-----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, HcJCGljxiQzcHhEKo0v5uLJbfI9ClkcaaBKJjk4JscIaU9uhPwzh/kE6rXg8r+v9 fKRjy3K71sm0ZSXcxlLH+A== 0000856386-99-000014.txt : 19991117 0000856386-99-000014.hdr.sgml : 19991117 ACCESSION NUMBER: 0000856386-99-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991002 FILED AS OF DATE: 19991116 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: 99758951 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 October 2, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.............. to ................... Commission file number 0-18110 GEHL COMPANY (Exact name of registrant as specified in its charter) Wisconsin 39-0300430 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 143 Water Street, West Bend, WI 53095 (Address of principal executive office) (Zip code) (262) 334-9461 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 2, 1999 Common Stock, $.10 Par Value 5,802,771 GEHL COMPANY FORM 10-Q October 2, 1999 REPORT INDEX Page No. PART I. - FINANCIAL INFORMATION: Item 1. Financial Statements Condensed Consolidated Statements of Income for the Three- and Nine-Month Periods Ended October 2, 1999 and September 26, 1998 . . . . . . . . . . 3 Condensed Consolidated Balance Sheets at October 2, 1999, December 31, 1998 and September 26, 1998 . 4 Condensed Consolidated Statements of Cash Flows for the Nine-Month Periods Ended October 2, 1999 and September 26, 1998 . . . . . . . . . . . . 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 12 PART II. - OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K . . . . 12 SIGNATURES . . . . . . . . . . . . . . . . . . . 13 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 Nine Months Ended October 2, Sept. 26, October 2, Sept. 26, 1999 1998 1999 1998 NET SALES $69,838 $63,452 $222,649 $199,971 Cost of goods sold 49,195 45,618 159,115 145,111 ------- ------- -------- -------- GROSS PROFIT 20,643 17,834 63,534 54,860 Selling, general and administrative expenses 10,322 10,734 35,348 33,283 ------- ------- -------- -------- INCOME FROM OPERATIONS 10,321 7,100 28,186 21,577 Interest expense (789) (925) (2,343) (3,352) Interest income 452 480 1,290 1,233 Other expense, net (525) (363) (1,742) (959) ------- ------- -------- -------- INCOME BEFORE INCOME TAXES 9,459 6,292 25,391 18,499 Income tax provision 3,358 2,234 9,014 6,567 ------- ------- -------- -------- NET INCOME $6,101 $4,058 $16,377 $11,932 ======= ======= ======== ======== EARNINGS PER SHARE Diluted $1.00 $.61 $2.52 $1.79 Basic $ 1.04 $.63 $2.62 $1.88
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
October 2, December 31, September 26, 1999 1998 1998 ASSETS (Unaudited) (Unaudited) Cash $ 3,967 $ 887 $ 4,925 Accounts receivable-net 74,057 70,806 77,975 Finance contracts receivable-net 10,945 9,786 8,892 Inventories 32,119 32,093 28,630 Deferred tax asset 7,138 7,138 4,217 Prepaid expenses and other assets 903 1,184 1,242 -------- ------- ---------- Total Current Assets 129,129 121,894 125,881 -------- ------- ---------- Property, plant and equipment-net 34,492 34,142 34,101 Finance contracts receivable- net, non-current 6,558 5,804 3,298 Intangible assets 15,894 16,451 14,317 Other assets 8,671 6,256 5,725 -------- ------- ------- TOTAL ASSETS $ 194,744 $ 184,547 $ 183,322 ======== ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current portion of long-term debt obligations $ 562 $ 597 $ 639 Accounts payable 26,198 23,562 26,758 Accrued liabilities 32,753 27,993 26,341 -------- ------- ------- Total Current Liabilities 59,513 52,152 53,738 Line of credit facility 21,060 19,359 23,583 Long-term debt obligations 9,142 9,588 9,726 Other long-term liabilities 5,205 5,400 1,979 Deferred income taxes 3,943 3,943 3,421 -------- ------- ------- Total Long-Term Liabilities 39,350 38,290 38,709 -------- ------- ------- Common stock, $.10 par value, 25,000,000 shares authorized, 6,570,271, 6,438,945 and 6,406,990 shares issued, respectively 657 644 640 Preferred stock, $.10 par value, 2,000,000 shares authorized, 250,000 shares designated as Series A Preferred Stock, no shares issued - - - Treasury stock, at cost (767,500 shares at October 2, 1999) (15,613) - - Capital in excess of par 29,329 28,330 27,670 Retained earnings 82,660 66,283 62,947 Accumulated other comprehensive loss (1,152) (1,152) (382) -------- ------- ------- Total Shareholders' Equity 95,881 94,105 90,875 -------- ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 194,744 $ 184,547 $ 183,322 ========= ========= =========
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited)
Nine Months Ended October 2, September 26, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 16,377 $ 11,932 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,239 3,205 Amortization 588 529 Proceeds from sales of finance contracts 53,553 38,668 Increase in finance contracts receivable (57,491) (40,485) Cost of sales of finance contracts 2,025 868 Net change in working capital items 4,400 5,771 ---------- --------- Net cash provided by operating activities 22,691 20,488 ---------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (3,589) (2,225) Other assets (2,446) (301) ---------- --------- Net cash used for investing activities (6,035) (2,526) ---------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: (Decrease) increase in long-term debt obligations (481) 4 (Decrease) increase in long-term liabilities (195) 124 Proceeds from (repayments of) credit facility 1,701 (15,774) Proceeds from issuance of common stock 1,012 1,370 Purchase of treasury stock (15,613) - ---------- --------- Net cash used for financing activities (13,576) (14,276) ---------- --------- Net increase in cash 3,080 3,686 Cash, beginning of period 887 1,239 ---------- --------- Cash, end of period $ 3,967 $ 4,925 =========== ========== Supplemental disclosure of cash flow information: Cash paid for the following: Interest $ 2,284 $ 3,346 Income taxes $ 8,702 $ 4,884
The accompanying notes are an integral part of the financial statements. GEHL COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS October 2, 1999 (Unaudited) NOTE 1 - BASIS OF PRESENTATION The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information presented not misleading. In the opinion of management, the information furnished for the three- and nine-month periods ended October 2, 1999 and September 26, 1998 includes all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results of operations and financial position of the Company. The results of operations for the nine months ended October 2, 1999 are not necessarily indicative of the results to be expected for the entire year due, in part, to the seasonal nature of the Company's operations. It is suggested that these interim financial statements be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 as filed with the Securities and Exchange Commission. NOTE 2 - INCOME TAXES The income tax provision is determined by applying an estimated annual effective income tax rate to income before income taxes. The estimated annual effective income tax rate is based on the most recent annualized forecast of pretax income, permanent book/tax differences and tax credits. NOTE 3 - INVENTORIES If all of the Company's inventories had been valued on a current cost basis, which approximated FIFO value, estimated inventories by major classification would have been as follows (in thousands): October 2, December 31, September 26, 1999 1998 1998 Raw materials and supplies $ 17,306 $ 15,656 $ 14,226 Work-in-process 5,149 5,863 5,349 Finished machines and parts 29,060 29,970 28,305 ---------- --------- -------- Total current cost value 51,515 51,489 47,880 Adjustment to LIFO basis (19,396) (19,396) (19,250) ---------- --------- -------- $ 32,119 $ 32,093 $ 28,630 ========== ========= ======== NOTE 4 - ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities" which was originally effective for fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the effective date was delayed one year and will be effective January 1, 2001 for the Company. Due to the Company's current limited use of derivative instruments, the adoption of this statement is not expected to have a material effect on the Company's financial condition or results of operations. NOTE 5 - EARNINGS PER SHARE Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted net income per common share is computed by dividing net income by the weighted average number of common shares and, if applicable, common stock equivalents which would arise from the exercise of stock options and warrants. A reconciliation of the shares used in the computation of earnings per share follows (in thousands): For the three months ended: October 2, 1999 September 26, 1998 --------------- ------------------ Basic shares 5,856 6,406 Effect of options 235 252 ----- ----- Diluted shares 6,091 6,658 ===== ===== For the nine months ended: October 2, 1999 September 26, 1998 --------------- ------------------ Basic shares 6,260 6,359 Effect of warrants and options 243 312 ----- ----- Diluted shares 6,503 6,671 ===== ===== NOTE 6 BUSINESS SEGMENTS The Company operates in two business segments: Construction equipment and Agriculture equipment. The long-term financial performance of the Company's reportable segments are affected by separate economic conditions and cycles. The segments are managed separately based on the fundamental differences in their operations. During 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Statement requires the Company to disclose selected segment information on an interim basis; this information is set forth below (in thousands): Three Months Ended Nine Months Ended ------------------ ----------------- October 2, Sept. 26, October 2, Sept. 26, 1999 1998 1999 1998 Net Sales: Construction $41,251 $38,774 $132,852 $118,255 Agriculture 28,587 24,678 89,797 81,716 -------- -------- -------- -------- Consolidated $69,838 $63,452 $222,649 $199,971 ======== ======== ======== ======== Income from Operations: Construction $6,640 $ 5,158 $ 19,033 $ 14,918 Agriculture 3,681 1,942 9,153 6,659 -------- -------- -------- -------- Consolidated $10,321 $ 7,100 $ 28,186 $ 21,577 ======== ======== ======== ======== NOTE 7 STOCK REPURCHASE In March 1999, the Company's Board of Directors authorized the repurchase of up to 325,000 shares of the Company's outstanding common stock. As of October 2, 1999, 41,600 shares had been repurchased in the open market under this authorization at an aggregate cost of $732,000. On July 9, 1999, the Company repurchased 725,900 shares of its common stock, at a per share purchase price of $20.50, from a shareholder (and affiliates) in a privately negotiated transaction. The aggregate purchase price of $14.9 million was financed with borrowings under the Company's existing revolving credit facility. In connection with the repurchase, the shareholder agreed not to acquire shares of the Company's stock or take certain other actions until after July 9, 2009. This repurchase was effected pursuant to separate Board authorization and does not impact the stock repurchase plan described above. Item 2. Management's Discussion And Analysis Of Results Of Operations And Financial Condition Results of Operations Three Months Ended October 2, 1999 Compared to Three Months Ended September 26, 1998 Net sales for the third quarter of 1999 of $69.8 million were 10% higher than the $63.5 million of net sales in the comparable period of 1998. Construction equipment net sales increased 6% to $41.2 million in the third quarter of 1999 from $38.8 million in the third quarter of 1998. The increased Construction equipment sales were due primarily to higher shipments of rough- terrain telescopic handlers. Additionally, during the third quarter of 1999, the Company commenced shipment of the mini-excavator product line introduced in May of this year. Agriculture equipment net sales increased 16% to $28.6 million in the third quarter of 1999 from $24.7 million in the third quarter of 1998, due primarily to increased shipments of skid loaders and forage harvesting equipment. Of the Company's total net sales reported for the third quarter of 1999, $10.3 million represented sales made outside the United States compared with $10.2 million in the comparable period of 1998. Gross profit increased $2.8 million, or 16%, during the third quarter of 1999 versus the comparable period of 1998, due primarily to increased sales volume. Gross profit as a percent of net sales increased to 29.6% for the third quarter of 1999 from 28.1% in the comparable period of 1998. Gross profit as a percent of net sales for Construction equipment increased to 28.0% in the third quarter of 1999 from 26.2% in the third quarter of 1998. The increase in Construction equipment gross margin was a function of increased rough-terrain telescopic handler sales, which sales are at higher gross margins than other construction equipment, and improved efficiencies at the manufacturing plants. Gross profit as a percent of net sales for Agriculture equipment increased to 31.9% in the third quarter of 1999 from 31.1% in the comparable period of 1998. The primary reason for the increase was the impact of a change in the mix of products shipped in the third quarter of 1999 versus products shipped in comparable 1998. Selling, general and administrative expenses decreased $412,000, or 4%, during the third quarter of 1999 versus the comparable period of 1998, due primarily to lower costs of selling Agriculture products in 1999 versus the comparable period of 1998. As a percent of net sales, selling, general and administrative expenses decreased to 14.8% during the third quarter of 1999 versus 16.9% in the comparable period of 1998. Income from operations in the third quarter of 1999 was $10.3 million versus $7.1 million in the third quarter of 1998. Interest expense decreased $136,000 to $789,000 in the third quarter of 1999 from $925,000 in the third quarter of 1998. This resulted from a decrease in average debt outstanding to $35.1 million in the third quarter of 1999 versus $41.4 million in the third quarter of 1998. Other expense increased $162,000 to $525,000 in the third quarter of 1999 from $363,000 in the third quarter of 1998. This was due primarily to the cost of selling finance contracts to third parties. In 1999 the cost of selling these contracts increased as the finance rates offered to Gehl finance customers were lower than the comparable period of 1998, while the discount rates used in selling finance contracts to third parties increased as a result of the general trend of overall interest rates. Third quarter 1999 net income of $6.1 million was a 50% increase from $4.1 million in the third quarter of 1998. Diluted earnings were $1.00 per share for the third quarter of 1999, a 64% increase from $.61 per share in 1998, reflecting the impact of a lower number of common stock shares outstanding as a result of the Company's stock repurchases as well as improved performance. Nine Months Ended October 2, 1999 Compared to Nine Months Ended September 26, 1998 Net sales for the first nine months of 1999 of $222.6 million were $22.6 million, or 11%, higher than the $200.0 million of net sales in the comparable period of 1998. Construction equipment net sales increased 12% to $132.8 million in the first nine months of 1999 from $118.3 million in the first nine months of 1998. The Construction equipment increase resulted from continued strong demand for rough-terrain telescopic handlers. Agriculture equipment net sales increased 10% to $89.8 million in the first nine months of 1999 from $81.7 million in the first nine months of 1998. The increase was due primarily to increased shipments of forage harvesting equipment and skid loaders. Of the Company's total net sales reported for the first nine months of 1999, $30.6 million represented sales made outside the United States compared with $32.4 million in the comparative period of 1998. The decrease in international sales was due to economic disruption in the Far East and Australia. Given the segments that the Company ships into, there exists some seasonality in the sales trends, primarily in the Company's second and third quarters which historically have tended to be its strongest quarters for sales, while sales levels have historically tended to be lower in the first and fourth quarters. Gross profit increased $8.7 million, or 16%, in the first nine months of 1999 versus the comparable period of 1998, due primarily to increased sales volume. Gross profit as a percent of net sales increased to 28.5% for the first nine months of 1999 from 27.4% in the comparable period of 1998. Gross profit as a percent of net sales for Construction equipment increased to 27.4% in the first nine months of 1999 from 25.7% in the first nine months of 1998. The increase in Construction gross margin was a function of increased rough- terrain telescopic handler sales, which sales are at higher gross margins than other construction equipment, and improved efficiencies at the manufacturing plants. Gross profit as a percent of net sales for Agriculture equipment increased to 30.2% for the first nine months of 1999 from 29.9% for the first nine months of 1998. Selling, general and administrative expenses increased $2.1 million, or 6%, during the first nine months of 1999 versus the comparable period of 1998 due to continued investment in engineering and sales related activities, as well as sales volume increases. As a percent of net sales, selling, general and administrative expenses decreased to 15.9% during the first nine months of 1999 versus 16.6% in the comparable period of 1998. Income from operations in the first nine months of 1999 of $28.2 million was 31% higher than the $21.6 million for the comparable period of 1998. Interest expense decreased $1.0 million to $2.3 million in the first nine months of 1999 from $3.3 million in the first nine months of 1998. The decrease was a result of a decrease in average debt outstanding to $35.5 million in the first nine months of 1999 versus $52.1 million in the comparable period of 1998 combined with a decrease in the average rate of interest paid by the Company to approximately 7.7% in the first nine months of 1999 versus 7.9% in the comparable period of 1998. Other expense increased $783,000 to $1,742,000 as of October 2, 1999 from $959,000 at September 26, 1998. This was primarily a result of selling $14.9 million more retail finance contracts to third parties during the nine months ended October 2, 1999 versus the comparable period of 1998, combined with lower finance rates offered to Gehl finance customers and increasing discount rates used in selling finance contracts to third parties resulting from the general trend of overall interest rates. Net income of $16.4 million for the nine months ended October 2, 1999 was a 37% increase from $11.9 million for the nine months ended September 26, 1998. Diluted earnings were $2.52 per share for the nine months ended October 2, 1999, a 41% increase from $1.79 per share in 1998, reflecting the impact of a lower number of shares of common stock outstanding as a result of the Company's stock repurchase, as well as improved performance. Financial Condition The Company's working capital was $69.6 million at October 2, 1999 as compared to $69.7 million at December 31, 1998 and $72.1 million at September 26, 1998. The Company's cash flow provided by operating activities in the first nine months of 1999 was $22.7 million versus $20.5 million in comparable 1998. Capital expenditures for property, plant and equipment during the first nine months of 1999 were approximately $3.6 million. The Company expects to make approximately $7.4 million of capital expenditures during 1999, which includes approximately $5 million related to plant expansion activities at its two South Dakota construction equipment manufacturing facilities. The capital expenditures are expected to be funded with borrowings under the Company's existing line of credit facility. Outstanding capital expenditure commitments as of October 2, 1999 totaled approximately $2.2 million. As of October 2, 1999, the weighted average interest rate paid by the Company on outstanding borrowings under its line of credit facility was 7.4%. The Company had available unused borrowing capacity of $51.8 million, $53.1 million and $49.2 million under the line of credit facility at October 2, 1999, December 31, 1998 and September 26, 1998, respectively. At October 2, 1999, December 31, 1998 and September 26, 1998, the borrowings outstanding under the line of credit facility were $21.1 million, $19.4 million and $23.6 million, respectively. The sale of finance contracts is an important component of the Company's overall liquidity. Gehl has arrangements with several financial institutions and finance service companies to sell, with recourse, its finance contracts receivable. The Company continues to service substantially all contracts whether or not sold. At October 2, 1999, Gehl serviced $101.4 million of such contracts, of which $84.0 million were owned by other parties. The Company believes that it has sufficient capacity to sell its retail finance contracts for the foreseeable future. Shareholders' equity at October 2, 1999 was $95.9 million. This amount was $5.0 million higher than the $90.9 million of shareholders' equity at September 26, 1998, due primarily to income earned from September 26, 1998 through October 2, 1999, offset by the purchase of treasury stock in the third quarter of 1999. On July 9, 1999, the Company repurchased 725,900 shares of its common stock, at a per share purchase price of $20.50, from a shareholder (and affiliates) in a privately negotiated transaction. The aggregate purchase price of $14.9 million was financed with borrowings under the Company's existing revolving credit facility. In addition, the Company has repurchased 41,600 share of its common stock in the open market at an aggregate cost of $732,000 under a stock repurchase program which allows for repurchases of up to 325,000 shares. The repurchase program was authorized by the Company's Board of Directors in March 1999. Accounting Pronouncements The Financial Accounting Standards Board (FASB) has issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities" which was originally effective for fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999, the effective date was delayed by one year and will be effective January 1, 2001 for the Company. Due to the Company's current limited use of derivative instruments, the adoption of this statement is not expected to have a material effect on the Company's financial condition or results of operations. Year 2000 The Year 2000 issue refers to computer systems which use two digits rather than four to define a given year and which therefore might read a date using "00" as the year 1900 rather than the Year 2000. As the Year 2000 approaches, such systems may be unable to process certain date-based information. This could result in system failure or miscalculations causing disruptions of operations and the potential inability to engage in normal business activities. In 1995, a Company-wide program was initiated to prepare its Information Technology (IT) systems and applications for the Year 2000. The initial focus of the Company's program contained the following steps: assessment of the relevant issues; planning the conversion; implementing the conversion; and testing. Those systems determined to be at risk were prioritized and plans were put in place to upgrade systems by remediation, replacement or outsourcing. By the end of September 1999, the assessment and planning phases have been completed for all IT systems and applications. The Company's objective to become Year 2000 compliant with its mission critical IT activities and systems by mid-1999 has been met, allowing time for further testing, verification and the final remediation of less important systems during the remainder of 1999. In addition to the IT systems review noted above, the Company has completed assessments, modifications and testing in other areas, where appropriate, impacted by Year 2000. These areas include, but are not limited to, personal computer hardware and software, remote location access to IT systems, facility management and certain non-IT issues, such as the extent to which embedded chips are used in machinery and equipment used in operations. The Company continues the process of communicating with its significant vendors to determine the extent to which the Company is vulnerable to those third parties' failure to remediate their own Year 2000 compliance issues. Although the Company believes it has taken reasonable steps to ensure Year 2000 compliance by its significant vendors, the Company cannot guarantee that the failure of another company to be Year 2000 compliant will not have an adverse effect on the Company. The Company believes that it has no exposure to contingencies related to the Year 2000 issue for products it has sold. The Company has evaluated its major customers and believes that the failure of these companies to adequately prepare for Year 2000 issues will not have a material adverse effect on the Company. The Company expects to incur consulting and other expenses related to its Year 2000 program. The cost of testing and the conversion of existing and replacement system applications are not expected to exceed $400,000, the majority of which expense has already been incurred. These costs have been and will continue to be treated as period costs and expensed as incurred. Based upon the progress to date, the Company does not believe that either future costs of modifications or the consequences of any unsuccessful modifications being implemented by the Company will have a material adverse effect on its financial position or results of operations. Nevertheless, since it is not possible to anticipate all possible future situations, especially when third parties are involved, the Company believes that the most reasonably likely worst case Year 2000 scenario could result in circumstances in which the Company may be unable to take customer orders, manufacture and ship products, invoice customers or collect payments. Contingency plans will be developed, as necessary, to address unforeseen circumstances prior to the end of 1999. No assurances can be given that Year 2000 compliance failures, if any, particularly as they relate to third parties, will not have a material adverse effect on the Company s financial position or results of operations. Forward-Looking Statements Certain matters discussed in this Quarterly Report on Form 10-Q are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include such words as the Company "believes," "anticipates" or "expects," or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. Such risks and uncertainties include competitive conditions in the markets served by the Company, changes in the Company's plans regarding capital expenditures, general economic conditions, unanticipated events related to resolving Year 2000 issues, market acceptance of existing and new products manufactured by the Company, changes in the cost of raw materials and component parts purchased by the Company, and interest and foreign currency fluctuations. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Item 3. Quantitative and Qualitative Disclosures about Market Risk There are no material changes to the information provided in response to this item as set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1998 as filed with the Securities and Exchange Commission. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 27 Financial Data Schedule [EDGAR version only] (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended October 2, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GEHL COMPANY Date: November 15, 1999 By: /s/ William D. Gehl William D. Gehl Chairman of the Board, President and Chief Executive Officer Date: November 15, 1999 By: /s/ Kenneth P. Hahn Kenneth P. Hahn Vice President of Finance, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer) GEHL COMPANY FORM 10-Q October 2, 1999 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 consolidated balance sheet at October 2, 1999 and consolidated statements of income for the nine-month period ended October 2, 1999 and is qualified in its entirety by reference to such financial statements. 1000 9-MOS DEC-31-1999 JAN-1-1999 OCT-2-1999 3967 0 85002 0 32119 129129 78925 44433 194744 59513 30202 657 0 0 95224 194744 222649 222649 159115 159115 0 0 2343 25391 9014 16377 0 0 0 16377 2.62 2.52 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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