,
respectively 616 622
Preferred stock, $.10 par value, 2,000,000 -- --
shares authorized, no shares issued
Capital in excess of par 26,155 26,580
Retained earnings 38,061 28,477
________ ________
Total shareholders' equity 64,832 55,679
________ ________
Total liabilities and shareholders' equity $120,125 $134,923
======== ========
Contingencies (Notes 2 and 11)
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
In Thousands, Except Per Share Data -
Year Ended December 31, 1996 1995 1994
Net sales $159,662 $153,452 $146,620
Cost of goods sold 111,902 108,838 103,346
________ ________ ________
Gross profit 47,760 44,614 43,274
Selling, general and administrative
expenses 32,213 31,001 30,313
________ ________ ________
Income from operations 15,547 13,613 12,961
Interest expense (3,443) (5,733) (6,711)
Interest income 1,542 1,820 1,715
Other income (expense), net (1,152) (537) (2,930)
________ ________ ________
Income before income taxes 12,494 9,163 5,035
Provision for income taxes 2,929 150 ---
________ ________ ________
Net income $ 9,565 $ 9,013 $ 5,035
======== ======== ========
Net income per common share $ 1.54 $ 1.44 $ .82
======== ======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Capital In
Common Excess of Retained
In Thousands Stock Par Earnings Total
Balance at December 31, 1993 $613 $25,820 $14,462 $40,895
Net income -- -- 5,035 5,035
Exercise of stock options 4 131 -- 135
Amortization of unearned
compensation related to
restricted stock grants -- 182 -- 182
Minimum liability adjustment -- -- 36 36
____ _______ ________ ________
Balance at December 31, 1994 617 26,133 19,533 46,283
Net income -- -- 9,013 9,013
Exercise of stock options 5 265 -- 270
Amortization of unearned
compensation related to
restricted stock grants -- 182 -- 182
Minimum liability adjustment -- -- (69) (69)
____ _______ _______ _______
Balance at December 31, 1995 622 26,580 28,477 55,679
Net income -- -- 9,565 9,565
Exercise of stock options 2 102 -- 104
Treasury stock
purchase/cancellation (8) (527) -- (535)
Minimum liability adjustment -- -- 19 19
____ _______ _______ _______
Balance at December 31, 1996 $616 $26,155 $38,061 $64,832
==== ======= ======= =======
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands - Year Ended
December 31, 1996 1995 1994
Cash Flows from Operating Activities
Net income $ 9,565 $ 9,013 $ 5,035
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 2,576 2,865 3,767
(Gain) loss on sale of equipment 10 (13) 8
Cost of sales of finance contracts 1,208 534 1,142
Deferred income taxes 306 (2,071) (900)
Proceeds from sales of finance
contracts 36,824 30,062 31,935
Increase (decrease) in cash
due to changes in:
Accounts receivable - net 13,946 3,306 12,576
Finance contracts receivable -
net (39,248) (33,432) (33,241)
Inventories 4,678 (1,868) 181
Prepaid expenses and other
assets (288) 231 155
Other assets (14) 240 113
Accounts payable 301 (394) (1,307)
Accrued liabilities 1,931 1,228 58
________ ________ ________
Net cash provided by
operating activities 31,795 9,701 19,522
________ ________ ________
Cash Flows from Investing Activities
Increase in unexpended
plant construction fund (10) (16) (7)
Proceeds from sale of equipment 26 47 42
Property, plant and equipment
additions (3,837) (2,437) (2,505)
Decrease in other assets 869 777 1,100
Other 19 113 217
________ ________ ________
Net cash (used for) investing
activities (2,933) (1,516) (1,153)
________ ________ ________
Cash Flows from Financing Activities
(Decrease)increase in other
long-term obligations (97) 14 (9,828)
Repayment of
revolving credit loans (27,394) (8,031) (8,100)
Increase in other long-
term liabilities 2 258 536
Proceeds from issuance of common
stock 104 270 135
Treasury stock purchase (535) -- --
________ ________ ________
Net cash (used for)
financing activities (27,920) (7,489) (17,257)
________ ________ ________
Net increase in cash 942 696 1,112
Cash, beginning of year 3,266 2,570 1,458
________ ________ ________
Cash, end of year $ 4,208 $ 3,266 $ 2,570
======== ======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
Note 1 - Significant Accounting Policies
Consolidation: Gehl Company is engaged in the manufacture and
distribution of equipment and machinery for the construction market, and in
the manufacture and distribution of farm equipment and machinery primarily for
the dairy, livestock and poultry agricultural sector. The consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiaries: Hedlund Martin, Inc.; Gehl Power Products, Inc.; and Gehl
International, Inc., a foreign sales corporation. All significant
intercompany transactions and balances are eliminated.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions, in certain circumstances, that affect the reported
amounts of assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Ultimate realization of assets and settlement of liabilities in the future
could differ from those estimates.
Revenue Recognition: Revenue is recorded upon the shipment of products
to dealers and distributors; these dealers and distributors have no right of
return, except as provided by law.
Accounts Receivable: The Company provides financing for its dealers in
both the construction and agricultural markets. The financing agreements
provide for, in certain instances, interest-free periods which generally range
from 4 to 12 months.
Finance Contracts Receivable: The Company offers financing for its
products to retail customers and to its dealers through its finance division.
Finance contracts require periodic installments of principal and interest over
periods of up to 60 months. Unearned interest is recognized over the life of
the contracts using the sum of the digits method. Principal expected to be
collected within twelve months of the balance sheet date is classified as a
current asset; the remainder is classified as a non-current asset.
Inventories: Inventories are valued at the lower of cost or market.
Cost is determined by the last-in, first-out (LIFO) method for substantially
all of the Company's inventories.
Properties and Depreciation: Properties are stated at cost. When
properties are sold or otherwise disposed of, cost and accumulated
depreciation are removed from the respective accounts and any gain or loss is
included in income. The Company provides for depreciation of assets generally
using the straight-line method for financial reporting purposes and
accelerated methods for income tax purposes. Expenditures which substantially
increase value or extend asset lives are capitalized. Expenditures for
maintenance and repairs are charged against income as incurred.
Debt Issue Costs: Costs incurred in conjunction with incurrence of
indebtedness are capitalized and subsequently amortized over the related
periods of the obligations.
Foreign Currency Transactions: Foreign currency transaction gains and
losses are included in the determination of income. Foreign currency gains
(losses) were $24,000, $107,000 and $(181,000) in 1996, 1995 and 1994,
respectively.
Income Taxes: The Company follows the liability method in accounting for
income taxes. The liability method provides that deferred tax assets and
liabilities be recorded based on the difference between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes.
Product Liability Costs: The Company directly assumes all liability for
costs associated with claims up to specified limits in any policy year.
Known incidents involving the Company's products are investigated and reserves
are established for any estimated liability.
Product Warranty Costs: In general, the Company provides warranty on
equipment for a period of up to twelve months or for a specified period of use
after sale or rental by the dealer. Reserves for estimated warranty costs are
established at the time of sale.
Environmental Costs: Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations, and that do not
contribute to current or future revenue generation, are expensed. Liabilities
are recorded when environmental assessments and/or remedial efforts are
probable, and the costs can be reasonably estimated.
Research and Development Costs: Costs for research activities relating
to product development and improvement are charged against income as incurred.
Such costs amounted to approximately $2,227,000, $1,363,000 and $1,172,000 in
1996, 1995 and 1994, respectively.
Other Income (Expense): Other income (expense) is comprised primarily of
foreign currency transaction gains (losses), cost of sales of finance
contracts, amortization of debt issue costs, and royalty and license income
(expense).
Net Income Per Common Share: Net income per common share is computed by
dividing net income by the weighted average number of common shares and, if
applicable, common stock equivalents which would arise from the exercise of
stock options and warrants. The weighted average number of shares used in the
computations was 6,227,479, 6,252,235 and 6,174,476 for 1996, 1995 and 1994,
respectively.
Reclassifications: Certain amounts in the 1995 financial statements have
been reclassified to conform to the 1996 presentation.
Note 2 -Accounts Receivable and Finance Contracts Receivable
Accounts receivable and finance contracts receivable were comprised of
the following (in thousands):
December 31, 1996 1995
Accounts receivable $58,356 $73,092
Less allowances for:
doubtful accounts (561) (752)
returns and dealer
discounts (2,654) (3,253)
_______ _______
$55,141 $69,087
======= =======
Finance contracts receivable $ 9,294 $ 9,056
Less: unearned interest (542) (773)
allowance for doubtful
accounts (591) (567)
_______ _______
8,161 7,716
Less: non-current portion (3,063) (2,899)
_______ _______
Current portion $ 5,098 $ 4,817
======= =======
The Company maintains a reserve for discontinued products. The allowance
for returns and dealer discounts contains $775,000 and $1,335,000 to reflect
the anticipated costs of retailing such products in dealer inventory at
December 31, 1996 and 1995, respectively.
The finance contracts receivable at December 31, 1996 have a weighted
average interest rate of approximately 8%.
The Company has entered into various agreements with third parties to
sell with recourse certain finance contracts receivable. The recourse
provisions of certain of these agreements require that the Company provide
additional collateral in the form of cash withheld at the time of sale. At
December 31, 1996, $1.6 million of cash previously withheld by third party
buyers was provided as additional collateral. The finance contracts require
periodic installments of principal and interest over periods of up to 60
months; interest rates are based on market conditions. The Company has
retained the servicing of these contracts which generally have maturities of
36 to 48 months. Amounts to cover potential losses on these sold receivables
are included in the allowance for doubtful accounts.
The following summarizes the Company's sales of retail finance contracts
receivable during 1996 and 1995 (in thousands):
1996 1995
Value of contracts sold
- net of $4.4 million and
$4.3 million, respectively,
of unearned interest $38,804 $31,363
Cash received on sales of
contracts 36,824 30,062
Cash withheld as additional
collateral 772 767
_______ _______
Cost of sales of finance
contracts $ 1,208 $ 534
======= =======
Net receivables outstanding
at December 31 relating
to finance contracts sold $52,971 $47,178
======= =======
The Company retains as collateral a security interest in the equipment
associated with accounts receivable and finance contracts receivable. The
Company also maintains certain levels of dealer recourse deposits as
additional security associated with finance contracts receivable.
Note 3 - Inventories
If all of the Company's inventories had been valued on a current cost
basis, which approximates FIFO value, estimated inventories by major
classification would have been as follows (in thousands):
December 31, 1996 1995
Raw materials and supplies $ 3,547 $ 4,151
Work-in-process 9,120 9,893
Finished machines and parts 24,770 28,149
________ ________
Total current cost value 37,437 42,193
Adjustment to LIFO basis (18,795) (18,873)
________ ________
$ 18,642 $ 23,320
======== ========
During 1996, inventory quantities were reduced. This reduction resulted
in a liquidation of LIFO inventory quantities carried at lower costs
prevailing in prior years as compared with the cost of 1996 purchases, the
effect of which decreased cost of goods sold by approximately $1 million.
Note 4 - Property, Plant and Equipment - Net
Property, plant and equipment consisted of the following (in thousands):
December 31, 1996 1995
Land $ 1,411 $ 1,411
Buildings 18,551 17,344
Machinery and equipment 28,972 27,014
Autos and trucks 410 418
Office furniture and fixtures 7,727 7,459
_________ _________
57,071 53,646
Less: accumulated
depreciation (35,393) (33,331)
_________ _________
Property, plant and
equipment - net $ 21,678 $ 20,315
========= =========
Note 5 - Debt Obligations
A summary of the Company's debt obligations, and related current
maturities, is as follows (in thousands):
December 31, 1996 1995
Line of credit facility $10,454 $37,848
9.0% industrial
development bonds 8,400 8,400
Other debt obligations 518 615
_______ _______
19,372 46,863
Less: current portion (178) (197)
_______ _______
Long-term debt obligations $19,194 $46,666
======= =======
The Company maintains a $75 million line of credit facility (the
"Facility") which expires December 31, 1998. Interest is paid monthly on
outstanding borrowings under the Facility as follows: borrowings in Canadian
denominated dollars up to a $6.5 million credit line are at 2.5% above
Canadian one-month bankers' acceptance rates; the remainder of the borrowings
are in U.S. dollars and are at 2.0% above the London Interbank Offered Rate
for one-month deposits ("LIBOR"). Under the Facility, $25 million is tied to
a borrowing base related to the Company's finance contracts receivable and
inventories. The remaining availability is tied to a borrowing base related
to the Company's accounts receivable. Borrowings under the Facility are
secured by finance contracts receivable, inventories and accounts receivable.
At December 31, 1996, the Company had unused borrowing capacity of
approximately $45.4 million under the Facility. The Facility also includes
financial covenants requiring the maintenance of a minimum tangible net worth
level and a maximum debt to equity ratio.
The 9% industrial development bonds are secured by the Company's Lebanon,
Pennsylvania manufacturing facility and require principal repayment in six
equal annual installments of $1.4 million commencing in 2005. The Company has
established a debt reserve fund of approximately $518,000 until the first
mandatory bond redemption period in 2003. The debt reserve fund was
established with remaining funds in the trustee-controlled unexpended plant
construction fund and interest subsequently earned. Financial covenants
related to the industrial development bonds require the maintenance of a
minimum tangible net worth level and a maximum debt to equity ratio.
Annual maturities of debt obligations are as follows (in thousands):
1997 $ 178
1998 10,648
1999 109
2000 37
2001 -
Later years 8,400
________
$19,372
========
Interest paid on total debt obligations was $3.6 million, $5.9 million
and $6.9 million in 1996, 1995 and 1994, respectively.
Note 6 - Accrued Liabilities
Accrued liabilities were comprised of the following (in thousands):
December 31, 1996 1995
Accrued salaries and wages $ 4,132 $ 3,033
Dealer recourse deposits 2,308 2,222
Accrued warranty costs 2,290 1,815
Accrued product liability costs 3,870 3,025
Other 4,974 5,186
_______ _______
$17,574 $15,281
======= =======
Note 7 - Income Taxes
The income tax provision (benefit) recorded for the years ended December
31, 1996, 1995 and 1994 consisted of the following (in thousands):
Year Ended State and
December 31, Federal Foreign Total
1996 Current $ 2,548 $ 75 $ 2,623
Deferred 306 - 306
________ ________ ________
Total $ 2,854 $ 75 $ 2,929
======== ======== ========
1995 Current $ 2,303 $ 150 $ 2,453
Deferred (2,303) - (2,303)
________ ________ ________
Total $ - $ 150 $ 150
======== ======== ========
1994 Current $ 900 $ 78 $ 978
Deferred (900) (78) (978)
________ ________ ________
Total $ - $ - $ -
======== ======== ========
A reconciliation between the reported income tax provision and the
federal statutory rate follows (as a percent of pre-tax income):
Year Ended December 31, 1996 1995 1994
Federal statutory rate 34.0% 34.0% 34.0%
Minimum tax credits utilized (10.5) - -
Net operating loss utilized - (34.0) (34.0)
State income taxes, net of
Federal income tax effect .5 1.6 -
Other, net (.6) - -
_______ _______ _______
23.4% 1.6% -
======= ======= =======
The Company's temporary differences and carryforwards which give rise to
deferred tax assets and liabilities consisted of the following (in thousands):
December 31, 1996 1995
Accrued expenses and reserves $4,297 $3,582
Asset valuation reserves 1,643 2,240
Operating loss carryforwards 925 1,024
Tax credit carryforwards 1,615 3,584
Installment sales (2,118) (2,718)
Property, plant and equipment (1,230) (1,222)
Other, net (1,231) (869)
Valuation allowance (1,235) (2,649)
______ ______
Net deferred tax asset $2,666 $2,972
====== ======
The net asset is included in the consolidated balance sheet in
the following captions (in thousands):
December 31, 1996 1995
Prepaid income taxes $5,035 $4,397
Deferred income taxes (2,369) (1,425)
______ ______
$2,666 $2,972
====== ======
At December 31, 1996, the Company had state net operating loss
carryforwards of $17.5 million and had alternative minimum tax credit
carryforwards of $1.3 million which do not expire. The carryforwards will be
available for the reduction of future income tax liabilities; a valuation
allowance has been recorded against certain of these carryforwards for which
utilization is uncertain.
Cash paid related to income taxes during 1996, 1995 and 1994 was
$2,607,000, $3,012,000 and $61,000, respectively.
Note 8 - Employee Retirement Plans
The Company maintains non-contributory defined benefit pension plans
covering the majority of its employees. The benefits provided by certain of
the plans are based on a defined monthly multiplier applied to the employee's
length of service, with the remaining plans providing benefits based primarily
on years of service and average compensation.
Net pension (income) expense includes the following components (in
thousands):
Year Ended December 31, 1996 1995 1994
Service cost $ 483 $ 411 $ 643
Interest cost on projected
benefit obligation 1,808 1,830 1,726
Actual (return) loss on
plan assets (1,830) (3,381) 4
Net amortization and
deferral (475) 1,018 (2,260)
_______ _______ _______
Net periodic pension
(income) expense $ (14) $ (122) $ 113
======= ======= =======
The following schedule details (in thousands) the funded status of the
plans.
1996 1995 1994
Actuarial present value
of benefit obligation:
Vested $21,866 $21,982 $19,299
Nonvested 1,570 1,690 1,607
_______ _______ _______
Accumulated benefit
obligation 23,436 23,672 20,906
Effect of projected
salary increases 1,103 1,186 1,316
_______ _______ _______
Total projected benefit
obligation 24,539 24,858 22,222
Plan assets at fair
value 25,277 23,670 21,754
_______ _______ _______
Plan assets in excess of
(less than) projected
benefit obligation 738 (1,188) (468)
Unrecognized
transitional asset (707) (1,093) (1,579)
Prior service cost not
yet recognized in net
periodic pension cost 1,544 1,094 1,190
Unrecognized net loss 1,315 3,607 3,154
_______ _______ _______
Prepaid pension asset $2,890 $ 2,420 $ 2,297
====== ====== ======
The projected benefit obligation was determined using assumed discount
rates of 8.0% in 1996, 7.75% in 1995 and 8.5% in 1994, and assumed long-term
rates of compensation increase of 4% in 1996, 1995 and 1994. The measurement
dates used in the actuarial calculations were September 30 in 1996 and 1995
and December 31 in 1994. The annual long-term rate of return on plan assets
was assumed to be 9.0% in 1996, 1995 and 1994. Plan assets consist
principally of common stocks and fixed income investments. Funding for the
plans equals or exceeds the minimum requirements of the Employee Retirement
Income Security Act of 1974.
In addition, the Company maintains an unfunded supplemental retirement
benefit plan for certain management employees. The accumulated benefit
obligation for this plan was $989,000 and $954,000 at December 31, 1996 and
1995, respectively, using a discount rate of 8.0% and 7.25%, respectively.
The Company maintains a savings and profit sharing plan under Section
401(k) of the Internal Revenue Code which covers substantially all employees
who have completed sixty (60) days of service with the Company. Effective
July 1, 1995, the Company reinstated its policy of matching 25% of non-
bargaining unit employee contributions to the plan not to exceed 6% of the
employee's annual compensation. Vesting of Company contributions occurs at
the rate of 20% per year. Contributions approximated $155,000 and $58,000 for
the years ended December 31, 1996 and 1995, respectively.
The Company maintains a defined contribution plan that covers
substantially all employees not included under a defined benefit plan. The
Company contributes various percentages of eligible employee compensation (as
defined therein); the plan does not allow employee contributions. The Company
has contributed approximately $252,000, $212,000 and $194,000 in connection
with this plan for 1996, 1995 and 1994, respectively.
The Company only provides postretirement benefits to retirees in two
areas: a $2,500 life insurance policy for retired office employees and
subsidized health insurance benefits for early retirees prior to their
attaining age 65. The number of retirees associated with postretirement
benefit costs is approximately 167.
Net postretirement benefit expense included the following components (in
thousands):
Year Ended December 31, 1996 1995 1994
Service cost $ 49 $ 47 $ 49
Interest cost on
projected benefit
obligation 102 117 106
Net amortization and
deferral 58 57 70
_____ _____ _____
Net postretirement
benefit expense $209 $221 $225
===== ===== =====
The Company's postretirement benefit plans are not funded. The status of
the Company's plans was as follows (in thousands):
December 31, 1996 1995
Actuarial present value of
accumulated
postretirement benefit
obligation $1,564 $1,634
Unrecognized transitional
obligation (361) (382)
Unrecognized net loss (667) (887)
----- -----
Accrued postretirement
benefit liability $ 536 $ 365
===== =====
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation at December 31, 1996 was 10% decreasing to
6% over four years and at December 31, 1995 was 12% decreasing to 6% over
seven years. The discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% at December 31, 1996 and 7.25% at
December 31, 1995. A one point percentage increase in the health care cost
trend rate would increase the accumulated postretirement benefit obligation by
approximately $192,000 and would increase the net postretirement benefit
expense by approximately $29,000.
Note 9 - Shareholders' Equity
During April 1996, the 1995 Stock Option Plan was adopted by the Company
as approved by the shareholders (the 1995 Plan ), which authorized the
granting of options for up to 600,000 shares of the Company's common stock.
In addition, through its expiration in December, 1996, the Company was
authorized to grant options for up to 530,000 shares of the Company's common
stock under the 1987 Stock Option Plan. The 1995 Plan provides that options
be granted at an exercise price not less than fair market value on the date
the options are granted and that the options vest ratably over a period not
exceeding three years after the grant date. The option period shall not be
more than ten years after the grant date.
Following is a summary of activity in the stock option plans for 1995 and
1996:
Weighted
Shares Average
Subject Option
to Option Price
Outstanding, January 1, 1995 240,919 $ 6.58
Granted 170,500 7.31
Exercised (47,242) 5.71
Cancelled (8,505) 5.94
_________ ______
Outstanding, December 31, 1995 355,672 $7.06
========= ======
Outstanding, January 1, 1996 355,672 $ 7.06
Granted 323,650 8.60
Exercised (32,082) 5.79
Cancelled (53,751) 8.82
_________ ______
Outstanding, December 31, 1996 593,489 $7.81
========= ======
Exercisable, December 31, 1996 208,350 $7.00
========= ======
The exercise price for options outstanding at December 31, 1996 range
from $3.00 to $9.375 per share. The weighted-average remaining contractual
life of these options approximates seven years.
The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for
options granted under the stock option plans. Had compensation cost been
determined based on the fair value at the grant date for awards in 1995 and
1996 consistent with the provisions of SFAS No. 123, the Company's pro-forma
net income and earnings per share would have been as presented below (in
thousands, except per share data):
For the year ended December 31, 1996 1995
Net income - as reported $9,565 $9,013
Net income - pro-forma 9,306 9,006
Net income per share - as reported 1.54 1.44
Net income per share - pro-forma 1.49 1.44
The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-
average assumptions used for grants in 1996 and 1995:
For the year ended December 31, 1996 1995
Expected stock price volatility 20.9% 21.2%
Risk-free interest rate 6.4% 5.6%
Expected life of options 7 years 6 years
The weighted-average grant-date fair value of options granted during 1996
and 1995 was $3.40 and $2.58, respectively.
At December 31, 1996, a warrant to purchase 180,000 shares of the
Company's common stock for $7 per share, subject to certain adjustments as
provided in the warrant agreement, was outstanding to a former junior note
holder. The warrant can be exercised at any time through March 5, 1998.
Note 10 - Leases
The Company occupies certain warehouse facilities and uses certain
equipment under operating lease arrangements. Rent expense under such
arrangements amounted to $1,381,000, $1,510,000 and $1,606,000 in 1996, 1995
and 1994, respectively.
The Company maintains non-cancellable operating leases for certain
facilities and equipment. Future minimum lease payments under such leases at
December 31, 1996, are as follows (in thousands):
1997 $212
1998 80
1999 42
2000 26
2001 13
-------
$373
=======
Note 11 - Contingencies
The Company is involved in litigation of which the ultimate outcome and
liability to the Company, if any, is not presently determinable. Management
believes, based on opinion of counsel, that final disposition of such
litigation will not have a material impact on the Company's results of
operations or financial position.
Note 12 - Segment Information
The Company manufactures and distributes products into two industry
segments.
Gehl Construction is engaged in the manufacture and distribution of
equipment and machinery for the construction market. As of December 31, 1996,
21% of the Company's accounts receivable were from customers in the
construction market.
Gehl Agriculture is engaged in the manufacture and distribution of farm
equipment and machinery for the dairy and livestock agricultural sector. As
of December 31, 1996, 79% of the Company's accounts receivable were from
customers in the agricultural sector.
Unallocated assets are cash, deferred income taxes and other nonallocable
assets.
Segments of business by industry are presented below (in thousands):
Year Ended December 31, 1996 1995 1994
Net Sales
Construction $ 70,826 $ 64,381 $ 51,796
Agriculture 88,836 89,071 94,824
________ ________ ________
Consolidated $159,662 $153,452 $146,620
======== ======== ========
Income from
Operations
Construction $ 12,967 $ 13,164 $ 8,542
Agriculture 2,580 449 4,419
________ ________ ________
Consolidated $ 15,547 $ 13,613 $ 12,961
======== ======== ========
Assets (Year-end)
Construction $ 27,994 $ 29,999 $ 24,029
Agriculture 76,857 91,612 97,730
Unallocated 15,274 13,312 9,268
________ ________ ________
Consolidated $120,125 $134,923 $131,027
======== ======== ========
Depreciation/
Amortization
Construction $ 760 $ 921 $ 1,076
Agriculture 1,758 1,883 2,273
Unallocated 58 61 418
________ ________ ________
Consolidated $ 2,576 $ 2,865 $ 3,767
======== ======== ========
Capital Expenditures
Construction $ 922 $ 655 $ 1,422
Agriculture 2,915 1,782 1,083
________ ________ ________
Consolidated $ 3,837 $ 2,437 $ 2,505
======== ======== ========
Exports of U.S. produced products were approximately $26.8 million, $28.0
million and $25.9 million in 1996, 1995 and 1994, respectively.
Note 13 - Quarterly Financial Data (unaudited)
In Thousands,
Except Per First Second Third Fourth
Share Data -- Quarter Quarter Quarter Quarter Total
1996
Net sales $39,165 $44,474 $40,550 $35,473 $159,662
Gross profit 11,016 13,352 12,252 11,140 47,760
Net income 1,896 2,933 2,621 2,115 9,565
Net income
per common
share .31 .47 .42 .34 1.54
1995
Net sales $38,268 $42,730 $36,901 $35,553 $153,452
Gross profit 10,680 12,697 10,726 10,511 44,614
Net income 1,813 3,598 2,236 1,366 9,013
Net income
per common
share <F1> .29 .58 .36 .22 1.44
<F1>
Due to the use of the weighted average shares outstanding each
quarter for computing net income per share, the sum of the quarterly per share
amounts does not equal the per share amount for the year.
<PAGE>
[Page 24 of the Annual Report]
GEHL COMPANY AND SUBSIDIARIES
FIVE-YEAR FINANCIAL SUMMARY
Dollars in
Thousands,
Except Per
Share Data 1996 1995 1994 1993 1992
Summary of
Operations
Net sales $159,662 $153,452 $146,620 $137,218 $129,694
Gross profit 47,760 44,614 43,274 38,883 32,971
Income (loss)
from
operations 15,547 13,613 12,961 7,339 (6,866)
Interest
expense 3,443 5,733 6,711 8,364 10,103
Income (loss)
before income
taxes 12,494 9,163 5,035 366 (18,150)
Net income
(loss) 9,565 9,013 5,035 241 (17,900)
Financial
Position at
December 31
Current assets $89,748 $106,563 $102,621 $114,355 $138,193
Current
liabilities 32,136 29,561 28,710 30,328 128,717
Working
capital 57,612 77,002 73,911 84,027 9,476
Accounts
receivable 55,141 69,087 72,393 84,969 101,181
Finance
contracts
receivable 8,161 7,716 5,647 6,847 9,793
Inventories 18,642 23,320 21,452 21,633 24,083
Property,
plant and
equipment, net 21,678 20,315 20,433 20,088 22,242
Total assets 120,125 134,923 131,027 144,280 170,225
Long-term debt 19,194 46,666 54,700 72,259 418
Total debt 19,372 46,863 54,880 72,808 97,676
Shareholders'
equity 64,832 55,679 46,283 40,895 40,405
Common Share
Summary
Net income
(loss) per
share $1.54 $1.44 $.82 $.04 $(3.05)
Dividends per
share -- -- -- -- --
Book value per
share 10.53 8.96 7.50 6.67 6.88
Shares
outstanding at
year-end 6,158,720 6,216,765 6,169,523 6,132,443 5,875,110
Other
Financial
Statistics
Net cash
provided by
(used for)
operating
activities $31,795 $9,701 $19,522 $26,113 $(162)
Capital
expenditures 3,837 2,437 2,505 809 1,473
Depreciation 2,438 2,520 2,692 2,940 3,093
Current ratio 2.8 to 1 3.6 to 1 3.6 to 1 3.8 to 1 1.1 to 1
Percent total
debt to total
capitalization 23.0% 45.7% 54.2% 64.0% 70.7%
Net income
(loss) as a
percent of net
sales 6.0% 5.9% 3.4% .2% (13.8%)
After-tax
return on
average
shareholders'
equity 15.9% 17.7% 11.6% .6% (36.3%)
Employees at
year-end 832 842 928 946 1,001
Common stock
price range 12-6-7/8 9-5/8-6-1/4 8-1/2-5-3/8 7-3/8-3 6-2-1/4
Investor Information
Price Range Dividends
1996 1995 1996 1995
Stock Prices
and Dividends
First Quarter $8-3/4 - 6-7/8 $7-5/8 - 6-1/4 $ -- $ --
Second Quarter 8-3/4 - 7-5/8 9-3/8 - 6-7/8 -- --
Third Quarter 8-5/8 - 7-3/8 9-5/8 - 7-3/4 -- --
Fourth Quarter 12 - 7-5/8 8-1/4 - 6-5/8 -- --
______________ ______________ ______________ ______________
Year $12 - 6-7/8 $9-5/8 - 6-1/4 $ -- $ --
============== ============== ============== =============
<PAGE>
[Page 25 of the Annual Report]
Directors and Officers
Board of Directors
Thomas J. Boldt
President, The Boldt Group, Inc. (1)
Fred M. Butler
President and Chief Executive Officer,
The Manitowoc Company (*2)
John W. Findley
Chairman and President, Vine and Branches Foundation, Inc. and Chairman and
President, Cedars of Nemahbin Foundation, Inc. (1,2)
John W. Gehl
Vice President, International (3)
William D. Gehl
Chairman of the Board of Directors,
President and Chief Executive Officer, (3)
William P. Killian
Vice President, Corporate Development and Strategy
Johnson Controls, Inc. (3)
Arthur W. Nesbitt
Chairman, President and Chief Executive Officer,
Nasco International (2,*3)
Roger E. Secrist
Retired Chairman and Chief Executive Officer,
ANGUS Chemical Company (2,3)
John W. Splude
President and Chief Executive Officer,
HK Systems, Inc. (*1)
Executive Officers
William D. Gehl
Chairman of the Board of Directors,
President and Chief Executive Officer
Victor A. Mancinelli
Executive Vice President and Chief Operating Officer
John W. Gehl
Vice President, International
Kenneth P. Hahn
Vice President, Finance and Treasurer
Michael J. Mulcahy
Vice President, Secretary and General Counsel
Richard J. Semler
Vice President, Data Systems
(*) Chairman
(1) Audit Committee
(2) Compensation and Benefits Committee
(3) Nominating Committee
Information of Interest
Annual Meeting
All shareholders are invited to attend our annual meeting which will be held
on Wednesday, April 16, 1997, at 3:00 p.m. at the Cedar Theatre, Cedar Lake
Campus, 5595 Hwy Z, West Bend, Wisconsin.
Transfer Agent
Shareholders with a change of address or related needs should contact:
Firstar Trust Company
615 E. Michigan Street, 4th Floor
P.O. Box 2077
Milwaukee, Wisconsin 53201
800-637-7549
Stock Market Information
Gehl Company common stock is traded on The Nasdaq Stock Market under the
symbol GEHL. As of February 3, 1997, share-holders of record numbered 856.
This number does not include shareholders who hold Gehl Company Stock in
street name.
Independent Accountants
Price Waterhouse LLP
Milwaukee, Wisconsin
Investor Information
The Company provides quarterly financial information to Shareholders through
an automated "News on Demand Service". The Company does not mail out
Quarterly Reports to Shareholders. By calling 1-800-882-2786, you will be
able to request from a directory maintained by the Company a faxed copy of
financial and other types of information about the Company to be sent directly
to you. You may also order for mailing to you Forms 10-K and 10-Q and other
available information by calling the same toll-free number.
Additionally, copies of Gehl Company's Form 10-K for 1996, as well as other
financial information about the Company, are available from:
Michael J. Mulcahy
Corporate Secretary
Gehl Company
143 Water Street
West Bend, Wisconsin 53095
414-334-9461
The Company anticipates making 1997 quarterly earnings announcements:
First Quarter: Week ending, April 18, 1997
Second Quarter: Week ending, July 18, 1997
Third Quarter: Week ending, October 17, 1997
Fourth Quarter: Week ending, February 20, 1998<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements listed below of Gehl Company of our report dated
February 10, 1997 appearing in the 1996 Annual Report to Shareholders which
is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears in this Form 10-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
Milwaukee, Wisconsin
February 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at December 31, 1996 and consolidated
statements of income for the twelve month period ended December 31, 1996 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 4208
<SECURITIES> 0
<RECEIVABLES> 67108
<ALLOWANCES> 3806
<INVENTORY> 18642
<CURRENT-ASSETS> 89748
<PP&E> 57071
<DEPRECIATION> 35393
<TOTAL-ASSETS> 120125
<CURRENT-LIABILITIES> 32136
<BONDS> 19194<F1>
<COMMON> 616
0
0
<OTHER-SE> 64216
<TOTAL-LIABILITY-AND-EQUITY> 120125
<SALES> 159662
<TOTAL-REVENUES> 159662
<CGS> 111902
<TOTAL-COSTS> 111902
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3443
<INCOME-PRETAX> 12494
<INCOME-TAX> 2929
<INCOME-CONTINUING> 9565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9565
<EPS-PRIMARY> 1.54
<EPS-DILUTED> 0<F2>
<FN>
<F1>Includes all non-current portion of debt obligations
<F2>Not reported
</FN>
</TABLE>
