-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CgIGBtqeb09EnQln3UztLBDo2tbqa9c/VwVNcQeR5Z617CUG7VOhH5ulBSKno9hL XGpmWDVwYQUfRUYrOzUisQ== 0000856386-00-000010.txt : 20000515 0000856386-00-000010.hdr.sgml : 20000515 ACCESSION NUMBER: 0000856386-00-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000401 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEHL CO CENTRAL INDEX KEY: 0000856386 STANDARD INDUSTRIAL CLASSIFICATION: FARM MACHINERY & EQUIPMENT [3523] IRS NUMBER: 390300430 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18110 FILM NUMBER: 628925 BUSINESS ADDRESS: STREET 1: 143 WATER STREET CITY: WEST BEND STATE: WI ZIP: 53095 BUSINESS PHONE: 4143349461 MAIL ADDRESS: STREET 1: 143 WATER STREET CITY: WEST BEND STATE: WI ZIP: 53095 10-Q 1 GEHL COMPANY 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 1, 2000 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 Wisconsin 39-0300430 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 143 Water Street, West Bend, WI 53095 (Address of principal (Zip code) executive office) (262) 334-9461 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer s classes of common stock, as of the latest practicable date. Class Outstanding at April 1, 2000 Common Stock, $.10 Par Value 5,567,402 GEHL COMPANY FORM 10-Q April 1, 2000 REPORT INDEX Page No. PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Statements of Income for the Three-Month Periods Ended April 1, 2000 and April 3, 1999 . . . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at April 1, 2000, December 31, 1999, and April 3, 1999 . 4 Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended April 1, 2000 and April 3, 1999 . . . . . . . . . . . . 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 11 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K . 11 SIGNATURES 12 PART I FINANCIAL INFORMATION Item 1. Financial Statements GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data; unaudited)
Three Months Ended April 1, 2000 April 3, 1999 ------------- ------------- NET SALES $70,696 $68,963 Cost of goods sold 51,414 50,187 ------- ------- GROSS PROFIT 19,282 18,776 Selling, general and administrative expenses 11,744 12,539 ------- ------- INCOME FROM OPERATIONS 7,538 6,237 Interest expense (873) (777) Interest income 380 413 Other expense, net (785) (440) ------- ------- INCOME BEFORE INCOME TAXES 6,260 5,433 Income tax provision 2,191 1,929 ------- ------- NET INCOME $ 4,069 $ 3,504 ======= ======= EARNINGS PER SHARE Diluted $ .70 $ .52 Basic $ .73 $ .54
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
April 1, December 31, April 3, 2000 1999 1999 (Unaudited) (Unaudited) ASSETS Cash $ 3,254 $ 1,010 $ 3,688 Accounts receivable-net 86,190 68,551 78,575 Finance contracts receivable-net 13,364 12,074 9,709 Inventories 42,219 35,206 36,015 Deferred tax assets 8,431 8,431 7,138 Other current assets 557 511 1,324 -------- -------- -------- Total Current Assets 154,015 125,783 136,449 -------- -------- -------- Property, plant and equipment-net 38,809 37,028 33,910 Finance contract receivable-net, non-current 8,041 7,311 5,805 Intangible assets 15,521 15,706 16,267 Other assets 8,205 8,332 6,998 -------- -------- -------- TOTAL ASSETS $224,591 $194,160 $199,429 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt obligations $ 427 $ 519 $ 562 Accounts payable 29,536 25,077 26,447 Accrued liabilities 31,941 30,703 30,499 -------- -------- -------- Total Current Liabilities 61,904 56,299 57,508 -------- -------- -------- Line of credit facility 44,117 22,038 25,329 Long-term debt obligations 9,010 9,059 9,445 Other long-term liabilities 5,976 5,391 5,372 Deferred income taxes 3,949 3,949 3,943 -------- -------- -------- Total Long-Term Liabilities 63,052 40,437 44,089 -------- -------- -------- Common stock, $.10 par value, 25,000,000 shares authorized, 5,567,402, 5,645,620 and 6,468,411 shares outstanding, respectively 557 565 647 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 9,444 11,294 28,550 Retained earnings 90,537 86,468 69,787 Accumulated other comprehensive loss (903) (903) (1,152) -------- -------- -------- Total Shareholders' Equity 99,635 97,424 97,832 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $224,591 $194,160 $199,429 ======== ======== ========
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited)
Three Months Ended April 1, April 3, 2000 1999 ---------- --------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 4,069 $ 3,504 Adjustments to reconcile net income to net cash (used for) provided by operating activities: Depreciation 1,250 1,075 Amortization 199 199 Proceeds from sales of finance contracts 14,796 14,880 Increase in finance contracts receivable (17,681) (15,310) Cost of sales of finance contracts 865 506 Net changes in remaining working capital items (19,001) (6,440) -------- -------- Net cash used for operating activities (15,503) (1,586) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (3,031) (843) Other assets 113 (757) -------- -------- Net cash used for investing activities (2,918) (1,600) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit facility 22,079 5,970 Proceeds from issuance of common stock 273 223 Treasury stock purchases (2,131) - Other 444 (206) -------- -------- Net cash provided by financing activities 20,665 5,987 -------- -------- Net increase in cash 2,244 2,801 Cash, beginning of period 1,010 887 -------- -------- Cash, end of period $ 3,254 $ 3,688 ======== ======== Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 743 $ 703 Income Taxes $ 886 $ 796
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS April 1, 2000 (Unaudited) NOTE 1 BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the information furnished for the three-month periods ended April 1, 2000 and April 3, 1999 includes all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results of operations and financial position of the Company. Due in part to the seasonal nature of the Company's business, the results of operations for the three months ended April 1, 2000 are not necessarily indicative of the results to be expected for the entire year. It is suggested that these interim financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999 as filed with the Securities and Exchange Commission. NOTE 2 INCOME TAXES The income tax provision is determined by applying an estimated annual effective income tax rate to income before income taxes. The estimated annual effective income tax rate is based on the most recent annualized forecast of pretax income, permanent book/tax differences, and tax credits. NOTE 3 INVENTORIES If all of the Company's inventories had been valued on a current cost basis, which approximated FIFO value, estimated inventories by major classification would have been as follows (in thousands): April 1, December 31, April 3, 2000 1999 1999 Raw materials and supplies $ 17,741 $ 17,371 $ 16,390 Work-in-process 5,655 5,767 6,637 Finished machines and parts 38,018 31,263 32,384 -------- -------- -------- Total current cost value 61,414 54,401 55,411 Adjustment to LIFO basis (19,195) (19,195) (19,396) -------- -------- -------- $ 42,219 $ 35,206 $ 36,015 ======== ======== ======== NOTE 4 ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Investments and Hedging Activities" which was originally effective for fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the effective date was delayed by one year and will be effective January 1, 2001 for the Company. Due to the Company's current limited use of derivative instruments, the adoption of this statement is not expected to materially affect the Company's financial condition or results of operations. NOTE 5 EARNINGS PER SHARE AND COMPREHENSIVE INCOME 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. A reconciliation of the shares used in the computation of earnings per share follows (in thousands): April 1, 2000 April 3, 1999 ------------- ------------- Basic shares 5,599 6,456 Effect of options 191 233 ----- ----- Diluted shares 5,790 6,689 ===== ===== Accumulated other comprehensive loss is comprised entirely of minimum pension liability adjustments. Comprehensive income equaled net income for the three months ended April 1, 2000 and April 3, 1999, as the minimum pension liability amount did not change from the respective prior year-end amount. NOTE 6 BUSINESS SEGMENTS The Company operates in two business segments: Construction equipment and Agricultural equipment. The long-term financial performance of the Company's reportable segments are affected by separate economic conditions and cycles. The segments are managed separately based on the fundamental differences in their operations. Following is selected segment information (in thousands): April 1, 2000 April 3, 1999 Net Sales: Construction $ 40,303 $ 40,246 Agricultural 30,393 28,717 -------- -------- Consolidated $ 70,696 $ 68,963 ======== ======== Income from Operations: Construction $ 4,320 $ 4,794 Agricultural 3,218 1,443 -------- -------- Consolidated $ 7,538 $ 6,237 ======== ======== NOTE 7 STOCK REPURCHASES In March 2000, the Company's Board of Directors authorized a repurchase plan providing for the repurchase of up to an additional 325,000 shares of the Company's outstanding common stock. As of April 1, 2000, no shares had been repurchased under this authorization. In March 1999, a repurchase plan relating to up to 325,000 shares of the Company s outstanding common stock was authorized. As of April 1, 2000, all of the authorized shares under that plan had been repurchased at an aggregate cost of $5.8 million. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations Three Months Ended April 1, 2000 Compared to Three Months Ended April 3, 1999 Net sales for the first quarter of 2000 of $70.7 million were $1.7 million, or 3%, higher than the $69.0 million in the comparable period of 1999. Construction equipment net sales increased to $40.3 million in the first quarter of 2000 from $40.2 million in the first quarter of 1999. Shipments of telescopic handlers were below last year's first quarter levels due to a reduction in retail sales activity of telescopic handlers throughout the entire industry during the quarter. However, construction sales benefited from increased shipments of skid loaders and shipments of mini-excavators, which were introduced in mid-1999. Agricultural equipment sales increased 6% to $30.4 million in the first quarter of 2000 from $28.7 million in the first quarter of 1999. The increase was due primarily to the shipments of the newly introduced 15' and 18' disc mower conditioners combined with increased shipment levels, over the first quarter of 1999, for skid loaders and manure handling equipment. Of the Company's total net sales reported for the first quarter of 2000, $10.8 million were made outside of the United States compared with $8.6 million in the comparable period of 1999. The increase was due primarily to strong demand for shipments to Europe and Canada. Given the segments that the Company ships into, there exists some seasonality in sales, primarily in the Company's second and third quarter which historically have tended to be its strongest quarters for sales, while sales levels have historically tended to be lower in the first and fourth quarters. Gross profit increased $506,000, or 3%, during the first quarter of 2000 versus the comparable period of 1999, due to increased sales volume. Gross profit as a percent of net sales increased to 27.3% for the first quarter of 2000 from 27.2% in the comparable period of 1999. Gross profit as a percent of net sales for Construction equipment decreased to 25.3% in the first quarter of 2000 from 26.6% in the first quarter of 1999. The decrease in Construction equipment gross margin was a function of increased export and mini-excavator shipments, which sales are, generally, at lower gross margins than other construction equipment, and decreased telescopic handler sales, which sales are at higher gross margins than other construction equipment. Gross profit as a percent of net sales for Agricultural equipment increased to 29.9% in the first quarter of 2000 from 28.0% for the first quarter of 1999. The primary reason for the increase was the impact of a change in the mix of products shipped in 2000 versus products shipped in 1999 and improved efficiencies at the manufacturing plants. Selling, general and administrative expenses decreased $795,000, or 6%, during the first quarter of 2000 versus the comparable period of 1999 due, primarily to lower sales related costs for Agricultural equipment in 2000 versus 1999. As a percent of net sales, selling, general and administrative expenses decreased to 16.6% of net sales during the first quarter of 2000 versus 18.2% in the comparable period of 1999. Income from operations in the first quarter of 2000 was $7.5 million, 21% higher than the $6.2 million for the first quarter of 1999. Interest expense increased $96,000 to $873,000 in the first quarter of 2000 from $777,000 in the first quarter of 1999. The increase was a result of an increase in average debt outstanding to $43.8 million in the first quarter of 2000 versus $35.2 million in the first quarter of 1999. The average rate of interest paid by the Company increased to 7.9% in the first quarter of 2000 from 7.7% for the first quarter of 1999. Other expense increased $345,000, to $785,000 in the first quarter of 2000 from $440,000 in the first quarter of 1999. This was primarily caused by increasing costs of sales of finance contracts due to lower finance rates offered to Gehl finance customers combined with increasing discount rates used in selling finance contracts to third parties resulting from the general trend of overall interest rates. First quarter 2000 net income of $4.1 million was a 16% increase from $3.5 million in the first quarter of 1999. Diluted earnings were $.70 per share for the first quarter of 2000 versus $.52 per share in 1999. Financial Condition The Company's working capital was $92.1 million at April 1, 2000, as compared to $69.5 million at December 31, 1999, and $78.9 million at April 3, 1999. The increase since December 31, 1999 was due primarily to seasonal increases in accounts receivable and factory inventories. The increase from April 3, 1999 in accounts receivables and inventories was primarily related to the new mini-excavator product line. Capital expenditures for property, plant and equipment during the first quarter of 2000 were approximately $3.0 million. The Company plans to make up to $20 million in capital expenditures in 2000, including approximately $9.8 million to complete the expansion of the two South Dakota manufacturing facilities and to add equipment necessary to increase production levels in the manufacture of skid loaders and telescopic handlers. The Company believes its present facilities, with these expansion projects, will be sufficient to provide adequate capacity for its operations in 2000. Outstanding commitments as of April 1, 2000 totaled approximately $2.4 million. As of April 1, 2000, the weighted-average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 8.1%. The Company had available unused borrowing capacity of $29.0 million, $49.8 million and $47.9 million under the line of credit facility at April 1, 2000, December 31, 1999, and April 3, 1999, respectively. At April 1, 2000, December 31, 1999, and April 3, 1999, the borrowings outstanding under the line of credit facility were $44.1 million, $22.0 million and $25.3 million, respectively. The increase in indebtedness in relation to April 3, 1999 is due to repurchase of Company stock, working capital requirements and capital expenditures offset by operating cash flow generated from April 4, 1999 to April 1, 2000. The sale of finance contracts is an important component of the Company's overall liquidity. The Company has arrangements with several financial institutions and financial service companies to sell, with recourse, its finance contracts receivable. The Company continues to service substantially all contracts whether or not sold. At April 1, 2000, the Company serviced $113.2 million of such contracts, of which $90.3 million were owned by other parties. The Company believes that it has sufficient capacity to sell its retail finance contracts for the foreseeable future. At April 1, 2000, shareholders' equity had increased $1.8 million to $99.6 million from $97.8 million at April 3, 1999. This increase primarily reflected the impact of the income earned from April 4, 1999 to April 1, 2000 offset by $20.6 million expended to repurchase Company stock. In March 2000, the Company's Board of Directors authorized a repurchase plan providing for the repurchase of up to an additional 325,000 shares of the Company's outstanding common stock. As of April 1, 2000, no shares had been repurchased under this authorization. In March 1999, a repurchase plan relating to up to 325,000 shares of the Company's outstanding common stock was authorized. As of April 1, 2000, all of the authorized shares under that plan had been repurchased at an aggregate cost of $5.8 million. The Company repurchased 120,400 shares of its common stock in the open market at an aggregate cost of $2.1 million during the quarter ended April 1, 2000. Accounting Pronouncements The Financial Accountings Standards Board (FASB) has issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Investments and Hedging Activities" which was originally effective for fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the effective date was delayed by one year and will be effective January 1, 2001 for the Company. Due to the Company's current limited used of derivative instruments, the adoption of this statement is not expected to materially affect the Company's financial condition or results of operations. Forward-Looking Statements Certain matters discussed in this quarterly report 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, changes in commodity prices, especially milk, market acceptance of existing and new products offered by the Company, changes in the cost of raw materials and component parts purchased by the Company, and interest rate and foreign currency fluctuations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk There are no material changes to the information provided in response to this item as set forth in the Company s Form 10-K for the year ended December 31, 1999 as filed with the Securities and Exchange Commission. PART II OTHER INFORMATION Item 6. Exhibits and Report on Form 8-K (a) Exhibits 27 Financial Data Schedule [EDGAR version only] (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended April 1, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GEHL COMPANY Date: May 12, 2000 By: /s/ William D. Gehl William D. Gehl Chairman of the Board, President and Chief Executive Officer Date: May 12, 2000 By: /s/ Kenneth P. Hahn Kenneth P. Hahn Vice President of Finance, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) GEHL COMPANY FORM 10-Q April 1, 2000 EXHIBIT INDEX Exhibit Number Document Description 27 Financial Data Schedule [EDGAR version only] EX-27 2
5 This schedule contains summary financial information extracted from Gehl Company's condensed consolidated balance sheet at April 1, 2000 and condensed consolidated statements of income for the three-month period ended April 1, 2000 and is qualified in its entirety by reference to such financial statements. 1000 3-MOS DEC-31-2000 JAN-1-2000 APR-01-2000 3254 0 99554 0 42219 154015 83823 45014 224591 61904 53127 557 0 0 99078 224591 70696 70696 51414 51414 0 0 873 6260 2191 4069 0 0 0 4069 .73 .70 The Company presents receivables on a net basis in compliance with Article 10 of Regulation S-X. Includes all non-current portion of debt obligations The EPS under the "EPS-Primary" tag represents Basic Earnings Per Share.
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