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 September 26, 1998
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 September 26, 1998
Common Stock, $.10 Par Value 6,406,990
<PAGE>
GEHL COMPANY
FORM 10-Q
September 26, 1998
REPORT INDEX
Page No.
PART I. - FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
Three- and Nine-Month Periods Ended September 26, 1998
and September 27, 1997 . . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at September 26, 1998,
December 31, 1997 and September 27, 1997 . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Nine-Month Periods Ended September 26, 1998 and
September 27, 1997 . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements . 6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition . . . . . . . . . . . 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
PART II. - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . 12
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data; unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET SALES $ 63,452 $ 48,140 $199,971 $143,407
Cost of goods sold 45,618 33,333 145,111 100,070
--------- --------- -------- --------
GROSS PROFIT 17,834 14,807 54,860 43,337
Selling, general and
administrative expenses 10,734 8,885 33,283 26,668
--------- --------- -------- --------
INCOME FROM OPERATIONS 7,100 5,922 21,577 16,669
Interest expense (925) (412) (3,352) (1,339)
Interest income 480 378 1,233 1,039
Other expense, net (363) (493) (959) (952)
--------- --------- -------- --------
INCOME BEFORE INCOME TAXES 6,292 5,395 18,499 15,417
Income tax provision 2,234 1,942 6,567 5,550
--------- --------- -------- --------
NET INCOME $4,058 $3,453 $ 11,932 $ 9,867
========= ========= ======== ========
EARNINGS PER SHARE
Diluted $.61 $.52 $1.79 $1.52
Basic $.63 $.56 $1.88 $1.59
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 26, December 31, September 27,
1998 1997 1997
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash $ 4,925 $ 1,239 $ 3,204
Accounts receivable-net 77,975 72,190 63,277
Finance contracts receivable - net 8,892 8,210 6,507
Inventories 28,630 30,340 16,877
Deferred tax asset 4,217 4,217 4,112
Prepaid expenses and other assets 1,242 1,645 1,233
----------- ---------- -----------
Total Current Assets 125,881 117,841 95,210
----------- ---------- -----------
Property, plant and equipment-net 34,101 35,082 25,179
Finance contracts receivable-net,
non-current 3,298 3,031 3,904
Intangible assets 14,317 14,816 -
Other assets 5,725 5,453 5,633
----------- ---------- -----------
TOTAL ASSETS $ 183,322 $ 176,223 $ 129,926
=========== ========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current portion of long-term debt
obligations $ 639 $ 672 $ 193
Accounts payable 26,758 22,212 18,197
Accrued liabilities 26,341 21,444 20,560
----------- ---------- -----------
Total Current Liabilities 53,738 44,328 38,950
Line of credit facility 23,583 39,357 3,423
Long-term debt obligations 9,726 9,689 8,593
Other long-term liabilities 1,979 1,855 1,722
Deferred income taxes 3,421 3,421 2,478
----------- ---------- -----------
Total Long-Term Liabilities 38,709 54,322 16,216
----------- ---------- -----------
Common stock, $.10 par value,
25,000,000 shares authorized,
6,406,990, 6,212,686 and 6,199,055
shares outstanding, respectively 640 621 620
Preferred stock, $.10 par value,
2,000,000 shares authorized,
250,000 shares designated as
Series A Preferred Stock, no
shares issued - - -
Capital in excess of par 27,670 26,319 26,212
Retained earnings 62,565 50,633 47,928
----------- ---------- -----------
Total Shareholders' Equity 90,875 77,573 74,760
----------- ---------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 183,322 $ 176,223 $ 129,926
=========== ========== ===========
</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)
Nine Months Ended
September 26, September 27,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 11,932 $ 9,867
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 3,734 2,087
Proceeds from sales of finance contracts 38,668 25,462
Increase in finance contracts receivable (40,485) (28,693)
Cost of sales of finance contracts 868 981
Net change in working capital items 5,771 1,641
------------ ------------
Net cash provided by operating
activities 20,488 11,345
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions,
net (2,225) (5,519)
Other (301) 144
------------ ------------
Net cash used for investing activities (2,526) (5,375)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long-term debt obligations 4 128
Increase (decrease) in long-term
liabilities 124 (132)
Repayments of credit facility (15,774) (7,031)
Proceeds from issuance of common stock 1,370 254
Purchase of warrant - (193)
------------ ------------
Net cash used for financing activities (14,276) (6,974)
------------ ------------
Net increase (decrease) in cash 3,686 (1,004)
Cash, beginning of period 1,239 4,208
------------ ------------
Cash, end of period $ 4,925 $ 3,204
============ ============
Supplemental disclosure of cash flow
information:
Cash paid for the following:
Interest $ 3,346 $ 1,319
Income taxes $ 4,884 $ 3,820
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 26, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading.
In the opinion of management, the information furnished for the three- and
nine-month periods ended September 26, 1998 and September 27, 1997 includes
all adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of the results of operations and financial position of the
Company. The results of operations for the nine months ended September 26,
1998 are not necessarily indicative of the results to be expected for the
entire year due, in part, to the seasonal nature of the Company's operation.
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, 1997 as filed with
the Securities and Exchange Commission.
NOTE 2 - 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 3 - 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):
September 26, December 31, September 27,
1998 1997 1997
------------- ------------ -------------
Raw materials and
supplies $ 14,226 $ 14,830 $ 9,273
Work-in process 5,349 5,182 3,838
Finished machines and parts 28,305 29,578 22,561
------------- ------------ --------------
Total current cost value 47,880 49,590 35,672
Adjustment to LIFO basis (19,250) (19,250) (18,795)
------------- ------------ --------------
$ 28,630 $ 30,340 $ 16,877
============= ============ ==============
NOTE 4 - ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities" which is effective for fiscal quarters of
fiscal years beginning after June 15, 1999. Due to the Company's current
limited use of derivative instruments, the adoption of this statement is not
expected to affect the Company's financial condition or results of operations.
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits: an amendment of FASB Statements No. 87, 88 and 106" was adopted
January 1, 1998. This statement revises disclosure requirements for pension
and other postretirement benefit plans. The revised rules are intended to
improve the understandability of benefit disclosures, to eliminate certain
requirements that the FASB believes are no longer necessary, and to
standardize footnote disclosures. None of the SFAS No. 132 changes affect the
measurement or the recognition of benefit costs. The appropriate footnote
disclosures will be incorporated into the Company's Form 10-K filing for the
year ending December 31, 1998. Effective January 1, 1998, the Company adopted
SFAS No. 130 "Reporting Comprehensive Income", the effect of which was
immaterial to the financial statements. SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", was adopted effective
January 1, 1998. This statement establishes standards for the way that
business enterprises report information, financial and descriptive, about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The appropriate footnote disclosures will be incorporated into the
Company's Form 10-K filing for the year ending December 31, 1998 as required.
NOTE 5 - EARNINGS PER SHARE
Basic net income per common share is computed by dividing net income by
the weighted average number of common shares outstanding for the period.
Diluted 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.
A reconciliation of the shares used in the computation of earnings per share
follows (in thousands):
For the third quarter ended: September 26, 1998 September 27, 1997
------------------ ------------------
Basic shares 6,406 6,198
Effect of warrants and options 252 429
----- -----
Diluted shares 6,658 6,627
===== =====
For the nine months ended: September 26, 1998 September 27, 1997
------------------ ------------------
Basic shares 6,359 6,191
Effect of warrants and options 312 313
----- -----
Diluted shares 6,671 6,504
===== =====
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Three Months Ended September 26, 1998 Compared to Three Months Ended September
27, 1997
Net sales for the third quarter of 1998 of $63.5 million were 32% higher
than the $48.1 million of net sales in the comparable period of 1997. The
increase was due, in part, to the shipment of Mustang skid loaders in 1998 as
a result of the fourth quarter 1997 acquisition of this product line, as well
as increased demand for existing products and sales of products introduced
during 1998. Construction equipment net sales increased 60% to $38.8 million
in the third quarter of 1998 from $24.2 million in the third quarter of 1997.
The Construction equipment increase resulted from continued strong demand for
telescopic handlers and the aforementioned Mustang skid loader shipments.
Agriculture equipment net sales increased 3% to $24.7 million in the third
quarter of 1998 from $23.9 million in the third quarter of 1997. Of the
Company's total net sales reported for the third quarter of 1998, $10.2
million represented sales made outside the United States compared with $7.3
million in the comparable period of 1997. The increase was due primarily to
the addition of Mustang product sales.
Gross profit increased $3.0 million, or 20%, during the third quarter of
1998 versus the comparable period of 1997, due primarily to increased sales
volume. Gross profit as a percent of net sales decreased to 28.1% for the
third quarter of 1998 from 30.8% in the comparable period of 1997. Gross
profit as a percent of net sales for Construction equipment decreased to 26.2%
in the third quarter of 1998 from 31.3% in the third quarter of 1997. This
decrease was due primarily to: 1) shipments of Mustang skid loaders which have
lower gross margins than other Company sales of Construction equipment; and 2)
competitive pressures restricting price increases to lower levels than the
cost increases incurred by the Company. Gross profit as a percent of net
sales for Agriculture equipment increased to 31.1% in the third quarter of
1998 from 30.2% in the comparable period of 1997. The primary reason for the
increase was the impact of a change in the mix of products shipped in the
third quarter of 1998 versus products shipped in comparable 1997.
Selling, general and administrative expenses increased $1.8 million, or
21%, during the third quarter of 1998 versus the comparable period of 1997,
due primarily to operating costs related to the Mustang skid loader
operations. As a percent of net sales, selling, general and administrative
expenses decreased to 16.9% during the third quarter of 1998 versus 18.5% in
the comparable period of 1997.
Income from operations in the third quarter of 1998 was $7.1 million versus
$5.9 million in the third quarter of 1997.
Interest expense increased $513,000 to $925,000 in the third quarter of
1998 from $412,000 in the third quarter of 1997. This resulted from an
increase in average debt outstanding to $41.4 million in the third quarter of
1998 versus $18.5 million in the third quarter of 1997, offset by a decrease
in the average rate of interest paid by the Company to 7.9% in the third
quarter of 1998 versus 8.1% in the comparable period of 1997. The increase in
the average debt outstanding was primarily the result of indebtedness related
to the Mustang acquisition.
<PAGE>
Nine Months Ended September 26, 1998 Compared to Nine Months Ended September
27, 1997
Net sales for the first nine months of 1998 of $200.0 million were $56.6
million, or 39%, higher than the $143.4 million of net sales in the comparable
period of 1997. Construction equipment net sales increased 68% to $118.3
million in the first nine months of 1998 from $70.4 million in the first nine
months of 1997. The Construction equipment increase resulted from continued
strong demand for telescopic handlers and Mustang skid loader shipments.
Agriculture equipment net sales increased 12% to $81.7 million in the first
nine months of 1998 from $73.0 million in the first nine months of 1997. The
increase was due primarily to the introduction of new product offerings,
including a forage harvester with a crop processing attachment and a wider
model disc mower conditioner. In addition, increased skid loader shipments
offset reduced levels of shipments of other forage harvesting equipment, hay
tools and feedmaking equipment. Of the Company's total net sales reported for
the first nine months of 1998, $32.4 million represented sales made outside
the United States compared with $23.7 million in the comparative period of
1997. The increase is due primarily to the addition of Mustang product sales.
As the Company has increased its sale of Construction equipment products, the
Company has been successful in reducing the seasonality of its sales.
However, some sales seasonality still remains, primarily in the Company's
second quarter which historically has tended to be its strongest quarter for
sales, while sales levels have historically tended to be lower in the first
and fourth quarters.
Gross profit increased $11.5 million, or 27%, in the first nine months of
1998 versus the comparable period of 1997, due primarily to increased sales
volume. Gross profit as a percent of net sales decreased to 27.4% for the
first nine months of 1998 from 30.2% in the comparable period of 1997. Gross
profit as a percent of net sales for Construction equipment decreased to 25.7%
in the first nine months of 1998 from 31.4% in the first nine months of 1997.
This decrease was due primarily to: 1) shipments of Mustang skid loaders which
have lower gross margins than other Company sales of Construction equipment;
and 2) competitive pressures restricting price increases to lower levels than
the cost increases incurred by the Company. Gross profit as a percent of net
sales for Agriculture equipment increased to 29.9% for the first nine months
of 1998 from 29.0% for the first nine months of 1997. The primary reason for
the improvement was the impact of a change in the mix of products shipped in
the first nine months of 1998 versus products shipped in comparable 1997.
Selling, general and administrative expenses increased $6.6 million, or
25%, during the first nine months of 1998 versus the comparable period of 1997
primarily due to operating costs related to Mustang skid loader operations.
As a percent of net sales, selling, general and administrative expenses
decreased to 16.6% during the first nine months of 1998 versus 18.6% in the
comparable period of 1997.
Income from operations in the first nine months of 1998 of $21.6 million
was 29% higher than the $16.7 million for the comparable period of 1997.
Interest expense increased $2.0 million to $3.3 million in the first nine
months of 1998 from $1.3 million in the first nine months of 1997. The
increase was a result of an increase in average debt outstanding to $52.1
million in the first nine months of 1998 versus $21.5 million in the
comparable period of 1997. The increase in the average debt outstanding was
primarily the result of indebtedness related to the Mustang acquisition.
Financial Condition
The Company's working capital was $72.1 million at September 26, 1998, as
compared to $73.5 million at December 31, 1997 and $56.3 million at September
27, 1997. The increase since September 27, 1997 was due primarily to the
working capital associated with the Mustang acquisition.
The Company's cash flow provided by operating activities in the first
nine months of 1998 was $20.5 million versus $11.3 million in comparable 1997.
The third quarter 1998 cash flow provided by operations was $13.4 million
compared to 1997's third quarter of $6.9 million provided by operations. This
increase was due primarily to a larger reduction in accounts receivable in the
third quarter of 1998.
Capital expenditures for property, plant and equipment during the first
nine months of 1998 were approximately $2.2 million. The Company expects to
make approximately $3.5 million of capital expenditures during 1998.
Outstanding commitments as of September 26, 1998 totaled approximately
$386,000.
As of September 26, 1998, the weighted average interest rate paid by the
Company on outstanding borrowings under its line of credit facility was 7.4%.
The Company had available unused borrowing capacity of $49.2 million,
$28.3 million and $59.8 million under the line of credit facility at
September 26, 1998, December 31, 1997 and September 27, 1997, respectively.
At September 26, 1998, December 31, 1997 and September 27,1997, the
borrowings outstanding under the line of credit facility were $23.6
million, $39.4 million and $3.4 million, respectively.
The sale of finance contracts is an important component of the Company's
overall liquidity. Gehl has arrangements with several financial institutions
and finance service companies to sell, with recourse, its finance
contracts receivable. The Company continues to service substantially all
contracts whether or not sold. At September 26, 1998, Gehl serviced $78.1
million of such contracts, of which $65.9 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 September 26, 1998 was $90.9 million. This amount
was $16.1 million higher than the $74.8 million of shareholders' equity at
September 27, 1997, due primarily to income earned from September 28, 1997
through September 26, 1998.
Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities" which is effective for fiscal quarters of
fiscal years beginning after June 15, 1999. Due to the Company's current
limited use of derivative instruments, the adoption of this statement is not
expected to effect the Company's financial condition or results of operations.
SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits: an amendment of FASB Statements No. 87, 88 and 106" was adopted
January 1, 1998. This statement revises disclosure requirements for pension
and other postretirement benefit plans. The revised rules are intended to
improve the understandability of benefit disclosures, to eliminate certain
requirements that the FASB believes are no longer necessary, and to
standardize footnote disclosures. None of the SFAS No. 132 changes affect the
measurement or the recognition of benefit costs. The appropriate footnote
disclosures will be incorporated into the Company's Form 10-K filing for the
year ending December 31, 1998. Effective January 1, 1998, the Company adopted
SFAS No. 130 "Reporting Comprehensive Income", the effect of which was
immaterial to the financial statements. SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", was adopted effective
January 1, 1998. This statement establishes standards for the way that
business enterprises report information, financial and descriptive, about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports issued to shareholders. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. The appropriate footnote disclosures will be incorporated into the
Company's Form 10-K filing for the year ending December 31, 1998 as required.
Year 2000
The Year 2000 issue refers to computer systems which use two digits rather
than four to define a given year and which therefore might read a date using
"00" as the year 1900 rather than the Year 2000. As the Year 2000 approaches,
such systems may be unable to process certain date-based information. This
could result in system failure or miscalculations causing disruptions of
operations and the potential inability to engage in normal business
activities.
In 1995, a Company-wide program was initiated to prepare its Information
Technology ("IT") systems and applications for the Year 2000. The initial
focus of the Company's program contained the following steps: assessment of
the relevant issues; planning the conversion; implementing the conversion; and
testing. Those systems determined to be at risk were prioritized and plans
were put in place to upgrade systems by remediation, replacement or
outsourcing. Through September 1998, the assessment and planning phases have
been completed for all IT systems and applications. The Company's objective
is to become Year 2000 compliant with its mission critical IT activities and
systems by December 1998, allowing substantial time for further testing,
verification and the final completion of less important systems by the second
quarter of 1999.
In addition to the IT systems review noted above, the Company has initiated
processes to review and to modify, where appropriate, other areas impacted by
Year 2000. These areas include, but are not limited to, personal computer
hardware and software, remote location access to IT systems, facility
management and certain non- IT issues, such as the extent to which embedded
chips are used in machinery and equipment used in operations. The Company has
completed assessments in all of the above areas and testing in all of these
areas, except the testing of personal computer hardware and software, which is
expected to be completed by the second quarter of 1999.
The Company is in the process of communicating with its significant vendors to
determine the extent to which the Company is vulnerable to those third
parties' failure to remediate their own Year 2000 compliance issues. The
Company expects to complete this evaluation by the second quarter of 1999.
The Company can not guarantee that the failure of another company to be Year
2000 compliant will not have an adverse effect on the Company.
The Company believes that it has no exposure to contingencies related to the
Year 2000 issue for products it has sold. The Company has evaluated its major
customers and believes that the failure of these Company's to adequately
prepare for Year 2000 issues will not have a material adverse effect on the
Company.
The Company expects to incur consulting and other expenses related to its Year
2000 program. The cost of testing and conversion of existing and replacement
system applications are not expected to exceed $400,000, the majority of
which have already been incurred. These costs will be treated as period costs
and expensed as incurred.
Based upon the progress to date, the Company does not believe that either
future costs of modifications or the consequences of any unsuccessful
modifications being implemented by the Company will have a material adverse
effect on it's financial position or results of operations. Nevertheless,
since it is not possible to anticipate all possible future situations,
especially when third parties are involved, the Company believes that the most
reasonably likely worse case Year 2000 scenario could result in circumstances
in which the Company may be unable to take customer orders, manufacture and
ship products, invoice customers or collect payments. A contingency plan has
not been developed for dealing with the most reasonably likely worst case Year
2000 scenario, as such scenario has not yet been clearly identified.
Therefore, no assurances can be given that the Company's ultimate Year 2000
compliance, particularly as it relates to third parties, will not have any
material adverse effect on the Company's financial position or results of
operations.
Forward-Looking Statements
Certain matters discussed in this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because
the context of the statement will include such words as the Company
"believes," "anticipates" or "expects," or words of similar import.
Similarly, statements that describe the Company's future plans, objectives or
goals are also forward-looking statements. The forward-looking statements are
subject to certain risks and uncertainties which could cause actual results to
differ materially from those currently anticipated. Such risks and
uncertainties include competitive conditions in the markets served by the
Company, changes in the Company's plans regarding capital expenditures,
general economic conditions, unanticipated events related to resolving the
Year 2000 issue, interest and foreign currency fluctuations, and the ability
of the Company to successfully integrate the Mustang operations.
Shareholders, potential investors and other readers are urged to consider
these factors carefully in evaluating the forward-looking statements and are
cautioned not to place undue reliance on such forward-looking statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
4.1 Seventh 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, a division of Deutsche Bank Canada and Gehl
Company and its Subsidiaries, dated as of September 1, 1998.
4.2 Loan Agreement by and between the City of Madison, a political
subdivision of the State of South Dakota and Gehl Company,
dated September 8, 1998.
4.3 Promissory Note signed by Gehl Company payable to the City of
Madison, a political subdivision of the State of South Dakota,
dated September 8, 1998.
4.4 Mortgage by and between Gehl Company and the City of Madison, a
political subdivision of the State of South Dakota, dated
September 8, 1998.
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 September 26, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GEHL COMPANY
Date: November 10, 1998 By: /s/ William D. Gehl
William D. Gehl
Chairman of the Board, President and
Chief Executive Officer
Date: November 10, 1998 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
September 26, 1998
EXHIBIT INDEX
Exhibit
Number Document Description
4.1 Seventh 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, a
division of Deutsche Bank Canada and Gehl Company and its
Subsidiaries, dated as of September 1, 1998.
4.2 Loan Agreement by and between the City of Madison, a political
subdivision of the State of South Dakota and Gehl Company, dated
September 8, 1998.
4.3 Promissory Note signed by Gehl Company payable to the City of
Madison, a political subdivision of the State of South Dakota, dated
September 8, 1998.
4.4 Mortgage by and between Gehl Company and the City of Madison, a
political subdivision of the State of South Dakota, dated September
8, 1998.
27 Financial Data Schedule [EDGAR version only]
SEVENTH AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Seventh Amendment is made to that certain Amended and Restated Loan
and Security Agreement executed as of October 1, 1994 by and between Deutsche
Financial Services Corporation, f/k/a ITT Commercial Finance Corp. ("ITT),
"("DFS"), Deutsche Financial Services, a division of Deutsche Bank Canada,
successor-in-interest to ITT Commercial Finance, a division of ITT Industries
of Canada Ltd., ("DFSC") (DFS and DFSC are hereinafter collectively referred
to as "DFS"), and Gehl Company ("Gehl") and its subsidiaries, including, but
not limited to, Hedlund Martin Inc., Gehl Power Products, Inc., Mustang
Manufacturing Company, Inc. and Mustang Finance, Inc. (collectively "Gehl
Company") as amended ("Agreement").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which
is acknowledged, DFS and Gehl Company agree to amend the Agreement as
follows:
Section 3.2 of the Agreement, Available Credit, is deleted in its
entirety and restated as follows:
"Available Credit . On receipt of each Schedule, or as
otherwise requested by Gehl Company, DFS will credit Gehl
Company with (a) Eighty percent (80.0%) of the net amount of
the Eligible Accounts listed in such Schedule, excluding Net
Accounts, and (b) Fifty percent (50%)of the net amount of Net
Accounts listed in such Schedule, and remit to Gehl Company, in
immediately available funds, an amount equal to Gehl Company's
Loan request up to the Maximum Line of Credit, in accordance
with the electronic transfer instructions contained in Section
8.16 of this Agreement; provided however, that the outstanding
principal balance of all advances or loans made on Net Accounts
will at no time exceed Five Million Dollars ($5,000,000.00),
and the outstanding principal balance of all loans made on
foreign Accounts which are insured by a policy in form and
substance and issued by an insurer acceptable to DFS will at no
time exceed Five Million Dollars ($5,000,000.00). DFS will
loan Gehl Company, on request, such amounts so credited or a
part thereof as requested provided that at no time will such
outstanding loans exceed Gehl Company's Maximum Line of Credit.
No advances or loans need be made by DFS if Gehl Company is in
Default. Gehl Company acknowledges that any advances or loans
made on Net Accounts or foreign Accounts will be deemed made
under the U.S. Line."
2. Section 3.3(1)of the Agreement is deleted in its entirety and
restated as follows:
"for Accounts in excess of $750,000.00 and not specifically
approved by DFS in writing, which approval will not be
unreasonably witheld, all amounts in excess of $750,000.00;"
3. All other terms and provisions of the Agreement remain
unchanged and in full force and effect.
IN WITNESS WHEREOF the dully authorized representatives of DFS,
DFSC, and Gehl Company have executed this Seventh Amendment to
Amended and Restated Loan and Security Agreement as of this 1st day
of September, 1998.
GEHL COMPANY HEDLUND MARTIN, INC.
By: /s/ W.D. Gehl By: /s/ W.D. Gehl
Title: President Title: President
GEHL POWER PRODUCTS, INC. MUSTANG MANUFACTURING COMPANY, INC.
By: /s/ W.D. Gehl By: /s/ W.D. Gehl
Title: President Title: President
MUSTANG FINANCE, INC.
By: /s/ W.D. Gehl
Title: President
DEUTSCHE FINANCIAL SERVICES DEUTSCHE FINANCIAL SERVICES,
CORPORATION a division of Deutsche Bank Canada
By: /s/ Kenneth C. MacDonell By: /s/ Bill Blight
Title: Vice President Title: Vice President
By: /s/ Joe Conte
Title: Vice President
LOAN AGREEMENT
WHEREAS, the CITY of Madison, a political subdivision of the State of
South Dakota, hereinafter referred to as the CITY, and Gehl Company, a
Wisconsin corporation, hereinafter referred to as Gehl, have entered into an
agreement by which the CITY is providing a loan for the improvement of real
property described as:
Lots One (1), Two (2), Three (3) and Four (4) in Madison
Industrial Park, ; and the North 334.4 Feet of Lot Nine (9)
except the East 177.4 Feet thereof; and the North 334.4
Feet of the West Half (W1/2) of Lot Ten (10), and the North
334.4 Feet of the East Half (E1/2) of Lot Ten (10), all in
County Auditor's Fourth Addition to Madison, Lake County, South
Dakota
It is covenanted and agreed by and between the parties the following
terms and conditions shall be the basis for the loan from the CITY to Gehl.
1.) Gehl shall receive a Two Hundred Fifty Five Thousand and no/100
($255,000.00) Dollar loan from the CITY of Madison to be evidenced by a
Promissory Note in the principal sum of Two Hundred Fifty Five Thousand and
no/100 ($255,000.00) Dollars secured by a shared first mortgage with the South
Dakota Board of Economic Development on a pro rated basis as set forth in a
separate Mortgage Subordination and Parity Agreement.
2.) The loan in the sum of $255,000.00 with interest thereon at the rate
of three per cent (3%) per annum with a blended monthly payment of principal
and interest based upon a 20 year amortization with fifty nine (59) monthly
payments of $1,414.23 and a balloon payment to be paid at the expiration of
five (5) years payable on or before September 1, 2003. If payment is not made
by the due date of each payment a late fee in the sum of $63.00 per day shall
be assessed. Payment shall first be applied to any late fees and interest
outstanding and then to principal. Adjustments to the interest rate based
upon the number of jobs as set forth in this agreement may be made after year
one of this agreement on a yearly basis if the required F.T.E. is not met
pursuant to Section 4 below.
3.) The building presently on the real property has been modified by an
addition partially financed through the funds received from the CITY and South
Dakota Board of Economic Development on the shared mortgage as hereinbefore
set forth, and all monies will be used for the purpose of expanding an
existing industry in the Lake County area. This expanded industry will create
eight (8) new jobs by May 31, 1998, and an additional forty three (43) F.T.E.
jobs will be created by May 31, 2000, (8 + 43 = 51). These numbers shall
continue for the remainder of the loan.
4.) It is further agreed that in the event the number of new employees
does not reach the full time employment (F.T.E.) levels identified in Section
3.) above, the interest rate identified on the aforesaid Promissory Note shall
increase by one half of one percent (1/2%) for each six month period during
which the required F.T.E. is not met, the initial six month period to begin on
the first day of the month following the failure of Gehl to achieve the
required F.T.E. goal after the first anniversary date of the Loan Agreement.
In the event Gehl does not achieve the required F.T.E. goal during the initial
six month period following the failure of Gehl to achieve the required F.T.E.
goal, the interest rate applicable to the aforementioned Promissory Note shall
increase by one half of one percent (1/2%) for each successive six (6) month
period during which the F.T.E. goal is not achieved; provided, however the
maximum interest applicable to the Promissory Note shall not exceed one
percent (1%) less than the prime rate charged by First Bank of Minneapolis,
N.A. as its base rate on corporate loans, determined as of the date Gehl fails
to meet the F.T.E. goal. In the event Gehl does meet the required F.T.E.
goal, the interest rate applicable to the Promissory Note shall revert to
three percent (3%) as of the date Gehl does meet the required F.T.E. goal,
provided Gehl submits to the CITY satisfactory documentation that the F.T.E.
goal was attained.
5.) On the date of closing, Gehl shall provide the CITY a Promissory
Note and Mortgage in the principal sum of $255,000.00 with the terms as
hereinbefore described (hereinafter collectively referred to as Loan
Documents).
6.) Gehl will reimburse the CITY for the cost of any obligations
incurred by the CITY in connection with this loan which shall include legal
fees not to exceed $2,000.00 plus costs of transfer fees, filing fees
including but not limited to title insurance or abstracting.
7.) Gehl shall abide with all Federal, State, and Municipal laws,
regulations, and rules concerning zoning, use and land use, building code,
fire, environmental, and any reporting required by any governmental entity.
8.) Gehl will provide to the CITY the information set forth on attached
Exhibit "A" every six (6) months; said information to be provided as long as
there is an outstanding loan from the CITY to Gehl; and said information will
be used by the CITY for the purposes of determining whether or not the
requirements of F.T.E. have been met in conformity with paragraph (4) of this
agreement.
9.) Gehl agrees to indemnify and hold harmless the CITY, it's agents or
employees from any and all losses, expenses, damages, demands and claims in
connection with or arising out of any injury or alleged injury of any persons
(including death) or damage or alleged damage to personal or real property,
sustained or alleged to have been sustained in connection with or to have
arisen out of Gehl interest in or use of the real property hereinbefore
described, and Gehl agrees to defend any suit or action brought against the
CITY it's agent, employees or any of them based on such injury or damage and
to pay all damages, costs and expenses including attorney fees in connection
herewith or resulting therefrom.
10.) Gehl shall have the right to prepay under this Loan Agreement in any
amount without penalty during the term of this Loan Agreement. Further, in
the event the F.T.E. does not meet the requirements set forth in paragraph 4,
then Gehl shall have the right to prepay on the loan in full without penalty.
11.) That failure to comply with any of the provisions of this agreement
shall be deemed to be a breach of the terms and conditions of the loan. In
the event any breach shall occur the CITY may demand payment of the note in
full.
12.) This agreement is legally binding upon the legal heirs, executors,
administrators, successors, and assigns of the respective parties.
13.) Any required or permitted notice or other communication
under this Loan Agreement shall be in writing and addressed as follows:
If to City: Finance Officer, City of Madison
PO Box 308
Madison, South Dakota 57042
If to Gehl: General Counsel, Gehl Company
143 Water Street
West Bend, Wisconsin 53095
Any such notice or other communication, if mailed, shall be sent by registered
or certified mail, return receipt requested. Notices or communications to or
between the parties shall be deemed sufficiently served or given for all
purposes hereunder on the first to occur of the receipt of such notice or
other communication or the fifth day after the time the same shall be
deposited in the mail or, if personally delivered when received by such party.
14.) This Loan Agreement and the Loan Documents may not be amended except
in writing, which writing shall be expressly identified as a part hereof or
thereof, and which writing will be signed by an authorized representative of
each of the parties.
Dated this 9th day of September, l998.
CITY OF MADISON
/s/ Royce D. Hueners
Mayor
ATTEST
/s/Jeff Heinemeyer
CITY Finance Officer
GEHL COMPANY
/s/Kenneth P. Hahn
It's Vice President
ATTEST:
/s/ M. J. Mulcahy
It's Secretary
STATE OF SOUTH DAKOTA )
: SS
COUNTY OF LAKE )
On this the 9th day of September, l998, before me, Claudea DeRungs, the
undersigned officer personally appeared Royce D. Hueners and Jeff Heinemeyer,
who acknowledged themselves to be the Mayor and Finance Officer respectively,
of the City of Madison, a municipal corporation, and that they, as such Mayor
and Finance Office being so authorized to do, executed the foregoing
instrument by signing the name of the City of Madison by themselves as Mayor
and Finance Officer thereof.
In witness whereof I hereunto set my hand and official seal.
Claudia DeRungs
Notary Public, South Dakota
My commission expires: 9-29-2001
STATE OF WISCONSIN )
: SS
COUNTY OF WASHINGTON )
On this the 8th day of September, l998, before me, Laurence Schwartz, the
undersigned officer personally appeared Kenneth P. Hahn and Michael J.
Mulcahy, who acknowledged themselves to be the Vice President and Secretary of
Gehl Company respectively, and that they, as such President and Secretary
being so authorized to do, executed the foregoing instrument by signing the
name of Gehl Company by themselves as Vice President and Secretary thereof.
In witness whereof I hereunto set my hand and official seal.
/s/Laurence Schwartz
Notary Public, Wisconsin
My commission expires: Permanent
PROMISSORY NOTE
$255,000.00 Madison, South Dakota
Dated: September 8, 1998
After date, for value received, the undersigned promises to pay to the
order of
THE CITY OF MADISON, a political subdivision of the
State of South Dakota,
at their address, Madison, South Dakota, the principal sum of
TWO HUNDRED FIFTY FIVE THOUSAND DOLLARS
($255,000.00) Dollars,
together with interest thereon at the rate of three per cent (3%) per annum,
payable as follows:
The sum of $1,414.23 per month commencing October 1, 1998, and on the
first day of each and every month thereafter. Such payment being a blended
payment of principal and interest with interest being at the rate of three per
cent (3%) per annum commencing as of September 1, 1998, with a balloon payment
in the amount of $206,216.01 due on or before September 1, 2003; such payments
being made according to the attached amortization schedule; This Promissory
Note is subject to a change in interest rate as further described in paragraph
4) of the Loan Agreement dated September 8, 1998 which paragraph is
incorporated hereby as if fully set forth herein.
All payments on account of the indebtedness evidenced by this Note shall
be first applied to interest and the remainder to principal. In the event
payment is not made by the due date, a late payment fee of ($63.00) Dollars
per day shall be assessed.
The undersigned, for itself, its successors and assigns, reserves the
privilege of prepaying without penalty the entire unpaid principal balance,
provided there shall also be paid with such prepayment all accrued interest on
the unpaid principal balance.
This note is secured, by and entitled to the benefits of a Mortgage of
even date herewith executed by Gehl Company, a Wisconsin corporation, and any
and all instruments and documents supplemental thereto which instruments are
herein referred to as Loan Agreement and Mortgage and any documents referred
to therein which shall collectively be referred to as "Loan Documents".
Reference is hereby made to said Loan Documents for a description of the
property covered thereby and the nature and extent of the security.
In the event of default by Gehl Company, on this Note, Mortgage or as
described in the Loan Agreement, the principal of this Note, together with all
accrued interest thereon, may, at the option of the City of Madison,
immediately become due and payable on demand.
All notices, demands and requests required or desired to be given
hereunder shall be in writing and shall be delivered in person or by United
States registered or certified mail, return receipt requested, postage
prepaid, if given to the undersigned addressed to the undersigned at:
General Counsel
Gehl Company
143 Water Street
West Bend, Wisconsin 53095-0179
or at such changed address as may from time to time be designated by the party
to be addressed, by written notice to the other in the manner herein provided.
Notices, demands and requests given by mail in the manner aforesaid shall be
deemed sufficiently served or given for all purposes hereunder on the first to
occur of the receipt of such notice, demand or request, or the fifth day after
the time the same shall be deposited in the mail.
In the event of default in the payment of the Promissory Note, and if the
same is collected by an attorney at law, the Borrower agrees to pay all costs
of collection, including reasonable attorney's fees.
The Borrower, maker and endorsers hereby waives presentment for payment,
demand, notice of nonpayment, protest, notice of protest, notice of dishonor,
trial by jury and the right to interpose any defense, set off, counterclaim or
any litigation arising out of this promissory note.
Gehl Company, for itself their successors, transferees and assigns and
all guarantors, hereby agrees that this Note and any payment coming due
hereunder may be extended from time to time without in any way affecting its
liability hereunder.
This Note shall be governed by the laws of the State of South Dakota,
which laws shall also cover and control the construction, enforceability,
validity and interpretation of this Note.
GEHL COMPANY
By /s/Kenneth P. Hahn(SEAL)
Its Vice President
(CORPORATE SEAL)
ATTEST
M. J. Mulcahy(SEAL)
Secretary
CITY OF MADISON
GEHL
SEPTEMBER 1, 1998
$255,000.00
ORIGINAL BALANCE . . . . . . . . . . . $255,000.00
ANNUAL INTEREST RATE . . . . . . . . . 3 %
PAYMENT . . . . . . . . . . . . . . . $1,414.23
TOTAL NUMBER OF PAYMENTS . . . . . . . 240
PAYMENT FREQUENCY . . . . . . . . . . MONTHLY
DATE OF LOAN INCEPTION . . . . . . . . 9 / 1 / 98
DATE OF FIRST PAYMENT . . . . . . . . 10 / 1 / 98
BALLOON PAYMENT . . . . . . . . . . . REMAINING BALANCE PAY. NO. 60
*** INTEREST CALCULATION BASED ON NO. OF DAYS IN THE PAYMENT PERIOD ***
<TABLE>
PAY-
MENT TOTAL APPLIED TO APPLIED TO REMAINING
NO. DUE DATE PAYMENT INTEREST PRINCIPAL BALANCE
<C> <S> <S> <S> <S>
$255,000.00
1 10/ 1/98 $ 1,414.23 $ 628.77 $ 785.45 254,214.55
2 11/ 1/98 1,414.23 635.54 778.68 253,435.87
3 12/ 1/98 1,414.23 633.59 780.63 252,655.24
ANNUAL
TOTAL $ 4,242.69 $ 1,897.90 $ 2,344.76
4 1/ 1/99 $ 1,414.23 $ 631.64 $ 782.58 $251,872.65
5 2/ 1/99 1,414.23 629.68 784.54 251,088.12
6 3/ 1/99 1,414.23 627.72 786.50 250,301.62
7 4/ 1/99 1,414.23 625.75 788.47 249,513.15
8 5/ 1/99 1,414.23 623.78 790.44 248,722.71
9 6/ 1/99 1,414.23 621.81 792.41 247,930.30
10 7/ 1/99 1,414.23 619.83 794.39 247,135.91
11 8/ 1/99 1,414.23 617.84 796.38 246,339.53
12 9/ 1/99 1,414.23 615.85 798.37 245,541.16
13 10/ 1/99 1,414.23 613.85 800.37 244,740.79
14 11/ 1/99 1,414.23 611.85 802.37 243,938.42
15 12/ 1/99 1,414.23 609.85 804.37 243,134.05
ANNUAL
TOTAL $ 16,970.76 $ 7,449.45 $ 9,521.19
16 1/ 1/ 0 $ 1,414.23 $ 607.84 $ 806.38 $242,327.67
17 2/ 1/ 0 1,414.23 605.82 808.40 241,519.27
18 3/ 1/ 0 1,414.23 603.80 810.42 240,708.85
19 4/ 1/ 0 1,414.23 601.77 812.45 239,896.40
20 5/ 1/ 0 1,414.23 599.74 814.48 239,081.92
21 6/ 1/ 0 1,414.23 597.70 816.52 238,265.40
22 7/ 1/ 0 1,414.23 595.66 818.56 237,446.84
23 8/ 1/ 0 1,414.23 593.62 820.60 236,626.24
24 9/ 1/ 0 1,414.23 591.57 822.65 235,803.59
25 10/ 1/ 0 1,414.23 589.51 824.71 234,978.88
26 11/ 1/ 0 1,414.23 587.45 826.77 234,152.11
27 12/ 1/ 0 1,414.23 585.38 828.84 233,323.27
ANNUAL
TOTAL $ 16,970.76 $ 7,159.86 $ 9,810.78
28 1/ 1/ 1 $ 1,414.23 $ 583.31 $ 830.91 $232,492.36
29 2/ 1/ 1 1,414.23 581.23 832.99 231,659.37
30 3/ 1/ 1 1,414.23 579.15 835.07 230,824.30
31 4/ 1/ 1 1,414.23 577.06 837.16 229,987.14
32 5/ 1/ 1 1,414.23 574.97 839.25 229,147.89
33 6/ 1/ 1 1,414.23 572.87 841.35 228,306.54
34 7/ 1/ 1 1,414.23 570.77 843.45 227,463.09
35 8/ 1/ 1 1,414.23 568.66 845.56 226,617.53
36 9/ 1/ 1 1,414.23 566.54 847.68 225,769.85
37 10/ 1/ 1 1,414.23 564.42 849.80 224,920.05
38 11/ 1/ 1 1,414.23 562.30 851.92 224,068.13
39 12/ 1/ 1 1,414.23 560.17 854.05 223,214.08
ANNUAL
TOTAL $ 16,970.76 $ 6,861.45 $ 10,109.19
40 1/ 1/ 2 $ 1,414.23 $ 558.04 $ 856.18 $222,357.90
41 2/ 1/ 2 1,414.23 555.89 858.33 221,499.57
42 3/ 1/ 2 1,414.23 553.75 860.47 220,639.10
43 4/ 1/ 2 1,414.23 551.60 862.62 219,776.48
44 5/ 1/ 2 1,414.23 549.44 864.78 218,911.70
45 6/ 1/ 2 1,414.23 547.28 866.94 218,044.76
46 7/ 1/ 2 1,414.23 545.11 869.11 217,175.65
47 8/ 1/ 2 1,414.23 542.94 871.28 216,304.37
48 9/ 1/ 2 1,414.23 540.76 873.46 215,430.91
49 10/ 1/ 2 1,414.23 538.58 875.64 214,555.27
50 11/ 1/ 2 1,414.23 536.39 877.83 213,677.44
51 12/ 1/ 2 1,414.23 534.19 880.03 212,797.41
ANNUAL
TOTAL $ 16,970.76 $ 6,553.97 $ 10,416.67
52 1/ 1/ 3 $ 1,414.23 $ 531.99 $ 882.23 $211,915.18
53 2/ 1/ 3 1,414.23 529.79 884.43 211,030.75
54 3/ 1/ 3 1,414.23 527.58 886.64 210,144.11
55 4/ 1/ 3 1,414.23 525.36 888.86 209,255.25
56 5/ 1/ 3 1,414.23 523.14 891.08 208,364.17
57 6/ 1/ 3 1,414.23 520.91 893.31 207,470.86
58 7/ 1/ 3 1,414.23 518.68 895.54 206,575.32
59 8/ 1/ 3 1,414.23 516.44 897.78 205,677.54
60 9/ 1/ 3 206,191.74 514.19 205,677.54 0.00
ANNUAL
TOTAL $217,505.58 $ 4,708.08 $212,797.41
GRAND
TOTAL $289,631.31 $34,630.71 $255,000.00
</TABLE>
MORTGAGE - ONE HUNDRED EIGHTY DAY REDEMPTION
THIS MORTGAGE, is made this 8th day of September, l998, by GEHL COMPANY,
a Wisconsin corporation, of 143 Water Street, West Bend, Wisconsin 53095-
0179,("MORTGAGOR") for a project at 915 S.W. 7th Street, Madison, Lake County,
South Dakota, to the CITY OF MADISON, a political subdivision of the State of
South Dakota, of P.O. Box 308, Madison, South Dakota, 57042, ("MORTGAGEE");
WITNESSETH, that in consideration of the advance of the principal sum as
stated herein, plus all future and additional advances together with interest
thereon, and in consideration of any future and additional advances made to
the Mortgagor at Mortgagee's option, Mortgagor does hereby mortgage, grant,
bargain, release, assign, transfer and convey to Mortgagee the real property
and premises together with all buildings and improvements now or thereafter
erected thereon, all hereditaments and appurtenances, and all rights and
interests thereunto belonging or appertaining, including rights of homestead,
and all contingent rights and estates of the Mortgagor in and to said
Premises, it being the intention of Mortgagor to mortgage an absolute title in
fee in and to said Premises in favor of the Mortgagee, to include all of the
right, title and interest of Mortgagor in said property now owned or hereafter
acquired, all easements and servient estates appurtenant thereto, rents,
issues, uses, profits and right to possession, and all crops raised or placed
thereon in the following described Premises situated in the County of Lake
and State of South Dakota, ("Premises") to-wit:
Lots One (1), Two (2), Three (3), and Four (4), in
Madison Industrial Park, Madison, Lake County, South
Dakota; and the North 334.4 Feet of Lot Nine (9), and
the North 334.4 Feet except the East 177.4 Feet of the
West Half (W1/2) of Lot Ten (10), and the North 334.4
Feet of the East Half (E1/2) of Lot Ten (10), all
in County Auditor's Fourth Addition to Madison, Lake
County, South Dakota
Mortgagor warrants that Mortgagor is the owner in fee and is lawfully
seized of said Premises; that the Premises are free and clear from all
encumbrances and liens whatsoever with the exception of the mortgage to the
South Dakota Board of Economic Development dated May 26, 1998 and recorded on
June 17, 1998 in Book 334 Page 127 in the office of Register of Deeds, Lake
County, South Dakota. Mortgagor hereby covenants to warrant and defend the
title to said Premises against any and all claims and demands of all persons
whomsoever. Mortgagor hereby relinquishes and waives all rights of homestead
in the Premises.
THE PARTIES AGREE THAT THE PROVISIONS OF THE ONE HUNDRED EIGHTY DAY
REDEMPTION MORTGAGE ACT GOVERN THIS MORTGAGE. In the event Mortgagee elects
to foreclose by action in state court, the holder of the certificate of sale
may apply to the court for a reduction of the 180 day redemption period if the
property has been abandoned by the Mortgagor. If, after notice to the parties
as the court directs, the court finds the property has been abandoned, the
redemption period may be reduced. The redemption period may not be reduced to
less than sixty (60) days from the date of recording the certificate of sale.
There is hereby granted to Mortgagee a power of sale for the purposes of SDCL
21-49. The foregoing shall not be deemed to be a waiver of Mortgagee's right
to foreclose this Mortgage in federal court and seek extinguishment of all
rights of redemption.
This Mortgage is given by the Morgagor as security for the following:
A. Payment by Mortgagor to the Mortgagee of the principal
sum of Two Hundred Fifty Five Thousand and no/l00
($255,000.00) Dollars, together with interest thereon,
according to the terms of a certain Promissory Note dated
the date hereof, given by Mortgagor to Mortgagee, and any
other Loan Documents or other instruments executed
in refinancing, extending or renewing said indebtedness or
any part thereof, all payable according to the terms of said
Promissory Note, Loan Documents and other instruments;
B. The repayment in full by Mortgagor of any and all future and
additional advances which may be made by Mortgagee at its
option, at the request of and to or for the account of
Mortgagor, for any purposes, whether or not the
obligation created by such future advances related to the
transaction evidenced by the Promissory Note or Loan Documents
and whether or not such an advance is presently contemplated
by the parties; repayment to be made as provided in the
Promissory Note, Loan Documents or in such other instruments;
provided, further, that THIS PARAGRAPH SHALL NOT CONSTITUTE
A COMMITMENT TO MAKE FURTHER OR ADDITIONAL ADVANCES IN ANY
AMOUNT;
C. The repayment in full by Mortgagor of all amounts advanced
by Mortgagee, at its option, to or on behalf of Mortgagor
as protective disbursements, as authorized in this Mortgage
or in the Loan Agreement, or any other Loan Document,
together with interest on all such advances, all payable
as provided in this Mortgage, the Promissory Note, or other
Loan Document or other instrument which may be taken to
evidence such advance (s) or any part thereof;
D. The payment by Mortgagor of all other present or future,
debts and liabilities of Mortgagor to Mortgagee of any
nature whatsoever.
Mortgagor covenants and agrees with the Mortgagee as follows:
A. To pay all taxes, assessments, rents, or governmental
or municipal charges levied, imposed, or charged against
the Premises or the project, before the same shall become
delinquent, and to pay when due all liens, judgments, or
other assessments which may lawfully be assessed against
the property herein mortgaged, and the rental charges upon
any leases assigned as additional security.
B. To insure and keep insured building and other improvements
now or which may hereafter be placed on said Premises, if
any, for the benefit of the Mortgagee, against loss by fire,
wind, and other hazards, casualties and contingencies, with
such insurers licensed to do business in the State, in such
amounts, and against such risks as are customary in the
State for entities of the same and similar size and type
as the Mortgagor, and similarly situated with Premises and
facilities of the Project's type, and provide proof of such
coverage to the Mortgagee. Each policy must provide that
such insurance will be payable to Mortgagee as its interest
may appear. Each policy must provide that it cannot be
canceled without 30 days prior written notice of
cancellation. In the event of cancellation the Mortgagor
will promptly obtain replacement insurance with the same
or substantially similar coverage and provide proof of
such coverage to the Mortgagee. In the event of renewal,
replacement or changes in coverage, the Mortgagor will
promptly provide written notice of such changes to the
Mortgagee. In the event of loss, the proceeds received by
Mortgagee may, at Mortgagee's option be used for the
reconstruction of the destroyed or damaged improvements or,
if not so applied, may, at the option of the Mortgagee, be
applied to the payment of any indebtedness matured or
unmatured, secured by this Mortgage.
C. To keep the Premises in good condition and repair, as the
same may now, or may hereafter, be placed, ordinary
wear and tear excepted; to permit no mechanic's or
other lien or encumbrance thereon; or to commit or permit
no impairment of the value of this security. Mortgagor
shall not commit or suffer waste on the Premises, and in
event of such waste the Mortgagee, in addition to any other
available remedy, shall be entitled immediately to restrain
the same by injunction or other appropriate proceeding.
Mortgagor warrants that the Premises will not be used for
any unlawful purpose or permitted to become a nuisance; not
to cut or remove, or permit to be cut or removed, any wood
or timber from said real property; to continuously practice
approved methods of farming on said Premises, to prevent
erosion, and to prevent the spread of noxious or damaging
weeds, and to preserve the fertility of the soil.
D. That no structure, or improvement of any kind whatsoever,
now or hereafter in or on the mortgaged Premises, shall be
removed, replaced, or substantially altered without the
Mortgagee's written consent, except for that property which
in the good faith opinion of the Mortgagor is obsolete,
outdated, worn out, is being replaced, or otherwise is not
needed for the operation of the Project. If at any time all
or any portion of the above described Premises shall be
taken or damaged by condemnation proceedings under the power
of eminent domain, all compensation awarded shall be paid
directly to Mortgagee and, at Mortgagee's option, applied to
the indebtedness hereby secured.
E. That in the event Mortgagor fails to pay when due any taxes,
rental charges upon any leases assigned as additional
security for this Mortgage, liens, judgments, or assessments
lawfully assessed against the Premises hereby mortgaged, or
governmental or municipal charges, fines, rates, fees or
charges levied, imposed, or charged against the Premises
before the same become delinquent, or fails to maintain
insurance as hereinabove provided, Mortgagee may do so, at its
sole option, and without the obligation to do so, as a
protective disbursement and the amount so paid, together with
interest at the current rate of the Mortgagee at the time the
Mortgagee makes such payment, shall, from the date of
payment be added to and deemed a part of the indebtedness
secured hereby, and shall be due and payable on demand by
the Mortgagee, provided, however, that the advancement by
Mortgagee of any sum pursuant to this paragraph shall in no
manner relieve Mortgagor of any obligations incurred under
this Mortgage nor limit the right of Mortgagee to declare a
default by Mortgagor and to exercise all rights and remedies
as set forth herein in the event of default.
F. In the case of default by the Mortgagor in the payment
of the principal sum, or any part thereof, or interest
thereon at the time or times as specified for the payments
hereof, or in the case of any breach of any covenant or
agreement contained in this Mortgage, the Loan Documents, or
the Promissory Note, or related mortgages, documents and
notes, or in the event of the failure of the Mortgagor to
promptly pay, when due, any taxes, charges, liens,
assessments, or encumbrances, or in the event of the
insolvency of the Mortgagor, the Mortgagee may at its option
declare this Mortgage to be in default and shall provide
Mortgagor with written notice of such default. If such
default has not been cured within fifteen (15) days of
Mortgagor's receipt of writen notice thereof, Mortgagee at
its sole option, may accelerate the payment of the
outstanding debt and may declare the entire unpaid principal
sum including interest due thereon immediately due and
payable, and if not paid within 10 days thereof this
Mortgage may be foreclosed by action, or by advertisement as
provided by statute or the rules or powers relating thereto,
including any amendments thereof, and this paragraph shall
be deemed as authorizing and constituting a power of sale as
mentioned in said statutes or rules or any amendments
thereof. In addition, Mortgagee may exercise any remedy set
forth in any of the Loan Documents or other agreements
between the parties made in connection with this Mortgage.
G. To the extent permitted by law, Mortgagor agrees that
in case of any action, or in any proceedings in any court,
to collect any sums payable under or secured by this
Mortgage, or to protect the lien or title herein of
the Mortgagee, or in any other case permitted by law,
including foreclosure by action or by advertisement,
in which attorney fees may be collected from Mortgagor or
charged upon the above described property, to pay
Mortgagee's reasonable attorney fees and actual
disbursements necessarily incurred in the course of said
action.
H. That in the event the mortgaged Premises or any portion
thereof are sold, divested, transferred, relinquished, or in
the event the Mortgagor should lose their right, title or
interest in the security herein described, or any portion
thereof during the term of this Mortgage, whether
voluntarily or by operation of law, without the prior written
consent of the Mortgagee, the entire indebtedness
remaining unpaid and owing together with interest
thereon, including advances for any purpose may at the
option of the Mortgagee, be declared immediately due
and payable and this Mortgage may then be foreclosed by
action or by advertisement, as provided by statute or
the rules or powers relating thereto.
I. In the event of default in the payment of any of the
obligations described in this Mortgage, Mortgagor hereby
assigns to Mortgagee all of Mortgagor's interest in and to
all rents, issues, uses, growing crops, profits, royalties,
or lease payments due to Mortgagor from use or
occupancy of any part of the Premises secured by this
Mortgage; this assignment shall also pertain to all
royalties, rents, or profits, due to Mortgagor for any oil,
gas, mineral, or other subsurface interest in and to the
above described Premises; all rents profits, lease payments,
or royalties received by Morrgagee hereunder shall be
applied to the indebtedness secured by this Mortgage.
J. In the case of foreclosure of this Mortgage, at any time
after the commencement of an action of foreclosure or at any
time after the commencement of foreclosure by advertisement,
or during any period of redemption, Mortgagee is authorized
to appoint a receiver to take possession of the Premises if
the Premises have been abandoned, or to have a receiver
appointed by the court upon other sufficient proof being
established therefore, said receiver to take immediate
possession of the above described property, and of all the
rents or profits accruing therefrom and to rent or cultivate
the same as the receiver may deem best for the interest of
all parties concerned, and be liable to account to Mortgagor
only for the net profits, after application of rents, issues
and profits upon the expenses and costs of the receivership
and foreclosure and upon the indebtedness, costs and
expenses hereby secured or herein mentioned.
K. Further, in the event of any action by Mortgagee to enforce
collection of the mortgage debt, Mortgagor agrees that any
expense incurred to procure or extend an abstract of title,
policy of title insurance or other lien search, shall,
when paid by Mortgagee, become a part of the debt secured
hereby, and shall be paid by Mortgagor together with all
taxable costs of such action.
L. In the case of any default the Mortgagee shall have the
privilege, without declaring the whole indebtedness due and
payable, to foreclosure on account of such specific default
for such sums as are in default and such foreclosure
proceedings may be had and the Premises described herein may
be sold, subject to the unpaid indebtedness hereby secured,
and this Mortgage shall continue as a lien for any unpaid
balance. If the Mortgageee waives the right to accelerate,
or any other right hereunder, such a waiver shall not
constitute a waiver of the right to rescind, or any other
remedy available to the Mortgagee, nor shall it be construed
as a waiver of such rights in the event of subsequent
defaults. No remedy herein conferred upon or reserved to
the Mortgagee is intended to be exclusive of any other
available remedy, but each and every remedy shall be
cumulative and in addition to every other remedy given under
this Mortgage and the Loan Agreement, or now or hereafter
existing at law or in equity or by statute. No delay or
omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be
construed as a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be
deemed expedient. In the event that any breach by the
Mortgagor is specifically waived in writing by the
Mortgagee, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other
or subsequent breach.
M. Any moneys collected by the Mortgagee pursuant to
foreclosure under this Mortgage shall be applied first
to pay Mortgagee's attorney's fees and other expenses of
collection; second to any interest and penalties on the Loan;
third to pay principal due on the Loan; fourth to pay any
other amounts due under this Mortgage, the Loan Agreement, the
Promissory Notes or the Loan Documents; and fifth to pay
principal and interest on the Loan, and other amounts not yet
due hereunder, as they become due, such to be made in the same
order as set forth in this section.
Mortgagor will comply with all statutes, ordinances, and governmental
regulation affecting the Premises, and if Mortgagor neglects or refuses to so
comply, and such failure or refusal has not been corrected within 15 days of
receipt of written notice, the entire balance of the principal sum secured
hereby, together with all accrued interest thereon, will, at Mortgagee's sole
option, immediately become due and payable.
This Mortgage shall be governed by and construed in accordance with the
laws of the State of South Dakota. Terms used herein and defined in the Loan
Agreement shall have the same meaning as set forth in the Loan Agreement
unless the context clearly required otherwise.
This Mortgage may not be modified or amended except by mutual consent
expressed in writing, which writing shall be expressly identified as a part
hereof, and which writing shall be signed by an authorized representative of
each of the parties hereto.
Any notice provided for herein shall be deemed given when transmitted as
provided in Section 13 of the Loan Agreement.
The covenants in this Mortgage shall be deemed to be severable; in the
event that any portion of this Mortgage is determined to be void or
unenforceable, that determination shall not affect the validity of the
remaining portions of the Mortgage.
IN WITNESS WHEREOF, this instrument has been executed the day and year
first above written.
GEHL COMPANY
By: /s/Kenneth P. Hahn
It's Vice President
ATTEST
By: M.J. Mulcahy (SEAL)
It's Secretary
STATE OF Wisconsin )
: SS
COUNTY OF Washington )
On this the 8th day of September, l998, before me, Laurence Schwartz,
the undersigned officer, personally appeared Kenneth P. Hahn and Michael J.
Mulcahy, who acknowledged themselves to be the Vice President and Secretary,
respectively, of Gehl Company, a Wisconsin corporation, and that they, as such
Vice President and Secretary, being authorized so to do, executed the same for
the purposes therein contained by signing the name of the corporation by
themselves as Vice President and Secretary thereof.
In witness whereof I hereunto set my hand and official seal.
Laurence Schwartz
Notary Public
My commission expires: Permanent
Prepared by:
ERICSSON, ERICSSON & LEIBEL
PO Box 406
Madison, SD 57042
(605) 256-4597
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at September 26, 1998 and consolidated
statements of income for the nine month period ended September 26, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-26-1998
<CASH> 4925
<SECURITIES> 0
<RECEIVABLES> 86867
<ALLOWANCES> 0<F1>
<INVENTORY> 28630
<CURRENT-ASSETS> 125881
<PP&E> 74888
<DEPRECIATION> 40787
<TOTAL-ASSETS> 183322
<CURRENT-LIABILITIES> 53738
<BONDS> 33309<F2>
<COMMON> 640
0
0
<OTHER-SE> 90235
<TOTAL-LIABILITY-AND-EQUITY> 183322
<SALES> 199971
<TOTAL-REVENUES> 199971
<CGS> 145111
<TOTAL-COSTS> 145111
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3352
<INCOME-PRETAX> 18499
<INCOME-TAX> 6567
<INCOME-CONTINUING> 11932
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11932
<EPS-PRIMARY> 1.88<F3>
<EPS-DILUTED> 1.79
<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>The EPS under the "EPS-Primary" tag represents Basic Earnings Per Share.
</FN>
</TABLE>
