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 April 3, 1999
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 (I.R.S. Employer
incorporation 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 April 3, 1999
Common Stock, $.10 Par Value 6,468,411
<PAGE>
GEHL COMPANY
FORM 10-Q
April 3, 1999
REPORT INDEX
Page No.
PART I. - FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Statements of Income for the
Three-Month Periods Ended April 3, 1999 and
March 28, 1998 . . . . . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at April 3, 1999,
December 31, 1998, and March 28, 1998 . . 4
Condensed Consolidated Statements of Cash Flows for the
Three-Month Periods Ended April 3, 1999 and
March 28, 1998 . . . . . . . . . . . . . . 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 11
PART II. - OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K . . . 11
SIGNATURES . . . . . . . . . . . . . . . . . . . 12
<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
April 3, March 28,
1999 1998
<S> <C> <C>
NET SALES $ 68,963 $ 61,288
Cost of goods sold 50,187 45,437
-------- --------
GROSS PROFIT 18,776 15,851
Selling, general and
administrative expenses 12,539 10,873
-------- --------
INCOME FROM OPERATIONS 6,237 4,978
Interest expense (777) (1,176)
Interest income 413 346
Other expense, net (440) (18)
-------- --------
INCOME BEFORE INCOME TAXES 5,433 4,130
Income tax provision 1,929 1,466
-------- --------
NET INCOME $ 3,504 $ 2,664
======== ========
EARNINGS PER SHARE
Diluted $ .52 $ .40
Basic $ .54 $ .42
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<CAPTION>
April 3, December 31, March 28,
1999 1998 1998
----------- ------------- ---------
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash $ 3,688 $ 887 $ 3,049
Accounts receivable-net 78,575 70,806 86,602
Finance contracts receivable-net 9,709 9,786 9,670
Inventories 36,015 32,093 32,793
Deferred tax assets 7,138 7,138 4,217
Other current assets 1,324 1,184 1,584
---------- ----------- ---------
Total Current Assets 136,449 121,894 137,915
Property, plant and equipment-
net 33,910 34,142 34,941
Finance contracts receivable-
net, non-current 5,805 5,804 3,531
Intangible assets 16,267 16,451 14,650
Other assets 6,998 6,256 5,546
---------- ---------- --------
TOTAL ASSETS $ 199,429 $ 184,547 $ 196,583
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current portion of long-term
debt obligations $ 562 $ 597 $ 689
Accounts payable 26,447 23,562 26,555
Accrued liabilities 30,499 27,993 23,695
----------- --------- ----------
Total Current Liabilities 57,508 52,152 50,939
Line of credit facility 25,329 19,359 49,252
Long-term debt obligations 9,445 9,588 9,515
Other long-term liabilities 5,372 5,400 1,929
Deferred income taxes 3,943 3,943 3,421
----------- --------- ----------
Total Long-Term Liabilities 44,089 38,290 64,117
----------- --------- ----------
Common stock, $.10 par value,
25,000,000 shares authorized,
6,468,411, 6,438,945 and
6,392,929 shares outstanding,
respectively 647 644 640
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 28,550 28,330 27,590
Retained earnings 69,787 66,283 53,679
Accumulated other comprehensive
loss (1,152) (1,152) (382)
----------- --------- --------
Total Shareholders' Equity 97,832 94,105 81,527
----------- --------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 199,429 $ 184,547 $196,583
=========== ========= ========
</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)
Three Months Ended
April 3, March 28,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $ 3,504 $ 2,664
Adjustments to reconcile net income to
net cash (used for) provided by operating
activities:
Depreciation 1,075 1,054
Amortization 199 178
Proceeds from sales of finance contracts 14,880 5,745
Increase in finance contracts receivable (15,310) (7,784)
Cost of sales of finance contracts 506 79
Net changes in remaining working capital items (6,440) (10,210)
---------- --------
Net cash used for operating activities (1,586) (8,274)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (843) (918)
Other assets (757) (100)
---------- --------
Net cash used for investing activities (1,600) (1,018)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit facility 5,970 9,895
Proceeds from issuance of common stock 223 1,290
Other (206) (83)
---------- --------
Net cash provided by financing activities 5,987 11,102
---------- --------
Net increase in cash 2,801 1,810
Cash, beginning of period 887 1,239
---------- --------
Cash, end of period $ 3,688 $ 3,049
========== ========
Supplemental disclosure of cash flow
information:
Cash paid for the following:
Interest $ 703 $ 1,057
Income Taxes $ 796 $ 65
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
April 3, 1999
(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 April 3, 1999 and March 28, 1998 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 April 3, 1999 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, 1998 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):
April 3, December March 28,
1999 31, 1998
1998
Raw materials and supplies $16,390 $15,656 $15,934
Work in process 6,637 5,863 5,768
Finished machines and parts 32,384 29,970 30,341
------- ------- -------
Total current cost value 55,411 51,489 52,043
Adjustment to LIFO basis (19,396) (19,396) (19,250)
------- ------- -------
$36,015 $32,093 $32,793
======= ======= =======
NOTE 4 - ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Investments 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 materially affect the Company s financial condition or results of
operations.
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):
April 3, March 28,
1999 1998
------- ---------
Basic shares 6,456 6,274
Effect of warrants and options 233 393
----- ------
Diluted shares 6,689 6,667
===== ======
NOTE 6 BUSINESS SEGMENTS
The Company operates in two business segments: Construction equipment
and Agricultural equipment. The long-term financial performance of the
Company's reportable segments are affected by separate economic conditions and
cycles. The segments are managed separately based on the fundamental
differences in their operations. Effective December 31, 1998, the Company
adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." The Statement requires the Company to disclose selected segment
information on an interim basis; this information is set forth below (in
thousands):
April 3, 1999 March 28, 1998
------------- --------------
Net Sales:
Construction $40,246 $34,054
Agricultural 28,717 27,234
-------- -------
Consolidated $68,963 $61,288
======= =======
Income from
Operations:
Construction $ 4,794 $ 3,240
Agricultural 1,443 1,738
------- -------
Consolidated $ 6,237 $ 4,978
======= =======
NOTE 7 STOCK REPURCHASE
In March 1999, the Company's Board of Directors authorized the repurchase
of up to 325,000 shares of the Company's outstanding common stock. As of
April 3, 1999, no shares had been repurchased under this authorization.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Results of Operations
Three Months Ended April 3, 1999 Compared to Three Months Ended March 28, 1998
Net sales for the first quarter of 1999 of $69.0 million were $7.7
million, or 13%, higher than the $61.3 million in the comparable period of
1998. Construction equipment net sales increased 18% to $40.3 million in the
first quarter of 1999 from $34.1 million in the first quarter of 1998. The
increase in sales of construction equipment was due primarily to higher
telescopic handler and service parts shipments. Agricultural equipment sales
increased 5% to $28.7 million in the first quarter of 1999 from $27.2 million
in the first quarter of 1998. The increase was due primarily to increased
shipments of skid loaders and forage harvesting equipment. Of the Company's
total net sales reported for the first quarter of 1999, $8.6 million were made
outside of the United States compared with $9.7 million in the comparable
period of 1998. The decrease was due to economic disruption in the Far East
and Australia. As the Company has continued to increase its sales of
Construction equipment products, the Company has been successful in reducing
the seasonality of its sales. However, some 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 $2.9 million, or 18%, during the first quarter of
1999 versus the comparable period of 1998, due to increased sales volume and
improved gross margin percentages. Gross profit as a percent of net sales
increased to 27.2% for the first quarter of 1999 from 25.9% in the comparable
period of 1998. Gross profit as a percent of net sales for Construction
equipment increased to 26.6% in the first quarter of 1999 from 24.4% in the
first quarter of 1998. The increase in Construction equipment gross margin was
a function of increased telescopic handler and service parts sales, which sales
are at higher gross margins than other Construction equipment, and improved
efficiencies at the manufacturing plants. Gross profit as a percent of net
sales for Agricultural equipment increased to 28.0% in the first quarter of
1999 from 27.7% for the first quarter of 1998.
Selling, general and administrative expenses increased $1.7 million, or
15%, during the first quarter of 1999 versus the comparable period of 1998
due primarily to sales volume increases. As a percent of net sales, selling,
general and administrative expenses increased to 18.2% of net sales during the
first quarter of 1999 versus 17.7% in the comparable period of 1998.
Income from operations in the first quarter of 1999 was $6.2 million, 25%
higher than the $5.0 million for the first quarter of 1998.
Interest expense decreased $399,000, to $777,000 in the first quarter of
1999 from $1,176,000 in the first quarter of 1998. The decrease was a result
of a decrease in average debt outstanding to $35.2 million in the first
quarter of 1999 versus $56.1 million in the first quarter of 1998. The
average rate of interest paid by the Company decreased to 7.7% in the first
quarter of 1999 from 8.1% for the first quarter of 1998.
Other expense increased $422,000, to $440,000 in the first quarter of
1999 from $18,000 in the first quarter of 1998. This was caused by selling $9
million more retail finance contracts to third parties in the first quarter of
1999 versus the comparable period of 1998 resulting in an increase in the cost
of sales of finance contracts.
First quarter 1999 net income of $3.5 million was a 32% increase from
$2.7 million in the first quarter of 1998. Diluted earnings were $.52 per
share for the first quarter of 1999 versus $.40 per share in 1998.
Financial Condition
The Company's working capital was $78.9 million at April 3, 1999, as
compared to $69.7 million at December 31, 1998, and $87.0 million at March 28,
1998. The increase since December 31, 1998 resulted primarily from seasonal
increases in accounts receivable. The working capital decrease from March 28,
1998 was due primarily to decreases in accounts receivable.
Capital expenditures for property, plant and equipment during the first
quarter of 1999 were approximately $843,000. The Company plans to make a
total of approximately $10.6 million of capital expenditures in 1999, which
includes $4.5 million related to plant expansion activities at the two South
Dakota construction equipment manufacturing facilities. The capital
expenditures are expected to be funded with proceeds borrowed under the
Company's existing revolving credit agreement. Outstanding commitments as of
April 3, 1999 totaled approximately $220,000.
As of April 3, 1999, the weighted average interest rate paid by the
Company on outstanding borrowings under its line of credit facility was 7.0%.
The Company had available unused borrowing capacity of $47.9 million, $53.1
million and $24.1 million under the line of credit facility at April 3, 1999,
December 31, 1998, and March 28, 1998, respectively. At April 3, 1999,
December 31, 1998, and March 28, 1998, the borrowings outstanding under the
line of credit facility were $25.3 million, $19.4 million and $49.3 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 substantially
all contracts whether or not sold. At April 3, 1999, the Company serviced
$88.0 million of such contracts, of which $72.5 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 April 3, 1999 was $97.8 million. This was $16.3
million higher than the $81.5 million of shareholders' equity at March 28,
1998, due primarily to income earned from March 29, 1998 through April 3,
1999.
In March 1999, the Company's Board of Directors authorized the repurchase
of up to 325,000 shares of the Company's outstanding common stock. As of
April 3, 1999, no shares had been repurchased under this authorization. The
repurchase of the Company's common stock, if any, is expected to be funded
with proceeds borrowed under the Company's existing revolving credit
arrangement.
Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Investments 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 materially affect the Company's financial condition or results of
operations.
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 March 1999, 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 mid-1999, allowing substantial time for further testing, verification and
the final completion of less important systems in the second half 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 cannot 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 entities 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 the conversion of existing and
replacement system applications are not expected to exceed $400,000, the
majority of which expense has already been incurred. These costs have been
and will continue to 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 its 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 worst 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. The Company continues to
evaluate whether a contingency plan to deal with any expected Year 2000
related failures is warranted.
No assurances can be given that Year 2000 compliance failures, if any,
particularly as they relate to third parties, will not have a material adverse
effect on the Company's financial position or results of operations.
Forward Looking Statements
Certain matters discussed in the 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 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 Year 2000
issues, market acceptance of existing and new products manufactured by the
Company, changes in the cost of raw materials and component parts purchased by
the Company, and interest and foreign currency fluctuations. 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
There are no material changes to the information provided in response to
this item as set forth in the Company's Form 10-K for the year ended December
31, 1998 as filed with the Securities and Exchange Commission.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Form of Supplemental Retirement Benefit Arrangement between Gehl
Company and each of Messrs. Hahn, Mulcahy and Semler
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 April 3, 1999.
<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: May 11, 1999 By: /s/ William D. Gehl
William D. Gehl
Chairman of the Board, President
and Chief Executive Officer
Date: May 11, 1999 By: /s/ Kenneth P. Hahn
Kenneth P. Hahn
Vice President of Finance,
Treasurer and Chief Financial
Officer (Principal Financial
and Accounting Officer)
<PAGE>
GEHL COMPANY
FORM 10-Q
April 3, 1999
EXHIBIT INDEX
Exhibit
Number Document Description
10.1 Form of Supplemental Retirement Benefit Arrangement between Gehl
Company and each of Messrs. Hahn, Mulcahy and Semler.
27 Financial Data Schedule [EDGAR version only]
GEHL COMPANY
1998
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
THIS AGREEMENT, made this 16th day of December, 1998, by and between
GEHL COMPANY, West Bend, Wisconsin (hereinafter referred to as the "Company"),
and ________________, of West Bend, Wisconsin (hereinafter referred to as the
"Employee"):
W I T N E S S E T H:
WHEREAS, the Employee is currently employed by the Company in the capacity
of Vice President and in such position can contribute materially to its
continued growth and development and to its future financial success; and
WHEREAS, the Company desires to insure insofar as possible that the
Company will have the benefit of the Employee's full services and executive
capacities for future years;
NOW, THEREFORE, in consideration of services rendered by the Employee to
the Company, it is agreed as follows:
Section 1. Definitions.
(a) "Average Monthly Compensation" means one-sixtieth (1/60th) of the
Employee's base salary and cash bonus from the Company for the highest five
(5) calendar years within the last ten (10) completed calendar years preceding
the date of the Employee's termination of employment with the Company. In the
event the Employee does not have five (5) calendar years of employment, only
the number of full months from the date of hire through the December preceding
termination of employment shall be used to determine Average Monthly
Compensation. Cash bonus means the cash distributed to the Employee during a
calendar year pursuant to the Company "SVA" Shareholder Value Added or similar
incentive/bonus compensation program. Base salary and cash bonus for this
purpose include any salary reduction deferrals pursuant to a cash or deferred
arrangement or a cafeteria plan pursuant to Internal Revenue Code ("Code")
Sections 401(k) or 125.
(b) "Beneficiary" means the person, trust and/or other entity
designated by the Employee on the form most recently filed with the Secretary
of the Company prior to the Employee's death. In the absence of a valid
designation, the Beneficiary shall be the Employee's estate.
(c) "Disability means a physical or mental condition which totally and
presumably permanently prevents the Employee from engaging in any
substantially gainful activity as determined in accordance with Section 4.03
of the Gehl Company Retirement Income Plan "B".
(d) "Vested Percentage" means the percentage of the supplemental
retirement benefit in Section 2 earned by the Employee, subject in any event
to the forfeiture provision of Section 4 and the change in control provision
of Section 5. The Vested Percentage is one hundred percent (100%) in any of
the following circumstances:
(i) after the Employee completes five (5) years of Vesting Service;
(ii) if the Employee suffers a Disability; or
(iii) if the Employee retires from the Company after attainment of
age sixty-two (62).
In the event the Employee does not have a Vested Percentage of one hundred
percent (100%), he shall receive ten percent (10%) vesting for each complete
year of Vesting Service.
(e) "Vesting Service" means the period of the Employee's consecutive
employment with the Company from _______________________, through the date of
termination of employment.
Section 2. Supplemental Retirement Benefits.
(a) The amount of the monthly supplemental retirement benefit shall be
the Employee's Vested Percentage times an amount equal to twenty percent (20%)
of the Employee's Average Monthly Compensation.
(b) The monthly supplement shall be payable to the Employee commencing as
of the first day of the month following the earlier to occur of:
(i) age sixty-five (65); or
(ii) the later of termination of employment from the Company or age
sixty two (62).
The supplement shall continue to be paid to the Employee for a period of
fifteen (15) years.
(c) In the event the Employee commences receiving the supplement but dies
prior to the end of the payment period, the remaining monthly payments in the
fifteen (15)-year period shall be made to the Beneficiary.
(d) In the event the Employee dies after termination of employment from
the Company but prior to the commencement of benefits pursuant to (b) above,
the monthly supplement calculated pursuant to subsection (a) above shall be
paid to the Beneficiary for the fifteen (15)-year period commencing as of the
first day of the month following the later to occur of the Employee's death or
the date the Employee would have attained (or if applicable, did attain) age
sixty-two (62).
Section 3. Pre-Retirement Death Benefit.
(a) In the event the Employee dies prior to commencement of the
supplemental retirement benefit under Section 2(b) above and while employed by
the Company, in lieu of any payment pursuant to Section 2 above, a pre-
retirement death benefit shall be paid to the Beneficiary.
(b) The death benefit shall be comprised of five (5) payments, the
first being due as of the last day of the month following the Employee's
death. Each succeeding payment shall be made on successive anniversaries of
the first payment due date.
(c) The amount of each of the five (5) payments shall be thirty
percent (30%) of the Employee's annual salary as of the Employee's date of
death.
Section 4. Non-Competition Requirement. Employee agrees that for a
period of two (2) years after termination of active employment hereunder, the
Employee shall not, except as permitted by the Company's prior written
consent, engage in, be employed by, or in any way advise or act for, or have
any financial interest in any business which is a competitor of the Company.
The ownership of minority and non-controlling shares of any corporation whose
shares are listed on a recognized stock exchange or traded in an over-the-
counter market shall not be deemed as constituting a financial interest in
such corporation. If the Employee shall fail to comply with any of the
foregoing conditions, he shall forfeit all right to any payments pursuant to
Section 2 hereof which would otherwise be payable to him thereafter.
Section 5. Change of Control. Notwithstanding the definition of Vested
Percentage in Section 1 hereof, an Employee shall be one hundred percent
(100%) vested, subject to Section 4, in the event there is a change of control
of the Company. For purposes of this Agreement, a "change in control of the
Company" occurs when:
(i) securities of GEHL representing 25% or more of the
combined voting power of GEHL's then outstanding voting
securities are acquired pursuant to a tender offer or an
exchange offer; or
(ii) the shareholders of GEHL approve a merger or consolidation of GEHL
with any other corporation as a result of which less than fifty
percent (50%) of the outstanding voting securities of the
surviving or resulting entity are owned by the former shareholders
of GEHL (other than a shareholder who is an affiliate, as defined
under rules promulgated under the Securities Act of 1933, as
amended, of any party to such consolidation or merger); or
(iii) the shareholders of GEHL approve the sale of substantially all of
GEHL's assets to a corporation which is not a wholly-owned
subsidiary of GEHL; or
(iv) any person becomes the "beneficial owner," as defined under rules
promulgated under the Securities Exchange Act of1934, as amended,
directly or indirectly, of securities of GEHL representing twenty-
five percent (25%) or more of the combined voting power of GEHL s
then outstanding securities the effect of which (as determined by
the Board) is to take over control of GEHL; or
(v) during any period of two consecutive years, individuals who, at the
beginning of such period, constituted the Board of Directors of GEHL
cease, for any reason, to constitute at least a majority thereof,
unless the election or nomination for election of each new director
was approved by the vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the
period.
Section 6. No Rights of Employment. Nothing herein contained shall be
deemed to confer upon the Employee any right to continue in the employ of the
Company nor to interfere with the right of the Company to terminate his
employment at any time.
Section 7. Employee's Rights Non-Assignable. Neither the Employee nor
the Beneficiary shall have the power to transfer, assign, anticipate,
mortgage, or otherwise encumber in advance any of the payments provided in
this Agreement; nor shall any of said payments nor any assets of the Company,
including any insurance policies owned by the Company, be subject to seizure
for the payment of any of the recipient's debts, judgments or other
obligations arising by operation of law or in the event of bankruptcy,
insolvency or otherwise.
Section 8. Company Not Required to Fund This Agreement. The Company is
not obligated to set aside or credit the Employee or the Beneficiary with
funds to provide for the payment of the amounts due under this Agreement, and
nothing in this Agreement shall be construed as creating a trust fund of any
kind for the benefit of the Employee or the Beneficiary.
Section 9. Administration. This Agreement shall be administered by the
Gehl Company Compensation and Benefits Committee (herein referred to as the
"Committee"). If the Employee is also a Committee member, he shall abstain
from any deliberations or vote on any matter in connection with this
Agreement.
Section 10. Successors and Assigns. This Agreement shall inure to and
be binding upon the successors and assigns of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Attest: GEHL COMPANY
_________________________ ____________________________
Its: President
EMPLOYEE
_________________________ _____________________________
Witness as to
SUPPLEMENTAL RETIREMENT BENEFIT AGREEMENT
BENEFICIARY DESIGNATION
This is to certify that I wish to make the following beneficiary
designation for any death benefit which may become payable under my Gehl
Company Supplemental Retirement Benefit Agreement:
Primary Beneficiary
Name___________________________ ______________________________
(Please Print) Social Security Number
Address _________________________ ______________________________
Relationship
_________________________
Secondary Beneficiary
Name___________________________ ______________________________
(Please Print) Social Security Number
Address _________________________ ______________________________
Relationship
_________________________
Date ___________________________ ______________________________
Signature of Employee
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's condensed consolidated balance sheet at April 3, 1999 and condensed
consolidated statements of income for the three-month period ended April 3,
1999 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-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> APR-03-1999
<CASH> 3688
<SECURITIES> 0
<RECEIVABLES> 88284
<ALLOWANCES> 0<F1>
<INVENTORY> 36015
<CURRENT-ASSETS> 136449
<PP&E> 76364
<DEPRECIATION> 42454
<TOTAL-ASSETS> 199429
<CURRENT-LIABILITIES> 57508
<BONDS> 34774<F2>
<COMMON> 647
0
0
<OTHER-SE> 97185
<TOTAL-LIABILITY-AND-EQUITY> 199429
<SALES> 68963
<TOTAL-REVENUES> 68963
<CGS> 50187
<TOTAL-COSTS> 50187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 777
<INCOME-PRETAX> 5433
<INCOME-TAX> 1929
<INCOME-CONTINUING> 3504
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3504
<EPS-PRIMARY> .54<F3>
<EPS-DILUTED> .52
<FN>
<F1>The 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>
