FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 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 or organization) (I.R.S. Employer Identification No.)
143 Water Street, West Bend, WI 53095
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (414) 334-9461
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.10 par value
(Title of class)
Rights to Purchase Preferred Shares
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X]
Aggregate market value of voting stock held by non-affiliates of the
registrant: $104,244,457 at February 15, 1999.
Number of shares outstanding of each of the registrant's classes of
common stock, as of February 15, 1999:
Class Shares Outstanding
Common Stock, $.10 Par Value 6,455,312
DOCUMENTS INCORPORATED BY REFERENCE
Gehl Company 1998 Annual Report to Shareholders (Parts I and II)
Gehl Company Proxy Statement for the 1999 Annual Meeting of Shareholders
(to be filed with the Commission under Regulation 14A within 120
days after the end of the registrant's fiscal year and, upon such
filing, to be incorporated by reference into Part III)
GEHL COMPANY
_________________
INDEX TO
ANNUAL REPORT ON FORM 10-K
For The Year Ended December 31, 1998
Part I Page
Item 1 Business . . . . . . . . . . . . . . . . . . 1
Item 2 Properties . . . . . . . . . . . . . . . . . 7
Item 3 Legal Proceedings . . . . . . . . . . . . . . 7
Item 4 Submission of Matters to a Vote of Security Holders 7
Executive Officers of the Registrant 8
Part II
Item 5 Market for Registrant's Common Equity and Related
Shareholder Matters . . . . . . . . . . . . 10
Item 6 Selected Financial Data . . . . . . . . . . . 10
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . 10
Item 7A Quantitative and Qualitative Disclosures About Market Risk 10
Item 8 Financial Statements and Supplementary Data . 10
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . 10
Part III
Item 10 Directors and Executive Officers of the Registrant 11
Item 11 Executive Compensation . . . . . . . . . . . 11
Item 12 Security Ownership of Certain Beneficial Owners
and Management . . . . . . . . . . . . . . 11
Item 13 Certain Relationships and Related Transactions 11
Part IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . 13
<PAGE>
Part I
Item 1. Business.
Overview
Gehl Company (the "Company" or "Gehl") designs, manufactures, distributes,
sells and finances equipment used in the light construction equipment and the
agriculture equipment industries. Construction equipment is comprised of skid
steer loaders, telescopic handlers, and asphalt pavers and is manufactured and
distributed for contractors, sub-contractors, owner operators and
municipalities. Agriculture equipment is distributed for customers in the
dairy and livestock industries, and includes a broad range of products
including haymaking, forage harvesting, materials handling (skid steer loaders
and attachments), manure handling and feedmaking equipment. The Company
believes that it is one of the largest non-tractor agriculture equipment
manufacturers in North America.
On October 2, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Brunel America, Inc. and Subsidiaries, including
Mustang Manufacturing Company, Inc. ("Mustang") from Brunel Holdings, plc.
Mustang designs, manufactures and distributes skid steer loaders and related
attachments. Gehl acquired the Brunel America, Inc. stock for $26.7 million;
and entered into a five year non-competition agreement with the seller
pursuant to which Gehl paid $1.0 million. The Company borrowed $27.7 million
under its existing credit facility to fund the acquisition. The acquisition
has been accounted for as a purchase transaction and the results of the
Mustang operation have been included in the Company's operating results since
the date of the acquisition.
Construction equipment is manufactured in Minnesota, Pennsylvania and in
two South Dakota facilities and Agriculture equipment is manufactured in
plants in Wisconsin, Pennsylvania and South Dakota. The Company was founded
in 1859 and was incorporated in the State of Wisconsin in 1890.
The statements which are not historical facts contained in this Form 10-K
and other information provided by the Company are forward-looking statements
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. Such statements are subject
to certain risks and uncertainties which could cause actual results to differ
materially from those currently anticipated. These factors include, without
limitation, competitive conditions in the markets served by the Company,
market acceptance of existing and new products manufactured by the Company,
unanticipated events related to resolving the year 2000 issue, changes in the
cost of raw materials and component parts purchased by the Company, changes in
the Company's plans regarding capital expenditures, changes in interest and
currency exchange rates, and general economic conditions. These factors
should be considered in evaluating the forward-looking statements, and undue
reliance should not be placed on such statements. The Company undertakes no
obligation to update publicly such statements to reflect subsequent events or
circumstances.
Business Segments
The Company operates in two business segments, construction equipment and
agriculture equipment. The following table shows certain information relating
to the Company's segments:
(dollars in thousands)
Years ended December 31,
1996 1997 1998
Amount % Amount % Amount %
Net sales:
Construction
Equipment $70,826 44.4% $101,635 51.6% $156,008 59.5%
Agriculture
Equipment 88,836 55.6 95,420 48.4 106,211 40.5
-------- ----- -------- ----- -------- -----
Total $159,662 100% $197,055 100% $262,219 100%
Income from
operations:
Construction
Equipment $ 12,967 83.4% $ 16,277 74.5% $ 19,384 71.1%
Agriculture
Equipment 2,580 16.6 5,571 25.5 7,894 28.9
-------- ----- -------- ----- ------- -----
Total $ 15,547 100% $ 21,848 100% $ 27,278 100%
The Company had no intersegment sales or transfers during the years
set forth above. For segment information with respect to identifiable assets,
depreciation/amortization and capital expenditures for the construction
equipment and agriculture equipment markets, see Note 13 of "Notes to
Consolidated Financial Statements", included on Pages 25 and 26 of the Gehl
Company 1998 Annual Report to Shareholders, which pages are incorporated by
reference herein.
Construction Equipment
Products:
Construction equipment is marketed in the following three product areas:
1. Skid Steer Loaders - Five models of Gehl skid steer loaders are
offered which feature a choice of hand-operated T-bar controls, hand
only or hand and foot controls; and four models of Mustang skid steer
loaders are offered which feature a choice of T-bar, hand only and
hand/foot controls. The skid steer loader, with its fixed-wheel four-
wheel drive, is used principally for material handling duties. The
skid steer loader may also be used with a variety of attachments,
including dirt, snow and cement buckets, pallet forks and
hydraulically-operated devices such as cold planers, backhoes, brooms,
trenchers, snowblowers, industrial grapples, tree diggers, concrete
breakers, augers and many more.
2. Telescopic Handlers - Gehl markets eight models of Dynalift
telescopic handlers and one model of the Dyna-Handler, rough-terrain
telescopic forklifts, all with digging capabilities. These handlers
are designed to handle heavy loads (up to 12,000 pounds) reaching
horizontally and vertically for use by a variety of customers,
including masons, roofers, building contractors and farmers.
3. Asphalt Pavers - Four models of Power Box pavers are marketed by
Gehl. These pavers allow variable paving widths from 4 1/2 to 13 feet
and are used for both commercial and municipal jobs such as county and
municipal road, sidewalk, golf cart path, jogging trail, parking lot,
driveway, trailer court and tennis court preparation.
Marketing and Distribution:
The Company maintains a separate distribution system for Construction
equipment. The Company markets its Construction equipment in North America
through 353 independent dealers (with 697 outlets) and worldwide through 86
distributors. The Company has no Company-owned dealers and its dealers may
sell equipment produced by other construction equipment manufacturers. The
top ten dealers and distributors of Construction equipment accounted for
approximately 13% of the Company's sales for the year ended December 31, 1998;
however, no single dealer or distributor accounted for more than 3% of the
Company's sales for that period. Sales of the Construction equipment skid
steer loader product line accounted for more than 19% of the Company's net
sales in 1996, 1997 and 1998. Sales of the Construction equipment telescopic
handler product line accounted for more than 20% of the Company's net sales in
1996, 1997 and 1998.
The Company believes that maintenance and expansion of its dealer network
is important to its success in the light construction equipment market.
Various forms of support are provided for its Construction equipment dealers,
including sales and service training, and, in the United States and Canada,
floor plan financing for its dealers and retail financing for both its dealers
and their customers. The light construction equipment dealers in North
America are also supported by district sales managers who provide a variety of
services, including training, equipment demonstrations and sales, warranty and
service assistance.
Industry and Competition:
Gehl's Construction equipment product lines face competition in each of
their markets. In general, each line competes with a small group of from
seven to twelve different companies. No one company competes directly across
all of Gehl's Construction equipment product lines. The Company competes
within the light construction equipment markets based primarily on price,
quality, service and distribution.
The primary markets for Gehl's Construction equipment outside of North
America are in Europe, Australia, Latin America, the Middle East and the
Pacific Rim. The Company believes it is a significant competitor in the skid
steer loader market in most of these markets.
Agriculture Equipment
Products:
Agriculture equipment is marketed in five product areas.
1. Haymaking - Gehl's haymaking line includes a broad range of products
used to harvest and process hay crops for livestock feed. The
Company offers disc mowers, a wide range of pull-type disc mower
conditioners, hay rakes and variable-chamber round balers.
2. Forage Harvesting - The Company believes that it currently
manufactures and sells one of the industry's most complete lines of
forage harvesting equipment, including forage harvesters, wagons and
blowers.
3. Materials Handling This line consists of six different models of
Gehl skid steer loaders and the Dyna-Handler forklift. The skid
steer loader is a compact, fixed-wheel four-wheel drive unit
typically equipped with a bucket or fork and is used for moving a
variety of material. The Dyna-Handler is a rough-terrain telescopic
forklift with digging capabilities. The skid steer loader and Dyna-
Handler forklift are marketed by dealers who handle Agriculture
equipment and by dealers who handle Construction equipment.
4. Manure Handling - Gehl offers a broad range of manure spreaders,
including the Scavenger "V-Tank" side-discharge manure spreader
which incorporates a hydraulically controlled auger allowing the
spreader to handle a wide range of semi-liquid waste products,
including municipal sludge. For handling mostly solid manure, the
Company also markets four models of rear-discharge box spreaders.
5. Feedmaking - The Company believes that it offers the broadest line of
portable feedmaking equipment in the industry. The Company offers the
Gehl Mix-All line of grinder mixers and a line of mixer feeders and
a feeder wagon for both mixing feed rations and delivery to livestock
feeders.
Marketing and Distribution:
In North America, Gehl's agricultural equipment is sold through
approximately 448 geographically dispersed dealers (with 498 outlets). Sixty-
four of these dealers are located in Canada. Agriculture equipment is also
marketed through 24 distributors in Europe, the Middle East, the Pacific Rim
and Latin America. The Company has no Company-owned dealers and its dealers
may sell equipment produced by other agricultural equipment manufacturers.
It has been and remains the Company's objective to increase the share of
Gehl products sold by a Gehl dealer. Gehl is not dependent for its sales on
any specific Agriculture dealer or group of dealers. The top ten dealers and
distributors in Agriculture equipment accounted for approximately 5% of the
Company's sales for the year ended December 31, 1998 and no one dealer or
distributor accounted for over .7% of the Company's sales during that period.
Sales of the Agriculture equipment skid steer loader product line accounted
for more than 13% of the Company's net sales in 1996, 1997 and 1998.
The Company provides various forms of support for its dealer network,
including sales and service training. The Company also provides floor plan
and retail finance support for products sold by its dealers in the United
States and Canada.
The Company employs district sales managers to assist its agricultural
dealers in the promotion and sale of its product and regional service managers
to assist in warranty and servicing matters. The Company currently operates
three service parts distribution centers located in: Memphis, Tennessee;
Syracuse, New York; and Minneapolis, Minnesota. The Company also contracts
with two service parts distribution locations in Rockwood, Ontario and
Saskatoon, Saskatchewan.
Industry and Competition:
The agriculture equipment industry has seen significant consolidation and
retrenchment since 1980. This has served to reduce the total number of
competitors, to strengthen certain major competitors, and to reduce the
strength of certain other companies in the industry. The Company competes
within the agriculture equipment industry based primarily on price, quality,
service and distribution.
The agriculture equipment markets in North America are highly competitive
and require substantial capital outlays. The Company has four major
competitors as well as numerous other limited line manufacturers and
importers. The largest manufacturers in the agriculture equipment industry,
the Company's major competitors, generally produce tractors and combines as
well as a full line of tillage and planting equipment. Such manufacturers
also market, to varying degrees, haymaking, forage harvesting, materials
handling, manure handling and/or feedmaking equipment, the areas in which the
Company's agriculture products are concentrated. No single competitor
competes with the Company in each of its product lines. The Company believes
that it is the only non-tractor manufacturer in the industry that produces
equipment in each of these product lines. Smaller manufacturers which compete
with the Company produce only a limited line of specialty items and often
compete only in regional markets.
Gehl's agriculture equipment is primarily distributed to customers in the
dairy and livestock industries. Compared to a more volatile period in the
late 1980's and early 1990's, milk prices, cash income, land values, and the
general economy were more favorable and stable for the dairy farmer in the mid
through late 1990's. These more favorable conditions and lower debt to equity
ratios as compared with those generally experienced in most of the 1980's led
to increased buying by farmers of agriculture equipment in 1993 and 1994.
However, declines in the total number of farms prevented total industry demand
to reach its 1989-1993 volume peaks in most product areas. In 1995-1998,
industry market demand varied, with demand for the Company's products
generally lower than its peak years.
Approximately 90% of the Company's agriculture dealers also carry the
tractor and combine product lines of a major manufacturer. In addition to
selling the tractors and combines of a major manufacturer, many of these
dealers carry the major manufacturer's entire line of products, some of which
directly compete with Gehl's products offered. Dealers of Gehl's Agriculture
equipment also market equipment manufactured by limited line manufacturers
which compete with specific product lines offered by the Company.
The primary markets for Gehl's Agriculture equipment outside of North
America are in Europe and the Pacific Rim. In these markets, the Company
competes with both agriculture equipment manufacturers from the United States,
some of which have manufacturing facilities in foreign countries, and foreign
manufacturers. The Company does not believe, however, that it is presently a
significant competitor in any of these foreign markets.
Backlog
The backlog of unfilled equipment orders (which orders are subject to
cancellation in certain circumstances) as of December 31, 1998 was $28.0
million versus $34.9 million at December 31, 1997. Virtually all orders in
the backlog at December 31, 1998 are expected to be shipped in 1999. The
decreased backlog at December 31, 1998 was due to the reduced levels of
backlog for both Agriculture equipment and Construction equipment. This trend
of decreasing backlog which, in general, has been occurring since 1994, is
believed to be a function of dealer order patterns, pursuant to which dealers
place orders at points in time closer to their expected utilization of the
machinery and due to the increased manufacturing capacity of the Company's
plants.
As the Company has increased its sales 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 of sales, while sales levels have historically tended to be lower in
the first and fourth quarters.
Floor Plan and Retail Financing
Floor Plan Financing:
The Company, as is typical in the industry, generally provides floor plan
financing for its dealers. Products shipped to dealers under the Company's
floor plan financing program are recorded by the Company as sales and the
dealers' obligations to the Company are reflected as accounts receivable.
The Company provides interest-free floor plan financing to its dealers,
for Construction equipment for varying periods of time generally up to six
months and for Agriculture equipment generally for up to one year. Dealers
who sell products utilizing floor plan financing are required to make
immediate payment for those products to the Company upon sale or delivery to
the retail customer. At the end of the interest-free period, if the equipment
remains unsold to retail customers, the Company generally charges interest to
the dealer at 3.25% above the prime rate or on occasion provides an interest-
free extension of up to six months upon payment by the dealer of a curtailment
of 25% of the original invoice price to the dealer. This type of floor plan
equipment financing accounts for approximately 90% of Gehl's accounts
receivable, with all such floor planned receivables required to be secured by
a first priority security interest in the equipment sold.
Retail Financing:
The Company also provides retail financing primarily to facilitate the
sale of equipment to end users. Additionally, a number of dealers purchase
equipment which is held for rental to the public. The Company also provides
retail financing to such dealers in connection with these purchases. Retail
financing in the United States is provided by the Company primarily through
Gehl Finance, the Company's finance division. Retail financing is provided
in Canada by third parties at rates subsidized by the Company. The Company
does not offer or sponsor retail financing outside of North America.
The Company maintains arrangements with third parties pursuant to which
the Company sells, with recourse, certain of the Company's retail finance
contracts. The finance contracts require periodic installments of principal
and interest over periods of up to 60 months; interest rates are based on
market conditions. The majority of these contracts have maturities of 24 to
48 months. The Company continues to service the finance contracts it sells,
including cash collections. See Note 3 of "Notes to Consolidated Financial
Statements," Page 20, and "Management's Discussion and Analysis," Page 13 of
the Gehl Company 1998 Annual Report to Shareholders, which pages are
incorporated by reference herein.
Employees
As of December 31, 1998, the Company had 1,127 employees, of which 763
were hourly employees and 364 were salaried employees. At the production
facilities in West Bend, Wisconsin, one of five Gehl production facilities,
222 hourly employees are covered by a collective bargaining agreement with the
United Paperworkers International Union (formerly the Allied Industrial
Workers) which expires December 31, 1999. None of the remaining employees of
the Company are represented by unions. There have been no labor-related work
stoppages at the Company's facilities during the past twenty-five years.
Manufacturing
The Company believes that its present manufacturing facilities will be
sufficient to provide adequate capacity for its operations in 1999.
Component parts needed in the manufacture of the Company's equipment are
primarily produced by the Company. The Company obtains raw materials
(principally steel), component parts that it does not manufacture, most
notably engines and hydraulics, and supplies from third party suppliers. All
such materials and components used are available from a number of sources.
The Company is not dependent on any supplier that cannot be readily replaced
and has not experienced difficulty in obtaining necessary purchased materials.
In addition to the equipment it manufactures, the Company markets
equipment acquired from third party suppliers. Products acquired from these
suppliers accounted for less than 10% of the Company's sales in 1998.
Research and Development
The Company attempts to maintain and strengthen its market position
through internal new product development and incremental improvements to
existing products. The Company's research and development is devoted to
developing new products that meet specific customer needs and to devising
incremental improvements to existing products. Research and development
performed by the Company includes the designing and testing of new and
improved products as well as the fabrication of prototypes. The Company
expended approximately $2.8 million, $2.3 million and $2.2 million on research
and development for the years ended December 31, 1998, 1997 and 1996,
respectively.
Patents and Trademarks
The Company possesses rights under a number of domestic and foreign
patents and trademarks relating to its products and business. While the
Company considers the patents and trademarks important in the operation of its
business, including the Gehl name, the Mustang name and the group of patents
relating to the Scavenger manure spreader, the business of the Company is not
dependent, in any material respect, on any single patent or trademark or group
of patents or trademarks.
Export Sales
Information regarding the Company's export sales is included in Note 13
of "Notes to Consolidated Financial Statements," Page 26, of the Gehl Company
1998 Annual Report to Shareholders, which page is incorporated by reference
herein.
Item 2. Properties.
The following table sets forth certain information as of December 31,
1998, relating to the Company's principal manufacturing facilities. See
"Management's Discussion and Analysis - Liquidity and Capital Resources,
Capital Expenditures," Page 13, of the Gehl Company 1998 Annual Report to
Shareholders, which page is incorporated by reference herein. For information
regarding collateral pledges, see Note 6 of "Notes to Consolidated Financial
Statements", included on Page 21, of the Gehl Company 1998 Annual Report to
Shareholders, which page is incorporated by reference herein.
Approximate Owned or Principal Uses
Floor Area in Leased
Square Feet
West Bend, WI 450,000 Owned General offices and
engineering, research
and development and
manufacture of
Agriculture equipment
Madison, SD 130,000 Owned Manufacture of Gehl
skid steer loaders for
dealers of
Construction equipment
and Agriculture
equipment
Lebanon, PA 170,000 Owned(1) Manufacture of
Agriculture equipment
and Construction
equipment
Yankton, SD 100,000 Owned Manufacture of
Construction equipment
Owatonna, MN 235,000 Owned Manufacture of Mustang
skid steer loaders
(1) This facility is financed with the proceeds from the sale of
industrial development bonds maturing in 2010.
The Company also operates three service parts centers located in:
Memphis, Tennessee; Syracuse, New York; and Minneapolis, Minnesota. The
Company leases these facilities, except for the Minneapolis center which is
owned. The leases have terms ranging from three to five years. The Company
anticipates no difficulty in retaining adequate leased facilities, either by
renewing existing leases prior to expiration or by replacing them with
equivalent leased facilities.
Item 3. Legal Proceedings.
The Company is a defendant from time to time in actions for product
liability and other matters arising out of its ordinary business operations.
The Company believes that the actions presently pending will not have a
material adverse effect on its consolidated financial position or results of
operations. To the Company's knowledge, there are no material legal
proceedings to which any director, officer, affiliate or more than 5%
shareholder of the Company (or any associate of the foregoing persons) is a
party adverse to the Company or any of its subsidiaries or has a material
interest adverse to the Company or its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
quarter ended December 31, 1998.
Executive Officers of the Registrant.
Set forth below is certain information concerning the executive officers
of the Company as of February 1, 1999:
Name, Age and Position Business Experience
William D. Gehl, 52, Mr. Gehl has served as Chairman
Chairman, President, of the Board of Directors of the
Chief Executive Company since April, 1996. Mr.
Officer and Director Gehl has served as President and
Chief Executive Officer of the
Company since November, 1992 and
has served as a director of the
Company since 1987. From
January, 1990 until joining the
Company, Mr. Gehl served as
Executive Vice President, Chief
Operating Officer, General
Counsel and Secretary of The
Ziegler Companies, Inc. (a
financial services holding
company). Mr. Gehl held various
senior management positions with
The Ziegler Companies from 1978
to 1990.
Victor A. Mancinelli, 55, Mr. Mancinelli has served as
Executive Vice Executive Vice President and
President and Chief Operating Officer of the
Chief Operating Officer Company since November, 1992.
From 1990 to 1992, Mr. Mancinelli
served as Group Vice President of
W.H. Brady Co. From 1987 to
1990, Mr. Mancinelli served as
President and Chief Operating
Officer of Syracuse China Corp.,
a subsidiary of Canadian Pacific
Ltd. From 1985 to 1987, Mr.
Mancinelli served as Vice
President International Business
for Simplex Time Record Co.
Prior to 1985, Mr. Mancinelli
served in a variety of management
positions with Cummins Engine
Company, Inc. Mr. Mancinelli, has
submitted his resignation, effective
April 9, 1999, and will leave his
position with the Company.
Kenneth P. Hahn, 41 Mr. Hahn joined the Company as
Vice President of Corporate Controller in April,
Finance, Treasurer 1988. Mr. Hahn was elected as an
and Chief Financial executive officer of the Company
Officer in April, 1994. Mr. Hahn was
appointed Vice President of
Finance and Treasurer in
February, 1997 and became Chief
Financial Officer in January,
1999.
Michael J. Mulcahy, 52, Mr. Mulcahy has served as General
Vice President, Counsel of the Company since 1974
Secretary and became Secretary in 1977 and
and General Counsel a Vice President in 1986. Mr.
Mulcahy has also served, since
1988, as President of Equipco
Insurance Company, Ltd., which
provides liability insurance
coverage for equipment
manufacturers, including the
Company.
Richard J. Semler, 59, Mr. Semler joined the Company in
Vice President of May, 1960 and has served in his
Data Systems current position with the Company
since January, 1977.
All officers of the Company are elected annually by the Board of
Directors following the Annual Meeting of Shareholders. The 1999 Annual
Meeting of Shareholders is currently scheduled for April 21, 1999. The
Company has an employment agreement with William D. Gehl, pursuant to which
he is to serve as President and Chief Executive Officer of the Company
through the expiration of the agreement on December 31, 2001.
PART II
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters.
Pursuant to the terms of the Gehl Company Director Stock Grant Plan,
each of the non-employee directors of the Company (i.e., Messrs. T. J. Boldt,
F. M. Butler, J. W. Gehl, W. P. Killian, A. W. Nesbitt, R. E. Secrist and J.
W. Splude) received on December 31, 1998 a grant of 196 shares of Company
common stock as part of their annual retainer fee. The shares were issued in
a transaction exempt from registration under Section 4(2) of the Securities
Act of 1933, as amended.
Information required by this item is also included on Pages 27 and 29 of
the Gehl Company 1998 Annual Report to Shareholders, which pages are hereby
incorporated herein by reference.
Item 6. Selected Financial Data.
Information required by this item is included on Page 27 of the Gehl
Company 1998 Annual Report to Shareholders, which page is hereby incorporated
herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Information required by this item is included on Pages 10 through 15 of
the Gehl Company 1998 Annual Report to Shareholders, which pages are hereby
incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Information required by this item is included on Page 15 of the Gehl
Company 1998 Annual Report to Shareholders, which page is hereby incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data.
Information required by this item is included on Page 9 and Pages 16
through 26 of the Gehl Company 1998 Annual Report to Shareholders, which
pages are hereby incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
There have been no changes in or disagreements with the Company's
accountants regarding accounting and financial disclosure required to be
reported pursuant to this item.
PART III
Item 10. Directors and Executive Officers of the
Registrant.
Pursuant to Instruction G, the information required by this item with
respect to directors is hereby incorporated herein by reference from the
caption entitled "Election of Directors" set forth in the Company's
definitive Proxy Statement for its 1999 Annual Meeting of Shareholders
("Proxy Statement")1. Information with respect to executive officers of the
Company appears at the end of Part I, Pages 8 through 9 of this Annual Report
on Form 10-K.
Item 11. Executive Compensation.
Pursuant to Instruction G, the information required by this item is
hereby incorporated herein by reference from the captions entitled "Board of
Directors" and "Executive Compensation" set forth in the Proxy Statement;
provided, however, that the subsection entitled "Executive Compensation -
Report on Executive Compensation" shall not be deemed to be incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial
Owners and Management.
Pursuant to Instruction G, the information required by this item is
hereby incorporated by reference herein from the caption "Principal
Shareholders" set forth in the Proxy Statement.
Item 13. Certain Relationships and Related Transactions.
There are no relationships or related transactions to be reported
pursuant to this item.
_____________________________________________________________________________
1 The Proxy Statement will be filed with the Commission pursuant to
Regulation 14A within 120 days after the end of the Company's fiscal year.
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) 1 and 2. Financial statements and financial statement
schedule.
Reference is made to the separate index to the Company's
consolidated financial statements and schedule contained on
Page 14 hereof.
3. Exhibits.
Reference is made to the separate exhibit index contained on
Pages 17 through 21 hereof.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended December 31, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GEHL COMPANY
Date: February 26, 1999 By /s/ William D. Gehl
William D. Gehl,
Chairman of the Board, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ William D. Gehl Chairman of the Board, President, February 26, 1999
William D. Gehl Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Kenneth P. Hahn Vice President of Finance February 26, 1999
Kenneth P. Hahn and Treasurer
(Principal Financial and Accounting Officer)
/s/ Thomas J. Boldt Director February 26, 1999
Thomas J. Boldt
/s/ Fred M. Butler Director February 26, 1999
Fred M. Butler
/s/ John W. Gehl Director February 26, 1999
John W. Gehl
/s/ William P. Killian Director February 26, 1999
William P. Killian
/s/ Arthur W. Nesbitt Director February 26, 1999
Arthur W. Nesbitt
/s/ Roger E. Secrist Director February 26, 1999
Roger E. Secrist
/s/ John W. Splude Director February 26, 1999
John W. Splude
GEHL COMPANY
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES
Page(s) in
Annual Report*
The following documents are filed as
part of this report:
(1)Financial Statements:
Report of Independent Accountants 9
Consolidated Balance Sheets at
December 31, 1998 and 1997 16
Consolidated Statements of Income
for the three years ended
December 31, 1998 17
Consolidated Statements of
Shareholders' Equity for the
three years ended December 31, 1998 17
Consolidated Statements of Cash
Flows for the three years ended
December 31, 1998 18
Notes to Consolidated Financial
Statements 19-26
* Incorporated by reference from the indicated pages of the Gehl Company 1998
Annual Report to Shareholders.
Page in
Form 10-K
(2)Financial Statement Schedule:
Report of Independent Accountants
on Financial Statement Schedule 15
For the three years ended
December 31, 1998 --
Schedule II - Valuation and Qualifying Accounts 16
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of Gehl Company
Our audits of the consolidated financial statements referred to in our report
dated February 10, 1999 appearing in the 1998 Annual Report to Shareholders of
Gehl Company (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the Financial Statement Schedule listed in Item 14(a) of this Form
10-K. In our opinion, this Financial Statement Schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
February 10, 1999
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(in thousands)
Additions
Period Description Balance Charged Acquired Deductions Balance
at to Costs Balances at End
Beginning and of Year
of Year Exposures
Year Ended
December 31,
1996
Allowance for
Doubtful
Accounts-Trade
Receivables . $752 $64 $ - $255 $561
Returns and
Dealer Discounts 1,918 2,424 - 2,463 1,879
Product
Discontinuance 1,335 (131) - 429 775
------ ------ ------ ------ ------
Total $4,005 $2,357 $ - $3,147 $3,215
====== ====== ====== ====== ======
Allowances of
Doubtful
Accounts -
Retail
Contracts . $ 567 $ 276 $ - $ 252 $ 591
====== ======= ====== ====== ======
Inventory
Obsolescence
Reserve $2,777 $ 527 $ - $1,564 $1,740
====== ====== ====== ====== ======
Income Tax
Valuation
Allowance . . $2,649 $ - $ - $1,414 $1,235
====== ====== ====== ====== ======
Year Ended
December 31,
1997
Allowance for
Doubtful
Accounts-Trade
Receivables . $ 561 $ 144 $ 313 $ 25 $ 993
Returns and
Dealer Discounts 1,879 2,674 - 2,705 1,848
Product
Discontinuance 775 - - 458 317
------ ------ ------- ------ ------
Total $3,215 $2,818 $ 313 $3,188 $3,158
====== ====== ====== ====== ======
Allowances of
Doubtful
Accounts -
Retail
Contracts . $ 591 $ 355 $ 28 $ 91 $ 883
====== ====== ====== ====== ======
Inventory
Obsolescence
Reserve $1,740 $ 576 $ 265 $ 982 $1,599
====== ====== ====== ====== ======
Income Tax
Valuation
Allowance . . $1,235 $ - $ - $ 268 $ 967
====== ====== ====== ====== ======
Year Ended
December 31,
1998
Allowance for
Doubtful
Accounts-Trade
Receivables . $ 993 $ 383 $ - $ 71 $1,305
Returns and
Dealer Discounts 1,848 3,644 - 3,243 2,249
Product
Discontinuance 317 (243) - 74 -
------ ------ ------ ------ ------
Total $3,158 $3,784 $ - $3,388 $3,554
====== ====== ====== ====== ======
Allowances of
Doubtful
Accounts -
Retail
Contracts . $ 883 $ 280 $ - $ 170 $ 993
====== ====== ====== ====== ======
Inventory
Obsolescence
Reserve $1,599 $ 722 $ - $ 613 $1,708
====== ====== ====== ====== ======
Income Tax
Valuation
Allowance . . $ 967 $ - $ - $ 113 $ 854
====== ====== ====== ====== ======
GEHL COMPANY
INDEX TO EXHIBITS
Exhibit Number Document Description
(2) Stock Purchase Agreement, dated as of September 12, 1997,
between Gehl Company and Brunel Holdings, plc
[Incorporated by reference to Exhibit 2 of the Company's
Current Report on Form 8-K, dated October 17, 1997]
(3.1) Restated Articles of Incorporation, as amended, of Gehl
Company [Incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 28, 1997.]
(3.2) Amendment to Gehl Company By-laws dated February 26, 1999
(3.3) By-laws of Gehl Company, as amended
(4.1) Amended and Restated Loan and Security Agreement by and
between ITT Commercial Finance Corp. and Gehl Company and
its subsidiaries, dated October 1, 1994 [Incorporated by
reference to Exhibit 4.1 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1994]
(4.2) First Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
Corporation, f/k/a ITT Commercial Finance Corp. and Gehl
Company and its subsidiaries, dated May 10, 1995
[Incorporated by reference to Exhibit 4.1 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended July 1, 1995]
(4.3) Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
Corporation, f/k/a ITT Commercial Finance Corp., Deutsche
Financial Services Canada Corporation and Gehl Company
and its subsidiaries, dated December 1, 1995
[Incorporated by reference to Exhibit 4.1 of the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995]
(4.4) Third Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
Corporation, Deutsche Financial Services Canada
Corporation and Gehl Company and its subsidiaries, dated
as of July 15, 1996 [Incorporated by reference to
Exhibit 4.4 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1997]
(4.5) Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
Corporation, Deutsche Financial Services Canada
Corporation and Gehl Company and its subsidiaries, dated
October 2, 1997 [Incorporated by reference to Exhibit 4.1
of the Company's Current Report on Form 8-K dated October
17, 1997]
(4.6) Fifth Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
Corporation, Deutsche Financial Services, a division of
Deutsche Bank Canada, and Gehl Company and its
subsidiaries, dated as of February 5, 1998 [Incorporated
by reference to Exhibit 4.6 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997]
(4.7) Sixth Amendment to Amended and Restated Loan and Security
Agreement by and between Deutsche Financial Services
Corporation, Deutsche Financial Services, a division of
Deutsche Bank Canada and Gehl Company and its
subsidiaries, dated as of June 1, 1998 [Incorporated by
reference to Exhibit 4.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended June 27, 1998]
(4.8) Seventh Amendment to Amended and Restated Loan and
Security Agreement by and between Deutsche Financial
Services Corporation, Deutsche Financial Services, a
division of Deutsche Bank Canada and Gehl Company and its
subsidiaries, dated as of September 1, 1998 [Incorporated
by reference to Exhibit 4.1 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 26,
1998]
(4.9) Loan Agreement between Pennsylvania Economic Development
Financing Authority and Gehl Company, dated as of
September 1, 1990 [Incorporated by reference to Exhibit
4.1 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 29, 1990]
(4.10) First Supplemental Loan Agreement between Pennsylvania
Economic Development Financing Authority and Gehl
Company, dated as of April 23, 1993 [Incorporated by
reference to Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended April 3, 1993]
(4.11) Second Supplemental Loan Agreement between Pennsylvania
Economic Development Financing Authority and Gehl
Company, dated as of February 1, 1994 [Incorporated by
reference to Exhibit 4.10 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1993]
(4.12) Mortgage and Security Agreement by and between Gehl
Company and First Pennsylvania Bank N.A., dated as of
September 1, 1990 [Incorporated by reference to Exhibit
4.2 to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 29, 1990]
(4.13) Rights Agreement, dated as of May 28, 1997, between Gehl
Company and Firstar Bank Milwaukee N.A.(as successor to
Firstar Trust Company) [Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on
Form 8-A, dated as of May 28, 1997]
(4.14) Loan Agreement by and between South Dakota Board of
Economic Development and Gehl Company, dated May 26, 1998
[Incorporated by reference to Exhibit 4.2 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 27, 1998]
(4.15) Promissory Note signed by Gehl Company payable to South
Dakota Board of Economic Development, dated May 26, 1998
[Incorporated by reference to Exhibit 4.3 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 27, 1998]
(4.16) Mortgage by and between Gehl Company and South Dakota
Board of Economic Development, dated May 26, 1998
[Incorporated by reference to Exhibit 4.4 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 27, 1998]
(4.17) Employment Agreement by and between Gehl Company and
South Dakota Board of Economic Development, dated May
26, 1998 [Incorporated by reference to Exhibit 4.5 of
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 27, 1998]
(4.18) 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 [Incorporated by
reference to Exhibit 4.2 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 26,
1998]
(4.19) 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 [Incorporated
by reference to Exhibit 4.3 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 26,
1998]
(4.20) Mortgage by and between Gehl Company and the City of
Madison, a political subdivision of the State of South
Dakota, dated September 8, 1998 [Incorporated by
reference to Exhibit 4.4 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 26,
1998]
(10.1)* Form of Supplemental Retirement Benefit Agreement between
Gehl Company and Messrs. Hahn, Mulcahy and Semler
[Incorporated by reference to Exhibit 10.4 to the
Company's Form S-1 Registration Statement (Reg. No. 33-
31571)].
(10.2)* Gehl Company Director Stock Grant Plan [Incorporated by
reference to Exhibit 10.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 29, 1997]
(10.3)* Amendment to Amended and Restated Employment Agreement
between Gehl Company and William D. Gehl dated as of
December 18, 1998
(10.4)* Supplemental Retirement Benefit Agreement by and between
William D. Gehl and Gehl Company [Incorporated by
reference to Exhibit 10.4 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1995]
(10.5)* Supplemental Retirement Benefit Agreement by and between
Victor A. Mancinelli and Gehl Company [Incorporated by
reference to Exhibit 10.5 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1995]
(10.6)* Gehl Company Shareholder Value Added Management Incentive
Compensation Plan [Incorporated by reference to Exhibit
10.6 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1995]
(10.7)* Gehl Savings Plan, as amended and restated executed March
17, 1997 [Incorporated by reference to Exhibit 10.8 of
the Company's Annual Report on Form 10-K for the year
ended December 31, 1997]
(10.8)* Gehl Company Retirement Income Plan "B", as amended
[Incorporated by reference to Exhibit 10.7 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1994]
(10.9)* Gehl Company 1987 Stock Option Plan, as amended
[Incorporated by reference to Exhibit 10.9 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996]
(10.10)* Form of Stock Option Agreement used in conjunction with
the Gehl Company 1987 Stock Option Plan [Incorporated by
reference to Exhibit 4.2 to the Company's Form S-8
Registration Statement (Reg. No. 33-38392)]
(10.11)* Gehl Company 1995 Stock Option Plan, as amended
[Incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996]
(10.12)* Form of Stock Option Agreement for executive officers
used in conjunction with the Gehl Company 1995 Stock
Option Plan [Incorporated by reference to Exhibit 10.12
of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995]
(10.13)* Form of Stock Option Agreement for non-employee directors
used in conjunction with the Gehl Company 1995 Stock
Option Plan [Incorporated by reference to Exhibit 10.13
of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995]
(10.14)* Form of Change in Control and Severance Agreement between
Gehl Company and Messrs. Hahn, Mulcahy and Semler.
(10.15) Technical Assistance and License Agreement by and between
Gehl Company and Rheiner Maschinenfabrik Windhoff AG,
dated as of May 4, 1985, as amended [Incorporated by
reference to Exhibit 10.13 to the Company's Form S-1
Registration Statement (Reg. No. 33-31571)]
(10.16) Distributorship Agreement by and between Gehl Company and
Gehl GmbH, dated as of April 15, 1985 [Incorporated by
reference to Exhibit 10.16 to the Company's Form S-1
Registration Statement (Reg. No. 33-31571)]
(10.17) Trademark Licensing Agreement by and between Gehl Company
and Gehl GmbH, dated as of April 15, 1985 [Incorporated
by reference to Exhibit 10.17 to the Company's Form S-1
Registration Statement (Reg. No. 33-31571)]
(13) Portions of the Gehl Company 1998 Annual Report to
Shareholders that are incorporated by reference herein
(21) Subsidiaries of Gehl Company
(23) Consent of PricewaterhouseCoopers LLP
(27) Financial Data Schedule
(99) Proxy Statement for 1999 Annual Meeting of Shareholders
(To be filed with the Securities and Exchange Commission
under Regulation 14A within 120 days after the end of the
Company's fiscal year; except to the extent incorporated
by reference, the Proxy Statement for the 1999 Annual
Meeting of Shareholders shall not be deemed to be filed
with the Securities and Exchange Commission as part of
this Annual Report on Form 10-K)
__________________
* A management contract or compensatory plan or arrangement.
Except as otherwise noted, all documents incorporated by reference are to
Commission File No. 0-18110.
Seventh
Amendment
of the
Restated 2/22/91
By-Laws
of
GEHL COMPANY
(A Wisconsin Corporation)
Effective immediately, Section 3.01 shall be revised to read as follows:
"3.01 General Powers and Number. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of its Board of Directors.
The number of directors of the corporation shall be nine (9) divided into
three (3) classes: Class I - three (3) directors; Class II - three (3)
directors; Class III - three (3) directors."
Approved at February 26, 1999, Board Meeting
BY-LAWS
OF
GEHL COMPANY
ARTICLE I. OFFICES
1.01. Principal and Business Offices. The corporation may have
such principal and other business offices, either within or without the State
of Wisconsin, as the Board of Directors may designate or as the business of
the corporation may require from time to time.
1.02. Registered Office. The registered office of the
corporation required by the Wisconsin Business Corporation Law to be
maintained in the State of Wisconsin may be, but need not be, identical with
the principal office in the State of Wisconsin, and the address of the
registered office may be changed from time to time by the Board of Directors.
The business office of the registered agent of the corporation shall be
identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01. Annual Meeting. The annual meeting of shareholders (the
"Annual Meeting") shall be held each year at 7:00 P.M. (Central Time) on the
last Thursday in April, or at such other time and date as may be fixed by or
under the authority of the Board of Directors, for the purpose of electing
that number of directors equal to the number of directors in the class whose
term expires at the time of the Annual Meeting and for the transaction of such
other business as may properly come before the Annual Meeting in accordance
with Section 2.14 of these by-laws. If the day fixed for the Annual Meeting
is a legal holiday in the State of Wisconsin, such meeting shall be held on
the next succeeding business day. In fixing a meeting date for any Annual
Meeting, the Board of Directors may consider such factors as it deems relevant
within the good faith exercise of its business judgment.
2.02. Special Meetings.
(a) A special meeting of shareholders (a "Special Meeting") may be
called only by (i) the President or (ii) the Board of Directors and shall be
called by the President upon the demand, in accordance with this Section 2.02,
of the holders of record of shares representing at least 10% of all the votes
entitled to be cast on any issue proposed to be considered at the Special
Meeting.
(b) In order that the corporation may determine the shareholders
entitled to demand a Special Meeting, the Board of Directors may fix a record
date to determine the shareholders entitled to make such a demand (the "Demand
Record Date"). The Demand Record Date shall not precede the date upon which
the resolution fixing the Demand Record Date is adopted by the Board of
Directors and shall not be more than 10 days after the date upon which the
resolution fixing the Demand Record Date is adopted by the Board of Directors.
Any shareholder of record seeking to have shareholders demand a Special
Meeting shall, by sending written notice to the Secretary of the corporation
by hand or by certified or registered mail, return receipt requested, request
the Board of Directors to fix a Demand Record Date. The Board of Directors
shall promptly, but in all events within 10 days after the date on which a
valid request to fix a Demand Record Date is received, adopt a resolution
fixing the Demand Record Date and shall make a public announcement of such
Demand Record Date. If no Demand Record Date has been fixed by the Board of
Directors within 10 days after the date on which such request is received by
the Secretary, the Demand Record Date shall be the 10th day after the first
date on which a valid written request to set a Demand Record Date is received
by the Secretary. To be valid, such written request shall set forth the
purpose or purposes for which the Special Meeting is to be held, shall be
signed by one or more shareholders of record (or their duly authorized proxies
or other representatives), shall bear the date of signature of each such
shareholder (or proxy or other representative) and shall set forth all
information about each such shareholder and about the beneficial owner or
owners, if any, on whose behalf the request is made that would be required to
be set forth in a shareholder's notice described in paragraph (a)(ii) of
Section 2.14 of these by-laws.
(c) In order for a shareholder or shareholders to demand a Special
Meeting, a written demand or demands for a Special Meeting by the holders of
record as of the Demand Record Date of shares representing at least 10% of all
the votes entitled to be cast on any issue proposed to be considered at the
Special Meeting must be delivered to the corporation. To be valid, each
written demand by a shareholder for a Special Meeting shall set forth the
specific purpose or purposes for which the Special Meeting is to be held
(which purpose or purposes shall be limited to the purpose or purposes set
forth in the written request to set a Demand Record Date received by the
corporation pursuant to paragraph (b) of this Section 2.02), shall be signed
by one or more persons who as of the Demand Record Date are shareholders of
record (or their duly authorized proxies or other representatives), shall bear
the date of signature of each such shareholder (or proxy or other
representative), and shall set forth the name and address, as they appear in
the corporation's books, of each shareholder signing such demand and the class
and number of shares of the corporation which are owned of record and
beneficially by each such shareholder, shall be sent to the Secretary by hand
or by certified or registered mail, return receipt requested, and shall be
received by the Secretary within 70 days after the Demand Record Date.
(d) The corporation shall not be required to call a Special Meeting
upon shareholder demand unless, in addition to the documents required by
paragraph (c) of this Section 2.02, the Secretary receives a written agreement
signed by each Soliciting Shareholder (as defined below), pursuant to which
each Soliciting Shareholder, jointly and severally, agrees to pay the
corporation's costs of holding the Special Meeting, including the costs of
preparing and mailing proxy materials for the corporation's own solicitation,
provided that if each of the resolutions introduced by any Soliciting
Shareholder at such meeting is adopted, and each of the individuals nominated
by or on behalf of any Soliciting Shareholder for election as director at such
meeting is elected, then the Soliciting Shareholders shall not be required to
pay such costs. For purposes of this paragraph (d), the following terms shall
have the meanings set forth below:
(i) "Affiliate" of any Person (as defined herein) shall mean
any Person controlling, controlled by or under common control with
such first Person.
(ii) "Participant" shall have the meaning assigned to such term
in Rule 14a-11 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(iii) "Person" shall mean any individual, firm,
corporation, partnership, joint venture, association, trust,
unincorporated organization or other entity.
(iv) "Proxy" shall have the meaning assigned to such term in
Rule 14a-1 promulgated under the Exchange Act.
(v) "Solicitation" shall have the meaning assigned to such
term in Rule 14a-11 promulgated under the Exchange Act.
(vi) "Soliciting Shareholder" shall mean, with respect to any
Special Meeting demanded by a shareholder or shareholders, any of
the following Persons:
(A) if the number of shareholders signing the demand or
demands of meeting delivered to the corporation pursuant to
paragraph (c) of this Section 2.02 is 10 or fewer, each
shareholder signing any such demand;
(B) if the number of shareholders signing the demand or
demands of meeting delivered to the corporation pursuant to
paragraph (c) of this Section 2.02 is more than 10, each Person
who either (I) was a Participant in any Solicitation of such
demand or demands or (II) at the time of the delivery to the
corporation of the documents described in paragraph (c) of this
Section 2.02 had engaged or intended to engage in any
Solicitation of Proxies for use at such Special Meeting (other
than a Solicitation of Proxies on behalf of the corporation);
or
(C) any Affiliate of a Soliciting Shareholder, if a
majority of the directors then in office determine, reasonably
and in good faith, that such Affiliate should be required to
sign the written notice described in paragraph (c) of this
Section 2.02 and/or the written agreement described in this
paragraph (d) in order to prevent the purposes of this Section
2.02 from being evaded.
(e) Except as provided in the following sentence, any Special
Meeting shall be held at such hour and day as may be designated by whichever
of the President or the Board of Directors shall have called such meeting. In
the case of any Special Meeting called by the President upon the demand of
shareholders (a "Demand Special Meeting"), such meeting shall be held at such
hour and day as may be designated by the Board of Directors; provided,
however, that the date of any Demand Special Meeting shall be not more than 70
days after the Meeting Record Date (as defined in Section 2.05 hereof); and
provided further that in the event that the directors then in office fail to
designate an hour and date for a Demand Special Meeting within 10 days after
the date that valid written demands for such meeting by the holders of record
as of the Demand Record Date of shares representing at least 10% of all the
votes entitled to be cast on each issue proposed to be considered at the
Special Meeting are delivered to the corporation (the "Delivery Date"), then
such meeting shall be held at 2:00 P.M. (Central Time) on the 100th day after
the Delivery Date or, if such 100th day is not a Business Day (as defined
below), on the first preceding Business Day. In fixing a meeting date for any
Special Meeting, the President or the Board of Directors may consider such
factors as he or it deems relevant within the good faith exercise of his or
its business judgment, including, without limitation, the nature of the action
proposed to be taken, the facts and circumstances surrounding any demand for
such meeting, and any plan of the Board of Directors to call an Annual Meeting
or a Special Meeting for the conduct of related business.
(f) The corporation may engage regionally or nationally recognized
independent inspectors of elections to act as an agent of the corporation for
the purpose of promptly performing a ministerial review of the validity of any
purported written demand or demands for a Special Meeting received by the
Secretary. For the purpose of permitting the inspectors to perform such
review, no purported demand shall be deemed to have been delivered to the
corporation until the earlier of (i) 5 Business Days following receipt by the
Secretary of such purported demand and (ii) such date as the independent
inspectors certify to the corporation that the valid demands received by the
Secretary represent at least 10% of all the votes entitled to be cast on each
issue proposed to be considered at the Special Meeting. Nothing contained in
this paragraph (f) shall in any way be construed to suggest or imply that the
Board of Directors or any shareholder shall not be entitled to contest the
validity of any demand, whether during or after such 5 Business Day period, or
to take any other action (including, without limitation, the commencement,
prosecution or defense of any litigation with respect thereto).
(g) For purposes of these by-laws, "Business Day" shall mean any
day other than a Saturday, a Sunday or a day on which banking institutions in
the State of Wisconsin are authorized or obligated by law or executive order
to close.
2.03. Place of Meeting. The Board of Directors or the President
may designate any place, either within or without the State of Wisconsin, as
the place of meeting for any Annual Meeting or for any Special Meeting, or for
any postponement thereof. If no designation is made, the place of meeting
shall be the principal office of the corporation in the State of Wisconsin.
Any meeting may be adjourned to reconvene at any place designated by vote of
the Board of Directors or by the President.
2.04. Notice of Meeting. Written or printed notice stating the
place, day and hour of any Annual Meeting or Special Meeting shall be
delivered not less than 10 days (unless a longer period is required by the
Wisconsin Business Corporation Law) nor more than 70 days, before the date of
such meeting, either personally or by mail, by or at the direction of the
Secretary to each shareholder of record entitled to vote at such meeting and
to other shareholders as may be required by the Wisconsin Business Corporation
Law. In the event of any Demand Special Meeting, such notice of meeting shall
be sent not more than 30 days after the Delivery Date. If mailed, notice
pursuant to this Section 2.04 shall be deemed to be effective when deposited
in the United States mail, addressed to the shareholder at his address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid. Unless otherwise required by the Wisconsin Business Corporation Law
or the restated articles of incorporation, a notice of an Annual Meeting need
not include a description of the purpose for which the meeting is called. In
the case of any Special Meeting, (a) the notice of meeting shall describe any
business that the Board of Directors shall have theretofore determined to
bring before the meeting and (b) in the case of a Demand Special Meeting, the
notice of meeting (i) shall describe any business set forth in the statement
of purpose of the demands received by the corporation in accordance with
Section 2.02 of these by-laws and (ii) shall contain all of the information
required in the notice received by the corporation in accordance with Section
2.14(b) of these by-laws. If an Annual Meeting or Special Meeting is
adjourned to a different date, time or place, the corporation shall not be
required to give notice of the new date, time or place if the new date, time
or place is announced at the meeting before adjournment; provided, however,
that if a new Meeting Record Date for an adjourned meeting is or must be
fixed, the corporation shall give notice of the adjourned meeting to persons
who are shareholders as of the new Meeting Record Date.
2.05. Fixing of Record Date. The Board of Directors may fix a
future date not less than 10 days and not more than 70 days prior to the date
of any Annual Meeting or Special Meeting as the record date for the
determination of shareholders entitled to notice of, or to vote at, such
meeting (the "Meeting Record Date"). In the case of any Demand Special
Meeting, (i) the Meeting Record Date shall be not later than the 30th day
after the Delivery Date and (ii) if the Board of Directors fails to fix the
Meeting Record Date within 30 days after the Delivery Date, then the close of
business on such 30th day shall be the Meeting Record Date. The shareholders
of record on the Meeting Record Date shall be the shareholders entitled to
notice of and to vote at the meeting. Except as provided by the Wisconsin
Business Corporation Law for a court-ordered adjournment, a determination of
shareholders entitled to notice of or to vote at any Annual Meeting or Special
Meeting is effective for any adjournment of such meeting unless the Board of
Directors fixes a new Meeting Record Date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting. The Board of Directors may also fix a future date as the record date
for the purpose of determining shareholders entitled to take any other action
or determining shareholders for any other purpose. Such record date shall be
not more than 70 days prior to the date on which the particular action,
requiring such determination of shareholders, is to be taken. The record date
for determining shareholders entitled to a distribution (other than a
distribution involving a purchase, redemption or other acquisition of the
corporation's shares) or a share dividend is the date on which the Board of
Directors authorizes the distribution or share dividend, as the case may be,
unless the Board of Directors fixes a different record date.
2.06. Voting Lists. After a Meeting Record Date has been fixed,
the corporation shall prepare a list of the names of all of the shareholders
entitled to notice of the meeting. The list shall be arranged by class or
series of shares, if any, and show the address of and number of shares held by
each shareholder. Such list shall be available for inspection by any
shareholder, beginning two business days after notice of the meeting is given
for which the list was prepared and continuing to the date of the meeting, at
the corporation's principal office or at a place identified in the meeting
notice in the city where the meeting will be held. A shareholder or his or
her agent may, on written demand, inspect and, subject to the limitations
imposed by the Wisconsin Business Corporation Law, copy the list, during
regular business hours and at his or her expense, during the period that it is
available for inspection pursuant to this Section 2.06. The corporation shall
make the shareholders' list available at the meeting and any shareholder or
his or her agent or attorney may inspect the list at any time during the
meeting or any adjournment thereof. Refusal or failure to prepare or make
available the shareholders' list shall not affect the validity of any action
taken at an Annual Meeting or Special Meeting.
2.07. Quorum and Voting Requirements; Postponements;
Adjournments.
(a) Shares entitled to vote as a separate voting group may take
action on a matter at any Annual Meeting or Special Meeting only if a quorum
of those shares exists with respect to that matter. If the corporation has
only one class of stock outstanding, such class shall constitute a separate
voting group for purposes of this Section 2.07. Except as otherwise provided
in the restated articles of incorporation or the Wisconsin Business
Corporation Law, a majority of the votes entitled to be cast on the matter
shall constitute a quorum of the voting group for action on that matter. Once
a share is represented for any purpose at any Annual Meeting or Special
Meeting, other than for the purpose of objecting to holding the meeting or
transacting business at the meeting, it is considered present for purposes of
determining whether a quorum exists for the remainder of the meeting and for
any adjournment of that meeting unless a new Meeting Record Date is or must be
set for the adjourned meeting. If a quorum exists, except in the case of the
election of directors, action on a matter shall be approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action, unless the restated articles of incorporation, these by-laws or the
Wisconsin Business Corporation Law requires a greater number of affirmative
votes. Unless otherwise provided in the restated articles of incorporation,
each director shall be elected by a plurality of the votes cast by the shares
entitled to vote in the election of directors at any Annual Meeting or Special
Meeting at which a quorum is present.
(b) The Board of Directors acting by resolution may postpone and
reschedule any previously scheduled Annual Meeting or Special Meeting;
provided, however, that a Demand Special Meeting shall not be postponed beyond
the 100th day following the Delivery Date. Any Annual Meeting or Special
Meeting may be adjourned from time to time, whether or not there is a quorum,
(i) at any time, upon a resolution of shareholders if the votes cast in favor
of such resolution by the holders of shares of each voting group entitled to
vote on any matter theretofore properly brought before the meeting exceed the
number of votes cast against such resolution by the holders of shares of each
such voting group or (ii) at any time prior to the transaction of any business
at such meeting, by the President or pursuant to a resolution of the Board of
Directors. No notice of the time and place of adjourned meetings need be
given except as required by the Wisconsin Business Corporation Law. At any
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally notified.
2.08. Conduct of Meetings. The President, and in his absence a
Vice-President in the order provided under Section 4.06, and in their absence,
any person chosen by the shareholders present shall call any Annual Meeting or
Special Meeting to order and shall act as chairman of such meeting, and the
Secretary of the corporation shall act as secretary of all meetings of the
shareholders, but, in the absence of the Secretary, the presiding officer may
appoint any other person to act as secretary of the meeting.
2.09. Proxies. At any Annual Meeting or Special Meeting, a
shareholder entitled to vote may vote in person or by proxy. A shareholder
may appoint a proxy to vote or otherwise act for the shareholder by signing an
appointment form, either personally or by his attorney-in-fact. An
appointment of a proxy is effective when received by the Secretary or other
officer or agent of the corporation authorized to tabulate votes. An
appointment is valid for 11 months from the date of its signing unless a
different period is expressly provided in the appointment form. Unless
otherwise provided in the proxy, a proxy may be revoked at any time before it
is voted, either by written notice filed with the Secretary or the acting
secretary of the meeting or by oral notice given by the shareholder to the
presiding officer during the meeting. The presence of a shareholder who has
filed his proxy shall not of itself constitute a revocation.
2.10. Voting of Shares. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at an Annual Meeting
or Special Meeting, except to the extent that the voting rights of the shares
of any class or classes are enlarged, limited or denied by the Wisconsin
Business Corporation Law or by the restated articles of incorporation.
2.11. Acceptance of Instruments Showing Shareholder Action. If
the name signed on a vote, consent, waiver or proxy appointment corresponds to
the name of the shareholder, the corporation, if acting in good faith, may
accept the vote, consent, waiver or proxy appointment and give it effect as
the act of a shareholder. If the name signed on a vote, consent, waiver or
proxy appointment does not correspond to the name of a shareholder, the
corporation may accept the vote, consent, waiver or proxy appointment and give
it effect as the act of the shareholder if any of the following apply:
(a) The shareholder is an entity and the name signed purports to be
that of an officer or agent of the entity.
(b) The name purports to be that of a personal representative,
administrator, executor, guardian or conservator representing the shareholder
and, if the corporation requests, evidence of fiduciary status acceptable to
the corporation is presented with respect to the vote, consent, waiver or
proxy appointment.
(c) The name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this status acceptable to the corporation is presented with respect to the
vote, consent, waiver or proxy appointment.
(d) The name signed purports to be that of a pledgee, beneficial
owner, or attorney-in-fact of the shareholder and, if the corporation
requests, evidence acceptable to the corporation of the signatory's authority
to sign for the shareholder is presented with respect to the vote, consent,
waiver or proxy appointment.
(e) Two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all
co-owners.
The corporation may reject a vote, consent, waiver or proxy
appointment if the Secretary or other officer or agent of the corporation who
is authorized to tabulate votes, acting in good faith, has reasonable basis
for doubt about the validity of the signature on it or about the signatory's
authority to sign for the shareholder.
2.12. Waiver of Notice by Shareholders. A shareholder may waive
any notice required by the Wisconsin Business Corporation Law, the restated
articles of incorporation or these by-laws before or after the date and time
stated in the notice. The waiver shall be in writing and signed by the
shareholder entitled to the notice, contain the same information that would
have been required in the notice under applicable provisions of the Wisconsin
Business Corporation Law (except that the time and place of meeting need not
be stated) and be delivered to the corporation for inclusion in the corporate
records. A shareholder's attendance at any Annual Meeting or Special Meeting,
in person or by proxy, waives objection to all of the following: (a) lack of
notice or defective notice of the meeting, unless the shareholder at the
beginning of the meeting or promptly upon arrival objects to holding the
meeting or transacting business at the meeting; and (b) consideration of a
particular matter at the meeting that is not within the purpose described in
the meeting notice, unless the shareholder objects to considering the matter
when it is presented.
2.13. Unanimous Consent without Meeting. Any action required or
permitted by the restated articles of incorporation or these by-laws or any
provision of the Wisconsin Business Corporation Law to be taken at an Annual
Meeting or Special Meeting, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof.
2.14. Notice of Shareholder Business and Nomination of
Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of Directors
of the corporation and the proposal of business to be considered by the
shareholders may be made at an Annual Meeting (A) pursuant to the
corporation's notice of meeting, (B) by or at the direction of the Board
of Directors or (C) by any shareholder of the corporation who is a
shareholder of record at the time of giving of notice provided for in
this by-law and who is entitled to vote at the meeting and complies with
the notice procedures set forth in this Section 2.14.
(ii) For nominations or other business to be properly brought before
an Annual Meeting by a shareholder pursuant to clause (C) of paragraph
(a)(i) of this Section 2.14, the shareholder must have given timely
notice thereof in writing to the Secretary of the corporation. To be
timely, a shareholder's notice shall be received by the Secretary of the
corporation at the principal office of the corporation not less than 60
days nor more than 90 days prior to the last Thursday in the month of
April; provided, however, that in the event that the date of the Annual
Meeting is advanced by more than 30 days or delayed by more than 60 days
from the last Thursday in the month of April, notice by the shareholder
to be timely must be so received not earlier than the 90th day prior to
the date of such Annual Meeting and not later than the close of business
on the later of (x) the 60th day prior to such Annual Meeting and (y) the
10th day following the day on which public announcement of the date of
such meeting is first made. Such shareholder's notice shall be signed by
the shareholder of record who intends to make the nomination or introduce
the other business (or his duly authorized proxy or other
representative), shall bear the date of signature of such shareholder (or
proxy or other representative) and shall set forth: (A) the name and
address, as they appear on the corporation's books, of such shareholder
and the beneficial owner or owners, if any, on whose behalf the
nomination or proposal is made; (B) the class and number of shares of the
corporation which are beneficially owned by such shareholder or
beneficial owner or owners; (C) a representation that such shareholder is
a holder of record of shares of the corporation entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to
make the nomination or introduce the other business specified in the
notice; (D) in the case of any proposed nomination for election or
re-election as a director, (I) the name and residence address of the
person or persons to be nominated, (II) a description of all arrangements
or understandings between such shareholder or beneficial owner or owners
and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination is to be made by such
shareholder, (III) such other information regarding each nominee proposed
by such shareholder as would be required to be disclosed in solicitations
of proxies for elections of directors, or would be otherwise required to
be disclosed, in each case pursuant to Regulation 14A under the Exchange
Act, including any information that would be required to be included in a
proxy statement filed pursuant to Regulation 14A had the nominee been
nominated by the Board of Directors and (IV) the written consent of each
nominee to be named in a proxy statement and to serve as a director of
the corporation if so elected; and (E) in the case of any other business
that such shareholder proposes to bring before the meeting, (I) a brief
description of the business desired to be brought before the meeting and,
if such business includes a proposal to amend these by-laws, the language
of the proposed amendment, (II) such shareholder's and beneficial owner's
or owners' reasons for conducting such business at the meeting and (III)
any material interest in such business of such shareholder and beneficial
owner or owners.
(iii) Notwithstanding anything in the second sentence of
paragraph (a)(ii) of this Section 2.14 to the contrary, in the event that
the number of directors to be elected to the Board of Directors of the
corporation is increased and there is no public announcement naming all
of the nominees for director or specifying the size of the increased
Board of Directors made by the corporation at least 70 days prior to the
last Thursday in the month of April, a shareholder's notice required by
this Section 2.14 shall also be considered timely, but only with respect
to nominees for any new positions created by such increase, if it shall
be received by the Secretary at the principal office of the corporation
not later than the close of business on the 10th day following the day on
which such public announcement is first made by the corporation.
(b) Special Meetings. Only such business shall be conducted at a
Special Meeting as shall have been described in the notice of meeting sent to
shareholders pursuant to Section 2.04 of these by-laws. Nominations of
persons for election to the Board of Directors may be made at a Special
Meeting at which directors are to be elected pursuant to such notice of
meeting (i) by or at the direction of the Board of Directors or (ii) by any
shareholder of the corporation who (A) is a shareholder of record at the time
of giving of such notice of meeting, (B) is entitled to vote at the meeting
and (C) complies with the notice procedures set forth in this Section 2.14.
Any shareholder desiring to nominate persons for election to the Board of
Directors at such a Special Meeting shall cause a written notice to be
received by the Secretary of the corporation at the principal office of the
corporation not earlier than 90 days prior to such Special Meeting and not
later than the close of business on the later of (x) the 60th day prior to
such Special Meeting and (y) the 10th day following the day on which public
announcement is first made of the date of such Special Meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
Such written notice shall be signed by the shareholder of record who intends
to make the nomination (or his duly authorized proxy or other representative),
shall bear the date of signature of such shareholder (or proxy or other
representative) and shall set forth: (A) the name and address, as they appear
on the corporation's books, of such shareholder and the beneficial owner or
owners, if any, on whose behalf the nomination is made; (B) the class and
number of shares of the corporation which are beneficially owned by such
shareholder or beneficial owner or owners; (C) a representation that such
shareholder is a holder of record of shares of the corporation entitled to
vote at such meeting and intends to appear in person or by proxy at the
meeting to make the nomination specified in the notice; (D) the name and
residence address of the person or persons to be nominated; (E) a description
of all arrangements or understandings between such shareholder or beneficial
owner or owners and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination is to be made by such
shareholder; (F) such other information regarding each nominee proposed by
such shareholder as would be required to be disclosed in solicitations of
proxies for elections of directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A under the Exchange Act,
including any information that would be required to be included in a proxy
statement filed pursuant to Regulation 14A had the nominee been nominated by
the Board of Directors; and (G) the written consent of each nominee to be
named in a proxy statement and to serve as a director of the corporation if so
elected.
(c) General.
(i) Only persons who are nominated in accordance with the
procedures set forth in this Section 2.14 shall be eligible to serve as
directors. Only such business shall be conducted at an Annual Meeting or
Special Meeting as shall have been brought before such meeting in
accordance with the procedures set forth in this Section 2.14. The
chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought
before the meeting was made in accordance with the procedures set forth
in this Section 2.14 and, if any proposed nomination or business is not
in compliance with this Section 2.14, to declare that such defective
proposal shall be disregarded.
(ii) For purposes of this Section 2.14, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or in a
document publicly filed by the corporation with the Securities and
Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange
Act.
(iii) Notwithstanding the foregoing provisions of this Section
2.14, a shareholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to
the matters set forth in this Section 2.14. Nothing in this Section 2.14
shall be deemed to limit the corporation's obligation to include
shareholder proposals in its proxy statement if such inclusion is
required by Rule 14a-8 under the Exchange Act.
ARTICLE III. BOARD OF DIRECTORS
3.01. General Powers and Number. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
corporation shall be managed under the direction of its Board of Directors.
The number of directors of the corporation shall be nine (9), divided into
three (3) classes: Class I - three (3) directors; Class II - three (3)
directors; Class III -three (3) directors.
3.02. Term and Qualifications. At each Annual Meeting the
successors to the class of directors whose terms shall expire at the time of
such Annual Meeting shall be elected to hold office until the third succeeding
Annual Meeting of shareholders, and until their successors are duly elected
and qualified. A director may resign at any time by delivering written notice
which complies with the Wisconsin Business Corporation Law to the Chairman of
the Board or to the corporation. Directors need not be residents of the State
of Wisconsin or shareholders of the corporation.
3.03. Nominations. Nominations for the election of directors
may only be made in accordance with the requirements of Section 2.14 hereof,
which requirements are hereby incorporated by reference in this Section 3.03.
3.04. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this by-law immediately
after the Annual Meeting, and each adjourned session thereof. The place of
such regular meeting shall be the same as the place of the Annual Meeting
which precedes it, or such other suitable place as may be
announced at such Annual Meeting. The Board of Directors may provide, by
resolution, the time and place, either within or without the State of
Wisconsin, for the holding of additional regular meetings without other notice
than such resolution.
3.05. Special Meetings. Special meetings of the Board of
Directors may be called by or at the request of the President, Secretary or
any two directors. The President or Secretary may fix any place, either
within or without the State of Wisconsin, as the place for holding any special
meeting of the Board of Directors, and if no other place is fixed, the place
of meeting shall be the principal office of the corporation in the State of
Wisconsin.
3.06. Notice; Waiver. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.04) shall be
given by written notice delivered or communicated in person, by telegram,
facsimile or other form of wire or wireless communication, or by mail or
private carrier, to each director at his business address or at such other
address as such director shall have designated in writing filed with the
Secretary, in each case not less than 48 hours prior to the time of the
meeting. If mailed, such notice shall be deemed to be effective when
deposited in the United States mail so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
effective when the telegram is delivered to the telegraph company. If notice
is given by private carrier, such notice shall be deemed to be effective when
the notice is delivered to the private carrier. Whenever any notice whatever
is required to be given to any director of the corporation under the restated
articles of incorporation or these by-laws or any provision of the Wisconsin
Business Corporation Law, a waiver thereof in writing, signed at any time,
whether before or after the time of meeting, by the director entitled to such
notice, shall be deemed equivalent to the giving of such notice. The
corporation shall retain any such waiver as part of the permanent corporate
records. A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board of Directors need
be specified in the notice or waiver of notice of such meeting.
3.07. Quorum. Except as otherwise provided by the Wisconsin
Business Corporation Law or by the restated articles of incorporation or these
by-laws, a majority of the number of directors set forth in Section 3.01 shall
constitute a quorum for the transaction of business at any meeting of the
Board of Directors, but a majority of the directors present (though less than
such quorum) may adjourn the meeting from time to time without further notice.
3.08. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors, unless the act of a greater number is required by
the Wisconsin Business Corporation Law or by the restated articles of
incorporation or these by-laws.
3.09. Conduct of Meetings. The Chairman of the Board, and in
his absence, the President, and in his absence, a Vice-President in the order
provided under Section 4.06, and in their absence, any director chosen by the
directors present, shall call meetings of the Board of Directors to order and
shall act as chairman of the meeting. The Secretary of the corporation shall
act as secretary of all meetings of the Board of Directors, but in the absence
of the Secretary, the presiding officer may appoint any Assistant Secretary or
any director or any other person present to act as secretary of the meeting.
Minutes of any regular or special meeting of the Board of Directors shall be
prepared and distributed to each director.
3.10. Compensation. The Board of Directors, by affirmative vote
of a majority of the directors then in office, and irrespective of any
personal interest of any of its members, may establish reasonable compensation
of all directors for services to the corporation as directors, officers or
otherwise, or may delegate such authority to an appropriate committee. The
Board of Directors also shall have authority to provide for or to delegate
authority to an appropriate committee to provide for reasonable pensions,
disability or death benefits, and other benefits or payments, to directors,
officers and employees and to their estates, families, dependents or
beneficiaries on account of prior services rendered by such directors,
officers and employees to the corporation.
3.11. Presumption of Assent. A director of the corporation who
is present at a meeting of the Board of Directors or a committee thereof of
which he is a member at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless any of the following
occurs: (a) the director objects at the beginning of the meeting or promptly
upon his arrival to holding the meeting or transacting business at the
meeting; (b) the director's dissent or abstention from the action taken is
entered in the minutes of the meeting; or (c) the director delivers written
notice that complies with the Wisconsin Business Corporation Law of his
dissent or abstention to the presiding officer of the meeting before its
adjournment or to the corporation immediately after adjournment of the
meeting. Such right to dissent or abstain shall not apply to a director who
voted in favor of such action.
3.12. Committees. The Board of Directors by resolution adopted
by the affirmative vote of a majority of the number of directors set forth in
Section 3.01 may create one or more committees, appoint members of the Board
of Directors to serve on the committees and designate other members of the
Board of Directors to serve as alternates. Alternate members of a committee
shall take the place of any absent member or members at any meeting of such
committee upon request of the President or upon request of the chairman of
such meeting. Each committee shall have two or more members who shall, unless
otherwise provided by the Board of Directors, serve at the pleasure of the
Board of Directors. A committee may be authorized to exercise the authority
of the Board of Directors, except that a committee may not do any of the
following: (a) authorize distributions; (b) approve or propose to
shareholders action that the Wisconsin Business Corporation Law requires to be
approved by shareholders; (c) fill vacancies on the Board of Directors or,
unless the Board of Directors provides by resolution that vacancies on a
committee shall be filled by the affirmative vote of the remaining committee
members, on any Board committee; (d) amend the corporation's restated articles
of incorporation; (e) adopt, amend or repeal by-laws; (f) approve a plan of
merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method prescribed by
the Board of Directors; and (h) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
Board of Directors may authorize a committee to do so within limits prescribed
by the Board of Directors. Unless otherwise provided by the Board of
Directors in creating the committee, a committee may employ counsel,
accountants and other consultants to assist it in the exercise of its
authority.
3.13. Telephonic Meetings. Except as herein provided and
notwithstanding any place set forth in the notice of the meeting or these
by-laws, members of the Board of Directors (and any committee thereof) may
participate in regular or special meetings by, or through the use of, any
means of communication by which all participants may simultaneously hear each
other, such as by conference telephone. If a meeting is conducted by such
means, then at the commencement of such meeting the presiding officer shall
inform the participating directors that a meeting is taking place at which
official business may be transacted. Any participant in a meeting by such
means shall be deemed present in person at such meeting. If action is to be
taken at any meeting held by such means on any of the following: (a) a plan
of merger or share exchange; (b) a sale, lease, exchange or other disposition
of substantial property or assets of the corporation; (c) a voluntary
dissolution or the revocation of voluntary dissolution proceedings; or (d) a
filing for bankruptcy, then the identity of each director participating in
such meeting must be verified by the disclosure at such meeting by each such
director of each such director's social security number to the secretary of
the meeting before a vote may be taken on any of the foregoing matters. For
purposes of the preceding clause (b), the phrase "sale, lease, exchange or
other disposition of substantial property or assets" shall mean any sale,
lease, exchange or other disposition of property or assets of the corporation
having a net book value equal to 10% or more of the net book value of the
total assets of the corporation on and as of the close of the fiscal year last
ended prior to the date of such meeting and as to which financial statements
of the corporation have been prepared. Notwithstanding the foregoing, no
action may be taken at any meeting held by such means on any particular matter
which the presiding officer determines, in his sole discretion, to be
inappropriate under the circumstances for action at a meeting held by such
means. Such determination shall be made and announced in advance of such
meeting.
3.14. Unanimous Consent without Meeting. Any action required or
permitted by the restated articles of incorporation or these by-laws or any
provision of the Wisconsin Business Corporation Law to be taken by the Board
of Directors (or any committee thereof) at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all members of the Board of Directors or of the committee, as the
case may be, then in office. Such action shall be effective when the last
director or committee member signs the consent, unless the consent specifies a
different effective date.
ARTICLE IV. OFFICERS
4.01. Number. The principal officers of the corporation shall
be a Chairman of the Board, a President, such number of Vice-Presidents as the
Board of Directors shall elect from time to time by affirmative vote of a
majority of the number of directors present at a meeting at which a quorum is
in attendance, a Secretary, and a Treasurer, each of whom shall be elected by
the Board of Directors. Such other officers and assistant officers as may be
deemed necessary may be elected or appointed by the Board of Directors. The
Board of Directors may also authorize any duly appointed officer to appoint
one or more officers or assistant officers. Any two or more offices may be
held by the same person.
4.02. Election and Term of Office. The officers of the
corporation to be elected by the Board of Directors shall be elected annually
by the Board of Directors at the first meeting of the Board of Directors held
after each Annual Meeting. If the election of officers shall not be held at
such meeting, such election shall be held as soon thereafter as conveniently
may be. Each officer shall hold office until his successor shall have been
duly elected or until his prior death, resignation or removal.
4.03. Removal; Vacancies. The Board of Directors may remove any
officer and, unless restricted by the Board of Directors or these by-laws, an
officer may remove any officer or assistant officer appointed by that officer,
at any time, with or without cause and notwithstanding the contract rights, if
any, of the officer removed. Election or appointment shall not of itself
create contract rights. An officer may resign at any time by delivering
notice to the corporation that complies with the Wisconsin Business
Corporation Law. The resignation shall be effective when the notice is
delivered, unless the notice specifies a later effective date and the
corporation accepts the later effective date. A vacancy in any principal
office because of death, resignation, removal, disqualification or otherwise,
shall be filled by the Board of Directors for the unexpired portion of the
term. If a resignation of an officer is effective at a later date as
contemplated by this Section 4.03, the Board of Directors may fill the pending
vacancy before the effective date if the Board provides that the successor may
not take office until the effective date.
4.04. Chairman of the Board. The Chairman of the Board shall,
when present, preside at all meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors from
time to time.
4.05. President. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all Annual
Meetings and Special Meetings. He shall have authority, subject to such rules
as may be prescribed by the Board of Directors, to appoint such agents and
employees of the corporation as he shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to them. Such
agents and employees shall hold office at the discretion of the President. He
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts,
leases, reports and all other documents or instruments necessary or proper to
be executed in the course of the corporation's regular business, or which
shall be authorized by resolution of the Board of Directors; and, except as
otherwise provided by law or the Board of Directors, he may authorize any
Vice-President or other officer or agent of the corporation to sign, execute
and acknowledge such documents or instruments in his place and stead. In
general he shall perform all duties incident to the office of the President
and such other duties as may be prescribed by the Board of Directors from time
to time.
4.06. The Vice-Presidents. In the absence of the President or
in the event of his death, inability or refusal to act, or in the event for
any reason it shall be impracticable for the President to act personally, the
Vice-President (or in the event there be more than one Vice-President, the
Vice-Presidents in the order designated by the Board of Directors, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any Vice-President
may sign, with the Secretary or Assistant Secretary, certificates for shares
of the corporation; and shall perform such other duties and have such
authority as from time to time may be delegated or assigned to him by the
President or by the Board of Directors. The execution of any instrument of
the corporation by any Vice-President shall be conclusive evidence, as to
third parties, of his authority to act in the stead of the President.
4.07. The Secretary. The Secretary shall: (a) keep the minutes
of all Annual Meetings and Special Meetings and all meetings of the Board of
Directors in one or more books provided for that purpose (including records of
actions taken without a meeting); (b) see that all notices are duly given in
accordance with the provisions of these by-laws or as required by the
Wisconsin Business Corporation Law; (c) be custodian of the corporate records
and of the seal of the corporation and see that the seal of the corporation is
affixed to all documents the execution of which on behalf of the corporation
under its seal is duly authorized; (d) maintain a record of the shareholders
of the corporation, in the form that permits preparation of a list of the
names and addresses of all shareholders, by class or series of shares and
showing the number and class or series of shares held by each shareholder; (e)
sign with the President, or a Vice-President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time
to time may be delegated or assigned to him by the President or by the Board
of Directors.
4.08. The Treasurer. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
(b) maintain appropriate accounting records; (c) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies or other depositaries as shall be selected in accordance with the
provisions of Section 5.04; and (d) in general perform all of the duties
incident to the office of Treasurer and have such other duties and exercise
such other authority as from time to time may be delegated or assigned to him
by the President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of his
duties in such sum and with such surety or sureties as the Board of Directors
shall determine.
4.09. Assistant Secretaries and Assistant Treasurers. There
shall be such number of Assistant Secretaries and Assistant Treasurers as the
Board of Directors may from time to time authorize. The Assistant Secretaries
may sign with the President or a Vice-President certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution
of the Board of Directors. The Assistant Treasurers shall respectively, if
required by the Board of Directors, give bonds for the faithful discharge of
their duties in such sums and with such sureties as the Board of Directors
shall determine. The Assistant Secretaries and Assistant Treasurers, in
general, shall perform such duties and have such authority as shall from time
to time be delegated or assigned to them by the Secretary or the Treasurer,
respectively, or by the President or the Board of Directors.
4.10. Other Assistants and Acting Officers. The Board of
Directors shall have the power to appoint, or to authorize any duly appointed
officer of the corporation to appoint, any person to act as assistant to any
officer, or as agent for the corporation in his stead, or to perform the
duties of such officer whenever for any reason it is impracticable for such
officer to act personally, and such assistant or acting officer or other agent
so appointed by the Board of Directors or the appointing officer shall have
the power to perform all duties of the office to which he is so appointed to
be assistant, or as to which he is so appointed to act, except as such power
may be otherwise defined or restricted by the Board of Directors or the
appointing officer.
4.11. Salaries. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such
salary by reason of the fact that he is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS
5.01. Contracts. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the corporation, and
such authorization may be general or confined to specific instances. In the
absence of other designation, all deeds, mortgages and instruments of
assignment or pledge made by the corporation shall be executed in the name of
the corporation by the President or one of the Vice-Presidents and by the
Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer;
the Secretary or an Assistant Secretary, when necessary or required, shall
affix the corporate seal thereto; and when so executed no other party to such
instrument or any third party shall be required to make any inquiry into the
authority of the signing officer or officers.
5.02. Loans. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such indebtedness
shall be issued in its name unless authorized by or under the authority of a
resolution of the Board of Directors. Such authorization may be general or
confined to specific instances.
5.03. Checks, Drafts, etc. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in
the name of the corporation, shall be signed by such officer or officers,
agent or agents of the corporation and in such manner as shall from time to
time be determined by or under the authority of a resolution of the Board of
Directors.
5.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as may be selected by or
under the authority of a resolution of the Board of Directors.
5.05. Voting of Securities Owned by this Corporation. Subject
always to the specific directions of the Board of Directors, (a) any shares or
other securities issued by any other corporation and owned or controlled by
this corporation may be voted at any meeting of security holders of such other
corporation by the President of this corporation if he be present, or in his
absence by any Vice-President of this corporation who may be present, and (b)
whenever, in the judgment of the President, or in his absence, of any
Vice-President, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by any
other corporation and owned by this corporation, such proxy or consent shall
be executed in the name of this corporation by the President or one of the
Vice-Presidents of this corporation, without necessity of any authorization by
the Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer. Any person or persons designated in the
manner above stated as the proxy or proxies of this corporation shall have
full right, power and authority to vote the shares or other securities issued
by such other corporation and owned by this corporation the same as such
shares or other securities might be voted by this corporation.
5.06. No Nominee Procedures. The corporation has not
established, and nothing in these by-laws shall be deemed to establish, any
procedure by which a beneficial owner of the corporation's shares that are
registered in the name of a nominee is recognized by the corporation as the
shareholder under Section 180.0723 of the Wisconsin Business Corporation Law.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01. Certificates for Shares. Certificates representing shares
of the corporation shall be in such form, consistent with the Wisconsin
Business Corporation Law, as shall be determined by the Board of Directors.
Such certificates shall be signed by the President or a Vice-President and by
the Secretary or an Assistant Secretary. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
corporation. All certificates surrendered to the corporation for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 6.06.
6.02. Facsimile Signatures and Seal. The seal of the
corporation on any certificates for shares may be a facsimile. The signatures
of the President or Vice-President and the Secretary or Assistant Secretary
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation
itself or an employee of the corporation.
6.03. Signature by Former Officers. In case any officer, who
has signed or whose facsimile signature has been placed upon any certificate
for shares, shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue.
6.04. Transfer of Shares. Prior to due presentment of a
certificate for shares for registration of transfer the corporation may treat
the registered owner of such shares as the person exclusively entitled to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner. Where a certificate for shares is presented to the
corporation with a request to register for transfer, the corporation shall not
be liable to the owner or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty to inquire into
adverse claims or has discharged any such duty. The corporation may require
reasonable assurance that said endorsements are genuine and effective and
compliance with such other regulations as may be prescribed under the
authority of the Board of Directors.
6.05. Restrictions on Transfer. The face or reverse side of
each certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.06. Lost, Destroyed or Stolen Certificates. Where the owner
claims that his certificate for shares has been lost, destroyed or wrongfully
taken, a new certificate shall be issued in place thereof if the owner (a) so
requests before the corporation has notice that such shares have been acquired
by a bona fide purchaser, and (b) files with the corporation a sufficient
indemnity bond, and (c) satisfies such other reasonable requirements as the
Board of Directors may prescribe.
6.07. Consideration for Shares. The Board of Directors may
authorize shares to be issued for consideration consisting of any tangible or
intangible property or benefit to the corporation, including cash, promissory
notes, services performed, contracts for services to be performed or other
securities of the corporation. Before the corporation issues shares, the
Board of Directors shall determine that the consideration received or to be
received for the shares to be issued is adequate. In the absence of a
resolution adopted by the Board of Directors expressly determining that the
consideration received or to be received is adequate, Board approval of the
issuance of the shares shall be deemed to constitute such a determination.
The determination of the Board of Directors is conclusive insofar as the
adequacy of consideration for the issuance of shares relates to whether the
shares are validly issued, fully paid and nonassessable. The corporation may
place in escrow shares issued in whole or in part for a contract for future
services or benefits, a promissory note, or other property to be issued in the
future, or make other arrangements to restrict the transfer of the shares, and
may credit distributions in respect of the shares against their purchase
price, until the services are performed, the benefits or property are received
or the promissory note is paid. If the services are not performed, the
benefits or property are not received or the promissory note is not paid, the
corporation may cancel, in whole or in part, the shares escrowed or restricted
and the distributions credited.
6.08. Stock Regulations. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII. SEAL
7.01. The Board of Directors shall provide a corporate seal
which shall be circular in form and shall have inscribed thereon the name of
the corporation and the state of incorporation and the words, "Corporate
Seal."
ARTICLE VIII. AMENDMENTS
8.01. By Shareholders. The affirmative vote of shareholders
possessing at least seventy-five percent of the voting power of the then
outstanding shares of all classes of stock of the corporation generally
possessing voting rights in elections of directors, considered for this
purpose as one class, shall be required to amend, alter, change or repeal, or
to adopt any provision inconsistent with, Sections 2.01 to 2.05 inclusive of
Article II of these by-laws, Sections 8.01 to 8.03 inclusive of Article VIII
of these by-laws and Sections 9.01 to 9.11 inclusive of Article IX of these
by-laws. Subject to the foregoing and except as otherwise provided in the
restated articles of incorporation of the corporation, the by-laws of this
corporation may be altered, amended, changed or repealed by the affirmative
vote of shareholders possessing at least a majority of the voting power of the
shares of all classes of stock of the corporation generally possessing voting
rights in elections of directors considered for this purpose as one class,
which are present or represented at any Annual Meeting or Special Meeting at
which a quorum is present.
8.02. By Directors. A Requisite Vote (as defined herein) of the
directors shall be required to alter, amend, change or repeal, or to adopt any
provision inconsistent with, Sections 2.01 to 2.05 inclusive, Section 2.07 and
Section 2.14 of Article II of these by-laws, Sections 8.01 to 8.03 inclusive
of Article VIII of these by-laws and Sections 9.01 to 9.11 inclusive of
Article IX of these by-laws. For purposes of this Section 8.02, "Requisite
Vote" shall mean the affirmative vote of at least two-thirds of the directors
then in office plus one director. Subject to the foregoing and except as
otherwise provided in the restated articles of incorporation of the
corporation, the by-laws of this corporation may be altered, amended, changed
or repealed by the Board of Directors by the affirmative vote of a majority of
the number of directors present at any meeting at which a quorum is present;
provided, however, that the shareholders in altering, adopting, amending,
changing or repealing a particular by-law may provide therein that the Board
of Directors may not amend, repeal or readopt that by-law.
8.03. Implied Amendments. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent with
the by-laws then in effect but is taken or authorized by affirmative vote of
not less than the number of votes or the number of directors required to amend
the by-laws so that the by-laws would be consistent with such action, shall be
given the same effect as though the by-laws had been temporarily amended or
suspended so far, but only so far, as is necessary to permit the specific
action so taken or authorized.
ARTICLE IX. INDEMNIFICATION
9.01. Certain Definitions. All capitalized terms used in this
Article IX and not otherwise hereinafter defined in this Section 9.01 shall
have the meaning set forth in Section 180.0850 of the Statute. The following
capitalized terms (including any plural forms thereof) used in this Article IX
shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise
that directly or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Corporation.
(b) "Authority" shall mean the entity selected by the Director or
Officer to determine his or her right to indemnification pursuant to Section
9.04.
(c) "Board" shall mean the entire then elected and serving Board of
Directors of the Corporation, including all members thereof who are Parties to
the subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer breached or
failed to perform his or her duties to the Corporation and his or her breach
of or failure to perform those duties is determined, in accordance with
Section 9.04, to constitute misconduct under Section 180.0851(2)(a) l, 2, 3 or
4 of the Statute.
(e) "Corporation," as used herein and as defined in the Statute and
incorporated by reference into the definitions of certain other capitalized
terms used herein, shall mean this Corporation, including, without limitation,
any successor corporation or entity to this Corporation by way of merger,
consolidation or acquisition of all or substantially all of the capital stock
or assets of this Corporation.
(f) "Director or Officer" shall have the meaning set forth in the
Statute; provided, that, for purposes of this Article IX, it shall be
conclusively presumed that any Director or Officer serving as a director,
officer, partner, trustee, member of any governing or decision-making
committee, employee or agent of an Affiliate shall be so serving at the
request of the Corporation.
(g) "Disinterested Quorum" shall mean a quorum of the Board who are
not Parties to the subject Proceeding or any related Proceeding.
(h) "Party" shall have the meaning set forth in the Statute;
provided, that, for purposes of this Article IX, the term "Party" shall also
include any Director or Officer or employee of the Corporation who is or was a
witness in a Proceeding at a time when he or she has not otherwise been
formally named a Party thereto.
(i) "Proceeding" shall have the meaning set forth in the Statute;
provided, that, in accordance with Section 180.0859 of the Statute and for
purposes of this Article IX, the term "Proceeding" shall also include all
Proceedings (i) brought under (in whole or in part) the Securities Act of
1933, as amended, the Exchange Act, their respective state counterparts,
and/or any rule or regulation promulgated under any of the foregoing; (ii)
brought before an Authority or otherwise to enforce rights hereunder; (iii)
any appeal from a Proceeding; and (iv) any Proceeding in which the Director or
Officer is a plaintiff or petitioner because he or she is a Director or
Officer; provided, however, that any such Proceeding under this subsection
(iv) must be authorized by a majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Sections 180.0850 through 180.0859,
inclusive, of the Wisconsin Business Corporation Law, Chapter 180 of the
Wisconsin Statutes, as the same shall then be in effect, including any
amendments thereto, but, in the case of any such amendment, only to the extent
such amendment permits or requires the Corporation to provide broader
indemnification rights than the Statute permitted or required the Corporation
to provide prior to such amendment.
9.02. Mandatory Indemnification. To the fullest extent
permitted or required by the Statute, the Corporation shall indemnify a
Director or Officer against all Liabilities incurred by or on behalf of such
Director or Officer in connection with a Proceeding in which the Director or
Officer is a Party because he or she is a Director or Officer.
9.03. Procedural Requirements.
(a) A Director or Officer who seeks indemnification under Section
9.02 shall make a written request therefor to the Corporation. Subject to
Section 9.03(b), within 60 days of the Corporation's receipt of such request,
the Corporation shall pay or reimburse the Director or Officer for the entire
amount of Liabilities incurred by the Director or Officer in connection with
the subject Proceeding (net of any Expenses previously advanced pursuant to
Section 9.05).
(b) No indemnification shall be required to be paid by the
Corporation pursuant to Section 9.02 if, within such 60-day period, (i) a
Disinterested Quorum, by a majority vote thereof, determines that the Director
or Officer requesting indemnification engaged in misconduct constituting a
Breach of Duty or (ii) a Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Section 9.03(b), the
Board shall immediately authorize by resolution that an Authority, as provided
in Section 9.04, determine whether the Director's or Officer's conduct
constituted a Breach of Duty and, therefore, whether indemnification should be
denied hereunder.
(d) (i) If the Board does not authorize an Authority to determine
the Director's or Officer's right to indemnification hereunder within such
60-day period and/or (ii) if indemnification of the requested amount of
Liabilities is paid by the Corporation, then it shall be conclusively presumed
for all purposes that a Disinterested Quorum has affirmatively determined that
the Director or Officer did not engage in misconduct constituting a Breach of
Duty and, in the case of subsection (i) above (but not subsection (ii)),
indemnification by the Corporation of the requested amount of Liabilities
shall be paid to the Director or Officer immediately.
9.04. Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a Director's
or Officer's right to indemnification pursuant to Section 9.03, then the
Director or Officer requesting indemnification shall have the absolute
discretionary authority to select one of the following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall
be mutually selected by such Director or Officer and by a majority vote
of a Disinterested Quorum or, if a Disinterested Quorum cannot be
obtained, then by a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels of
arbitrators of the American Arbitration Association in Wisconsin;
provided, that (A) one arbitrator shall be selected by such Director or
Officer, the second arbitrator shall be selected by a majority vote of a
Disinterested Quorum or, if a Disinterested Quorum cannot be obtained,
then by a majority vote of the Board, and the third arbitrator shall be
selected by the two previously selected arbitrators, and (B) in all other
respects, such panel shall be governed by the American Arbitration
Association's then existing Commercial Arbitration Rules; or
(iii) A court pursuant to and in accordance with Section
180.0854 of the Statute.
(b) In any such determination by the selected Authority there shall
exist a rebuttable presumption that the Director's or Officer's conduct did
not constitute a Breach of Duty and that indemnification against the requested
amount of Liabilities is required. The burden of rebutting such a presumption
by clear and convincing evidence shall be on the Corporation or such other
party asserting that such indemnification should not be allowed.
(c) The Authority shall make its determination within 60 days of
being selected and shall submit a written opinion of its conclusion
simultaneously to both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is required
hereunder, the Corporation shall pay the entire requested amount of
Liabilities (net of any Expenses previously advanced pursuant to Section
9.05), including interest thereon at a reasonable rate, as determined by the
Authority, within 10 days of receipt of the Authority's opinion; provided,
that, if it is determined by the Authority that a Director or Officer is
entitled to indemnification against Liabilities incurred in connection with
some claims, issues or matters, but not as to other claims, issues or matters,
involved in the subject Proceeding, the Corporation shall be required to pay
(as set forth above) only the amount of such requested Liabilities as the
Authority shall deem appropriate in light of all of the circumstances of such
Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the Corporation regardless of any
prior determination that the Director or Officer engaged in a Breach of Duty.
(f) All Expenses incurred in the determination process under this
Section 9.04 by either the Corporation or the Director or Officer, including,
without limitation, all Expenses of the selected Authority, shall be paid by
the Corporation.
9.05. Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or at
any time, within 10 days after the receipt of the Director's or Officer's
written request therefor, the reasonable Expenses of the Director or Officer
as such Expenses are incurred; provided, the following conditions are
satisfied:
(i) The Director or Officer furnishes to the Corporation an
executed written certificate affirming his or her good faith belief that
he or she has not engaged in misconduct which constitutes a Breach of
Duty; and
(ii) The Director or Officer furnishes to the Corporation an
unsecured executed written agreement to repay any advances made under
this Section 9.05 if it is ultimately determined by an Authority that he
or she is not entitled to be indemnified by the Corporation for such
Expenses pursuant to Section 9.04.
(b) If the Director or Officer must repay any previously advanced
Expenses pursuant to this Section 9.05, such Director or Officer shall not be
required to pay interest on such amounts.
9.06. Indemnification and Allowance of Expenses of Certain
Others.
(a) The Board may, in its sole and absolute discretion as it deems
appropriate, pursuant to a majority vote thereof, indemnify a director or
officer of an Affiliate (who is not otherwise serving as a Director or
Officer) against all Liabilities, and shall advance the reasonable Expenses,
incurred by such director or officer in a Proceeding to the same extent
hereunder as if such director or officer incurred such Liabilities because he
or she was a Director or Officer, if such director or officer is a Party
thereto because he or she is or was a director or officer of the Affiliate.
(b) The Corporation shall indemnify an employee of the Corporation
who is not a Director or Officer, to the extent he or she has been successful
on the merits or otherwise in defense of a Proceeding, for all Expenses
incurred in the Proceeding if the employee was a Party because he or she was
an employee of the Corporation.
(c) The Board may, in its sole and absolute discretion as it deems
appropriate, pursuant to a majority vote thereof, indemnify (to the extent not
otherwise provided in Section 9.06(b) hereof) against Liabilities incurred by,
and/or provide for the allowance of reasonable Expenses of, an employee or
authorized agent of the Corporation acting within the scope of his or her
duties as such and who is not otherwise a Director or Officer.
9.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of a Director or Officer or any individual who is or was
an employee or authorized agent of the Corporation against any Liability
asserted against or incurred by such individual in his or her capacity as such
or arising from his or her status as such, regardless of whether the
Corporation is required or permitted to indemnify against any such Liability
under this Article IX.
9.08. Notice to the Corporation. A Director, Officer or
employee of the Corporation shall promptly notify the Corporation in writing
when he or she has actual knowledge of a Proceeding which may result in a
claim of indemnification against Liabilities or allowance of Expenses
hereunder, but the failure to do so shall not relieve the Corporation of any
liability to the Director, Officer or employee hereunder unless the
Corporation shall have been irreparably prejudiced by such failure (as
determined, in the case of Directors or Officers only, by an Authority
selected pursuant to Section 9.04(a)).
9.09. Severability. If any provision of this Article IX shall
be deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Article IX contravene public
policy, this Article IX shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any such
provisions which are invalid or inoperative or which contravene public policy
shall be deemed, without further action or deed by or on behalf of the
Corporation, to be modified, amended and/or limited, but only to the extent
necessary to render the same valid and enforceable; it being understood that
it is the Corporation's intention to provide the Directors and Officers with
the broadest possible protection against personal liability allowable under
the Statute.
9.10. Nonexclusivity of Article IX. The rights of a Director,
Officer or employee of the Corporation (or any other person) granted under
this Article IX shall not be deemed exclusive of any other rights to
indemnification against Liabilities or allowance of Expenses which the
Director, Officer or employee (or such other person) may be entitled to under
any written agreement, Board resolution, vote of shareholders of the
corporation or otherwise, including, without limitation, under the Statute.
Nothing contained in this Article IX shall be deemed to limit the
Corporation's obligations to indemnify against Liabilities or allow Expenses
to a Director, Officer or employee of the Corporation under the Statute.
9.11. Contractual Nature of Article IX; Repeal or Limitation of
Rights. This Article IX shall be deemed to be a contract between the
Corporation and each Director, Officer and employee of the Corporation and any
repeal or other limitation of this Article IX or any repeal or limitation of
the Statute or any other applicable law shall not limit any rights of
indemnification against Liabilities or allowance of Expenses then existing or
arising out of events, acts or omissions occurring prior to such repeal or
limitation, including, without limitation, the right to indemnification
against Liabilities or allowance of Expenses for Proceedings commenced after
such repeal or limitation to enforce this Article IX with regard to acts,
omissions or events arising prior to such repeal or limitation.
AMENDMENT TO THE WILLIAM D. GEHL/GEHL COMPANY
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
DATED AS OF DECEMBER 15, 1995.
THIS AMENDMENT is made by and between Gehl Company ("GEHL"), a Wisconsin
corporation with its principal place of business in West Bend, Wisconsin, and
William D. Gehl, ("Executive") as of December 18, 1998.
RECITALS
WHEREAS, GEHL wishes to continue to retain the services of Executive as
its Chairman of the Board, President and Chief Executive Officer and Executive
desires to continue to serve GEHL in that capacity; and
WHEREAS, GEHL and Executive wish to amend the Employment Agreement
between the parties dated as of December 19, 1997.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the parties agree as follows:
Section 2, Term of Employment, shall be revised to read as follows:
Executive's "term of employment," as this phrase is used throughout this
Agreement, shall be for the period commencing January 1, 1999, and ending on
December 31, 2001.
Section 3, Compensation, shall be revised to read as follows: GEHL shall
pay or cause to be paid to Executive during the period commencing January 1,
1999, through the end of the term of employment a minimum base salary of Three
Hundred Fifty Thousand Dollars ($350,000.00) per annum, payable in twenty-six
(26) equal installments (subject to the appropriate withholding items). This
salary shall be reviewed at least annually by the GEHL Board of Directors or a
committee thereof and increased or decreased in its discretion, subject to the
minimum above.
Section 9, Stock Option, shall be revised to read as follows: Concurrent
with the execution of this Amendment Agreement, Executive and GEHL entered
into a Stock Option Agreement, specifically referenced herein and made a part
hereof, wherein Executive was granted, as of December 18, 1998, an option to
purchase twenty-five thousand (25,000) shares of GEHL common stock under the
1995 Stock Option Plan.
IN WITNESS WHEREOF, GEHL has caused this Agreement to be executed by its
duly authorized officers, and Executive has hereunto set his hand, all as of
the date set forth above.
GEHL COMPANY
___________________________________
Its Director
___________________________________
Executive
GEHL COMPANY/_________________________
CHANGE IN CONTROL AND SEVERANCE AGREEMENT
THIS AGREEMENT, made and entered into as of the 1st day of January, 1999,
by and between Gehl Company, a Wisconsin corporation (hereinafter referred to
as the "GEHL"), and __________________________(hereinafter referred to as the
"Executive").
W I T N E S S E T H :
WHEREAS, the Executive is employed by GEHL in a key executive capacity,
and the Executive's services are valuable to the conduct of the business of
GEHL;
WHEREAS, the Board of Directors of GEHL (the "Board") recognizes that
circumstances may arise in which a change in control of GEHL occurs, through
acquisition or otherwise, thereby causing uncertainty about the Executive's
future employment with GEHL without regard to the Executive's competence or
past contributions, which uncertainty may result in the loss of valuable
services of the Executive to the detriment of GEHL and its shareholders, and
GEHL and the Executive wish to provide reasonable security to the Executive
against changes in the Executive's relationship with GEHL in the event of any
such change in control;
WHEREAS, GEHL and the Executive are desirous that any proposal for a
change in control or acquisition of GEHL will be considered by the Executive
objectively and with reference only to the best interests of GEHL and its
shareholders;
WHEREAS, the Executive will be in a better position to consider GEHL's
best interests if the Executive is afforded reasonable security, as provided
in this Agreement, against altered conditions of employment which could result
from any such change in control or acquisition; and
WHEREAS, GEHL deems it appropriate to provide the Executive with
specified severance benefits, as provided in this Agreement, in the event of
certain termination of the Executive other than in the context of a Change in
Control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto mutually
covenant and agree as follows:
Section 1. Change in Control. In the event a Change in Control, as
defined below, occurs while the Executive is employed by the company and this
Agreement is in effect, the Executive shall automatically be entitled to
employment by the company for two years after the occurrence of the Change in
Control (such two-year term of employment is hereafter referred to as the
"Change in Control Contract Term"). While employed by the Company during the
Change in Control Contract Term, the Executive shall be entitled to a base
salary, bonus opportunity and other employee benefits substantially equivalent
to those the Executive was entitled to immediately prior to the Change in
Control. In addition, upon the occurrence of a Change in Control, and
assuming that the Executive is in the employ of the Company at such time or
demonstrates that his prior termination was effected in anticipation of a
Change in Control as contemplated by the succeeding paragraph, (i) the
unvested stock options awarded to the Executive under the GEHL Stock Option
Plans shall vest, (ii) the Executive's Bank Balance in the Bonus Bank under
the GEHL Shareholder Value Added Management Incentive Compensation Plan shall
vest and be paid and (iii) all restrictions limiting the exercise,
transferability, entitlement or incidents of ownership of any outstanding
award, including options, restricted stock, supplemental retirement and death
benefits, deferred compensation, or other property or rights granted to the
Executive after the date of this Agreement (other than pursuant to plans of
general application to salaried employees such as tax-qualified retirement
plans, life insurance and the health plan) shall lapse, and such awards shall
become fully vested and be held by or for the Executive free and clear of all
such restrictions. This provision shall apply to all such property or rights
notwithstanding the provisions of any other plan or agreement.
If the Executive's employment shall be terminated by GEHL without
Cause (as defined below) or the Executive shall terminate his employment for
Good Reason (as defined below) during the Change in Control Contract Term, or
if GEHL shall terminate the Executive's employment without Cause within six
(6) months before the execution of a definitive purchase agreement that
ultimately results in a Change in Control and the Executive shall reasonably
demonstrate that such termination was in connection with or in anticipation of
the Change in Control, the Executive shall be entitled to the following paid
in a lump sum within 30 days of the date of the Executive's termination of
employment hereunder (the "Termination Date") or the date that the Executive
demonstrates that such termination was in connection with or in anticipation
of the Change in Control, whichever is applicable:
(a) The Executive's base salary as in effect on the Termination
Date ("Current Base Salary") through the Termination Date to
the extent not theretofore paid;
(b) The bonus which would be earned by the Executive through the
Termination Date computed under GEHL's existing bonus plan,
ignoring any requirement that the Executive be employed through
the end of the fiscal year and not reduced for any deferrals
which would otherwise be required under the bonus plan;
(c) Any compensation previously deferred, including that deferred
under any bonus plan as then in effect, which deferrals shall
become immediately vested upon the Change in Control, to the
extent not previously paid; and
(d) Two (2) times the sum of the Current Base Salary.
In addition, for twenty-four (24) months after the Termination Date, GEHL
shall provide to the Executive and his family medical benefits at least
substantially equal on a pre-tax basis to those provided to him and his family
just prior to the date of the Change in Control, whether pursuant to a group
plan or individual coverage. Notwithstanding the foregoing, if the Executive
obtains employment during the 24-month period and family medical benefits
(substantially equivalent to those offered by GEHL just prior to the date of
the Change in Control) are available from the new employer, GEHL's obligation
to provide such family medical benefits shall cease for so long as the
Executive remains employed.
In no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Executive under this Agreement and such amounts shall not be reduced (except
to the extent set forth in the immediately preceding paragraph) whether or not
the Executive obtains other employment. In addition, GEHL will not be
entitled to reduce the amounts payable under this Agreement for any claims or
rights it may have against the Executive.
"Change in Control," for the purposes of this Agreement shall be defined
as one of the following:
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 of 1934, as amended,
directly or indirectly of securities of GEHL representing twenty-
five (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 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.
"Good Reason" for the purposes of this Agreement, shall be defined as the
occurrence of any one of the following events or conditions after, or in
anticipation of, the Change in Control:
i) The removal of the Executive from, or any failure to re-elect or
reappoint the Executive to, any of the positions held with GEHL on
the date of the Change in Control or any other positions with GEHL
to which the Executive shall thereafter be elected, appointed or
assigned, except in connection with the termination of his
employment for disability, Cause, as a result of his death or by the
Executive other than for Good Reason; or
ii) A good faith determination by the Executive that there has been a
significant adverse change, without the Executive's written consent,
in the Executive's working conditions or status with GEHL from such
working conditions or status in effect immediately prior to the
Change in Control, including but not limited to (A) a significant
change in the nature or scope of the Executive's authority, powers,
functions, duties or responsibilities, or (B) a significant
reduction in the level of support services, staff, secretarial and
other assistance, office space and accoutrements; or
iii) Any material breach by GEHL of any provision of this Agreement; or
iv) Any purported termination of the Executive's employment for Cause by
GEHL which is determined under Section 14 not to be for conduct
encompassed in the definition of Cause contained herein; or
v) The failure of GEHL to obtain an agreement, satisfactory to the
Executive, from any successor or assign of GEHL, to assume and agree
to perform this Agreement, as contemplated in Section 3 hereof; or
vi) GEHL's requiring the Executive to be based at any office or location
which is not within a fifty (50) mile radius of West Bend,
Wisconsin, except for travel reasonably required in the performance
of the Executive's responsibilities hereunder, without the
Executive's consent.
For purposes of this Section, any good faith determination of Good Reason made
by the Executive shall be conclusive.
Section 2. Termination of Employment Other Than in the Context of a
Change in Control/Severance. If the Executive's employment is involuntarily
terminated by GEHL for any reason other than (i) Cause, (ii) circumstances
under which the Executive would be entitled to the payments provided by
Section 1 hereof or (iii) the Executive's death or disability, the Executive
shall be entitled to receive, and GEHL shall be obligated to pay, the
Executive's then Current Base Salary, as in effect immediately prior to such
termination, for one (1) full year from the Executive's date of termination.
During such year, the Executive shall also continue to participate in all
group health and welfare benefit plans and programs of GEHL to the extent that
such continued participation is possible under the general terms and
provisions of such plans and programs. In the event that the Executive's
continued participation in any such plans and programs is barred, and in lieu
thereof, the Executive shall be entitled to receive for the above period an
amount equal to the sum of the average annual contributions, payments,
credits, or allocations made by GEHL to him, to his account, or on his behalf
over the two (2) fiscal years (or fraction thereof) of GEHL preceding the
termination of his employment under such plans and programs from which his
continued participation is barred.
Termination by GEHL for "Cause" shall mean termination by action of the
Board because of the material failure of the Executive to fulfill his
obligations as an officer of the Company or because of serious willful
misconduct by the Executive in respect of his obligations as an officer of the
Company as, for example, the commission by the Executive of a felony or the
perpetration by the Executive of a common-law fraud against GEHL or any major
material action (i.e., not procedural or operational differences )taken
against the expressed directive of the Board.
Section 3. Assigns and Successors. The rights and obligations of GEHL
under this Agreement shall inure to the benefit of and shall be binding upon
the successors and assigns of GEHL and GEHL shall require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that GEHL would be required to perform if no
such succession or assignment had taken place.
Section 4. Construction. Section headings are for convenience only and
shall not be considered a part of the terms and provisions of this Agreement.
Section 5. Notices. All notices under this Agreement shall be in
writing and shall be deemed effective when delivered in person (in GEHL's
case, to its Secretary, or to its Chief Executive Officer if the Executive is
then serving as Secretary) or by facsimile to the number provided for such
purpose by the applicable party or forty-eight (48) hours after deposit
thereof in the U.S. mails, postage prepaid, addressed, in the case of the
Executive, to his last known address as carried on the personnel records of
GEHL and, in the case of GEHL, to the corporate headquarters, attention of the
Secretary, or to its Chief Executive Officer if the Executive is then serving
as Secretary, or to such other address as the party to be notified may specify
by notice to the other party.
Section 6. Severability. Should it be determined that one or more of
the clauses of this Agreement is (are) found to be unenforceable, illegal,
contrary to public policy, etc., this Agreement shall remain in full force and
effect except for the unenforceable, illegal, or contrary to public policy
provisions.
Section 7. Limitation on Payments.
(a) Notwithstanding anything contained herein to the contrary, prior to
the payment of any amounts pursuant to Sections 1 or 2 hereof, a
national accounting firm designated by GEHL (the "Accounting Firm")
shall compute whether there would be any "excess parachute payments"
payable to the Executive, within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), taking into
account the total "parachute payments," within the meaning of
Section 280G of the Code, payable to the Executive by GEHL or any
successor thereto under this Agreement and any other plan, agreement
or otherwise. If there would be any excess parachute payments, the
Accounting Firm will compute the net after-tax proceeds to the
Executive, taking into account the excise tax imposed by Section
4999 of the Code, if (i) the payments hereunder were reduced, but
not below zero, such that the total parachute payments payable to
the Executive would not exceed three (3) times the "base amount" as
defined in Section 280G of the Code, less One Dollar ($1.00) or (ii)
the payments hereunder were not reduced. If reducing the payments
hereunder would result in a greater after-tax amount to the
Executive, such lesser amount shall be paid to the Executive. If
not reducing the payments hereunder would result in a greater after-
tax amount to the Executive, such payments shall not be reduced.
The determination by the Accounting Firm shall be binding upon GEHL
and the Executive.
(b) As a result of the uncertainty in the application of Section 280G of
the Code, it is possible that excess parachute payments will be paid
when such payment would result in a lesser after-tax amount to the
Executive; this is not the intent hereof. In such cases, the
payment of any excess parachute payments will be void ab initio as
regards any such excess. Any excess will be treated as a loan by
GEHL to the Executive. The Executive will return the excess to
GEHL, within fifteen (15) business days of any determination by the
Accounting Firm that excess parachute payments have been paid when
not so intended, with interest at an annual rate equal to the rate
provided in Section 1274(d) of the Code (or 120% of such rate if the
Accounting Firm determines that such rate is necessary to avoid an
excise tax under Section 4999 of the Code) from the date the
Executive received the excess until it is repaid to GEHL.
(c) All fees, costs and expenses (including, but not limited to, the
cost of retaining experts) of the Accounting Firm shall be borne by
GEHL and GEHL shall pay such fees, costs and expenses as they become
due. In performing the computations required hereunder, the
Accounting Firm shall assume that taxes will be paid for state and
federal purposes at the highest possible marginal tax rates which
could be applicable to the Executive in the year of receipt of the
payments, unless the Executive agrees otherwise.
Section 8. Confidentiality. During and following the Executive's
employment by GEHL, the Executive shall hold in confidence and not directly or
indirectly disclose or use or copy or make lists of any confidential
information or proprietary data of GEHL except to the extent authorized in
writing by the Board or required by any court or administrative agency, other
than to an employee of GEHL or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Executive
of his duties as an executive of GEHL. Confidential information shall not
include any information known generally to the public or any information of a
type not otherwise considered confidential by persons engaged in the same
business or a business similar to that of GEHL. All records, files, documents
and materials, or copies thereof, relating to the business of GEHL which the
Executive shall prepare, or use, or come into contact with, shall be and
remain the sole property of GEHL and shall be promptly returned to GEHL upon
termination of employment with GEHL.
Section 9. Expenses and Interest. If (i) a dispute arises with respect
to the enforcement of the Executive's rights under this Agreement, (ii) any
legal or arbitration proceeding shall be brought to enforce or interpret any
provision contained herein or to recover damages for breach hereof, or (iii)
any tax audit or proceeding is commenced that is attributable in part to the
application of Section 4999 of the Code, in any case so long as the Executive
is not acting in bad faith, then GEHL shall reimburse the Executive for any
reasonable attorneys' fees and necessary costs and disbursements incurred as a
result of such dispute, legal or arbitration proceeding or tax audit or
proceeding ("Expenses"), and prejudgment interest on any money judgment or
arbitration award obtained by the Executive calculated at the rate of interest
announced by M&I Bank, Milwaukee, Wisconsin, from time to time as its prime or
base lending rate from the date that payments to the Executive should have
been made under this Agreement. Within ten days after the Executive's written
request therefor, GEHL shall pay to the Executive, or such other person or
entity as the Executive may designate in writing to GEHL, the Executive's
reasonable Expenses in advance of the final disposition or conclusion of any
such dispute, legal or arbitration proceeding.
Section 10. Payment Obligations Absolute. GEHL's obligation to pay the
Executive any amounts required hereunder and to make the benefit and other
arrangements provided herein shall be absolute and unconditional and shall not
be affected by any circumstances, including, without limitation, any setoff,
counterclaim, recoupment, defense or other right which GEHL may have against
the Executive or anyone else. Except as provided in Section 9, all amounts
payable by GEHL hereunder shall be paid without notice or demand. Each and
every payment made hereunder by GEHL shall be final, and GEHL will not seek to
recover all or any part of such payment from the Executive, or from whomsoever
may be entitled thereto, for any reason whatsoever.
Section 11. No Waiver. The Executive's or GEHL's failure to insist upon
strict compliance with any provision of this Agreement or the failure to
assert any right the Executive or GEHL may have hereunder, including, without
limitation, the right of the Executive to terminate employment for Good
Reason, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.
Section 12. Headings. The headings herein contained are for reference
only and shall not affect the meaning or interpretation of any provision of
this Agreement.
Section 13. Governing Law; Resolution of Disputes. This Agreement and
the rights and obligations hereunder shall be governed by and construed in
accordance with the laws of the State of Wisconsin. Any dispute arising out
of this Agreement shall, at the Executive's election, be determined by
arbitration under the rules of the American Arbitration Association then in
effect (in which case both parties shall be bound by the arbitration award) or
by litigation. Whether the dispute is to be settled by arbitration or
litigation, the venue for the arbitration or litigation shall be West Bend,
Wisconsin or, at the Executive's election, if the Executive is no longer
residing or working in the West Bend, Wisconsin metropolitan area, in the
judicial district encompassing the city in which the Executive resides;
provided, that, if the Executive is not then residing in the United States,
the election of the Executive with respect to such venue shall be either West
Bend, Wisconsin or in the judicial district encompassing that city in the
United States among the thirty cities having the largest population (as
determined by the most recent United States Census data available at
Termination Date) which is closest to the Executive's residence. The parties
consent to personal jurisdiction in each trial court in the selected venue
having subject matter jurisdiction notwithstanding their residence or situs,
and each party irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
Section 14. Amendment. No modification or amendment to this Agreement
may be made without the written consent of the parties hereto.
IN WITNESS WHEREOF, GEHL COMPANY has caused this Agreement to be executed
by its duly authorized officer, and the Executive has hereunto set his hand,
all as of the date set forth above.
GEHL COMPANY
_____________________________________
William D. Gehl
Chairman, President & CEO
_____________________________________
Executive
Reports of Management and Independent Accountants
Report of Management
The management of Gehl Company is responsible for the preparation and
integrity of all financial statements and other information contained in this
annual report. The financial statements have been prepared by the Company in
conformity with generally accepted accounting principles appropriate in the
circumstances. Such statements necessarily include amounts based on the best
estimates and judgments of management after giving due consideration to
materiality.
The Company maintains an internal control system designed to provide
reasonable assurance that transactions are properly recorded and executed in
accordance with management's authorization and that assets are safeguarded
from loss or unauthorized use. The internal control system is augmented by
careful selection and training of qualified employees, proper division of
responsibilities, and the development and dissemination of written policies
and procedures.
The Board of Directors elects, from among its members, an Audit Committee,
consisting entirely of outside directors, which is responsible for reviewing
and evaluating the overall performance of the Company's financial reporting
and accounting practices and for recommending appointment of the independent
accountants. The Audit Committee meets periodically with management and the
independent accountants to discuss any and all matters within the Committee's
responsibilities. The independent accountants have free access to the
Committee, without the presence of management if so requested.
The Company's financial statements have been audited by PricewaterhouseCoopers
LLP, independent accountants, whose report also appears on this page.
Included in the audit process was a review of the Company's system of internal
controls. PricewaterhouseCoopers LLP annually provides to management and the
Audit Committee a supplemental report which includes recommendations to
improve internal controls or enhance administrative procedures.
William D. Gehl
Chairman of the Board of Directors,
President and Chief Executive Officer
Kenneth P. Hahn
Vice President of Finance, Treasurer
and Chief Financial Officer
Report of Independent Accountants
To the Board of Directors and Shareholders of Gehl Company
In our opinion, the statements appearing on pages 16 through 26 of this report
present fairly, in all material respects, the financial position of Gehl
Company and its subsidiaries at December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Milwaukee, Wisconsin
February 10, 1999
<PAGE>
Management's Discussion and Analysis
Overview
The Company's net income in 1998 was $15.3 million, a 20% increase from $12.8
million earned in 1997. Diluted earnings per share for 1998 were $2.29
compared to $1.95 reported for 1997. Basic earnings per share for 1998 were
$2.39 versus $2.06 reported in 1997. Net sales in 1998 increased 33% to
$262.2 million from $197.1 million in 1997. Construction equipment 1998 net
sales increased 54% to $156.0 million and Agriculture equipment 1998 net sales
increased 11% to $106.2 million. Construction equipment comprised 59% of
Company net sales in 1998 versus 52% in 1997 and 44% in 1996. Agriculture
equipment sales were 41% of Company net sales in 1998, down from 48% in 1997
and 56% in 1996.
Income from operations in 1998 increased 25% to $27.3 million. Construction
equipment accounted for $19.4 million of the operating profit, while
Agriculture equipment contributed the balance of $7.9 million. Interest
expense in 1998 increased $1.7 million to $4.0 million due to the average debt
outstanding during 1998 exceeding 1997 levels primarily as a result of the
acquisition of Mustang in the fourth quarter of 1997 (see below).
On October 2, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Brunel America, Inc. and subsidiaries, including
Mustang Manufacturing Company, Inc. (Mustang), from Brunel Holdings, plc.
Mustang designs, manufactures and distributes skid steer loaders and related
attachments. Gehl acquired the Brunel America, Inc. stock for $26.7 million,
and entered into a five year non-competition agreement with the seller
pursuant to which Gehl paid $1.0 million. The Company borrowed $27.7 million
under its existing credit facility to fund the acquisition. The acquisition
has been accounted for as a purchase transaction and the results of the
Mustang operation have been included in the Company's operating results since
the date of the acquisition. Thus, 1998 was the first full year for which the
results of Mustang have been included in the Company's operating results.
The Company continued to reduce its Agriculture equipment accounts receivable
in 1998, from $41.6 million at December 31, 1997 to $38.0 million at December
31, 1998. Cash flow provided by operating activities in 1998 was $21.4
million following $15.1 million provided by operating activities in 1997.
Cash flow generated in 1998 was used to repay debt outstanding under the
Company's line of credit facility and to fund capital expenditures. The
Company has reduced its debt by $68.2 million, or 70%, during the last six
years, despite borrowing $27.7 million to fund the Mustang acquisition. The
Company's ratio of debt to total capital was 23.9% at December 31, 1998, as
compared with 39.1% at December 31, 1997.
Results of Operations
1998 vs. 1997
Net Sales:
1998 1997 1996 1995 1994
($ millions)
Construction Equipment $156.0 $101.7 $ 70.8 $ 64.4 $ 51.8
Agriculture Equipment 106.2 95.4 88.9 89.1 94.8
------ ------ ------ ------ ------
Total $262.2 $197.1 $159.7 $153.5 $146.6
(% of total)
Construction Equipment 59.5% 51.6% 44.4% 42.0% 35.3%
Agriculture Equipment 40.5% 48.4% 55.6% 58.0% 64.7%
Net sales for 1998 of $262.2 million were 33% greater than the $197.1 million
of net sales in 1997. Construction equipment net sales in 1998 were $156.0
million, 54% higher than sales of $101.7 million in 1997. The increase from
1997 levels was a result of 1998 including a full year of Mustang skid loader
shipments versus only fourth quarter shipments in 1997, and increased
shipments of telescopic handlers due to increased production capacity and
increased demand as a result of the continuation of the favorable economic
trends which prevailed in the United States construction industry.
Agriculture equipment net sales in 1998 increased 11% to $106.2 million from
$95.4 million in 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 disc mower conditioner. In addition, increased skid
loader shipments offset reduced levels of shipments of other forage harvesting
equipment and haytools, and feedmaking equipment.
Of the Company's total net sales reported for 1998, $41.4 million represented
sales made outside the United States compared with $32.9 million in 1997. The
increase is due primarily to the addition of Mustang product sales for the
full year. As the Company has increased its sales 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: Gross profit in 1998 of $71.4 million was 24% higher than 1997's
$57.8 million. Gross profit as a percent of net sales decreased in 1998 to
27.2% from 29.3% in 1997.
Construction equipment gross profit as a percent of net sales for 1998
decreased to 25.7% from 29.6% in 1997. This decrease was due primarily to:
1) Mustang skid loader gross margins being lower than the gross margin on
other Construction equipment sales; 2) competitive pressures restricting price
increases to lower levels than incurred cost increases; and 3) increased
shipments made directly to national account rental operations which are
generally at lower gross margin percentages than sales to dealers.
Agriculture equipment 1998 gross profit as a percent of net sales increased to
29.5% from 29.0% in 1997. This increase was due primarily to: 1) the
favorable impact of a change in the mix of products shipped in 1998 versus
products shipped in 1997; 2) higher production levels in 1998 over 1997
generating increased absorption of factory overhead; and 3) improved
efficiencies realized at the manufacturing plants.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased $8.2 million, or 23%, to $44.1 million in
1998 as compared with $36.0 million in 1997. As a percent of net sales,
however, selling, general and administrative expenses in 1998 decreased to
16.8% from 18.2% in 1997. The increased expenses in 1998 resulted primarily
from costs associated with a full year of Mustang operations versus only the
fourth quarter in 1997, and increased selling and promotional expenses.
Income from Operations:
1998 1997 1996 1995 1994
($ millions)
Construction Equipment $19.4 $16.3 $12.9 $13.2 $ 8.6
Agriculture Equipment 7.9 5.5 2.6 .4 4.4
----- ----- ----- ----- -----
Total $27.3 $21.8 $15.5 $13.6 $13.0
Due primarily to higher net sales volume combined with controlled operating
expense spending, income from operations in 1998 increased 25% from 1997 to
$27.3 million. Construction equipment income from operations increased 19% in
1998 to $19.4 million from $16.3 million in 1997. The impact of increased
Construction equipment sales volume was offset, in part, by reduced gross
margin levels and increased expenditures in selling, general and
administrative costs, which include the impact of a full year of Mustang
operations in 1998. Agriculture equipment income from operations increased 42%
in 1998 to $7.9 million from $5.5 million in 1997. Increased Agriculture
equipment sales volume coupled with an improved gross margin percentage were
the primary factors in generating this increase.
Interest Expense: Interest expense increased $1.7 million, to $4.0 million,
due to the average debt outstanding during 1998 exceeding 1997 levels
primarily as a result of the late 1997 acquisition of Mustang. During the
last six years, annual interest expense has declined $6.1 million, or 60%,
from the peak of $10.1 million in 1992. Reductions in interest-bearing debt
from $97.7 million at the end of 1992 to $29.5 million at December 31, 1998
and lower borrowing rates have resulted in the significant reduction in the
Company's interest expense. The average rate of interest paid by the Company
in 1998, of 8%, was consistent with 1997.
Provision for Income Taxes: The Company's effective income tax rate was 35.5%
for 1998 versus 36.4% for 1997.
Net Income: Net income in 1998 of $15.3 million was 20% higher than 1997's
$12.8 million of net income. Diluted earnings per share were $2.29 in 1998
compared to $1.95 in 1997. Basic earnings per share were $2.39 in 1998 versus
$2.06 in 1997. No dividends were declared in 1998 on the Company's common
stock.
1997 vs. 1996
Net Sales: Net sales for 1997 of $197.1 million were 23% greater than the
$159.7 million of net sales in 1996. Construction equipment net sales in 1997
were $101.7 million, 44% higher than sales of $70.8 million in 1996. The
increase from 1996 levels was a result of the fourth quarter 1997 shipment of
Mustang skid loaders subsequent to the closing of the acquisition of Mustang
and increased demand for telescopic handlers and skid loaders due to the
continuation of the favorable economic trends which prevailed in the United
States construction industry.
Agriculture equipment net sales in 1997 increased 7% to $95.4 million from
$88.9 million in 1996. The increase was a result of increased demand for skid
loaders and manure spreading equipment from 1996 levels. Partially offsetting
this increase was a decrease in haytool equipment sales, primarily the result
of approximately $1.7 million of shipments, during 1996, of products not
available in 1997 due to their previous discontinuance.
Of the Company's total net sales reported in 1997, $32.9 million represented
sales made outside the United States compared to $26.8 million in 1996. The
increase is due primarily to the addition of Mustang product sales.
Gross Profit: Gross profit in 1997 of $57.8 million was 21% higher than
1996's $47.8 million. Gross profit as a percent of net sales decreased in 1997
to 29.3% from 29.9% in 1996 (29.3% excluding $1.0 million of decreased cost of
sales in 1996 resulting from liquidation of LIFO quantities carried at lower
costs prevailing in prior years - See Note 4 of Notes to Consolidated
Financial Statements).
Construction equipment gross profit as a percent of net sales for 1997
decreased to 29.6% from 32.2% in 1996. This decrease was due primarily to:
1) Mustang skid loader gross margins being lower than the gross margin on
other Construction equipment sales; 2) competitive pressures restricting price
increases to lower levels than incurred cost increases; and 3) inefficiencies
incurred late in 1997 in producing the newly redesigned Dynalift line of
telescopic handlers.
Agriculture equipment 1997 gross profit as a percent of net sales increased to
29.0% from 28.1% (26.9% without the favorable LIFO liquidation impact) in
1996. This increase was due primarily to: 1) the favorable impact of a
change in the mix of products shipped in 1997 versus products shipped in 1996;
2) higher production levels in 1997 over 1996 generating increased absorption
of factory overhead; 3) 1996's gross margin being adversely impacted by the
sale of $1.7 million of previously discontinued, low margin products; and 4)
export sales, typically at lower gross margins than domestic sales, comprising
a lower percentage of sales in 1997 than in 1996.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased $3.8 million, or 12%, to $36.0 million in
1997 as compared with $32.2 million in 1996. As a percent of sales, however,
selling, general and administrative expenses in 1997 decreased to 18.2% from
20.2% in 1996. The increased expenses in 1997 resulted primarily from costs
associated with the Mustang operations for the fourth quarter of 1997 and
increased selling expenses.
Income from Operations: Due primarily to higher net sales volume combined
with controlled operating expense spending, income from operations in 1997
increased 41% from 1996 to $21.8 million. Construction equipment income from
operations increased 26% in 1997 to $16.3 million from $12.9 million in 1996.
The impact of increased Construction equipment sales volume was offset, in
part, by reduced gross margin levels and increased investments in research,
development and selling costs. Agriculture equipment income from operations
increased to $5.5 million in 1997 from $2.6 million in 1996. Increased
Agriculture equipment sales volume coupled with an improved gross margin
percentage and lower promotional costs combined to generate this increase.
Interest Expense: Interest expense decreased $1.1 million, or 32%, to $2.3
million. Reductions in interest-bearing debt from $97.7 million at the end of
1992 to $49.7 million at December 31, 1997 and lower borrowing rates have
resulted in the significant reduction in the Company's interest expense. The
average rate of interest paid by the Company in 1997 was 8.0% compared to 8.2%
in 1996.
Provision for Income Taxes: The Company's effective income tax rate was 36.4%
for 1997 versus 23.4% for 1996 when the Company utilized its remaining federal
net operating loss carryforwards.
Net Income: Net income in 1997 of $12.8 million was 33% higher than 1996's
$9.6 million of net income. Diluted earnings per share were $1.95 in 1997
compared to $1.54 in 1996. Basic earnings per share were $2.06 in 1997 versus
$1.56 in 1996. No dividends were declared in 1997 on the Company's common
stock.
Liquidity and Capital Resources
Working Capital: The Company's working capital decreased 5% to $69.7 million
at December 31, 1998 from $73.5 million twelve months earlier. The Company's
current ratio at December 31, 1998 decreased to 2.3 to 1 from 2.7 to 1 at the
same time a year ago. Cash on hand at December 31, 1998 was $887,000 as
compared to $1.2 million a year earlier.
Cash Flow Provided by Operating Activities:
1998 1997 1996 1995 1994
($ thousands)
Cash Flow $21,367 $15,119 $31,795 $9,701 $19,522
In 1998, cash flow provided by operating activities was $21.4 million as
compared to $15.1 million in 1997. Net income before depreciation and
amortization was primarily responsible for the positive cash flow. The 1998
cash flow was used to repay debt and fund property, plant and equipment
additions.
Accounts Receivable: The Company's net accounts receivable decreased $1.4
million during 1998. Agriculture equipment accounts receivable at year-end
1998 decreased $3.6 million from a year earlier, while Construction equipment
accounts receivable increased $2.2 million over the same period.
Finance Contracts Receivable: Finance contracts receivable increased $4.3
million to $15.6 million at December 31, 1998. The combined portfolio of
owned and sold-but-serviced finance contracts receivable was $85.5 million at
December 31, 1998 as compared to $67.6 million at year-end 1997. (See "Sales
of Finance Contracts Receivable" following.)
Capital Expenditures:
1998 1997 1996 1995 1994
($ thousands)
Capital expenditures $3,051 $8,718 $3,837 $2,437 $2,505
Depreciation $3,941 $2,955 $2,438 $2,520 $2,692
The Company expended $3.1 million for property, plant and equipment in 1998.
The majority of the 1998 expenditures were incurred to upgrade and maintain
machinery and equipment, to enhance capability, to improve productivity and to
improve product quality. The 1997 expenditures included approximately $4.4
million spent to expand the Company's two South Dakota manufacturing
facilities and add equipment to increase production levels of skid loaders,
telescopic handlers and pavers. No significant commitments for capital items
were outstanding at December 31, 1998. Approximately $6.1 million in capital
expenditures are planned for 1999, primarily to upgrade and maintain machinery
and equipment. The Company believes its present facilities are sufficient to
provide adequate capacity for its operations in 1999.
Debt and Equity:
December 31, 1998 1997 1996 1995 1994
($ millions)
Total Debt $29.5 $49.7 $19.4 $46.9 $54.9
Shareholders' Equity $94.1 $77.6 $64.8 $55.7 $46.3
% Total Debt to
Total Capitalization 23.9% 39.1% 23.0% 45.7% 54.2%
At December 31, 1998, shareholders' equity had increased $16.5 million to
$94.1 million from $77.6 million a year earlier. By reducing debt $20.2
million, or 41%, during 1998, to $29.5 million, the Company lowered its
capitalization ratio to 23.9% at December 31, 1998.
Borrowing Arrangements (See also Note 6 of Notes to Consolidated Financial
Statements): The Company maintains a $75 million line of credit facility (the
Facility) which expires December 31, 2000, and is subject to a borrowing base
related to the Company's accounts receivable, finance contracts receivable and
inventories. The interest rate paid on loans denominated in U.S. dollars is
2.00% above the London Interbank Offered Rate for one-month deposits (LIBOR).
In Canada, where the Company may borrow up to $5.5 million, the interest rate
is 2.50% above Canadian one-month bankers' acceptance rates (BA Rate). At
December 31, 1998, the Company had unused borrowing capacity of $53.1 million
under the Facility, versus $28.3 million a year earlier. Management believes
the Facility provides sufficient borrowing capacity for the Company to finance
its operations for the foreseeable future.
The Company also has outstanding $8.4 million of 9% industrial development
bonds with a 2010 final maturity; repayments commence in 2005.
Sales of Finance Contracts Receivable: The sale of finance contracts is an
important component of the Company's overall liquidity. The Company has
arrangements with several financial institutions and financial service
companies to sell, with recourse, its finance contracts receivable. The
Company continues to service substantially all contracts whether or not sold.
At December 31, 1998, the Company serviced $85.5 million of such contracts, of
which $69.0 million were owned by third parties. Losses on finance contracts
due to customer nonperformance were $155,000 in 1998 as compared to $91,000 in
1997. As a percentage of outstanding serviced contracts, the loss ratios were
.2% and .1% in 1998 and 1997, respectively.
The Company incurred $1.1 million of costs in selling $55.4 million of its
finance contracts in 1998, as compared to $1.1 million of costs in selling
$37.1 million of such contracts in 1997. The costs arise primarily from the
difference between the weighted average interest rate on the contracts being
sold and the interest rate negotiated with the purchaser of the contracts.
Management believes the Company has sufficient capacity to sell its finance
contracts for the foreseeable future.
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 materially 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. None of the SFAS
No. 132 changes effect the measurement or the recognition of benefit costs.
The appropriate disclosures have been incorporated into the footnotes to the
financial statements for the year ended December 31, 1998. Effective January
1, 1998, the Company adopted SFAS No. 130 "Reporting Comprehensive Income",
the effect of which has been reflected in the Statement of Shareholders'
Equity. SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information", was adopted effective January 1, 1998. The appropriate
footnote disclosures have been incorporated into the footnotes to the
financial statements for the year ended December 31, 1998.
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 December 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 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 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 the 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 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 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.
Market Risk
The Company is exposed to market risks from changes in interest rates as well
as currency and commodities. See further disclosure relating to variable rate
debt under "Liquidity and Capital Resources - Borrowing Arrangements" above.
Interest Rate Risk: The Company's line of credit facility is primarily LIBOR-
based and is subject to interest rate movements. A 10% increase or decrease
in the average cost of the Company's variable rate debt would result in a
change in pre-tax interest expense of approximately $150,000 based upon
borrowings outstanding at December 31, 1998.
Commodity Risk: The Company is exposed to fluctuation in market prices for
commodities, especially steel. Each one of the Company's business segments is
subject to commodity price risk as the prices for raw materials change with
movements in underlying commodity prices. Therefore, the Company has
established various programs to manage the negotiations of commodity prices.
In general, the Company enters into contracts with its vendors to lock in
commodity prices at various times and for various periods in order to limit
near-term exposure to fluctuations in raw material prices.
Currency Risk: The Company has limited exposure to foreign currency exchange
fluctuations. Certain sales are made in Canadian dollars; however, to
minimize this exposure, the Company borrows in Canadian dollars under its line
of credit facility.
Forward-Looking Statements
Certain matters discussed in this Annual Report (particularly in this section
and the Letter to Shareholders) 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 the Year 2000 issue, 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.
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
In Thousands, Except Share Data - December 31, 1998 1997
Assets
Cash $ 887 $ 1,239
Accounts receivable - net 70,806 72,190
Finance contracts receivable - net 9,786 8,210
Inventories 32,093 30,340
Prepaid income taxes 7,138 4,217
Prepaid expenses and other current assets 1,184 1,645
-------- --------
Total current assets 121,894 117,841
-------- --------
Property, plant and equipment - net 34,142 35,082
Finance contracts receivable - net, non-current 5,804 3,031
Intangible assets 16,451 14,816
Other assets 6,256 5,453
-------- --------
Total assets $184,547 $176,223
======== ========
Liabilities and Shareholders' Equity
Current portion of long-term debt obligations $ 597 $ 672
Accounts payable 23,562 22,212
Accrued liabilities 27,993 21,444
-------- --------
Total current liabilities 52,152 44,328
-------- --------
Line of credit facility 19,359 39,357
Long-term debt obligations 9,588 9,689
Deferred income taxes 3,943 3,421
Other long-term liabilities 5,400 1,855
-------- --------
Total long-term liabilities 38,290 54,322
-------- --------
Common stock, $.10 par value, 25,000,000 shares
authorized, 6,438,945 and 6,212,686 shares
outstanding at December 31, 1998 and 1997,
respectively 644 621
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 28,330 26,319
Retained earnings 66,283 51,015
Accumulated other comprehensive loss (1,152) (382)
-------- --------
Total shareholders' equity 94,105 77,573
-------- --------
Total liabilities and shareholders' equity $184,547 $176,223
======== ========
Contingencies (Notes 3 and 12)
The accompanying notes are an integral
part of the financial statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
In Thousands, Except Per Share Data -
Year Ended December 31, 1998 1997 1996
Net sales $262,219 $197,055 $159,662
Cost of goods sold 190,808 139,252 111,902
-------- -------- --------
Gross profit 71,411 57,803 47,760
Selling, general and administrative
expenses 44,133 35,955 32,213
-------- -------- --------
Income from operations 27,278 21,848 15,547
Interest expense (4,026) (2,325) (3,443)
Interest income 1,655 1,429 1,542
Other (expense) income, net (1,235) (892) (1,152)
-------- -------- --------
Income before income taxes 23,672 20,060 12,494
Provision for income taxes 8,404 7,299 2,929
-------- -------- --------
Net income $ 15,268 $ 12,761 $ 9,565
======== ======== ========
Diluted net income per common share $ 2.29 $ 1.95 $ 1.54
======== ======== ========
Basic net income per common share $ 2.39 $ 2.06 $ 1.56
======== ======== ========
The accompanying notes are an
integral part of the financial
statements.
<PAGE>
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
In Thousands Total Compre- Retained Accum- Common Capital
hensive Earnings ulated Stock in
Income Other Excess
Compre- of Par
hensive
Loss
Balance at
December 31, 1995 $55,679 $28,689 $(212) $ 622 $26,580
Comprehensive Income:
Net income 9,565 $9,565 9,565
Minimum pension
liability adjustments,
net of $9 of taxes 19 19 19
------
Comprehensive Income 9,584
======
Exercise of stock
options 104 2 102
Treasury stock purchase/
cancellation (535) (8) (527)
------ ------- ------ ------ ------- -----
Balance at December 31,
1996 64,832 38,254 (193) 616 26,155
Comprehensive Income:
Net income 12,761 12,761 12,761
Minimum pension
liability
adjustments, net
of $108 of taxes (189) (189) (189)
------
Comprehensive Income 12,572
=======
Exercise of stock
options 362 5 357
Purchase of stock
warrant (193) (193)
------ ------- ------- ------- ------- -----
Balance at December 31,
1997 77,573 51,015 (382) 621 26,319
Comprehensive Income:
Net income 15,268 15,268 15,268
Minimum pension
liability
adjustments, net
of $415 of taxes (770) (770) (770)
-------
Comprehensive Income $14,498
=======
Exercise of stock
options/warrant 1,652 23 1,629
Other 382 382
------ ------- ------ ----- -------
Balance at December 31,
1998 $94,105 $66,283 $(1,152) $ 644 $28,330
======= ======= ======== ===== =======
The accompanying notes are an integral part of the financial statements
GEHL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands - Year Ended
December 31, 1998 1997 1996
Cash Flows from Operating Activities
Net income $ 15,268 $ 12,761 $ 9,565
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 3,941 2,955 2,438
Amortization 807 256 138
Loss on sale of equipment 2 13 10
Cost of sales of finance contracts 1,088 1,123 1,208
Deferred income taxes (177) 1,592 306
Proceeds from sales of finance
contracts 54,267 35,962 36,824
Increase (decrease) in cash
due to changes in:
Accounts receivable - net 1,384 1,451 13,946
Finance contracts receivable -
net (59,704) (39,285) (39,248)
Inventories (1,808) (3,816) 4,678
Prepaid expenses and other
current assets 70 (291) (288)
Other assets 377 689 (14)
Accounts payable 1,350 1,165 301
Accrued liabilities 4,502 544 1,931
-------- -------- --------
Net cash provided by
operating activities 21,367 15,119 31,795
-------- -------- --------
Cash Flows from Investing Activities
Property, plant and equipment
additions (3,051) (8,718) (3,837)
Acquisition of business -
net of cash acquired - (27,857) -
(Increase) decrease in unexpended
plant construction fund (42) 20 (10)
Proceeds from sale of equipment 13 215 26
(Increase) decrease in other assets (621) 45 869
Other - (189) 19
-------- -------- --------
Net cash (used for) investing
activities (3,701) (36,484) (2,933)
-------- -------- --------
Cash Flows from Financing Activities
(Repayment of) proceeds from
revolving credit loans (19,998) 18,258 (27,394)
Decrease in other long-term
obligations (176) (292) (97)
Increase in other long-
term liabilities 504 261 2
Proceeds from issuance of common
stock 1,652 362 104
Purchase of stock warrant - (193) -
Treasury stock purchase - - (535)
________ ________ ________
Net cash (used for) provided by
financing activities (18,018) 18,396 (27,920)
________ ________ ________
Net (decrease) increase in cash (352) (2,969) 942
Cash, beginning of year 1,239 4,208 3,266
________ ________ ________
Cash, end of year $ 887 $ 1,239 $ 4,208
======== ======== ========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Notes to Consolidated Financial Statements
Note 1 - Significant Accounting Policies
Consolidation: Gehl Company is engaged in the manufacture and distribution of
equipment and machinery for the construction market, and in the manufacture and
distribution of farm equipment and machinery primarily for the dairy, livestock
and poultry agricultural sector. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries: Hedlund Martin,
Inc.; Gehl Power Products, Inc.; Mustang America, Inc. and subsidiaries
(Mustang); and Gehl International, Inc., a foreign sales corporation. All
significant intercompany transactions and balances are eliminated.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions, in certain circumstances, that affect the reported amounts of
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Ultimate
realization of assets and settlement of liabilities in the future could
differ from those estimates.
Revenue Recognition: Revenue is recorded upon the shipment of products to
dealers and distributors; these dealers and distributors have no right of
return, except as provided by law.
Accounts Receivable: The Company provides financing for its dealers in both
the construction and agricultural markets. The financing agreements provide
for, in certain instances, interest-free periods which generally range from
4 to 12 months.
Finance Contracts Receivable: The Company offers financing for its products
to retail customers and to its dealers. Finance contracts require periodic
installments of principal and interest over periods of up to 60 months.
Unearned interest is recognized over the life of the contracts using the sum
of the digits method. Principal expected to be collected within twelve
months of the balance sheet date is classified as a current asset; the
remainder is classified as a non-current asset.
Inventories: Inventories are valued at the lower of cost or market. Cost is
determined by the last-in, first-out (LIFO) method for substantially all of
the Company's inventories.
Properties and Depreciation: Properties are stated at cost. When properties
are sold or otherwise disposed of, cost and accumulated depreciation are
removed from the respective accounts and any gain or loss is included in
income. The Company provides for depreciation of assets generally using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes. Expenditures which substantially increase value
or extend asset lives are capitalized. Expenditures for maintenance and
repairs are charged against income as incurred.
Debt Issue Costs: Costs incurred in conjunction with incurrence of
indebtedness are capitalized and subsequently amortized over the related
periods of the obligations.
Intangible Assets: The cost in excess of the fair market value of net assets
acquired (goodwill) arising from the acquisition of Mustang is being
amortized on the straight line basis over 30 years. A five year noncompete
agreement with the former owners of Mustang is being amortized on the
straight line basis over the life of the agreement. Accumulated amortization
of intangible assets at December 31, 1998 and 1997 is $937,000 and $167,000,
respectively.
Foreign Currency Transactions: Foreign currency transaction gains and
(losses) are included in the determination of income. Foreign currency
(losses) gains were ($130,000), ($98,000), and $24,000 in 1998, 1997 and
1996, respectively.
Income Taxes: The Company follows the liability method in accounting for
income taxes. The liability method provides that deferred tax assets and
liabilities be recorded based on the difference between the tax bases of
assets and liabilities and their carrying amounts for financial reporting
purposes.
Product Liability Costs: The Company directly assumes all liability for
costs associated with claims up to specified limits in any policy year.
Known incidents involving the Company's products are investigated and
reserves are established for any estimated liability.
Product Warranty Costs: In general, the Company provides warranty on
equipment for a period of up to twelve months or for a specified period
of use after sale or rental by the dealer. Reserves for estimated warranty
costs are established at the time of sale.
Environmental Costs: Environmental expenditures that relate to current
operations are expensed or capitalized as appropriate. Expenditures that
relate to an existing condition caused by past operations, and that do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessments and/or remedial
efforts are probable, and the costs can be reasonably estimated.
Research and Development Costs: Costs for research activities relating to
product development and improvement are charged against income as incurred.
Such costs amounted to approximately $2.8 million, $2.3 million and $2.2
million in 1998, 1997 and 1996, respectively.
Other (Expense) Income: Other (expense) income is comprised primarily of
foreign currency transaction gains (losses), cost of sales of finance
contracts, amortization of debt issue costs, and royalty and license
(expense) income.
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 derivativeinstruments, the
adoption of this statement is not expected to materially 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. None of
SFAS No. 132 changes effect the measurement or the recognition of benefit
costs. The appropriate disclosures have been incorporated into the footnotes
to the financial statements for the year ended December 31, 1998. Effective
January 1, 1998, the Company adopted SFAS No. 130 "Reporting Comprehensive
Income", the effect of which has been reflected in the Statement of
Shareholders' Equity. SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", was adopted effective January 1, 1998.
The appropriate footnote disclosures have been incorporated into the
footnotes to the financial statements for the year ended December 31, 1998.
Reclassifications: Certain amounts in the 1997 financial statements have been
reclassified to conform to the 1998 presentation.
Note 2 - Acquisition of Business
On October 2, 1997, the Company acquired all of the issued and outstanding
shares of capital stock of Mustang for $27.7 million. Mustang designs,
manufactures and distributes skid steer loaders and related attachments.
This acquisition has been accounted for as a purchase and the results of
operations of Mustang have been included in the Company's consolidated
financial statements since the date of the acquisition. The following
unaudited pro-forma consolidated results of operations for the years ended
December 31, 1997 and 1996 are presented as if the acquisition occurred as of
January 1, 1996 (in thousands, except per share data):
Year ended December 31 1997 1996
Net sales $ 240,532 $ 214,124
Net income 12,658 8,906
Diluted net income per share 1.93 1.43
Basic net income per share 2.04 1.45
The unaudited pro-forma financial information is not necessarily indicative
of either the results of operations that would have occurred had the
acquisition been made during the period presented or the future results of
the combined operations.
Note 3 - Accounts Receivable and Finance Contracts Receivable
Accounts receivable and finance contracts receivable were comprised
of the following (in thousands):
December 31, 1998 1997
Accounts receivable $74,360 $75,348
Less allowances for:
doubtful accounts (1,305) (993)
returns and dealer discounts (2,249) (2,165)
------- -------
$70,806 $72,190
======= =======
Finance contracts receivable $17,784 $12,879
Less: unearned interest (1,201) (755)
allowance for doubtful
accounts (993) (883)
_______ _______
15,590 11,241
Less: non-current portion (5,804) (3,031)
_______ _______
Current portion $ 9,786 $ 8,210
======= =======
The finance contracts receivable at December 31, 1998 have a weighted
average interest rate of approximately 6.5%.
The Company has entered into various agreements with third parties to sell
with recourse certain finance contracts receivable. The finance contracts
require periodic installments of principal and interest over periods of
up to 60 months; interest rates are based on market conditions. The Company
has retained the servicing of substantially all of these contracts which
generally have maturities of 24 to 48 months. Amounts to cover potential
losses on these sold receivables are included in the allowance for doubtful
accounts.
The following summarizes the Company's sales of retail finance contracts
receivable during 1998 and 1997 (in thousands):
1998 1997
Value of contracts sold $55,355 $37,085
- net of $4.8 million and
$4.0 million, respectively,
of unearned interest
Cash received on sales of
contracts 54,267 35,962
_______ _______
Cost of sales of finance
contracts $ 1,088 $ 1,123
======== =======
Net receivables outstanding
at December 31 relating
to finance contracts sold $ 71,329 $61,710
The Company retains as collateral a security interest in the equipment
associated with accounts receivable and finance contracts receivable. The
Company also maintains certain levels of dealer recourse deposits as
additional security associated with finance contracts receivable.
Note 4 - Inventories
If all of the Company's inventories had been valued on a current cost basis,
which approximates FIFO value, estimated inventories by major classification
would have been as follows (in thousands):
December 31, 1998 1997
Raw materials and supplies $ 15,656 $ 14,830
Work-in-process 5,863 5,182
Finished machines and parts 29,970 29,578
-------- --------
Total current cost value 51,489 49,590
Adjustment to LIFO basis (19,396) (19,250)
________ ________
$ 32,093 $ 30,340
======== ========
During 1996, inventory quantities were reduced. This reduction resulted in
a liquidation of LIFO inventory quantities carried at lower costs prevailing
in prior years as compared with the cost of 1996 purchases, the effect of
which decreased cost of goods sold by approximately $1 million.
Note 5 - Property, Plant and Equipment - Net
Property, plant and equipment consisted of the following (in thousands):
December 31, 1998 1997
Land $ 1,838 $ 1,838
Buildings 25,781 25,507
Machinery and equipment 38,669 36,665
Autos and trucks 350 393
Office furniture and fixtures 8,995 8,346
_________ _________
75,633 72,749
Less: accumulated depreciation (41,491) (37,667)
_________ _________
Property, plant and equipment - net $ 34,142 $ 35,082
========= =========
Note 6 - Debt Obligations
A summary of the Company's debt obligations, and related current maturities,
is as follows (in thousands):
December 31, 1998 1997
Line of credit facility $19,359 $39,357
9.0% industrial development bonds 8,400 8,400
Other debt obligations 1,785 1,961
_______ _______
29,544 49,718
Less: current portion (597) (672)
_______ _______
Long-term debt obligations $28,947 $49,046
======= =======
The Company maintains a $75 million line of credit facility (the Facility)
which expires December 31, 2000. Interest is paid monthly on outstanding
borrowings under the Facility as follows: borrowings in Canadian
denominated dollars up to a $5.5 million credit line are at 2.5% above
Canadian one-month bankers' acceptance rates; the remainder of the borrowings
are in U.S. dollars and are at 2.0% above the London Interbank Offered Rate
for one-month deposits (LIBOR). Under the Facility, $25 million is tied to
a borrowing base related to the Company's finance contracts receivable and
inventories. The remaining availability is tied to a borrowing base related
to the Company's accounts receivable. Borrowings under the Facility are
secured by finance contracts receivable, inventories and accounts receivable.
At December 31, 1998, the Company had unused borrowing capacity of
approximately $53.1 million under the Facility. The Facility also includes
financial covenants requiring the maintenance of a minimum tangible net
worth level and a maximum debt to equity ratio.
The 9% industrial development bonds are secured by the Company's Lebanon,
Pennsylvania manufacturing facility and require principal repayment in six
equal annual installments of $1.4 million commencing in 2005. The Company
has established a debt reserve fund of approximately $500,000 until the first
mandatory bond redemption period in 2003. The debt reserve fund was
established with remaining funds in the trustee-controlled unexpended plant
construction fund and interest subsequently earned. Financial covenants
related to the industrial development bonds require the maintenance of a
minimum tangible net worth level and a maximum debt to equity ratio.
Annual maturities of debt obligations are as follows (in thousands):
1999 $ 597
2000 19,887
2001 171
2002 67
2003 422
Later years 8,400
________
$29,544
========
Interest paid on total debt obligations was $4.1 million, $2.4 million and
$3.6 million in 1998, 1997 and 1996, respectively.
Note 7 - Accrued Liabilities
Accrued liabilities were comprised of the following (in thousands):
December 31, 1998 1997
Accrued salaries and wages $ 5,516 $ 4,982
Dealer recourse deposits 2,441 2,335
Accrued warranty costs 4,754 3,581
Accrued product liability costs 3,833 3,272
Accrued income taxes 2,934 1,556
Other 8,515 5,718
_______ _______
$27,993 $21,444
======= =======
Note 8 - Income Taxes
The income tax provision recorded for the years ended December 31, 1998, 1997
and 1996 consisted of the following (in thousands):
Year Ended
December 31, Federal State Total
1998 Current $ 8,232 $ 349 $ 8,581
Deferred (177) - (177)
________ ________ ________
Total $ 8,055 $ 349 $ 8,404
======== ======== ========
1997 Current $ 5,552 $ 155 $ 5,707
Deferred 1,592 - 1,592
________ ________ ________
Total $ 7,144 $ 155 $ 7,299
======== ======== ========
1996 Current $ 2,548 $ 75 $ 2,623
Deferred 306 - 306
________ ________ ________
Total $ 2,854 $ 75 $ 2,929
======== ======== ========
A reconciliation between the reported income tax provision and the federal
statutory rate follows (as a percent of pre-tax income):
Year Ended December 31, 1998 1997 1996
Federal statutory rate 35.0% 35.0% 34.0%
Minimum tax credits utilized - - (10.5)
State income taxes, net of
Federal income tax effect 1.0 .5 .5
Other, net (.5) .9 (.6)
_______ _______ _______
35.5% 36.4% 23.4%
======= ======= =======
The Company's temporary differences and carryforwards which give rise to
deferred tax assets and liabilities consisted of the following (in thousands):
December 31, 1998 1997
Accrued expenses and reserves $ 7,422 $5,167
Asset valuation reserves 1,182 705
Operating loss carryforwards 844 1,741
Tax credit carryforwards 522 377
Installment sales (1,890) (2,056)
Property, plant and equipment (2,932) (2,802)
Other, net (1,099) (1,369)
Valuation allowance (854) (967)
______ ______
Net deferred tax asset $ 3,195 $ 796
====== ======
The net asset is included in the consolidated balance sheet in the following
captions (in thousands):
December 31, 1998 1997
Prepaid income taxes $ 7,138 $ 4,217
Deferred income taxes (3,943) (3,421)
-------- --------
$ 3,195 $ 796
======== ========
At December 31, 1998, the Company had alternative minimum tax credit
carryforwards of $265,000 which do not expire, federal net operating loss
carryforwards of $707,000 and state net operating loss carryforwards of
$11.5 million. The carryforwards will be available for the reduction
of future income tax liabilities; a valuation allowance has been recorded
against certain of these carryforwards for which utilization is uncertain.
Cash paid related to income taxes during 1998, 1997 and 1996 was $7.0
million, $5.5 million and $2.6 million, respectively.
NOTE 9 - Employee Retirement Plans
The Company sponsors two qualified defined benefit pension plans for certain
of its employees. The following schedules set forth a reconciliation of the
changes in the plans' benefit obligation and fair value of assets and a
statement of the funded status (in thousands):
1998 1997
Reconciliation of benefit
obligation:
Obligation at beginning of year $ 27,990 $ 24,539
Service cost 525 493
Interest cost 2,037 1,901
Actuarial loss 1,159 2,712
Benefit payments (1,758) (1,655)
-------- --------
$ 29,953 $ 27,990
Reconciliation of fair value
of plan assets:
Fair value of plan assets at
beginning of year $ 30,199 $ 25,278
Actual return on plan asset (1,714) 6,391
Employer contributions 901 401
Benefit and expense payments (1,942) (1,871)
------- -------
$ 27,444 $ 30,199
Funded Status:
Funded status at end of year $ (2,509) $ 2,209
Unrecognized transition asset - (272)
Unrecognized prior service cost 1,247 1,396
Unrecognized loss (gain) 4,747 (71)
-------- --------
Net amount recognized 3,485 3,262
Employer contributions paid
between 9/30 and 12/31 358 -
-------- --------
Net amount recognized at December 31 $ 3,843 $ 3,262
The following table provides the amounts recognized in the statement of
financial position (in thousands):
December 31, 1998 1997
Prepaid benefit cost $ 3,485 $ 3,262
Accrued benefit liability (1,295) -
Intangible asset 29 -
Accumulated other comprehensive loss 1,266 -
------- --------
Net amount recognized 3,485 3,262
Employer contributions paid
between 9/30 and 12/31 358 -
------- --------
Net amount recognized at December 31 $ 3,843 $ 3,262
The following table provides disclosure of the net periodic benefit cost
(in thousands):
Year Ended December 31, 1998 1997 1996
Service cost $ 525 $ 493 $ 482
Interest cost 2,037 1,901 1,809
Expected return on plan assets (2,244) (2,098) (2,038)
Amortization of transition asset (272) (436) (436)
Amortization of prior service cost 149 149 149
Amortization of net loss 126 20 20
------- ------- -------
Net periodic benefit cost $ 321 $ 29 $ (14)
The assumptions used in the measurement of the Company's benefit obligation
are shown in the following table:
Weighted-average assumptions as of September 30:
Discount rate 7.25% 7.50%
Expected return on plan assets 9.00% 9.00%
Rate of compensation increase 4.00% 4.00%
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the plan having accumulated benefit obligations in
excess of plan assets were $15.7 million, $13.9 million and $13.2 million,
respectively, as of December 31, 1998.
The measurement date used for each of the actuarial calculations was
September 30. Plan assets consist principally of common stocks and fixed
income investments. Funding for the plans equals or exceeds the minimum
requirements of the Employee Retirement Income Security Act of 1974.
In addition, the Company maintains an unfunded supplemental retirement
benefit plan for certain management employees. The accumulated benefit
obligation for this plan was $1.5 million and $1.3 million at December 31,
1998 and 1997, respectively, using a discount rate of 7.25% in 1998 and 8%
in 1997.
The Company maintains a savings and profit sharing plan. In 1998 and 1997,
the Company matched 50% of non-bargaining unit employee contributions to
the plan not to exceed 6% of the employees annual compensation. In 1996,
the matching percentage was 25%. Vesting of Company contributions occur at
the rate of 20% per year. Contributions approximated $577,000, $436,000
and $155,000 in 1998, 1997 and 1996, respectively.
The Company maintains a defined contribution plan that covers certain
employees not covered by a defined benefit plan. The Company contributes
various percentages of eligible employee compensation (as defined therein);
the plan does not allow employee contributions. The Company contributed
approximately $329,000, $287,000 and $252,000 in connection with this plan
in 1998, 1997 and 1996, respectively.
The Company provides postretirement benefits to certain retirees in two
areas: a $2,500 life insurance policy for retired office employees and
subsidized health insurance benefits for early retirees prior to their
attaining age 65. The number of retirees associated with postretirement
benefit costs is approximately 171.
The following schedules set forth a reconciliation of the changes in the
plan's benefit obligation and funded status (in thousands):
December 31, 1998 1997
Reconciliation of benefit
obligation:
Obligation at beginning of year $ 1,407 $ 1,564
Service cost 40 45
Interest cost 110 100
Actuarial loss 175 (71)
Benefit payments (225) (231)
-------- --------
Obligation $ 1,507 $ 1,407
Funded Status:
Funded status at end of year $(1,507) $(1,407)
Unrecognized transition obligation 316 338
Unrecognized loss 710 573
-------- --------
Net amount recognized $ (481) $ (496)
======== ========
The following table provides disclosure of the net periodic benefit cost
(in thousands):
Year Ended December 31, 1998 1997 1996
Service cost $ 40 $ 45 $ 48
Interest cost 110 100 102
Amortization of transition
obligation 23 23 23
Amortization of net loss 37 23 36
------- ------- -------
Net periodic benefit cost $ 210 $ 191 $ 209
======= ======= =======
The assumed health care cost rate trend used in measuring the accumulated
postretirement benefit obligation at December 31, 1998 was 8% decreasing to
5% over four years and at December 31, 1997 was 9% decreasing to 6% over
four years. The discount rate used in determining the accumulated
postretirement obligation was 7.25% in 1998 and 7.5% in 1997 and 1996.
Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A 1% change in assumed health care cost
trend rates would have the following effects:
1% Increase 1% Decrease
Effect on total of service and interest
cost components of net periodic
postretirement health care benefit cost $ 29,919 $ (25,645)
Effect on the health care component
of the accumulated postretirement
benefit obligation $ 189,730 $ (167,479)
Note 10 - Shareholders' Equity
During April 1996, the 1995 Stock Option Plan was adopted by the Company
as approved by the shareholders (the "1995 Plan"), which authorized the
granting of options for up to 600,000 shares of the Company's common stock.
In addition, through its expiration in December 1996, the Company was
authorized to grant options for up to 530,000 shares of the Company's common
stock under the 1987 Stock Option Plan. The 1995 Plan provides that options
be granted at an exercise price not less than fair market value on the date
the options are granted and that the options generally vest ratably over a
period not exceeding three years after the grant date. The option period
shall not be more than ten years after the grant date.
Following is a summary of activity in the stock option plans for 1996, 1997
and 1998:
Shares Subject Weighted
to Option Average
Option
Price
Outstanding, January 1, 1996 355,672 $ 7.06
Granted 323,650 8.60
Exercised (32,082) 5.79
Cancelled (53,751) 8.82
--------- --------
Outstanding, December 31, 1996 593,489 $ 7.81
Granted 96,000 19.59
Exercised (41,084) 6.70
Cancelled (5,000) 14.88
--------- --------
Outstanding, December 31, 1997 643,405 $ 9.58
Granted 117,750 14.54
Exercised (92,359) 7.67
Cancelled (13,002) 8.61
--------- --------
Outstanding, December 31, 1998 655,794 $ 10.76
========= ========
Exercisable, December 31, 1998 431,746 $ 8.57
========= ========
The exercise price for options outstanding at December 31, 1998 range from
$3.00 to $21.25 per share. The weighted-average remaining contractual life
of these options approximates seven years.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost
has been recognized for options granted under the stock option plans. Had
compensation cost been determined based on the fair value at the grant date
for awards in 1996, 1997 and 1998 consistent with the provisions of SFAS No.
123, the Company's pro-forma net income and earnings per share would have
been as presented below (in thousands, except per share data):
For the year ended December 31, 1998 1997 1996
Net income $14,831 $12,414 $9,306
Diluted net income per share 2.23 1.90 1.49
Basic net income per share 2.33 2.00 1.51
The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1998, 1997 and 1996:
For the year ended December 31, 1998 1997 1996
Expected stock price volatility 19.7% 19.1% 20.9%
Risk-free interest rate 4.8% 6.1% 6.4%
Expected life of options - years 7 7 7
The weighted-average grant-date fair value of options granted during 1998,
1997 and 1996 was $5.13, $7.60 and $3.40, respectively.
On May 28, 1997, the Board of Directors of the Company adopted a Shareholder
Rights Plan and declared a rights dividend of one preferred share purchase
right (Right) for each share of common stock outstanding on June 16, 1997,
and provided that one Right would be issued with each share of common stock
thereafter issued. The Shareholder Rights Plan provides that in the event a
person or group acquires or seeks to acquire 15% or more of the outstanding
common stock of the Company, the Rights, subject to certain limitations,
will become exercisable. Each Right once exercisable initially entitles the
holder thereof (other than the acquiring person whose rights are cancelled)
to purchase from the Company one one-hundredth of a share of Series A
preferred stock at an initial exercise price of $55 per one one-hundredth
of a share (subject to adjustment), or, upon the occurrence of certain
events, common stock of the Company or common stock of an "acquiring company"
having a market value equivalent to two times the exercise price. Subject to
certain conditions, the Rights are redeemable by the Board of Directors for
$.01 per Right and are exchangeable for shares of common stock. The Rights
have no voting power and expire on May 28, 2007.
During 1997, the Company purchased a previously issued warrant to purchase
50,000 shares of the Company's stock for $193,000. During 1998, warrants to
purchase 130,000 shares of the Company's common stock for $7 per share were
exercised.
Note 11 - 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 follows (in thousands):
Year Ended December 31, 1998 1997 1996
Basic shares 6,376 6,194 6,147
Effect of warrants and options 286 348 80
----- ----- -----
Diluted shares 6,662 6,542 6,227
Note 12 - Contingencies
The Company is involved in litigation of which the ultimate outcome and
liability to the Company, if any, is not presently determinable. Management
believes, based in part on the advice of counsel, that final disposition of
such litigation will not have a material impact on the Company's results of
operations or financial position.
Note 13 - Segment Information
The Company adopted SFAS 131, "Disclosure about Segments of an Enterprise and
Related Information" in 1998. The Company has two segments, Construction
equipment and Agricultural equipment, as the long-term financial performance
of these segments is affected by separate economic conditions and cycles.
Segment net sales and income from operations tend to be aligned with the
distribution networks of the Company, and correlate with the manner in which
the Company evaluates performance.
Construction equipment is manufactured and distributed for customers in the
construction market. Products include a diversified offering of skid
loaders, telescopic handlers and paving equipment. As of December 31, 1998,
46% of the Company's accounts receivable were from customers in the
construction market.
Agricultural equipment is manufactured and distributed for customers in the
dairy, livestock and poultry agricultural sectors. The products include
equipment for haymaking, forage harvesting, feed making, manure handling and
materials handling. As of December 31, 1998, 54% of the Company's accounts
receivable were from customers in the agricultural sector.
Unallocated assets are cash, deferred income taxes and other nonallocable
assets.
Segments of business are presented below (in thousands):
Year Ended December 31, 1998 1997 1996
Net Sales
Construction $156,008 $101,635 $ 70,826
Agriculture 106,211 95,420 88,836
-------- -------- --------
Consolidated $262,219 $197,055 $159,662
======== ======== ========
Income from
Operations
Construction $ 19,384 16,277 $ 12,967
Agriculture 7,894 5,571 2,580
-------- -------- --------
Consolidated $ 27,278 $ 21,848 $ 15,547
======== ======== ========
Assets (Year-end)
Construction $ 92,472 $ 86,647 $ 27,994
Agriculture 77,766 78,281 76,857
Unallocated 14,309 11,295 15,274
-------- -------- --------
Consolidated $184,547 $176,223 $120,125
======== ======== ========
Depreciation/
Amortization
Construction $ 2,687 $ 1,225 $ 760
Agriculture 2,033 1,957 1,758
Unallocated 28 29 58
-------- -------- --------
Consolidated $ 4,748 $ 3,211 $ 2,576
======== ======== ========
Capital Expenditures
Construction $ 1,827 $ 5,265 $ 922
Agriculture 1,224 3,453 2,915
________ ________ ________
Consolidated $ 3,051 $ 8,718 $ 3,837
======== ======== ========
Note 14 - Quarterly Financial Data (unaudited)
In Thousands,
Except Per Share First Second Third Fourth
Data Quarter Quarter Quarter Quarter Total
1998
Net sales $61,288 $75,231 $63,452 $62,248 $262,219
Gross profit 15,851 21,175 17,834 16,551 71,411
Net income 2,664 5,210 4,058 3,336 15,268
Diluted net income
per common share .40 .78 .61 .50 2.29
Basic net income per .42 .81 .63 .52 2.39
common share (1)
1997
Net sales $43,675 $51,592 $48,140 $53,648 $197,055
Gross profit 12,983 15,547 14,807 14,466 57,803
Net income 2,529 3,885 3,453 2,894 12,761
Diluted net income
per common share (1) .39 .60 .52 .43 1.95
Basic net income per
common share (1) .41 .63 .56 .47 2.06
<PAGE>
1 Due to the use of the weighted average shares outstanding each quarter for
computing net income per share, the sum of the quarterly per share amounts
does not equal the per share amount for the year.
Five Year Financial Summary
Dollars in 1998 1997 1996 1995 1994
Thousands, Except
Per Share Data
Summary of
Operations
Net sales $262,219 $197,055 $159,662 $153,452 $146,620
Gross profit 71,411 57,803 47,760 44,614 43,274
Income from operations 27,278 21,848 15,547 13,613 12,961
Interest expense 4,026 2,325 3,443 5,733 6,711
Income before income
taxes 23,672 20,060 12,494 9,163 5,035
Net income 15,268 12,761 9,565 9,013 5,035
Financial Position at
December 31
Current assets $121,894 $117,841 $89,748 $106,563 $102,621
Current liabilities 52,152 44,328 32,136 29,561 28,710
Working capital 69,742 73,513 57,612 77,002 73,911
Accounts receivable 70,806 72,190 55,141 69,087 72,393
Finance contracts
receivable 15,590 11,241 8,161 7,716 5,647
Inventories 32,093 30,340 18,642 23,320 21,452
Property, plant and
equipment, net 34,142 35,082 21,678 20,315 20,433
Total assets 184,547 176,223 120,125 134,923 131,027
Long-term debt 28,947 49,046 19,194 46,666 54,700
Total debt 29,544 49,718 19,372 46,863 54,880
Shareholders' equity 94,105 77,573 64,832 55,679 46,283
Common Share Summary
Diluted net income per
share $2.29 $1.95 $1.54 $1.44 $.82
Basic net income per
share 2.39 2.06 1.56 1.46 .82
Dividends per share -- -- -- -- --
Book value per share 14.61 12.49 10.53 8.96 7.50
Shares outstanding at
year-end 6,438,945 6,212,686 6,158,720 6,216,765 6,169,523
Other Financial
Statistics
Net cash provided by
operating activities $21,367 $15,119 $31,795 $9,701 $19,522
Capital expenditures 3,051 8,718 3,837 2,437 2,505
Depreciation 3,941 2,955 2,438 2,520 2,692
Current ratio 2.3 to 1 2.7 to 1 2.8 to 1 3.6 to 1 3.6 to 1
Percent total debt to
total capitalization 23.9% 39.1% 23.0% 45.7% 54.2%
Net income as a percent
of net sales 5.8% 6.5% 6.0% 5.9% 3.4%
After-tax return on
shareholders' equity 17.8% 17.9% 15.9% 17.7% 11.6%
Employees at year-end 1,127 1,192 832 842 928
Common stock price
range 22-1/2-11 24-15/16-9-3/8 12-6-7/8 9-5/8-6-1/4 8-1/2-5-3/8
Investor Information
Stock Prices and Dividends
Price Range Dividends
1998 1997 1998 1997
Stock Prices
and Dividends
First Quarter $22- 1/2 - 18-5/8 $11- 5/8 - 9-3/8 $ -- $ --
Second Quarter 22 - 16 17- 7/8 - 10 -- --
Third Quarter 21- 1/2 - 11 24- 5/8 - 16-5/8 -- --
Fourth Quarter 17- 1/2 - 12-3/4 24-15/16 - 19-3/8 -- --
----------------- ------------------ ---------------
Year $22- 1/2 - 11 $24-15/16 - 9-3/8 $ -- $ --
Exhibit 21
The following are subsidiaries of Gehl Company
Gehl Power Products, Inc. South Dakota
Hedlund Martin, Inc. Pennsylvania
Mustang America, Inc. Delaware
Mustang Manufacturing Company, Inc. Minnesota
Mustang Finance, Inc. Minnesota
Gehl International, Inc. Barbados
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements listed below of Gehl Company of our report dated
February 10, 1999 appearing in the 1998 Annual Report to Shareholders which
is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule,
which appears in this Form 10-K.
1. Registration Statement on Form S-8 (Registration No. 33-38392)
2. Registration Statement on Form S-8 (Registration No. 33-39150)
3. Registration Statement on Form S-8 (Registration No. 333-02195)
4. Registration Statement on Form S-8 (Registration No. 333-04017)
5. Registration Statement on Form S-3 (Registration No. 333-9173)
6. Registration Statement on Form S-3 (Registration No. 333-51723)
PRICEWATERHOUSECOOPERS LLP
Milwaukee, Wisconsin
March 8, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Gehl
Company's consolidated balance sheet at December 31, 1998 and consolidated
statements of income for the twelve month period ended December 31, 1998 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<CASH> 887
<SECURITIES> 0
<RECEIVABLES> 90943
<ALLOWANCES> 4547
<INVENTORY> 32093
<CURRENT-ASSETS> 121894
<PP&E> 75633
<DEPRECIATION> 41491
<TOTAL-ASSETS> 184547
<CURRENT-LIABILITIES> 52152
<BONDS> 28947<F1>
<COMMON> 644
0
0
<OTHER-SE> 93461
<TOTAL-LIABILITY-AND-EQUITY> 184547
<SALES> 262219
<TOTAL-REVENUES> 262219
<CGS> 190808
<TOTAL-COSTS> 190808
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4026
<INCOME-PRETAX> 23672
<INCOME-TAX> 8404
<INCOME-CONTINUING> 15268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15268
<EPS-PRIMARY> 2.39<F2>
<EPS-DILUTED> 2.29
<FN>
<F1>Includes all non-current portion of debt obligations.
<F2>The EPS under the "EPS-Primary" tag represents Basic
Earnings Per Share.
</FN>
</TABLE>
