SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
___ 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: 0-25360
AG-CHEM EQUIPMENT CO., INC.
(Exact Name of Registrant as Specified in Its Charter)
Minnesota 41-0872842
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5720 Smetana Drive
Minnetonka, Minnesota 55343-9688
(Address of Principal Executive Offices)
(612)933-9006
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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 of
the past 90 days.
__X__ Yes _____ No
As of April 30, 1996, there were outstanding, 9,695,768 shares of the
issuers' Common Stock, $.01 par value per share.
TABLE OF CONTENTS
Page
PART I
ITEM 1. FINANCIAL STATEMENTS.......................................... 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION................. 8
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................. 11
SIGNATURES............................................................. S-1
EXHIBITS............................................................... E-1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars in Thousands)
(UNAUDITED)
March 31, September 30,
ASSETS 1996 1995
------ -------- --------
CURRENT ASSETS:
Accounts receivable, less allowance for
doubtful accounts of $371 and $334, respectively $ 28,562 $ 21,973
Notes receivable, current portion, and
accrued interest receivable 1,793 3,787
Notes receivable and accrued interest receivable
from tax increment financing, current portion 221 132
Inventories (note 2) 104,379 75,836
Deferred income tax benefits 4,301 3,371
Prepaid expenses and other current assets 394 431
-------- --------
Total current assets 139,650 105,530
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF $20,111 AND $17,808 RESPECTIVELY 46,590 38,322
OTHER ASSETS:
Notes receivable, long-term portion 3,397 4,807
Note receivable from tax increment financing,
long-term portion 353 438
Bond funds held by trustees 745 745
Intangible and other assets, net of accumulated
amortization of $2,601 and $2,222 respectively 4,655 1,847
-------- --------
Total other assets 9,150 7,837
-------- --------
Total assets $195,390 $151,689
======== ========
See accompanying condensed notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEETS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars in Thousands)
(UNAUDITED)
March 31, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
- - ------------------------------------ --------- ---------
CURRENT LIABILITIES:
Current installments of long-term debt $ 17,006 $ 288
Note payable to bank -- 5,000
Accounts payable 25,025 18,803
Checks outstanding in excess of cash balances 1,943 2,623
Customer prepayments 9,182 4,321
Accrued expenses (note 3) 14,652 15,753
Deferred income 1,035 272
Accrued income taxes 4,406 2,222
--------- ---------
Total current liabilities 73,249 49,282
LONG-TERM DEBT, LESS CURRENT INSTALLMENTS 67,894 57,105
--------- ---------
Total liabilities 141,143 106,387
MINORITY INTEREST IN SOIL TEQ, INC. (NOTE 6) -- 429
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value Authorized,
40,000,000 shares; issued and
outstanding, 9,695,768 and
9,595,768 shares, respectively (note 5) 97 96
Additional paid-in capital 2,699 --
Retained earnings 51,465 44,764
Foreign currency translation adjustment (14) 13
--------- ---------
Total stockholders' equity 54,247 44,873
--------- ---------
Total liabilities and stockholders' equity $ 195,390 $ 151,689
========= =========
See accompanying condensed notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF EARNINGS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars in Thousands Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 101,385 $ 95,485 $ 146,336 $ 127,050
Cost of sales 72,876 68,599 104,201 89,944
----------- ----------- ----------- -----------
Gross profit 28,509 26,886 42,135 37,106
Selling, general and administrative expenses 17,323 14,245 29,685 23,915
----------- ----------- ----------- -----------
Operating income 11,186 12,641 12,450 13,191
Other income (expense):
Other income 508 482 1,038 833
Interest expense (1,339) (539) (2,574) (1,095)
----------- ----------- ----------- -----------
Earnings before income taxes 10,355 12,584 10,914 12,929
Income tax expense 4,000 4,810 4,200 4,925
----------- ----------- ----------- -----------
Net earnings $ 6,355 $ 7,774 $ 6,714 $ 8,004
=========== =========== =========== ===========
Earnings per share $ 0.66 $ 0.81 $ 0.70 $ 0.83
=========== =========== =========== ===========
Weighted average common shares outstanding 9,695,768 9,597,412 9,647,966 9,612,272
=========== =========== =========== ===========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars In Thousands)
(UNAUDITED)
Six Months ended March 31,
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 6,714 $ 8,004
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
USED IN OPERATING ACTIVITIES:
Depreciation and amortization 2,446 2,011
Gain on sale of assets (13) --
Minority interest in net earnings of Soil Teq, Inc. -- 4
Increase in deferred income tax benefits (930) (484)
Changes in operating assets and liabilities:
Accounts receivable (6,589) (18,519)
Operating notes receivable 3,404 495
Inventories (28,543) (5,973)
Other current assets 37 (394)
Accounts payable 6,222 2,004
Customer prepayments and deferred income 5,624 9,758
Accrued expenses (1,101) (2,990)
Income taxes 2,184 4,397
-------- --------
Cash used in operating activities (10,545) (4,335)
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment of note and interest receivable
from tax increment financing (4) 89
Purchase of property, plant and equipment (8,216) (3,489)
Decrease (Increase) in rental equipment (2,022) 624
Proceeds from sale of equipment 13 11
Increase in other assets (546) (84)
Capital contributed by Soil Teq's minority owner -- 240
-------- --------
Cash used in investing activities (10,775) (3,639)
(continued on next page)
See accompanying condensed notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars In Thousands)
(UNAUDITED)
Six months ended March 31,
1996 1995
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in checks outstanding in excess
of cash balances (680) 1,979
Proceeds from long-term borrowings 33,462 27,830
Repayments of long-term borrowings (11,435) (30,067)
Purchase of common stock -- (438)
-------- --------
Cash provided by (used in) financing activities 21,347 (696)
Foreign currency translation adjustment (27) --
-------- --------
Net increase in cash -- --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ -- $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,567 $ 670
Income taxes $ 3,826 $ 879
Supplemental disclosure of non-cash investing and financing activities:
On December 27, 1995, the Company acquired the minority interest in Soil Teq
Inc. for 100,000 shares of the Company's common stock valued at $2,700 and a
$480 promissory note.
See accompanying condensed notes to consolidated financial statements.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars In Thousands)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions in Rule 10-01 of Regulation S-X.
Accordingly, they do not include all of the footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. For further
information, refer to the consolidated financial statements and footnotes
thereto for the year ended September 30, 1995 included in the Company's annual
report on Form 10-K. Results of the interim periods are not necessarily
indicative of the results for an entire year.
(2) INVENTORIES
Inventories consist of the following:
March 31, September 30,
1996 1995
--------- ---------
Finished goods $ 50,927 $ 39,546
Resale parts 20,209 13,996
Work in process 9,020 6,661
Raw materials 27,058 19,487
--------- ---------
Total 107,214 79,690
Less LIFO reserve (10,169) (9,442)
--------- ---------
Total 97,045 70,248
Used equipment 7,334 5,588
--------- ---------
Total inventories $ 104,379 $ 75,836
========= =========
If the first in, first out (FIFO) method utilizing current costs had
been used for inventories valued using the LIFO method, inventories would have
been higher by $10,169 at March 31, 1996 and $9,442 at September 30, 1995.
(3) ACCRUED EXPENSES
Accrued expenses consist of the following:
March 31, September 30,
1996 1995
------- -------
Compensation $ 6,822 $ 8,812
Warranty 977 1,189
Taxes other than income 1,752 1,847
Health insurance 1,832 1,205
Interest 1,335 901
Other 1,934 1,799
------- -------
Total $14,652 $15,753
======= =======
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Ag-Chem Equipment Co., Inc. and Subsidiaries
(Dollars In thousands)
(UNAUDITED)
(4) NOTES PAYABLE
On October 10, 1995, the Company entered into a $15 million note
agreement payable in seven annual payments of $2,143 commencing in April 1999,
with interest payable semiannually at 7.25%. The agreement contains certain
restrictive covenants as to additional borrowings and requires the Company to
maintain certain financial ratios.
In January 1996, the Company refinanced its line of credit agreement
with three banks. The new line of credit agreements allow total borrowings of
$45 million of which, $20 million is due in June 1996, and $25 million is
payable in January 1999. Interest is payable quarterly at a rate which
approximates the banks' reference rate. The agreements contain certain covenants
which, among other things, restrict capital expenditures, cash dividends,
mergers and acquisitions and require the Company to maintain certain financial
ratios. The Company is required to pay a commitment fee of 0.125% to 0.375% on
the unused portion of the lines of credit.
(5) STOCKHOLDERS' EQUITY
In May 1995, the Board of Directors declared a four-for-one stock split
effected in the form of a stock dividend. Par value remained at $.01 per share.
All share and per share amounts have been restated to retroactively reflect the
stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (DOLLARS IN THOUSANDS)
RESULTS OF OPERATIONS - THREE-MONTH PERIOD ENDED MARCH 31, 1996 COMPARED TO
THREE-MONTH PERIOD ENDED MARCH 31, 1995
Consolidated net sales increased by $5,900 or 6.2 percent to $101,385
in the three-month period ended March 31, 1996 from the three-month period ended
March 31, 1995. The increase was primarily due to a $11,472 increase in RoGator
sales due to increased unit shipments. This increase was partially offset by a
$7,177 decrease in sales of pre-emergence fertilization equipment due to
decreased demand. Several factors have delayed customer purchases. For example,
the shipment of grain from local elevators (often our customers) was inhibited
this winter by rail car shortages. As a result, much of such elevators' capital
was tied up in stored grain. Also, the weather last fall and this spring has
been conducive to easy application, taking away some of the pressure for such
elevators and other users to buy more equipment. The Company believes such
conditions will pass and, the continued strength of the agricultural market will
result in improved sales of pre-emergence fertilization equipment such as the
Company's. All other sales were up $1,605 or 6.2 percent during the three-month
period ended March 31, 1996 compared to the prior year period.
Consolidated gross profit for the three-month period ended March 31,
1996 increased $1,623 or 6.0 percent. Consolidated gross profit, as a percent of
sales, was 28.1 percent and 28.2 percent for the three-month periods ended March
31, 1996 and 1995, respectively.
Consolidated selling, general and administrative ("S,G&A") expenses
increased $3,078 or 21.6 percent in the three-month period ended March 31, 1996
as compared to the prior-year period. S,G&A expenses, as a percent of sales,
were 17.1 percent and 14.9 percent in the three-month periods ended March 31,
1996 and 1995, respectively. This increase is largely attributable to an 18.4
percent or $1,514 increase in compensation, employee benefits and
employee-related expenses resulting from an increase in the number of employees
to support new product development and the Company's sales growth. All other
S,G&A expenses increased by 25.9 percent or $1,564 as a result of expected
growth.
As a result of the above, operating income was $11,186 and $12,641 for
the three-month periods ended March 31, 1996 and 1995, respectively.
Other income increased 5.4 percent to $508 in the current three-month
period as compared to the prior three-month period.
Interest expense increased $800 in the three-month period ended March
31, 1996 compared to the prior-year period due to increased borrowings to
support working capital needs and higher reference interest rates.
The effective tax rates in the three-month periods ended March 31, 1996
and 1995 were 38.6 percent and 38.2 percent, respectively.
As a result of the above, net earnings were $6,355 and $7,774 for the
three-month periods ended March 31, 1996 and 1995, respectively, and earnings
per share were $0.66 and $0.81 for such periods, respectively.
RESULTS OF OPERATIONS - SIX-MONTH PERIOD ENDED MARCH 31, 1996 COMPARED TO
SIX-MONTH PERIOD ENDED MARCH 31, 1995
Consolidated net sales increased by $19,286 or 15.2 percent to $146,336
in the six-month period ended March 31, 1996 from the six-month period ended
March 31, 1995. The increase was primarily due to a $22,180 increase in RoGator
sales due to increased unit shipments, offset by a $5,700 decrease in sales of
pre-emergence fertilization equipment due to the decreased demand discussed
above for the three-month period ended March 31, 1996. All other sales were up
$2,806 or 7.6 percent during the three-month period ended March 31, 1996
compared to the same prior year period.
Consolidated gross profit for the six-month period ended March 31, 1996
increased $5,029 or 13.6 percent. Consolidated gross profit as a percent of
sales was 28.8 and 29.2 percent for the six-month periods ended March 31, 1996
and 1995, respectively.
Consolidated selling, general and administrative ("S,G&A") expenses
increased $5,770 or 24.1 percent in the six-month period ended March 31, 1996 as
compared to the prior-year period. This increase is largely attributable to an
23.3 percent or $3,176 increase in compensation, employee benefits and
employee-related expenses resulting from an increase in the number of employees
to support new product development and the Company's sales growth. All other
S,G&A expenses increased by 25.2 percent or $2,594 as a result of expected
growth. S,G&A expenses as a percent of sales were 20.3 and 18.8 percent in the
six-month periods ended March 31, 1996 and 1995, respectively.
As a result of the above, operating income was $12,450 and $13,191 in
the six-month periods ended March 31, 1996 and 1995, respectively.
Other income increased 24.6 percent to $1,038 for the current six-month
period as compared to the prior six-month period which is largely related to
increased sales.
Interest expense increased $1,479 in the six-month period ended March
31, 1996 due to increased borrowings to support working capital needs and higher
reference interest rates.
The effective tax rates in the six-month periods ended March 31, 1996
and 1995 were 38.5 and 38.1 percent, respectively.
As a result of the above, net earnings were $6,714 and $8,004 for the
six-month periods ended March 31, 1996 and 1995, respectively. Earnings per
share were $0.70 and $0.83 for the six-month periods ended March 31, 1996 and
1995, respectively.
LIQUIDITY AND FINANCIAL POSITION - SIX MONTH PERIOD ENDED MARCH 31, 1996
COMPARED TO SIX-MONTH PERIOD ENDED MARCH 31, 1995
Net cash used in operating activities increased to $10,545 in the
six-month period ended March 31, 1996, compared to cash used in operating
activities of $4,335 in the six-month period ended March 31, 1995. The major
reason for this change was an increase in cash used by operating assets and
liabilities to $18,762 from $11,222 in the six-month period ended March 31, 1996
and 1995, respectively. Inventories, net of increased accounts payable balances,
used cash of $22,321 compared to $3,969 during the six months ended March 31,
1996 and 1995, respectively, as inventories increased to $104,379 at March 31,
1996 as compared to $75,836 at September 30, 1995. The Company believed that
higher inventory levels were necessary in order to meet growing product demand
based on third quarter sales and existing backlog, however second quarter sales
were less than expected due to early season weather conditions and customer
liquidity. The Company has adjusted its production level for the remainder of
fiscal 1996 to reduce inventory levels. The Company normally experiences the
highest sales levels in the second and third quarters of the fiscal year. In
addition, accounts receivable increased $6,589 during the six months ended March
31, 1996, compared to $18,518 during the six months ended March 31, 1995. With
40 percent of net sales normally occurring during the quarter ending March 31,
accounts receivable balances traditionally peak during this quarter. This year's
increase was substantially smaller due to shorter collection periods and payment
terms. The increase in accounts receivable was partially offset by an increase
in customer prepayments. Customer prepayments increased $5,624 in the six months
ended March 31, 1996 compared to $9,758 in the six months ended March 31, 1995.
This decrease is the result of earlier shipments and increased product
availability.
Cash used in investing activities in the six-month period ended March
31, 1996 was $10,972 compared to $3,639 in the prior-year period. This increased
use of cash was primarily due to increased investments in property, plant and
equipment to support the Company's growth. In the six-month period ended March
31, 1996, property, plant and equipment increased by $8,216 compared to an
increase of $3,489 in the six-month period ended March 31, 1995.
Cash provided by financing activities was $21,347 in the six-month
period ended March 31, 1996, compared to cash used in financing activities of
$696 in the prior period. The increased cash provided by financing activities
was primarily the result of the net proceeds from long-term borrowings of
$22,027 during the six-month period ended March 31, 1996, compared to the net
repayments of long term debt of $2,237 during the six-month period ended March
31, 1995. This decrease in net repayments is primarily due to increased working
capital requirements due to inventory and revenue growth.
Working capital at March 31, 1996 was $67,019. The Company periodically receives
prepayments from customers to secure either more favorable pricing or a desired
delivery date. If the Company did not receive customer prepayments, it believes
its line of credit provides sufficient liquidity to meet working capital
requirements. Cash flow from operations, supplemented by $3,150 of unused credit
line available at March 31, 1996 and a planned increase in the line of credit
which is currently being negotiated as part of the Company's renewal of its
annual line of credit agreement, are expected to be adequate to meet working
capital requirements for the foreseeable future.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit No. Title
10.1 First Amendment to Long Term Amended and Restated
Revolving Credit Agreement
10.2 First Amendment to Short Term Revolving Credit Agreement
11.1 Statement Regarding Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report was filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AG-CHEM EQUIPMENT CO., INC.
Date: May 9, 1996 By: /s/ Alvin E. McQuinn
Alvin E. McQuinn
Its: Chief Executive Officer
Date: May 9, 1996 By: /s/ John C. Retherford
John C. Retherford
Its: Chief Financial Officer
Exhibit 10.1
FIRST AMENDMENT TO SHORT TERM AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT
This First Amendment to Short Term Revolving Credit Agreement ("First
Amendment") is dated as of March 29, 1996, and is entered into among Ag-Chem
Equipment, Co., Inc., a Minnesota corporation (the "Company"), NBD Bank, a
Michigan banking corporation ("NBD"), for itself and as Agent, National City
Bank of Minneapolis, a national banking association, and Harris Trust and
Savings Bank, a national savings bank (together with NBD, such financial
institutions being sometimes referred to collectively as the "Lenders" and
individually as a "Lender"). This First Amendment amends that certain Short Term
Revolving Credit Loan Agreement dated as of January 12, 1996 ("Credit
Agreement"), among the Company and Lenders. Capitalized terms not otherwise
defined in this First Amendment shall have the meanings given to them in the
Credit Agreement.
Recitals
WHEREAS, the Company has requested that certain covenants be amended.
WHEREAS, the parties have agreed to amend the Credit Agreement as
provided below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Tangible Net Worth. Section 5.2(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
(b) Total Liabilities to Tangible Net Worth. Permit or suffer
the ratio of Total Liabilities to Tangible Net Worth to exceed the
ratios specified in the table below for the relevant period:
Relevant Ratio of Total Liabilities
Fiscal Quarter to Tangible Net Worth
Fiscal Quarter Ending December 31, 1995 3.25 to 1.0
Fiscal Quarter Ending March 31, 1996 3.25 to 1.0
Fiscal Quarter Ending June 30, 1996 3.25 to 1.0
2. Conditions to Amendment.
2.1 Conditions. Notwithstanding anything in this First
Amendment to the contrary, this First Amendment will not be effective
unless and until the Agent will have received copies of this First
Amendment duly executed by each of the parties hereto.
2.2 Effectiveness. Provided that no Default or Event of
Default will exist or will have occurred and be continuing, as of the
date on which the condition specified in 2.1 hereof has been satisfied.
3. Representations. The Company hereby represents and warrants to the
Lenders, as of the date of this First Amendment becomes effective, that: (a) the
representations and warranties of the Company in the Credit Agreement are true
and correct; (b) no Default or Event of Default exists or has occurred and is
continuing; and (c) the forms of the Articles of Incorporation, ByLaws,
resolutions and certificates of incumbency of the company delivered to the Agent
at the Effective Date continue to be true, correct and complete and have not
been amended or modified in any respect.
4. Ratification. The parties hereto acknowledge and agree that the
terms and provisions of this First Amendment amend, add to and constitute part
of the Credit Agreement. Except as expressly modified and amended by the terms
of this First Amendment, all of the other terms and conditions of the Credit
Agreement and all of the documents executed in connection therewith or referred
to or incorporated therein, remain in full force and effect and are hereby
ratified, confirmed and approved.
5. References to Credit Agreement. References in the Credit Agreement
or in any other Loan Document to the Credit Agreement will be deemed to be
references to the Credit Agreement as amended hereby and as further amended from
time to time.
6. Indemnification. The Company agrees to pay and to save the Agent and
the Lenders harmless from the payment of all costs and expenses arising in
connection with this First Amendment and the other documents and agreements
executed hereunder or thereunder, including the fees of Honigman Miller Schwartz
and Cohn, counsel to the Agent, in connection with preparing this First
Amendment and such other documents and agreements.
7. Conflicts. If there is an express conflict between the terms of this
First Amendment and the terms of the Credit Agreement, or any of the other
agreements or documents executed in connection therewith or referred to or
incorporated therein, the terms of this First Amendment shall govern and
control.
8. Counterparts. This First Amendment may be executed in any number of
counterparts which when taken together will constitute one agreement.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Short Term Revolving Credit Agreement effective as of the date noted above.
AG-CHEM EQUIPMENT CO., INC.
By: /s/ John Retherford
John Retherford
Its: Senior Vice President
NBD BANK
By: /s/ Marguerite C. Mullins
Marguerite C. Mullins
Its: Second Vice President
NATIONAL CITY BANK OF MINNEAPOLIS
By: /s/ David W. Boyce
David W. Boyce
Its: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Catherine C. Ciolek
Catherine C. Ciolek
Its: Vice President
REAFFIRMATION OF GUARANTY
The undersigned hereby acknowledges the terms of this First Amendment
to Short Term Revolving Credit Agreement and hereby reaffirms each and every
term of its respective Guaranty (Short Term) dates January 12, 1996, given in
favor of NBD Bank for itself as Agent and National City Bank of Minneapolis and
Harris Trust and Savings Bank, with respect to the obligations of Ag-Chem
Equipment Co., Inc.
Lor*Al Products, inc.
By: /s/ John Retherford
John Retherford
Its: Vice President
Ag-Chem Equipment Co. International Corp.
By: /s/ John Retherford
John Retherford
Its: Treasurer
Ag-Chem Equipment Canada Ltd.
By: /s/ John Retherford
John Retherford
Its: Treasurer
Soil Teq, Inc.
By: /s/ John Retherford
John Retherford
Its: Vice President
Exhibit 10.2
FIRST AMENDMENT TO LONG TERM AMENDED
AND RESTATED REVOLVING CREDIT AGREEMENT
This First Amendment to Long Term Amended and Restated Revolving Credit
Agreement ("First Amendment") is dated as of March 29, 1996, and is entered into
among Ag-Chem Equipment, Co., Inc., a Minnesota corporation (the "Company"), NBD
Bank, a Michigan banking corporation ("NBD"), for itself and as Agent, National
City Bank of Minneapolis, a national banking association, and Harris Trust and
Savings Bank, a national savings bank (together with NBD, such financial
institutions being sometimes referred to collectively as the "Lenders" and
individually as a "Lender"). This First Amendment amends that certain Long Term
Amended and Restated Revolving Credit Agreement dated as of January 12, 1996
("Credit Agreement"), among the Company and Lenders. Capitalized terms not
otherwise defined in this First Amendment shall have the meanings given to them
in the Credit Agreement.
Recitals
WHEREAS, the Company has requested that certain covenants be amended.
WHEREAS, the parties have agreed to amend the Credit Agreement as
provided below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Tangible Net Worth. Section 5.2(b) of the Credit Agreement is hereby
amended in its entirety to read as follows:
(b) Total Liabilities to Tangible Net Worth. Permit or suffer
the ratio of Total Liabilities to Tangible Net Worth to exceed the
ratios specified in the table below for the relevant period:
Relevant Ratio of Total Liabilities
Fiscal Quarter to Tangible Net Worth
Each Fiscal Quarter Ending December 31 and March 31 3.25 to 1.0
and the Fiscal Quarter Ending June 30, 1996
Each Fiscal Quarter Ending June 30 and September 30 2.75 to 1.0
except the Fiscal Quarter Ending June 30, 1996
2. Conditions to Amendment.
2.1 Conditions. Notwithstanding anything in this First
Amendment to the contrary, this First Amendment will not be effective
unless and until the Agent will have received copies of this First
Amendment duly executed by each of the parties hereto.
2.2 Effectiveness. Provided that no Default or Event of
Default will exist or will have occurred and be continuing, as of the
date on which the condition specified in 2.1 hereof has been satisfied.
3. Representations. The Company hereby represents and warrants to the
Lenders, as of the date of this First Amendment becomes effective, that: (a) the
representations and warranties of the Company in the Credit Agreement are true
and correct; (b) no Default or Event of Default exists or has occurred and is
continuing; and (c) the forms of the Articles of Incorporation, ByLaws,
resolutions and certificates of incumbency of the company delivered to the Agent
at the Effective Date continue to be true, correct and complete and have not
been amended or modified in any respect.
4. Ratification. The parties hereto acknowledge and agree that the
terms and provisions of this First Amendment amend, add to and constitute part
of the Credit Agreement. Except as expressly modified and amended by the terms
of this First Amendment, all of the other terms and conditions of the Credit
Agreement and all of the documents executed in connection therewith or referred
to or incorporated therein, remain in full force and effect and are hereby
ratified, confirmed and approved.
5. References to Credit Agreement. References in the Credit Agreement
or in any other Loan Document to the Credit Agreement will be deemed to be
references to the Credit Agreement as amended hereby and as further amended from
time to time.
6. Indemnification. The Company agrees to pay and to save the Agent and
the Lenders harmless from the payment of all costs and expenses arising in
connection with this First Amendment and the other documents and agreements
executed hereunder or thereunder, including the fees of Honigman Miller Schwartz
and Cohn, counsel to the Agent, in connection with preparing this First
Amendment and such other documents and agreements.
7. Conflicts. If there is an express conflict between the terms of this
First Amendment and the terms of the Credit Agreement, or any of the other
agreements or documents executed in connection therewith or referred to or
incorporated therein, the terms of this First Amendment shall govern and
control.
8. Counterparts. This First Amendment may be executed in any number of
counterparts which when taken together will constitute one agreement.
IN WITNESS WHEREOF, the parties have executed this First Amendment to
Long Term Amended and Restated Revolving Credit Agreement effective as of the
date noted above.
AG-CHEM EQUIPMENT CO., INC.
By: /s/ John Retherford
John Retherford
Its: Senior Vice President
NBD BANK
By: /s/ Marguerite C. Mullins
Marguerite C. Mullins
Its: Second Vice President
NATIONAL CITY BANK OF MINNEAPOLIS
By: /s/ David W. Boyce
David W. Boyce
Its: Vice President
HARRIS TRUST AND SAVINGS BANK
By: /s/ Catherine C. Ciolek
Catherine C. Ciolek
Its: Vice President
REAFFIRMATION OF GUARANTY
The undersigned hereby acknowledges the terms of this First Amendment
to Long Term Amended and Restated Revolving Credit Agreement and hereby
reaffirms each and every term of its respective Guaranty (Long Term) dates
January 12, 1996, given in favor of NBD Bank for itself as Agent and National
City Bank of Minneapolis and Harris Trust and Savings Bank, with respect to the
obligations of Ag-Chem Equipment Co., Inc.
Lor*Al Products, inc.
By: /s/ John Retherford
John Retherford
Its: Vice President
Ag-Chem Equipment Co. International Corp.
By: /s/ John Retherford
John Retherford
Its: Treasurer
Ag-Chem Equipment Canada Ltd.
By: /s/ John Retherford
John Retherford
Its: Treasurer
Soil Teq, Inc.
By: /s/ John Retherford
John Retherford
Its: Vice President
Exhibit 11.1
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Ag-Chem Equipment Co., Inc. and subsidiaries
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The per share computation are based on the weighted average number of common
shares outstanding during the periods.
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares outstanding at beginning of period 9,695,768 9,599,768 9,595,768 9,639,768
Issuance of common stock -- -- 100,000 --
Repurchase and retirement of common stock -- (4,000) -- (44,000)
----------- ----------- ----------- -----------
Shares outstanding at end of period 9,695,768 9,595,768 9,695,768 9,595,768
=========== =========== =========== ===========
Weighted average shares outstanding 9,695,768 9,597,412 9,647,966 9,612,272
=========== =========== =========== ===========
Net Earnings $ 6,355 $ 7,774 $ 6,714 $ 8,004
=========== =========== =========== ===========
Earnings per common share
$ 0.66 $ 0.81 $ 0.70 $ 0.83
=========== =========== =========== ===========
</TABLE>
In May 1995, the Board of Directors declared a four-for-one stock split effected
in the form of a stock dividend. Par value remained at $.01 per share. All share
and per share amounts have been restated to retroactively reflect the stock
split.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 28,562
<ALLOWANCES> (244)
<INVENTORY> 104,379
<CURRENT-ASSETS> 139,650
<PP&E> 46,590
<DEPRECIATION> (20,111)
<TOTAL-ASSETS> 195,390
<CURRENT-LIABILITIES> 73,249
<BONDS> 0
0
0
<COMMON> 9,695,768
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 195,390
<SALES> 146,336
<TOTAL-REVENUES> 146,336
<CGS> 104,201
<TOTAL-COSTS> 104,201
<OTHER-EXPENSES> 29,685
<LOSS-PROVISION> 120
<INTEREST-EXPENSE> 2,574
<INCOME-PRETAX> 10,914
<INCOME-TAX> 4,200
<INCOME-CONTINUING> 6,714
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,714
<EPS-PRIMARY> 0.70
<EPS-DILUTED> 0.70
</TABLE>
