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 October 2, 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 incorporation (I.R.S. Employer
or organization) Identification No.)
143 Water Street, West Bend, WI 53095
(Address of principal executive office) (Zip code)
(262) 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 October 2, 1999
Common Stock, $.10 Par Value 5,802,771
<PAGE>
GEHL COMPANY
FORM 10-Q
October 2, 1999
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 October 2, 1999
and September 26, 1998 . . . . . . . . . . 3
Condensed Consolidated Balance Sheets at October 2, 1999,
December 31, 1998 and September 26, 1998 . 4
Condensed Consolidated Statements of Cash Flows for the
Nine-Month Periods Ended October 2, 1999 and
September 26, 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 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
October 2, Sept. 26, October 2, Sept. 26,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET SALES $69,838 $63,452 $222,649 $199,971
Cost of goods sold 49,195 45,618 159,115 145,111
------- ------- -------- --------
GROSS PROFIT 20,643 17,834 63,534 54,860
Selling, general and
administrative expenses 10,322 10,734 35,348 33,283
------- ------- -------- --------
INCOME FROM OPERATIONS 10,321 7,100 28,186 21,577
Interest expense (789) (925) (2,343) (3,352)
Interest income 452 480 1,290 1,233
Other expense, net (525) (363) (1,742) (959)
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 9,459 6,292 25,391 18,499
Income tax provision 3,358 2,234 9,014 6,567
------- ------- -------- --------
NET INCOME $6,101 $4,058 $16,377 $11,932
======= ======= ======== ========
EARNINGS PER SHARE
Diluted $1.00 $.61 $2.52 $1.79
Basic $ 1.04 $.63 $2.62 $1.88
</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>
October 2, December 31, September 26,
1999 1998 1998
ASSETS (Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash $ 3,967 $ 887 $ 4,925
Accounts receivable-net 74,057 70,806 77,975
Finance contracts receivable-net 10,945 9,786 8,892
Inventories 32,119 32,093 28,630
Deferred tax asset 7,138 7,138 4,217
Prepaid expenses and other assets 903 1,184 1,242
-------- ------- ----------
Total Current Assets 129,129 121,894 125,881
-------- ------- ----------
Property, plant and equipment-net 34,492 34,142 34,101
Finance contracts receivable-
net, non-current 6,558 5,804 3,298
Intangible assets 15,894 16,451 14,317
Other assets 8,671 6,256 5,725
-------- ------- -------
TOTAL ASSETS $ 194,744 $ 184,547 $ 183,322
======== ======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current portion of long-term
debt obligations $ 562 $ 597 $ 639
Accounts payable 26,198 23,562 26,758
Accrued liabilities 32,753 27,993 26,341
-------- ------- -------
Total Current Liabilities 59,513 52,152 53,738
Line of credit facility 21,060 19,359 23,583
Long-term debt obligations 9,142 9,588 9,726
Other long-term liabilities 5,205 5,400 1,979
Deferred income taxes 3,943 3,943 3,421
-------- ------- -------
Total Long-Term Liabilities 39,350 38,290 38,709
-------- ------- -------
Common stock, $.10 par value,
25,000,000 shares authorized,
6,570,271, 6,438,945 and
6,406,990 shares issued,
respectively 657 644 640
Preferred stock, $.10 par value,
2,000,000 shares authorized,
250,000 shares designated as
Series A Preferred Stock, no
shares issued - - -
Treasury stock, at cost
(767,500 shares at October 2,
1999) (15,613) - -
Capital in excess of par 29,329 28,330 27,670
Retained earnings 82,660 66,283 62,947
Accumulated other
comprehensive loss (1,152) (1,152) (382)
-------- ------- -------
Total Shareholders' Equity 95,881 94,105 90,875
-------- ------- -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 194,744 $ 184,547 $ 183,322
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)
<CAPTION>
Nine Months Ended
October 2, September 26,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 16,377 $ 11,932
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 3,239 3,205
Amortization 588 529
Proceeds from sales of finance contracts 53,553 38,668
Increase in finance contracts receivable (57,491) (40,485)
Cost of sales of finance contracts 2,025 868
Net change in working capital items 4,400 5,771
---------- ---------
Net cash provided by operating activities 22,691 20,488
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions, net (3,589) (2,225)
Other assets (2,446) (301)
---------- ---------
Net cash used for investing activities (6,035) (2,526)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) increase in long-term debt
obligations (481) 4
(Decrease) increase in long-term liabilities (195) 124
Proceeds from (repayments of) credit facility 1,701 (15,774)
Proceeds from issuance of common stock 1,012 1,370
Purchase of treasury stock (15,613) -
---------- ---------
Net cash used for financing activities (13,576) (14,276)
---------- ---------
Net increase in cash 3,080 3,686
Cash, beginning of period 887 1,239
---------- ---------
Cash, end of period $ 3,967 $ 4,925
=========== ==========
Supplemental disclosure of cash flow
information:
Cash paid for the following:
Interest $ 2,284 $ 3,346
Income taxes $ 8,702 $ 4,884
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
October 2, 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-
and nine-month periods ended October 2, 1999 and September 26, 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. The results of operations for the nine months ended October 2, 1999
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 operations.
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):
October 2, December 31, September 26,
1999 1998 1998
Raw materials and supplies $ 17,306 $ 15,656 $ 14,226
Work-in-process 5,149 5,863 5,349
Finished machines and parts 29,060 29,970 28,305
---------- --------- --------
Total current cost value 51,515 51,489 47,880
Adjustment to LIFO basis (19,396) (19,396) (19,250)
---------- --------- --------
$ 32,119 $ 32,093 $ 28,630
========== ========= ========
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 was originally effective for fiscal
quarters of fiscal years beginning after June 15, 1999. In June 1999, the
effective date was delayed one year and will be effective January 1, 2001 for
the Company. Due to the Company's current limited use of derivative
instruments, the adoption of this statement is not expected to have a material
effect on 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):
For the three months ended: October 2, 1999 September 26, 1998
--------------- ------------------
Basic shares 5,856 6,406
Effect of options 235 252
----- -----
Diluted shares 6,091 6,658
===== =====
For the nine months ended: October 2, 1999 September 26, 1998
--------------- ------------------
Basic shares 6,260 6,359
Effect of warrants and options 243 312
----- -----
Diluted shares 6,503 6,671
===== =====
NOTE 6 BUSINESS SEGMENTS
The Company operates in two business segments: Construction equipment and
Agriculture 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. During 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):
Three Months Ended Nine Months Ended
------------------ -----------------
October 2, Sept. 26, October 2, Sept. 26,
1999 1998 1999 1998
Net Sales:
Construction $41,251 $38,774 $132,852 $118,255
Agriculture 28,587 24,678 89,797 81,716
-------- -------- -------- --------
Consolidated $69,838 $63,452 $222,649 $199,971
======== ======== ======== ========
Income from
Operations:
Construction $6,640 $ 5,158 $ 19,033 $ 14,918
Agriculture 3,681 1,942 9,153 6,659
-------- -------- -------- --------
Consolidated $10,321 $ 7,100 $ 28,186 $ 21,577
======== ======== ======== ========
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 October
2, 1999, 41,600 shares had been repurchased in the open market under this
authorization at an aggregate cost of $732,000.
On July 9, 1999, the Company repurchased 725,900 shares of its common stock,
at a per share purchase price of $20.50, from a shareholder (and affiliates)
in a privately negotiated transaction. The aggregate purchase price of $14.9
million was financed with borrowings under the Company's existing revolving
credit facility. In connection with the repurchase, the shareholder agreed
not to acquire shares of the Company's stock or take certain other actions
until after July 9, 2009. This repurchase was effected pursuant to separate
Board authorization and does not impact the stock repurchase plan described
above.
Item 2. Management's Discussion And Analysis Of Results Of Operations And
Financial Condition
Results of Operations
Three Months Ended October 2, 1999 Compared to Three Months Ended September
26, 1998
Net sales for the third quarter of 1999 of $69.8 million were 10% higher
than the $63.5 million of net sales in the comparable period of 1998.
Construction equipment net sales increased 6% to $41.2 million in the third
quarter of 1999 from $38.8 million in the third quarter of 1998. The increased
Construction equipment sales were due primarily to higher shipments of rough-
terrain telescopic handlers. Additionally, during the third quarter of 1999,
the Company commenced shipment of the mini-excavator product line introduced
in May of this year. Agriculture equipment net sales increased 16% to $28.6
million in the third quarter of 1999 from $24.7 million in the third quarter
of 1998, due primarily to increased shipments of skid loaders and forage
harvesting equipment. Of the Company's total net sales reported for the third
quarter of 1999, $10.3 million represented sales made outside the United
States compared with $10.2 million in the comparable period of 1998.
Gross profit increased $2.8 million, or 16%, during the third quarter of
1999 versus the comparable period of 1998, due primarily to increased sales
volume. Gross profit as a percent of net sales increased to 29.6% for the
third quarter of 1999 from 28.1% in the comparable period of 1998. Gross
profit as a percent of net sales for Construction equipment increased to 28.0%
in the third quarter of 1999 from 26.2% in the third quarter of 1998. The
increase in Construction equipment gross margin was a function of increased
rough-terrain telescopic handler 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 Agriculture
equipment increased to 31.9% in the third quarter of 1999 from 31.1% in the
comparable period of 1998. The primary reason for the increase was the impact
of a change in the mix of products shipped in the third quarter of 1999 versus
products shipped in comparable 1998.
Selling, general and administrative expenses decreased $412,000, or 4%,
during the third quarter of 1999 versus the comparable period of 1998, due
primarily to lower costs of selling Agriculture products in 1999 versus the
comparable period of 1998. As a percent of net sales, selling, general and
administrative expenses decreased to 14.8% during the third quarter of 1999
versus 16.9% in the comparable period of 1998.
Income from operations in the third quarter of 1999 was $10.3 million
versus $7.1 million in the third quarter of 1998.
Interest expense decreased $136,000 to $789,000 in the third quarter of
1999 from $925,000 in the third quarter of 1998. This resulted from a
decrease in average debt outstanding to $35.1 million in the third quarter of
1999 versus $41.4 million in the third quarter of 1998.
Other expense increased $162,000 to $525,000 in the third quarter of 1999
from $363,000 in the third quarter of 1998. This was due primarily to the
cost of selling finance contracts to third parties. In 1999 the cost of
selling these contracts increased as the finance rates offered to Gehl finance
customers were lower than the comparable period of 1998, while the discount
rates used in selling finance contracts to third parties increased as a result
of the general trend of overall interest rates.
Third quarter 1999 net income of $6.1 million was a 50% increase from
$4.1 million in the third quarter of 1998. Diluted earnings were $1.00 per
share for the third quarter of 1999, a 64% increase from $.61 per share in
1998, reflecting the impact of a lower number of common stock shares
outstanding as a result of the Company's stock repurchases as well as improved
performance.
Nine Months Ended October 2, 1999 Compared to Nine Months Ended September 26,
1998
Net sales for the first nine months of 1999 of $222.6 million were $22.6
million, or 11%, higher than the $200.0 million of net sales in the comparable
period of 1998. Construction equipment net sales increased 12% to $132.8
million in the first nine months of 1999 from $118.3 million in the first nine
months of 1998. The Construction equipment increase resulted from continued
strong demand for rough-terrain telescopic handlers. Agriculture equipment
net sales increased 10% to $89.8 million in the first nine months of 1999 from
$81.7 million in the first nine months of 1998. The increase was due
primarily to increased shipments of forage harvesting equipment and skid
loaders. Of the Company's total net sales reported for the first nine months
of 1999, $30.6 million represented sales made outside the United States
compared with $32.4 million in the comparative period of 1998. The decrease
in international sales was due to economic disruption in the Far East and
Australia. Given the segments that the Company ships into, there exists some
seasonality in the sales trends, primarily in the Company's second and third
quarters which historically have tended to be its strongest quarters for
sales, while sales levels have historically tended to be lower in the first
and fourth quarters.
Gross profit increased $8.7 million, or 16%, in the first nine months of
1999 versus the comparable period of 1998, due primarily to increased sales
volume. Gross profit as a percent of net sales increased to 28.5% for the
first nine months of 1999 from 27.4% in the comparable period of 1998. Gross
profit as a percent of net sales for Construction equipment increased to 27.4%
in the first nine months of 1999 from 25.7% in the first nine months of 1998.
The increase in Construction gross margin was a function of increased rough-
terrain telescopic handler 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 Agriculture equipment
increased to 30.2% for the first nine months of 1999 from 29.9% for the first
nine months of 1998.
Selling, general and administrative expenses increased $2.1 million, or 6%,
during the first nine months of 1999 versus the comparable period of 1998 due
to continued investment in engineering and sales related activities, as well
as sales volume increases. As a percent of net sales, selling, general and
administrative expenses decreased to 15.9% during the first nine months of
1999 versus 16.6% in the comparable period of 1998.
Income from operations in the first nine months of 1999 of $28.2 million
was 31% higher than the $21.6 million for the comparable period of 1998.
Interest expense decreased $1.0 million to $2.3 million in the first nine
months of 1999 from $3.3 million in the first nine months of 1998. The
decrease was a result of a decrease in average debt outstanding to $35.5
million in the first nine months of 1999 versus $52.1 million in the
comparable period of 1998 combined with a decrease in the average rate of
interest paid by the Company to approximately 7.7% in the first nine months of
1999 versus 7.9% in the comparable period of 1998.
Other expense increased $783,000 to $1,742,000 as of October 2, 1999 from
$959,000 at September 26, 1998. This was primarily a result of selling $14.9
million more retail finance contracts to third parties during the nine months
ended October 2, 1999 versus the comparable period of 1998, combined with
lower finance rates offered to Gehl finance customers and increasing discount
rates used in selling finance contracts to third parties resulting from the
general trend of overall interest rates.
Net income of $16.4 million for the nine months ended October 2, 1999 was
a 37% increase from $11.9 million for the nine months ended September 26,
1998. Diluted earnings were $2.52 per share for the nine months ended October
2, 1999, a 41% increase from $1.79 per share in 1998, reflecting the impact of
a lower number of shares of common stock outstanding as a result of the
Company's stock repurchase, as well as improved performance.
Financial Condition
The Company's working capital was $69.6 million at October 2, 1999 as
compared to $69.7 million at December 31, 1998 and $72.1 million at September
26, 1998.
The Company's cash flow provided by operating activities in the first
nine months of 1999 was $22.7 million versus $20.5 million in comparable 1998.
Capital expenditures for property, plant and equipment during the first
nine months of 1999 were approximately $3.6 million. The Company expects to
make approximately $7.4 million of capital expenditures during 1999, which
includes approximately $5 million related to plant expansion activities at its
two South Dakota construction equipment manufacturing facilities. The capital
expenditures are expected to be funded with borrowings under the Company's
existing line of credit facility. Outstanding capital expenditure commitments
as of October 2, 1999 totaled approximately $2.2 million.
As of October 2, 1999, 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 $51.8 million, $53.1
million and $49.2 million under the line of credit facility at October 2,
1999, December 31, 1998 and September 26, 1998, respectively. At October 2,
1999, December 31, 1998 and September 26, 1998, the borrowings outstanding
under the line of credit facility were $21.1 million, $19.4 million and $23.6
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 October 2, 1999, Gehl serviced $101.4 million of
such contracts, of which $84.0 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 October 2, 1999 was $95.9 million. This amount
was $5.0 million higher than the $90.9 million of shareholders' equity at
September 26, 1998, due primarily to income earned from September 26, 1998
through October 2, 1999, offset by the purchase of treasury stock in the third
quarter of 1999.
On July 9, 1999, the Company repurchased 725,900 shares of its common
stock, at a per share purchase price of $20.50, from a shareholder (and
affiliates) in a privately negotiated transaction. The aggregate purchase
price of $14.9 million was financed with borrowings under the Company's
existing revolving credit facility. In addition, the Company has repurchased
41,600 share of its common stock in the open market at an aggregate cost of
$732,000 under a stock repurchase program which allows for repurchases of up
to 325,000 shares. The repurchase program was authorized by the Company's
Board of Directors in March 1999.
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 was originally effective for fiscal
quarters of fiscal years beginning after June 15, 1999. In June 1999, the
effective date was delayed by one year and will be effective January 1, 2001
for the Company. Due to the Company's current limited use of derivative
instruments, the adoption of this statement is not expected to have a material
effect on 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. By the end of September 1999, the assessment and planning phases
have been completed for all IT systems and applications. The Company's
objective to become Year 2000 compliant with its mission critical IT
activities and systems by mid-1999 has been met, allowing time for further
testing, verification and the final remediation of less important systems
during the remainder of 1999.
In addition to the IT systems review noted above, the Company has
completed assessments, modifications and testing in other areas, where
appropriate, 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 continues 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.
Although the Company believes it has taken reasonable steps to ensure Year
2000 compliance by its significant vendors, 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 companies 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. Contingency plans will
be developed, as necessary, to address unforeseen circumstances prior to the
end of 1999.
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 this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbors 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 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 Annual Report on Form 10-K for the
year ended December 31, 1998 as filed with the Securities and Exchange
Commission.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
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 October 2, 1999.
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 15, 1999 By: /s/ William D. Gehl
William D. Gehl
Chairman of the Board, President and
Chief Executive Officer
Date: November 15, 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
October 2, 1999
EXHIBIT INDEX
Exhibit
Number Document Description
27 Financial Data Schedule [EDGAR version only]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at October 2, 1999 and consolidated
statements of income for the nine-month period ended October 2, 1999 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-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> OCT-2-1999
<CASH> 3967
<SECURITIES> 0
<RECEIVABLES> 85002
<ALLOWANCES> 0<F1>
<INVENTORY> 32119
<CURRENT-ASSETS> 129129
<PP&E> 78925
<DEPRECIATION> 44433
<TOTAL-ASSETS> 194744
<CURRENT-LIABILITIES> 59513
<BONDS> 30202<F2>
<COMMON> 657
0
0
<OTHER-SE> 95224
<TOTAL-LIABILITY-AND-EQUITY> 194744
<SALES> 222649
<TOTAL-REVENUES> 222649
<CGS> 159115
<TOTAL-COSTS> 159115
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2343
<INCOME-PRETAX> 25391
<INCOME-TAX> 9014
<INCOME-CONTINUING> 16377
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16377
<EPS-BASIC> 2.62<F3>
<EPS-DILUTED> 2.52
<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>
