SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 29, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from.............. to ...................
Commission file number 0-18110
GEHL COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0300430
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
143 Water Street, West Bend, WI 53095
(Address of principal executive office) (zip code)
(414) 334-9461
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 29, 1997
Common Stock, $.10 Par Value 6,188,685
<PAGE>
GEHL COMPANY
FORM 10-Q
March 29, 1997
REPORT INDEX
Page No.
PART I. - FINANCIAL INFORMATION:
Condensed Consolidated Statements of Income for the
Three-Month Periods Ended March 29, 1997 and
March 30, 1996 . . . . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at March 29, 1997,
December 31, 1996, and March 30, 1996 . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Three-Month Periods Ended March 29, 1997 and
March 30, 1996 . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements 6
Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . 8
PART II. - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
PART I - FINANCIAL INFORMATION
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data; unaudited)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
<S> <C> <C>
NET SALES $ 43,675 $ 39,165
Cost of goods sold 30,692 28,149
--------- --------
GROSS PROFIT 12,983 11,016
Selling, general and
administrative expenses 8,832 8,033
--------- --------
INCOME FROM OPERATIONS 4,151 2,983
Interest expense (468) (1,041)
Interest income 322 409
Other expense, net (53) (52)
---------- ---------
INCOME BEFORE INCOME TAXES 3,952 2,299
Income tax provision 1,423 403
---------- ---------
NET INCOME $ 2,529 $ 1,896
========= ========
EARNINGS PER SHARE $ .39 $ .31
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
March 29, December 31, March 30,
1997 1996 1996
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash $ 3,137 $ 4,208 $ 3,740
Accounts receivable-net 64,420 55,141 71,951
Finance contracts receivable-net 5,763 5,098 7,214
Inventories 17,483 18,642 22,856
Deferred tax asset 5,035 5,035 4,397
Prepaid expenses and other assets 1,821 1,624 1,401
-------- --------- ----------
Total Current Assets 97,659 89,748 111,559
-------- --------- ----------
Property, plant and equipment-net 22,487 21,678 20,438
Finance contracts receivable-net, non-
current 3,446 3,063 4,228
Other assets 5,666 5,636 5,365
-------- --------- ----------
TOTAL ASSETS $ 129,258 $ 120,125 $ 141,590
========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt
obligations $ 181 $ 178 $ 167
Accounts payable 16,142 14,384 14,191
Accrued liabilities 18,934 17,574 16,126
--------- --------- ----------
Total Current Liabilities 35,257 32,136 30,484
--------- --------- ----------
Line of credit facility 13,717 10,454 42,365
Long-term debt obligations 8,697 8,740 8,785
Other long-term liabilities 1,671 1,594 1,485
Deferred income taxes 2,369 2,369 1,425
--------- --------- ----------
Total Long-Term Liabilities 26,454 23,157 54,060
--------- --------- ----------
Common stock, $.10 par value,
25,000,000 shares authorized, 6,188,685,
6,158,720 and 6,218,765 shares issued,
respectively 619 616 622
Preferred stock, $.10 par value,
2,000,000 shares authorized, no
shares issued - - -
Capital in excess of par 26,338 26,155 26,586
Retained earnings 40,590 38,061 30,373
--------- --------- ----------
67,547 64,832 57,581
Less: Treasury stock (76,393 shares
at March 30, 1996) at cost - - (535)
--------- --------- ----------
Total Shareholders' Equity 67,547 64,832 57,046
--------- --------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 129,258 $ 120,125 $ 141,590
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<CAPTION>
Three Months Ended
March 29, March 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 2,529 $ 1,896
Adjustments to reconcile net income to
net cash (used for) provided by operating
activities:
Depreciation and amortization 697 675
Increase in finance contracts receivable (6,254) (8,765)
Proceeds from sales of finance contracts 5,127 5,028
Cost of sales of finance contracts 79 11
Net changes in remaining working capital
items (5,299) (2,087)
---------- ---------
Net cash (used for) provided by
operating activities (3,121) (3,242)
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (1,482) (760)
Other assets 46 505
--------- ---------
Net cash (used for) provided by
investing activities (1,436) (255)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in long-term debt obligations (40) (63)
Increase in long-term liabilities 77 46
Proceeds from line of credit facility 3,263 4,517
Treasury stock purchase - (535)
Proceeds from issuance of common stock 186 6
---------- ---------
Net cash provided by financing activities 3,486 3,971
---------- ---------
Net (decrease) increase in cash (1,071) 474
Cash, beginning of period 4,208 3,266
---------- ---------
Cash, end of period $ 3,137 $ 3,740
========== =========
Supplemental disclosure of cash flow
information:
Cash paid for the following:
Interest $ 444 $ 1,007
Income Taxes $ 23 $ 299
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 29, 1997
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have
been prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although management
believes that the disclosures are adequate to make the information presented
not misleading.
In the opinion of management, the information furnished for the three-
month periods ended March 29, 1997 and March 30, 1996 includes all
adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of the results of operations and financial position of the
Company. Due in part to the seasonal nature of the Company's business, the
results of operations for the three months ended March 29, 1997 are not
necessarily indicative of the results to be expected for the entire year.
It is suggested that these interim financial statements be read in
conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 as
filed with the Securities and Exchange Commission.
NOTE 2 - EARNINGS PER SHARE
Earnings per share is computed by dividing net income by the weighted
average number of common shares outstanding and, if applicable, common stock
equivalents which would arise from the exercise of stock options and warrants.
The weighted average number of shares used in the computations was 6,404,340
and 6,203,045 for the three months ended March 29, 1997 and March 30, 1996,
respectively.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS
128 replaces primary EPS with basic EPS, which excludes dilution, and requires
presentation of both basic and diluted EPS on the face of the income
statement. Diluted EPS is computed similarly to the current fully diluted
EPS. SFAS 128 is effective for financial statements issued for periods ending
after December 15, 1997, and requires restatement of all prior-period EPS data
presented. The adoption of this statement is not expected to materially
affect either future or prior-period EPS.
NOTE 3 - INCOME TAXES
The income tax provision is determined by applying an estimated annual
effective income tax rate to income before income taxes. The estimated annual
effective income tax rate is based on the most recent annualized forecast of
pretax income, permanent book/tax differences, and tax credits.
NOTE 4 - INVENTORIES
If all of the Company's inventories had been valued on a current cost
basis, which approximated FIFO value, estimated inventories by major
classification would have been as follows (in thousands):
March 29, December 31, March 30,
1997 1996 1996
Raw materials and
supplies $ 3,833 $ 3,547 $ 3,898
Work in process 10,263 9,120 9,292
Finished machines
and parts 22,182 24,770 28,539
------- ------- -------
Total current cost
value 36,278 37,437 41,729
Adjustment to LIFO
basis (18,795) (18,795) (18,873)
------- ------- --------
$17,483 $18,642 $22,856
======= ======= ========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Results of Operations
Three Months Ended March 29, 1997 Compared to Three Months Ended March 30,
1996
Net sales for the first quarter of 1997 of $43.7 million were $4.5
million, or 12%, higher than the $39.2 million in the comparable period of
1996. Gehl Construction's net sales increased 21% to $20.7 million in the
first quarter of 1997 from $17.1 million in the first quarter of 1996. The
Gehl Construction increase resulted from continued strong demand for the
Company's skid loader, rough-terrain telescopic forklift and paving equipment
product lines. Gehl Agriculture sales increased 4% to $23.0 million in the
first quarter of 1997 from $22.1 million in the first quarter of 1996. The
increase was due primarily to increased shipments of forage harvesting and
manure handling equipment. Of the Company's total net sales reported for the
first quarter of 1997, $7.6 million were made outside of the United States.
Gross profit increased $2.0 million, or 18%, during the first quarter of
1997 versus the comparable period of 1996, due primarily to increased sales
volume. Gross profit as a percent of net sales increased to 29.7% for the
first quarter of 1997 from 28.1% in the comparable period of 1996. A shift in
the mix of product shipments toward the relatively higher margin Gehl
Construction products combined with an improvement in the gross profit of
Agriculture shipments resulted in the overall Company increase in gross profit
as a percent of net sales. Gross profit as a percent of net sales for Gehl
Construction did, however, decrease to 30.7% in the first quarter of 1997 from
31.7% in the first quarter of 1996. The primary reasons for the decrease were
a shift in mix of product shipments and a competitive pricing environment in
which price increases have not kept pace with cost increases. Gross profit as
a percent of net sales for Gehl Agriculture increased to 28.8% in the first
quarter of 1997 from 25.4% for the first quarter of 1996. The primary reasons
for the increase were: 1) reduced product costs due to higher overhead
absorption associated with increased levels of production, 2) export sales,
typically made at a lower gross margin than domestic sales, constituting a
smaller portion of the first quarter shipments in 1997 than in 1996, and 3)
the impact of a change in the mix of products shipped in the first quarter of
1997 versus products shipped in comparable 1996.
Selling, general and administrative expenses increased $799,000, or 10%,
during the first quarter of 1997 versus the comparable period of 1996 due
primarily to increased investments in research and development costs and
increased selling expenses. As a percent of net sales, selling, general and
administrative expenses decreased to 20.2% of net sales during the first
quarter of 1997 versus 20.5% in the comparable period of 1996.
First quarter 1997 income from operations of $4.2 million was 39% higher
than the $3.0 million for the first quarter of 1996.
Interest expense decreased $573,000, or 55%, to $468,000 in the first
quarter of 1997 from $1,041,000 in the first quarter of 1996. The decrease
was a result of a reduction in average debt outstanding to $21.3 million in
the first quarter of 1997 versus $50.0 million in the first quarter of 1996.
The average rate of interest paid by the Company in the first quarter of 1997
increased slightly to 8.3% from 8.1% for the comparable period of 1996. The
decrease in the average debt outstanding was primarily the result of the
application of cash generated from reduced accounts receivable and inventory
levels and increased shareholders' equity over the past twelve months.
Interest income decreased $87,000, or 21%, to $322,000 in the first
quarter of 1997 from $409,000 in the comparable period of 1996 due primarily
to reduced interest income earned on floor plan wholesale receivables
and retail finance receivables during the first quarter of 1997 as compared
with the first quarter of 1996. The Company's effective income tax rate was
36% for the first quarter of 1997 versus 17.5% for the first quarter of 1996.
Financial Condition
The Company's working capital was $62.4 million at March 29, 1997, as
compared to $57.6 million at December 31, 1996, and $81.1 million at March 30,
1996. The increase since December 31, 1996 resulted primarily from seasonal
increases in accounts receivable. The decrease from March 30, 1996 was due
primarily to a reduction in accounts receivable and inventory levels.
The Company's first quarter 1997 cash flow used for operating activities
was $3.1 million versus $3.2 million used for operating activities in
comparable 1996. The first quarter cash flow from operating activities is
normally negative due to seasonal increases in accounts receivable.
Capital expenditures for property, plant and equipment during the first
quarter of 1997 were approximately $1.5 million. The Company plans to make a
total of approximately $8.0 million of 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. Outstanding commitments as
of March 29, 1997 totaled approximately $1.7 million, including $1.4 million
related to the aforementioned plant expansion projects.
As of March 29, 1997, the weighted average interest rate paid by the
Company on outstanding borrowings under its line of credit facility was 7.6%.
The Company had available unused borrowing capacity of $50.6 million, $45.4
million and $28.9 million under the line of credit facility at March 29, 1997,
December 31, 1996, and March 30, 1996, respectively. At March 29, 1997,
December 31, 1996, and March 30, 1996, the borrowings outstanding under the
line of credit facility were $13.7 million, $10.5 million and $42.4 million,
respectively.
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 March 29, 1997, Gehl serviced $60.4 million of such
contracts, of which $50.6 million were owned by other parties. The Company
believes that it has sufficient capacity to sell its retail finance contracts
for the foreseeable future.
Shareholders' equity at March 29, 1997 was $67.5 million. This was $10.5
million higher than the $57.0 million of shareholders' equity at March 30,
1996, due primarily to income earned from March 31, 1996 through March 29,
1997.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Gehl Company Director Stock Grant Plan
27 Financial Data Schedule [EDGAR version only]
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 29, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GEHL COMPANY
Date: May 12, 1997 By: /s/ William D. Gehl
William D. Gehl
Chairman, President and
Chief Executive Officer
Date: May 12, 1997 By: /s/ Kenneth P. Hahn
Kenneth P. Hahn
Vice President of Finance
and Treasurer (Principal
Financial and Accounting
Officer)
<PAGE>
GEHL COMPANY
FORM 10-Q
March 29, 1997
EXHIBIT INDEX
Exhibit
Number Document Description
10.1 Gehl Company Director Stock Grant Plan
27 Financial Data Schedule [EDGAR version only]
Approved: _________________
__________________________
Michael J. Mulcahy, Secretary
GEHL COMPANY
DIRECTOR STOCK GRANT PLAN
1.Purpose. The purpose of the Gehl Company Director Stock Grant
Plan (the Plan ) is to promote the best interests of the Company and its
shareholders by providing a means to attract and retain competent independent
directors and to provide opportunities for additional stock ownership by such
directors which will further increase their proprietary interest in the
Company and, consequently, their identification with the interests with the
interests of the Shareholders of the Company.
2.Administration. The Plan shall be administered by the
Compensation and Benefits Committee of the Board of Directors of the Company
(the "Administrator"), subject to review by the Board of Directors (the
"Board"). The Administrator may adopt such rules and regulations for carrying
out the Plan as it may deem proper and in the best interests of the Company.
The interpretation by the Board of any provision of the Plan or any related
documents shall be final.
3.Stock Subject to the Plan. Subject to adjustment in accordance
with the provisions of paragraph 7, the total number of shares of common
stock, $.10 par value, of the Company ("Common Stock") available for awards
under the Plan shall be 25,000. Shares of Common Stock to be delivered under
the Plan shall be made available from presently authorized but unissued Common
Stock or authorized and issued shares of Comomon Stock reacquired and held as
treasury shares, or a combination thereof. In no event shall the Company be
required to issue fractional shares of Common Stock under the Plan. Whenever
under the terms of the Plan a fractional share of Common Stock would otherwise
be required to be issued, there shall be paid in lieu thereof one full share
of Common Stock.
4.Director Grants. Each member of the Board who is not an employee
of the Company or any subsidiary of the Company shall receive a grant of
Common Stock (a Director Grant ) on the 31st day of December of each year in
payment of a portion of his or her retainer fee for serving as a member of the
Board.
5.Grant Amount. Each Director Grant shall consist of such number of
shares of Common Stock whose value on the issue date equals $3,000.00. For
purposes of the Plan, the value of the Common Stock as of the issue date shall
equal the last sale price of a share of Common Stock on The Nasdaq Stock
Market on the issue date (or if no sale took place on such exchange on such
date, the last sale price on such exchange on the most recent preceding date
on which a sale took place).
6.Restrictions on Transfer. Shares of Common Stock acquired under
the Plan may not be sold or otherwise disposed of except pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
or except in a transaction which, in the opinion of counsel, is exempt from
registration under said Act. All certificates evidencing shares subject to
Director Grants may bear an appropriate legend evidencing any such transfer
restriction. The Administrator may require each person receiving a Director
Grant under the Plan to represent in writing that such person is acquiring the
shares of Common Stock without a view to the distribution thereof. All
dividends and voting rights for shares awarded under the Plan shall accrue as
of the issue date of the Director Grant.
7.Adjustment Povisions. In the event of any change in the Common
Stock by reason of a declaration of a stock divident (other than a stock
dividend declared in lieu of an ordinary cash divident), spin-off, merger,
consolidation, recapitalization, or split-up, combination or exchange of
shares, or otherwise, the aggregate number of shares available under this Plan
shall be appropriately adjusted in order to prevent dilution or enlargement of
the benefits intended to be made available under the Plan.
8.Amendment of Plan. The Board shall have the right to amend the
Plan at any time or from time to time in any manner that it may deem
appropriate, provided that such amendments shall not be made more than once
every six months.
9.Governing Law. The Plan, all awards hereunder, and all
determinations made and actions taken pursuant to the Plan shall be governed
by the internal laws of the State of Wisconsin and applicable federal law.
10.Term of Plan. The Plan shall terminate on such date as may be
determined by the Board.
Approved at the December 20, 1996 Board Meeting.
12/96
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's condensed consolidated balance sheet at March 29, 1997 and condensed
consolidated statements of income for the three-month period ended March 29,
1997 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-29-1997
<CASH> 3137
<SECURITIES> 0
<RECEIVABLES> 70183
<ALLOWANCES> 0<F1>
<INVENTORY> 17483
<CURRENT-ASSETS> 97659
<PP&E> 58511
<DEPRECIATION> 36024
<TOTAL-ASSETS> 129258
<CURRENT-LIABILITIES> 35257
<BONDS> 22414<F2>
<COMMON> 619
0
0
<OTHER-SE> 66928
<TOTAL-LIABILITY-AND-EQUITY> 129258
<SALES> 43675
<TOTAL-REVENUES> 43675
<CGS> 30692
<TOTAL-COSTS> 30692
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 468
<INCOME-PRETAX> 3952
<INCOME-TAX> 1423
<INCOME-CONTINUING> 2529
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2529
<EPS-PRIMARY> .39
<EPS-DILUTED> 0<F3>
<FN>
<F1>Company presents receivables on a net basis in compliance with Article 10
of Regulation S-X.
<F2>Includes all non-current portion of debt obligations
<F3>Not reported
</FN>
</TABLE>
