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, 1998
_______ 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, 1998, there were outstanding, 9,666,768 shares of the
issuers' Common Stock, $.01 par value per share.
<PAGE>
3
TABLE OF CONTENTS
Page
----
PART I
ITEM 1. FINANCIAL STATEMENTS............................... 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS....................................... 8
PART II
ITEM 1. LEGAL
PROCEEDINGS........................................12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................12
SIGNATURES ...................................................13
EXHIBITS ...................................................14
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, September 30,
ASSETS 1998 1997
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,401 $ --
Accounts receivable, less allowance for
doubtful accounts of $711 and $576, respectively 30,976 23,728
Notes receivable, current portion, and
accrued interest receivable 3,993 3,188
Inventories (note 2) 91,906 99,894
Deferred income tax benefits 5,073 4,550
Prepaid expenses and other current assets 603 881
-------- --------
Total current assets 134,952 132,241
PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF $33,581 AND $30,257, RESPECTIVELY 49,669 46,260
OTHER ASSETS:
Notes receivable, long-term portion 5,535 5,213
Bond funds held by trustees -- 745
Intangible and other assets, net of accumulated
amortization of $2,841 and $2,392, respectively 3,032 3,540
-------- --------
Total other assets 8,567 9,498
-------- --------
Total assets $193,188 $187,999
======== ========
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED BALANCE SHEETS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars in Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, September 30,
1998 1997
--------- ---------
<S> <C> <C>
CURRENT LIABILITIES:
Current installments of long-term debt $ 2,236 $ 5,135
Note payable to banks 24,023 32,685
Accounts payable 19,892 15,049
Checks outstanding in excess of cash balances -- 7
Customer prepayments 8,433 7,718
Accrued expenses (note 3) 16,585 17,363
Deferred income 1,862 563
Accrued income taxes 4,543 224
--------- ---------
Total current liabilities 77,574 78,744
LONG-TERM DEBT, LESS CURRENT INSTALLMENTS 45,045 45,368
--------- ---------
Total liabilities 122,619 124,112
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value
Authorized, 40,000,000 shares; issued and
outstanding, 9,666,768 and 9,670,268 shares, respectively 97 97
Additional paid in capital 2,142 2,188
Retained earnings 68,917 62,082
Foreign currency translation adjustment (587) (480)
--------- ---------
Total stockholders' equity 70,569 63,887
--------- ---------
Total liabilities and stockholders' equity $ 193,188 $ 187,999
========= =========
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
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,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 122,500 $ 130,618 $ 185,037 $ 186,908
Cost of sales 88,353 95,846 133,918 134,997
--------- --------- --------- ---------
Gross profit 34,147 34,772 51,119 51,911
Selling, general and administrative
expenses 20,549 20,149 38,168 34,786
--------- --------- --------- ---------
Operating income 13,598 14,623 12,951 17,125
Other income (expense):
Other income 715 765 1,432 1,628
Interest expense (1,508) (1,541) (3,225) (3,272)
--------- --------- --------- ---------
Earnings before income taxes 12,805 13,847 11,158 15,481
Income tax expense 4,875 5,560 4,323 6,200
--------- --------- --------- ---------
Net earnings $ 7,930 $ 8,287 $ 6,835 $ 9,281
========= ========= ========= =========
Earnings per share $ 0.82 $ 0.86 $ 0.71 $ 0.96
========= ========= ========= =========
Weighted average common shares
outstanding 9,667 9,691 9,668 9,694
========= ========= ========= =========
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months ended March 31,
--------------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 6,835 $ 9,281
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 4,126 3,557
Loss (Gain) on sale of assets (21) 140
Increase in deferred income tax benefits (523) (136)
Changes in operating assets and liabilities:
Accounts receivable (7,248) (13,178)
Operating notes receivable (1,127) 1,356
Inventories 7,988 13,817
Other current assets 278 110
Accounts payable 4,843 5,546
Customer prepayments and deferred income 2,014 9,347
Accrued expenses (778) 220
Income taxes 4,319 2,840
-------- --------
Cash provided by operating activities 20,706 32,900
CASH FLOWS FROM INVESTING ACTIVITIES:
Retirement of short-term investments
for industrial revenue bond 745 (4)
Purchase of property, plant and equipment (2,180) (3,182)
Increase in rental equipment (4,037) (3,512)
Proceeds from sale of equipment 26 8
Increase in other assets (26) (584)
-------- --------
Cash used in investing activities (5,472) (7,274)
</TABLE>
(CONTINUED ON NEXT PAGE)
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
AG-CHEM EQUIPMENT CO., INC. AND SUBSIDIARIES
(Dollars In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended March 31,
----------------------------
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in checks outstanding in excess of
cash balances (7) 916
Proceeds from notes payable - banks 50,800 14,845
Repayments of notes payable - banks (59,462) (34,545)
Proceeds from long-term borrowings 11,480 50,721
Repayments of long-term borrowings (15,491) (57,861)
Purchase of common stock (46) (100)
-------- --------
Cash used in financing activities (12,726) (26,024)
Foreign currency translation adjustment (107) 398
-------- --------
Change in cash 2,401 --
Cash at beginning of period -- --
-------- --------
Cash at end of period $ 2,401 $ --
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,225 $ 3,272
Income taxes $ 323 $ 3,530
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
The Company entered into capital leases for computer equipment. Such
leases amounted to $789 and $141 for the six month period ended March 31, 1998
and 1997, respectively.
SEE ACCOMPANYING CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
NOTES TO INTERIM 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, 1997 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:
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
---------- ---------
<S> <C> <C>
Finished goods $ 39,688 $ 46,278
Resale parts 26,208 22,116
Work in process 5,291 7,542
Raw materials 24,881 25,700
---------- ---------
Total 96,068 101,636
Less LIFO reserve (13,171) (12,454)
---------- ---------
Total 82,897 89,182
Used equipment 9,009 10,712
---------- ---------
Total inventories $ 91,906 $ 99,894
========== =========
</TABLE>
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 $13,171 at March 31, 1998 and $12,454 at September 30, 1997.
(3) ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
---------- ----------
<S> <C> <C>
Compensation $ 7,130 $ 9,396
Warranty 823 1,385
Taxes other than income 2,024 1,790
Insurance 2,923 1,861
Interest 1,274 1,755
Other 2,411 1,176
---------- ----------
Total $ 16,585 $ 17,363
========= =========
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
RESULTS OF OPERATIONS - THREE-MONTH PERIOD ENDED MARCH 31, 1998 COMPARED TO
THREE-MONTH PERIOD ENDED MARCH 31, 1997
Consolidated net sales decreased by $8,118 or 6.2 percent in the
three-month period ended March 31, 1998 from the three-month period ended March
31, 1997. The decrease was primarily the result of a decrease in post-emergence
equipment sales that resulted from decreased unit shipments due to increased
competition in this market, rather than pricing changes. The Company expects
this competition to be a factor in the post-emergence market and is uncertain
about the impact on future sales. Additionally, weather conditions have been
favorable in the current year, allowing growers to apply fertilizers earlier,
which temporarily decreased demand for new equipment. Also, in the prior year,
there was a significant increase in the number of orders received in the second
quarter. This year, orders were received in a pattern similar to a more typical
year, resulting in more shipments in the first quarter. As a result,
post-emergence equipment sales decreased as a percent of total sales, while the
remaining product mix remained substantially unchanged.
Consolidated gross profit for the three-month period ended March 31,
1998 decreased $625 or 1.8 percent as compared to the prior-year period.
Consolidated gross profit as a percent of net sales was 27.9 percent and 26.6
percent for the three-month periods ended March 31, 1998 and 1997, respectively.
The primary reason for the higher margin percentage was special discounts given
in the prior year on the Company's carry-over of 1996 models in an effort to
reduce inventory balances. Additionally, the new model 8103 has a higher average
selling price and gross margin than previous models. In the three-month period
ended December 31, 1997, start-up costs related to the introduction of the new
model 8103 negatively impacted margins, but as these start-up costs were
complete, margins improved in the current period. Additional new models are not
expected to negatively impact margins for the three-month period ending June 30,
1998, but will likely reduce margins in the fourth quarter of fiscal 1998. The
Company has not yet fully utilized the capacity of the latest plant expansions.
In the near-term, the Company expects this under-utilization to continue to
negatively impact margins, while in the long term, the expectation is that
margins will improve as plant utilization improves with increased production and
sales. Also, the Company introduces its discount programs on old models in the
summer, which further reduce margins. The Company estimates that impact of these
factors will not significantly affect margins for the three-month period ending
June 30, 1998, but will reduce gross profit as a percent of sales in the fourth
quarter of fiscal 1998, depending on sales and product mix. Such a decrease in
the fourth quarter is normal for the Company. The decrease is expected to be
similar to the decrease experienced in the prior year, although the Company
expects margins to continue to show improvement over the prior year.
Consolidated selling, general and administrative ("S,G&A") expenses
increased $400 or 2.0 percent in the three-month period ended March 31, 1998 as
compared to the prior-year period. Compensation, employee benefits and
employee-related expenses decreased 2.9 percent or $350. This decrease was
primarily due to a decrease in the amount payable to the Company's profit
sharing plan, but was partially offset by an increase in the number of employees
to support new product development and improve customer service. All other S,G&A
expenses increased by 9.2 percent or $751. S,G&A expenses as a percent of net
sales were 16.8 percent and 15.4 percent in the three-month periods ended March
31, 1998 and 1997, respectively. The Company expects that S,G&A expenses may
increase as a percentage of sales compared to previous periods, on an annual
basis, depending on sales during the remainder of fiscal 1998.
<PAGE>
As a result of the above, operating income was $13,598 and $14,623 in
the three-month periods ended March 31, 1998 and 1997, respectively.
Other income decreased 6.5 percent to $715 in the current three-month
period as compared to the prior year three-month period. The Company does not
expect the decrease to be a continuing trend.
Interest expense decreased 2.1 percent to $1,508 in the current
three-month period ended as compared to the prior-year period. Base interest
rates were relatively stable and changes in such rates had a minimal effect on
interest expense. The Company expects interest expense to continue to decrease
due to net repayments of notes payable.
The effective tax rate in the three-month periods ended March 31, 1998
and 1997 was 38.1 percent and 40.2 percent, respectively. The decrease in the
effective tax rate was primarily the result of partial utilization of tax net
operating loss carry forwards by the Company's Dutch subsidiary. Net income for
this subsidiary was $690 in the current three-month period as compared to $4 in
the prior year three-month period.
As a result of the above, net earnings were $7,930 and $8,287 in the
three-month periods ended March 31, 1998 and 1997, respectively. Earnings per
share were $.82 and $.86 for the three-month periods ended March 31, 1998 and
1997, respectively.
RESULTS OF OPERATIONS - SIX-MONTH PERIOD ENDED MARCH 31, 1998 COMPARED TO
SIX-MONTH PERIOD ENDED MARCH 31, 1997
Consolidated net sales decreased by $1,871 or 1.0 percent in the
six-month period ended March 31, 1998 from the six-month period ended March 31,
1997. The decrease was primarily the result of a decrease in post-emergence
equipment sales that resulted from decreased unit shipments due to increased
competition in this market, rather than pricing changes. The Company expects
this competition to be a significant factor in the post-emergence market and is
uncertain about the impact on future sales. Additionally, weather conditions
were mild throughout the winter months, which temporarily decrease demand for
new equipment Also, in the prior year, there was a significant increase in the
number of orders received in the second quarter. This year, orders were received
in a pattern similar to a more typical year, resulting in more shipments in the
first quarter. As a result, post-emergence equipment sales decreased as a
percent of total net sales, while the remaining product mix remained
substantially unchanged.
Consolidated gross profit for the six-month period ended March 31, 1998
decreased $792 or 1.5 percent as compared to the prior-year period. Consolidated
gross profit as a percent of net sales was 27.6 percent and 27.8 percent for the
six-month periods ended March 31, 1998 and 1997, respectively. Special discounts
given in the prior year on the Company's carry-over of 1996 models in an effort
to reduce inventory balances caused gross profit as a percent of sales to be
higher in the current period. However, this increase was more than offset by
higher product costs due to start-up expenditures in the first quarter on the
new model 8103. The Company expected margins on the new model 8103 to improve
once start-up expenditures were complete, and this was achieved in the second
quarter. The Company expects model 8103 margins to stabilize in future periods,
however, the start-up costs associated with the introduction of additional new
models is expected to negatively impact margins during the fourth quarter of
fiscal year 1998. Additionally, higher levels of used equipment sales as a
percent of total net sales negatively impacted gross profit as a percent of net
sales as compared to the prior year. Used equipment sales have lower margins
than new equipment. The Company has not yet fully utilized the capacity of the
latest plant expansions. In the near-term, the Company expects this
under-utilization to continue to negatively impact margins, while in the long
term, the expectation is that margins will improve as plant utilization grows
with increased sales and
<PAGE>
production. Also, the Company introduces its discount programs on old models in
the summer, which further reduce margins. The Company estimates that impact of
these factors will not significantly affect margins for the three-month period
ending June 30, 1998, but will reduce gross profit as a percent of sales in the
fourth quarter of fiscal 1998, depending on sales and product mix. Such a
decrease in the fourth quarter is normal for the Company. The decrease is
expected to be similar to the decrease experienced in the prior year, although
the Company expects margins to continue to show improvement over the prior year.
Consolidated sales, general and administrative ("S,G&A") expenses
increased $3,382 or 9.7 percent in the six-month period ended March 31, 1998 as
compared to the prior-year period. Of the overall increase in S,G&A expenses,
costs to support the Company's sales growth increased $2,130 or 7.1 percent, and
costs to support product development increased $1,252 or 26.3 percent. S,G&A
expenses as a percent of net sales was 20.6 percent and 18.6 percent in the
six-month periods ended March 31, 1998 and 1997, respectively. The Company
expects that S,G&A expenses may increase as a percentage of sales compared to
previous periods, on an annual basis, depending on sales during the remainder of
fiscal 1998.
As a result of the above, operating income was $12,951 and $17,125 in
the six-month periods ended March 31, 1998 and 1997, respectively.
Other income decreased 12.0 percent to $1,432 in the current six-month
period as compared to the prior year six-month period. The Company does not
expect the decrease to be a continuing trend.
Interest expense decreased 1.4 percent to $3,225 in the current
six-month period ended as compared to the prior year period. Base interest rates
were relatively stable and changes in such rates had a minimal effect on
interest expense. The Company expects interest expense to continue to decrease
due to net repayments of notes payable.
The effective tax rate in the six-month periods ended March 31, 1998
and 1997 was 38.7 percent and 40.0 percent, respectively. The decrease in the
effective tax rate was primarily the result of partial utilization of tax net
operating loss carry forwards by the Company's Dutch subsidiary. Net income for
this subsidiary was $407 in the current six-month period as compared to a net
loss of $326 in the prior year six-month period.
As a result of the above, net earnings were $6,835 and $9,281 in the
six-month periods ended March 31, 1998 and 1997, respectively. Earnings per
share were $.71 and $.96 for the six-month periods ended March 31, 1998 and
1997, respectively.
LIQUIDITY AND FINANCIAL POSITION - SIX MONTH PERIOD ENDED MARCH 31, 1998
COMPARED TO SIX-MONTH PERIOD ENDED MARCH 31, 1997
Net cash provided by operating activities decreased to $20,706 in the
six-month period ended March 31, 1998, compared to $32,900 in the six-month
period ended March 31, 1997. The major reason for this change was a decrease in
cash provided by operating assets and liabilities to $10,289 in the six-month
period ended March 31, 1998 from $20,058 in the prior-year period. Inventories,
together with increased accounts payable balances provided cash of $12,831
compared to $19,363 during the six months ended March 31, 1998 and 1997,
respectively. The primary reason for the decrease was special discounts given in
the prior year on the Company's carry-over of 1996 models in an effort to reduce
inventory balances. Inventories decreased to $91,906 at March 31, 1998 as
compared to $99,894 at September 30, 1997. This decrease was the result of
increased shipments to fill orders received during the first and second quarters
of the fiscal year. The Company normally experiences the highest sales levels in
the second quarter of the fiscal year. Customer prepayments increased $715 in
the six months ended March 31, 1998 compared to an increase of $9,347 in
<PAGE>
the six months ended March 31, 1997. The smaller increase in prepayments was
primarily the result of more orders in the prior-year. The decrease in cash
provided was partially offset by an increase in accounts receivable of $7,248
during the six months ended March 31, 1997, compared to an increase of $13,178
during the prior year period. The Company expects cash will continue to be
provided by operating activities through net earnings, and this cash will be
used to satisfy the current portion of long-term debt.
Accounts receivable and inventory turnover have remained relatively
stable in recent periods, and have not significantly affected liquidity.
Cash used in investing activities in the six-month period ended March
31, 1998 was $5,472 compared to $7,274 in the prior-year period. This decreased
use of cash was primarily due to prior-year investments in other assets and
property, plant and equipment to support the Company's growth. Conversely,
demand for rental equipment has increased in the current year, requiring further
investment.
Cash used in financing activities was $12,726 in the six-month period
ended March 31, 1998, compared to $26,024 in the prior period. The decrease in
cash used in financing activities was primarily the result of the net repayments
of notes payable of $8,662 during the six-month period ended March 31, 1998,
compared to $19,700 in the prior-year period. Additionally, net repayments of
long term borrowings were $4,011 during the six-month period ended March 31,
1998, compared to $7,140 during the six-month period ended March 31, 1997. This
decrease in net repayments is primarily due to increased working capital
requirements as compared to the prior year, when working capital was generated
through the reduction of higher inventory levels.
Working capital at March 31, 1998 was $57.4 million. As of March 31,
1998 the Company had $34.6 million of unused credit line available. 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.
The terms of the Company's amended credit line agreement include
covenants that the Company must maintain. There are a number of standard
affirmative covenants, as well as restrictive negative covenants as to
additional borrowings and requirements for the Company to maintain certain
financial ratios. These restrictive covenants include a minimum tangible net
worth of $35 million plus 75 percent of each fiscal year's net earnings, a ratio
of total liabilities to tangible net worth, and an interest coverage ratio.
There are additional limitations on mergers, acquisitions, disposal of assets,
and capital expenditures. The Company does not anticipate any difficulty in
meeting these covenants.
The Company is currently engaged in a comprehensive review of its
computer systems to identify those systems that will be affected by the year
2000 problem. The Company will have all affected systems corrected and tested
prior to June 30, 1999. At this time, the Company does not have an estimate of
the total cost, but believes it will not be material.
FORWARD-LOOKING STATEMENTS
Certain information included in this Report is "forward looking" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements can be identified by the use of words such as "will,"
"intends," "expects," "should," and similar language. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company,
or industry results, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. These include factors that affect all businesses, as well as matters
specific to the Company and markets it serves. A more complete discussion of
such factors is included in the Company's form 10-K for the year ended September
30, 1997.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1997 on file with the Securities and Exchange
Commission. During the quarter ended March 31, 1998, the Company was not a party
to any newly initiated material legal proceedings and there have been no
material developments during such period to existing legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
See the index to exhibits immediately preceding the exhibits filed with
this report.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this report was filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AG-CHEM EQUIPMENT CO., INC.
Date: May 11, 1998 By: /s/ Alvin E. McQuinn
--------------------
Alvin E. McQuinn
Its: Chief Executive Officer
Date: May 11, 1998 By: /s/ John C. Retherford
----------------------
John C. Retherford
Its: Chief Financial Officer
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 computations 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,
---------------------------- --------------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shares outstanding at 9,670 9,696 9,670 9,696
beginning of period
Issuance of common stock -- -- -- --
Repurchase and retirement of
common stock
(3) (5) (3) (5)
------- ------- ------- -------
Shares outstanding at end of
period 9,667 9,691 9,667 9,691
======= ======= ======= =======
Weighted average shares
outstanding 9,667 9,691 9,668 9,694
======= ======= ======= =======
Net earnings $ 7,930 $ 8,287 $ 6,835 $ 9,281
======= ======= ======= =======
Earnings per common share
$ 0.82 $ 0.86 $ 0.71 $ 0.96
======= ======= ======= =======
</TABLE>
The Company has no common stock equivalents outstanding.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-08-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,401
<SECURITIES> 0
<RECEIVABLES> 30,976
<ALLOWANCES> (711)
<INVENTORY> 91,906
<CURRENT-ASSETS> 134,952
<PP&E> 49,669
<DEPRECIATION> (33,581)
<TOTAL-ASSETS> 193,188
<CURRENT-LIABILITIES> 77,574
<BONDS> 0
9,667
0
<COMMON> 0
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<SALES> 185,037
<TOTAL-REVENUES> 185,037
<CGS> 133,918
<TOTAL-COSTS> 133,918
<OTHER-EXPENSES> 38,168
<LOSS-PROVISION> 135
<INTEREST-EXPENSE> 3,225
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<INCOME-TAX> 4,323
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<CHANGES> 0
<NET-INCOME> 6,835
<EPS-PRIMARY> 0.71
<EPS-DILUTED> 0.71
</TABLE>
