[GEHL LOGO OMITTED]
Gehl Company Tel: 262/334-9461
143 Water Street Fax: 262/334-6603
P.O. Box 179 http://www.gehl.com
CONTACT: West Bend, WI
Kenneth Hahn 53095-0179
Chief Financial Officer USA
262-334-6632
News Release
GEHL COMPANY REPORTS 2002 NET INCOME, BEFORE
NON-RECURRING CHARGES, OF $1.7 MILLION, OR $.30 PER DILUTED
SHARE; CONSTRUCTION EQUIPMENT SALES INCREASE BY 10%
WEST BEND, WI, February 21, 2003 -- Gehl Company (NASDAQ NM: GEHL), a
manufacturer of compact construction and agricultural equipment, today reported
net sales for the year ended December 31, 2002 of $232.6 million, compared to
$240.4 million recorded for the prior year. Net income, before non-recurring
charges, for the year ended December 31, 2002, totaled $1.7 million, or $.30 per
diluted share. Net income in 2001, exclusive of non-recurring charges, was $5.4
million, or $.99 per diluted share. Non-recurring after-tax charges in 2002 were
$621,000, or $.11 per diluted share, related to previously announced
restructuring and plant rationalization initiatives. Non-recurring after-tax
charges in 2001 were $3.1 million, including $2.8 million, or $.51 per diluted
share, for plant rationalization initiatives, and $.3 million, or $.06 per
diluted share, for strategic review process expenses. Net income for the year
ended December 31, 2002, including non-recurring charges, totaled $1.0 million,
or $.19 per diluted share, compared to $2.3 million, or $.42 per diluted share,
in 2001. 2001 results included approximately $476,000 of goodwill amortization
expense, or $.09 per diluted share.
For the quarter ended December 31, 2002, Gehl reported net sales of $51.2
million, an increase of 8%, compared to $47.4 million for the fourth quarter of
2001. The Company reported a net loss for the quarter of $155,000, or $.03 per
diluted share, excluding non-recurring after-tax charges of $150,000, compared
to a net loss of $430,000, or $.08 per diluted share in the fourth quarter of
2001. Including the effect of
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Gehl Company
Gehl Company Reports 2002 Net Income
February 21, 2003
Page 2
the non-recurring after tax charges of $150,000 related to previously announced
restructuring and plant rationalization initiatives, the net loss for the fourth
quarter of 2002 was $304,000, or $.06 per diluted share. Fourth quarter 2001
results include approximately $119,000 of goodwill amortization expense, or $.02
earnings per diluted share.
"In general, our fourth quarter 2002 total net sales and our construction
equipment sales were up, while our agricultural sales were down - which is the
reverse of what we reported last year at this time," said Gehl Company Chairman,
President and CEO, William D. Gehl. Mr. Gehl said "Sluggishness in the U.S.
economy affected us in general, while lower milk prices and unfavorable weather
conditions in certain areas of the United States reduced demand for our
agricultural equipment. In addition, industry-wide telescopic handler retail
demand in North America in 2002 was down for the third straight year, which
reduced shipments of our telescopic handlers."
"We continue," Mr. Gehl said, "to take aggressive steps to control costs.
We've already realized some of the benefits of these efforts and expect to see
more reflected in our future performance. Our plant rationalization project has
been completed, in which we transferred and outsourced production, enabling us
to close two of our plants. We will continue to reduce expenses and adjust
production to reflect the demand for our products."
"On the positive side" said Mr. Gehl, "good demand for the recently
introduced all-wheel steer loader and compact tracked loader products, sales of
telescopic handlers and compact excavators to Mustang dealers, and sales from
the Company's new attachment business and the Company's newest subsidiary, Gehl
Europe, have all benefited total Company sales."
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Gehl Company Reports 2002 Net Income
February 21, 2003
Page 3
CONSTRUCTION EQUIPMENT SALES
Sales of construction equipment in the fourth quarter of 2002 were $32.2
million, an increase of 40% over the $23.1 million recorded in the disappointing
fourth quarter of 2001. Construction equipment sales for the full year ended
December 31, 2002 were $135.1 million, an increase of 10% above the $122.3
million for the full year ended December 31, 2001. Sales of the new compact
tracked loaders have been strong since their introduction in the second quarter
of 2002. In addition, construction equipment segment net sales in 2002 benefited
from the introduction of new all-wheel steer loaders in the 2002 third quarter,
contributions from telescopic handlers and compact excavator models sold through
the Mustang distribution channel and net sales from the Company's new attachment
business and the newly consolidated Gehl Europe subsidiary. These increases more
than offset the reduction in telescopic handler shipments resulting from the
continuing downward trend in that market. Net sales of $2.8 million and $10.0
million have been included in the 2002 fourth quarter and full year periods,
respectively, as a result of including the newly consolidated Gehl Europe
subsidiary.
AGRICULTURAL EQUIPMENT SALES
Sales of agricultural equipment in the fourth quarter of 2002 were $19.0
million versus $24.3 million reported in the fourth quarter of 2001, a decrease
of 22%. Agricultural equipment sales for the full year ended December 31, 2002
were $97.5 million, 17% below the $118.1 million recorded for the full year
ended December 31, 2001.
Agricultural implement net sales were adversely impacted by the significant
decline in milk prices as well as drought conditions in certain regions of the
United States. Sales of the new compact tracked loaders introduced in the 2002
second quarter, the introduction of new all-wheel steer loaders in the 2002
third quarter, increased shipments of compact excavators to select rural
equipment dealers, and
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Gehl Company Reports 2002 Net Income
February 21, 2003
Page 4
increased sales from the Company's new attachment business partially offset
reduced implement and skid loader net sales in the agricultural segment.
GROSS MARGINS AND OPERATING EXPENSES
For the fourth quarter of 2002, the Company's total gross margin was 18.6%,
versus 20.8% for the fourth quarter of 2001. For the full year 2002, total gross
margin was 21.0% versus 22.2% for 2001. Gross margin for construction equipment
was 20.6% and 21.3% for the 2002 fourth quarter and full year periods,
respectively, compared to 22.1% and 20.6%, respectively, for the comparable
periods of 2001. The increase in the construction equipment gross margin for the
full year 2002 was primarily due to lower levels of discounts and sales
incentives associated with the mix of products shipped as well as improved
manufacturing efficiencies. The reduction in the construction equipment gross
margin for the fourth quarter of 2002 was due primarily to lower production
levels and less favorable mix of product shipments. Gross margin for
agricultural equipment was 15.4% and 20.5%, for the 2002 fourth quarter and full
year periods, respectively, compared to the 19.6% and 23.8% margins realized for
the comparable periods of 2001. The decrease in the agricultural equipment
segment gross margin was due to significant competitive pressure resulting in
higher sales discounts and sales incentives, reduced production volume and a
less favorable mix of product shipments.
Selling, general and administrative expense in the fourth quarter of 2002
was $9.3 million, or 18.2% of net sales, compared to $9.8 million (including
approximately $119,000 of goodwill amortization), or 20.8% of net sales in the
fourth quarter of 2001. For the full year 2002, selling, general and
administrative expense was $42.7 million, or 18.4% of net sales, compared to
$39.6 million (including $476,000 of goodwill amortization), or 16.5% of net
sales for the full year 2001.
The increase in the dollar amount of expenses for 2002 is primarily due to
the consolidation of Gehl Europe effective January 1, 2002 and expenses
associated with
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Gehl Company Reports 2002 Net Income
February 21, 2003
Page 5
the Company's attachment business that was launched in July 2001. These costs,
combined with a lower level of net sales, contributed to the Company's increased
selling, general and administrative expense as a percentage of net sales for the
full year 2002.
NEW ACCOUNTING PROCEDURES
Effective January 1, 2002, the Company adopted the provisions of Emerging
Issues Task Force ("EITF") 00-25 "Vendor Income Statement Characterization of
Consideration Paid to a Retailer of the Vendor's Products." As a result of this
adoption, the Company now classifies the costs associated with sales incentives
provided to dealers as a reduction of net sales. These costs were previously
included in selling, general and administrative expense. Net sales and selling,
general and administrative expense for 2001 have been restated to conform with
the current year presentation. This reclassification had no impact on reported
income before income taxes, net income or income per share amounts.
Effective January 1, 2002, Gehl Company has accounted for its investment in
a German distribution operation, Gehl Europe, as a consolidated subsidiary, as a
result of its controlling influence on the operation as of such date. Net sales
of $2.8 million and $10.0 million have been included in the 2002 fourth quarter
and full year periods, respectively, as a result of this consolidation.
Effective January 1, 2002, the Company adopted the provisions of Financial
Accounting Standard No. 142 ("FAS 142") "Goodwill and Other Intangible Assets"
which states that goodwill and intangible assets deemed to have indefinite lives
are no longer subject to amortization, but will be tested for impairment at
least annually. Upon adoption, Gehl discontinued the amortization of goodwill.
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Gehl Company Reports 2002 Net Income
February 21, 2003
Page 6
OUTLOOK FOR 2003
Demand for construction equipment in the North American market during 2003
is expected to be flat compared to 2002 levels, while demand for agricultural
equipment in the North American market is expected to be flat to slightly down.
Based on the current market outlook, the Company's net sales are expected
to range between being flat to up approximately 4% in 2003. Any growth in net
sales is expected to result primarily from the sales of recently introduced
products and new products to be introduced in 2003. Growth in net sales is more
likely to occur in the construction equipment segment as compared with the
agricultural equipment segment. Overall, any anticipated sales growth would
likely occur in the latter portion of 2003 based on the Company's expectation of
a gradually improving economy. Operating margins are expected to improve as the
result of further initiatives to reduce costs, the effect of factory
rationalizations completed in 2002 and a more favorable product mix. While it is
difficult to predict results in these unsettled economic times, if the economy
experiences some gradual improvement and the Company's sales levels meet
projected forecasts, the Company expects to earn in the range of $.60 to $.75
per diluted share in 2003.
About Gehl Company
Gehl Company (NASDAQ NM: GEHL) is a manufacturer of compact equipment used
worldwide in construction and agricultural markets. Founded in 1859, the Company
is headquartered in West Bend, WI, with manufacturing facilities in West Bend,
WI; and Madison and Yankton, SD. The Company markets its products under the Gehl
(R) and Mustang (R) brand names. Mustang product information is available on the
Mustang Manufacturing website (www.mustangmfg.com). CE Attachments, Inc.
information is available at (www.ceattach.com). Gehl Company information is
available at (www.gehl.com) or contact: Gehl Company, 143 Water Street, West
Bend, WI 53095 (telephone: 262-334-9461).
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Gehl Company Reports 2002 Net Income
February 21, 2003
Page 7
Forward Looking Statements
The Company intends that certain matters discussed in this press release
are "forward-looking statements" intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact, including statements
regarding the Company's future financial position, business strategy, targets
and projected sales and earnings, and the plans and objectives of management for
future operations, are forward-looking statements. When used in this press
release, words such as the Company "believes," "anticipates," "expects",
"estimates" or "projects" or words of similar meaning are generally intended to
identify forward-looking statements. These forward-looking statements are not
guarantees of future performance and are subject to certain risks,
uncertainties, assumptions and other factors, some of which are beyond the
Company's control, that could cause actual results to differ materially from
those anticipated as of the date of this press release. Factors that could cause
such a variance include, but are not limited to, a delay in the expected general
economic recovery, unanticipated changes in capital market conditions, the
Company's ability to implement successfully its strategic initiatives, market
acceptance of newly introduced products, the cyclical nature of the Company's
business, the Company's and its customers' access to credit, competitive
pricing, product initiatives and other actions taken by competitors, disruptions
in production capacity, excess inventory levels, the effect of changes in laws
and regulations (including government subsidies and international trade
regulations), technological difficulties, changes in currency exchange rates,
the Company's ability to secure sources of liquidity necessary to fund its
operations, changes in environmental laws, the impact of any acquisition
effected by the Company, and employee and labor relations. Shareholders,
potential investors, and other readers are urged to consider these factors in
evaluating the forward-looking statements and are cautioned not to place undue
reliance on such forward-looking statements. The forward-looking statements
included in this release are only made as of the date of this release, and the
Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances. In addition, the
Company's expectations for fiscal year 2003 are based in part on certain
assumptions made by the Company, including those relating to commodities prices,
which are strongly affected by weather and other factors and can fluctuate
significantly, housing starts and other construction activities, which are
sensitive to, among other things, interest rates and government spending, and
the performance of the U.S. economy generally. The accuracy of these or other
assumptions could have a material effect on the Company's ability to achieve its
expectations.
( TABLES TO FOLLOW )
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GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
For the Fourth Quarter Ended For the Year Ended
(unaudited) (audited)
---------------------------- --------------------------
(1) (1)
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
------------- ------------- ------------ ------------
NET SALES $ 51,233 $ 47,372 $ 232,565 $ 240,394
Cost of goods sold 41,682 37,520 183,720 187,069
-------- -------- --------- ---------
GROSS PROFIT 9,551 9,852 48,845 53,325
Selling, general
and administrative
expenses 9,340 9,838 42,733 39,569
Strategic review
process costs - - - 513
Restructuring and
other charges 230 - 955 4,300
-------- -------- --------- ---------
Total operating
expenses 9,570 9,838 43,688 44,382
INCOME (LOSS) FROM
OPERATIONS (19) 14 5,157 8,943
Interest expense (868) (886) (4,052) (4,299)
Interest income 479 575 1,986 2,024
Other expense, net (60) (364) (1,486) (3,122)
-------- -------- --------- ---------
INCOME (LOSS) BEFORE
INCOME TAXES (468) (661) 1,605 3,546
Income tax provision
(benefit) (164) (231) 562 1,241
-------- -------- --------- ---------
NET INCOME (LOSS) $ (304) $ (430) $ 1,043 $ 2,305
======== ======== ========= =========
EARNINGS (LOSS) PER
SHARE
Diluted $ (0.06) $ (0.08) $ 0.19 $ 0.42
Weighted average
number of common
shares and common
stock equivalents 5,374 5,357 5,466 5,507
Basic $ (0.06) $ (0.08) $ 0.19 $ 0.43
Weighted average
number of
common shares 5,374 5,357 5,390 5,345
(1) Selling, general and administrative expenses for the quarter and year ended
December 31, 2001 include $119, or $.02 diluted earnings per share, and
$476, or $.09 diluted earnings per share, respectively, of goodwill
amortization.
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2002 December 31, 2001
(audited) (audited)
----------------- -----------------
ASSETS
Cash $ 2,243 $ 2,248
Accounts receivable - net 97,627 90,714
Finance contracts receivable - net 4,701 7,511
Inventories 36,771 52,161
Deferred income taxes 8,469 10,171
Prepaid expenses and other current
assets 3,203 1,119
---------- ----------
Total current assets 153,014 163,924
Property, plant and equipment - net 46,697 43,431
Goodwill 11,696 12,248
Other assets 14,662 17,806
---------- ----------
Total assets $ 226,069 $ 237,409
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 49,634 $ 56,466
Long-term debt obligations 56,135 64,237
Other long-term obligations 22,518 14,225
Deferred income taxes 1,644 2,460
Total shareholders' equity 96,138 100,021
---------- ----------
Total liabilities and shareholders'
equity $ 226,069 $ 237,409
========== ==========
GEHL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Year Ended
(audited)
---------------------------------------
December 31, 2002 December 31, 2001
----------------- -----------------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 1,043 $ 2,305
Adjustments to reconcile net income
to net cash provided by (used for)
operating activities:
Depreciation 4,630 4,687
Amortization 183 729
Deferred income taxes 2,750 (1,611)
Restructuring charge (non-cash) - 1,754
Cost of sales of finance contracts 1,763 3,222
Proceeds from the sales of
finance contracts 102,120 109,740
Increase in finance contracts
receivable (98,260) (99,104)
Net change in remaining working
capital items 2,539 (21,828)
---------- ----------
Net cash provided by (used
for) operating activities 16,768 (106)
CASH FLOW FROM INVESTING ACTIVITIES:
Property, plant and equipment
additions - net (6,790) (4,135)
Other 797 553
---------- ----------
Net cash used for investing
activities (5,993) (3,582)
CASH FLOW FROM FINANCING ACTIVITIES:
(Repayments of) Proceeds from
revolving credit loans (7,811) 3,580
Repayments of other borrowings - net (2,900) (346)
Proceeds from issuance of common
stock 623 357
Treasury stock purchases (692) (245)
---------- ----------
Net cash (used for) provided by
financing activities (10,780) 3,346
Net decrease in cash (5) (342)
Cash, beginning of period 2,248 2,590
---------- ----------
Cash, end of period $ 2,243 $ 2,248
========== ==========