# FORM 10-QUNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

|[X] | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
|--- | --------------------------------------------------------------------------------------

# For the Quarterly Period Ended
June 30, 2006

# 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 Identification No.)
|or organization)                             
|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 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 by check mark whether the
registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act.

Large accelerated filer 
           Accelerated filer    X  Non-accelerated filer

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes 
              No X

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 June 30, 2006
|---------------------------- | ----------------------------
|Common Stock, $.10 Par Value | 12,154,909                  

---

# Gehl Company

# FORM 10-Q

# June 30, 2006

# Report Index

|                                |                                                                                 
|------------------------------- | --------------------------------------------------------------------------------
|                                |                                                                                 
|PART I. - Financial Information |                                                                                 
|Item 1.                         | Financial Statements                                                            
|                                | Condensed Consolidated Statements of Income for the Three- and Six-month Periods
|                                | Ended June 30, 2006 and July 2, 2005                                            
|                                | Condensed Consolidated Balance Sheets at June 30, 2006,                         
|                                | December 31, 2005, and July 2, 2005                                             
|                                | Condensed Consolidated Statements of Cash Flows for the Six-month Periods Ended 
|                                | June 30, 2006 and July 2, 2005                                                  
|                                | Notes to Condensed Consolidated Financial Statements                            
|Item 2.                         | Managements Discussion and Analysis of Financial Condition and                 
|                                | Results of Operations                                                           
|Item 3.                         | Quantitative and Qualitative Disclosures about Market Risk                      
|Item 4.                         | Controls and Procedures                                                         
|PART II. - Other Information   
|Item 1A.                        | Risk Factors                                                                    
|Item 2.                         | Unregistered Sales of Equity Securities and Use of Proceeds                     
|Item 4.                         | Submission of Matters to a Vote of Security Holders                             
|Item 6.                         | Exhibits                                                                        
|Signatures                      | 35                                                                              

-2-

---

PART I  Financial
Information

# Item 1. Financial
Statements

# Gehl Company and
SubsidiariesCondensed Consolidated Statements of Income  (unaudited and in thousands,
except per share data)

|                                     
|-------------------------------------
|July 2, 2005                         
|Net sales                            
|Cost of goods sold                   
|                                     
|Gross profit                         
|Selling, general and                 
|administrative expenses              
|                                     
|Income from operations               
|Interest expense                     
|Interest income                      
|Other expense, net                   
|                                     
|Income from continuing operations    
|before income taxes                  
|Provision for income taxes           
|                                     
|Income from continuing operations    
|Income (loss) from discontinued      
|operations, net of tax               
|Loss on disposal of discontinued     
|operations, net of tax               
|                                     
|Net income                           
|                                     
|Diluted earnings (loss) per share(1):
|Continuing operations                
|Discontinued operations              
|                                     
|Total diluted earnings per share     
|                                     
|Basic earnings (loss) per share(1):  
|Continuing operations                
|Discontinued operations              
|                                     
|Total basic earnings per share       
|                                     

(1)        2005
data adjusted to reflect the August 2005 three-for-two common stock split.

The accompanying notes
are an integral part of the financial statements.

---

# Gehl Company and
SubsidiariesCondensed Consolidated Balance Sheets  (unaudited and in thousands, except
share data)

|                                                  | June 30, 2006
|------------------------------------------------- | -------------
|Assets                                            |              
|Cash                                              |              
|Accounts receivable - net                         |              
|Finance contracts receivable - net                |              
|Inventories                                       |              
|Assets of discontinued operations - net (Note 3)  |              
|Deferred income tax assets                        |              
|Prepaid expenses and other current assets         |              
|                                                  |              
|Total current assets                              |              
|                                                  |              
|Property, plant and equipment - net               |              
|Goodwill                                          |              
|Other assets                                      |              
|                                                  |              
|Total assets                                      |              
|                                                  |              
|Liabilities and Shareholders Equity              |              
|Current portion of long-term debt obligations     |              
|Short-term debt obligations                       |              
|Accounts payable                                  |              
|Liabilities of discontinued operations (Note 3)   |              
|Accrued and other current liabilities             |              
|                                                  |              
|Total current liabilities                         |              
|                                                  |              
|Long-term debt obligations                        |              
|Deferred income tax liabilities                   |              
|Other long-term liabilities                       |              
|                                                  |              
|Total long-term liabilities                       |              
|                                                  |              
|Common stock, $.10 par value, 25,000,000 shares   |              
|authorized, 12,154,909, 12,009,527 and 10,238,852 |              
|shares outstanding, respectively(1)               |              
|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(1)                       |              
|Retained earnings                                 |              
|Accumulated other comprehensive loss              |              
|                                                  |              
|Total shareholders equity                        |              
|                                                  |              
|Total liabilities and shareholders equity        |              
|                                                  |              

(1)           2005 data adjusted to
reflect the August 2005 three-for-two common stock split.

The accompanying notes
are an integral part of the financial statements.

-4-

---

# Gehl Company and
SubsidiariesCondensed Consolidated Statements of Cash Flows (unaudited and in thousands)

|                                                        
|--------------------------------------------------------
|July 2, 2005                                            
|Cash Flows from Operating Activities                    
|Net income                                              
|Adjustments to reconcile net income to net cash         
|provided by operating activities:                       
|Loss on discontinued operations (non-cash), net of taxes
|Depreciation and amortization                           
|Compensation expense for share-based payments           
|Cost of sales of finance contracts                      
|Proceeds from sales of finance contracts                
|Increase in finance contracts receivable                
|Increase in retained interest in sold finance contracts 
|Increase (decrease) in cash due to changes in:          
|Accounts receivable - net                               
|Inventories                                             
|Accounts payable                                        
|Other                                                   
|                                                        
|Net cash provided by operating activities               
|                                                        
|Cash Flows from Investing Activities                    
|Property, plant and equipment additions                 
|Proceeds from the sale of property, plant and equipment 
|Other                                                   
|                                                        
|Net cash used for investing activities                  
|                                                        
|Cash Flows from Financing Activities                    
|(Repayments on) proceeds from revolving credit loans    
|Proceeds from short-term borrowings                     
|Repayments of short-term borrowings                     
|(Repayments of) proceeds from other borrowings          
|Proceeds from exercise of stock options                 
|                                                        
|Net cash (used for) provided by financing activities    
|                                                        
|Net increase in cash                                    
|Cash, beginning of period                               
|                                                        
|Cash, end of period                                     
|                                                        
|Supplemental disclosure of cash flow information:       
|Cash paid for the following:                            
|Interest                                                
|Income taxes                                            

The accompanying notes
are an integral part of the financial statements.

-5-

---

Gehl Company and
Subsidiaries  Notes to Condensed Consolidated Financial StatementsJune 30, 2006
 (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 accounting principles generally accepted
in the United States of America 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 six-month periods
ended June 30, 2006 and July 2, 2005 include all adjustments, consisting only of normal
recurring accruals, necessary for a fair presentation of the results of operations and
financial position of the Company. Certain prior year amounts have been reclassified to
conform to the current year presentation. Such reclassifications had no impact on
previously reported net income. Due, in part, to the seasonal nature of the Companys
business, the results of operations for the three- and six-month periods ended June 30,
2006 are not necessarily indicative of the results to be expected for the entire year.

Effective
January 1, 2006, the Companys fiscal quarter-ends were converted to calendar
quarter-ends on a prospective basis. For the six-month period ended June 30, 2006, the
prior year comparative period consisted of two additional days. The Companys
year-end will remain December 31, consistent with all prior years.

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, 2005 as filed with the Securities and Exchange
Commission.

# Note 2 
Significant Accounting Policies

Stock-Based
Compensation: Effective January 1, 2006, the Company adopted Statement of Financial
Accounting Standard (SFAS) No. 123R, Share-Based Payment
(SFAS No. 123R) using the modified prospective method, in which compensation
cost was recognized beginning with the effective date based on the requirements of SFAS
No. 123R for all share-based payments granted after the effective date and all awards
granted to employees prior to the effective date of SFAS No. 123R that were unvested on
the effective date.

Prior
to adopting SFAS No. 123R, as permitted under SFAS No. 123, Accounting for
Stock-Based Compensation (SFAS No. 123), the Company elected to follow Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB No. 25), and related interpretations in accounting for stock-based awards
to employees through December 31, 2005. Accordingly, compensation cost for stock options
and restricted stock grants was measured as the excess, if any, of the market price of the
Companys common stock at the date of grant over the exercise price. All employee
stock options were granted at the grant day market price resulting in no compensation cost
for prior periods. All stock-based compensation expense prior to the adoption of SFAS No.
123R related to restricted stock grants. See Note 4, Stock-Based Compensation,
for more information.

-6-

---

# Note 3 
Discontinued Operations

During
March 2006, the Company decided to discontinue the manufacturing and distribution of
agricultural implement products. The agricultural implement business included one
manufacturing facility and related manufacturing machinery and equipment. The reduction in
headcount totaled 140 employees which includes both manufacturing and administrative
positions related to the agricultural implements business. As a result of this action, the
Condensed Consolidated Financial Statements and related notes have been restated to
present the results of the agricultural implement business as a discontinued operation.

The
discontinuation of the agricultural implement business resulted in an after-tax charge to
the Companys earnings for the six-month period ended June 30, 2006 of $9.0 million,
or $0.73 per diluted share. Of the $9.0 million charge, $8.9 million, or $0.72 per diluted
share, was recorded in the three-month period ended March 31, 2006 and $0.1 million, or
$0.01 per diluted share, was recorded in the three-month period ended June 30, 2006. The
after-tax charge is comprised of non-cash asset impairment charges of $7.1 million related
to agricultural implement field and factory inventory and certain property, plant and
equipment, and cash charges related to severance and other employee termination costs of
$1.9 million. The Company does not anticipate any additional charges during the third or
fourth quarter of 2006.

The following table summarizes the
pre-tax charge associated with the discontinued operation (in thousands):

|                         
|-------------------------
|Pre-tax charge           
|Non-cash adjustments     
|Cash payments            
|                         
|Balance at March 31, 2006
|                         
|Pre-tax charge           
|Change in estimate       
|Non-cash adjustments     
|Cash payments            
|                         
|Balance at June 30, 2006 
|                         

-7-

---

The
Company has reflected the results of its agricultural implements business as discontinued
operations in the Condensed Consolidated Statements of Income and prior periods have been
restated. Summary results of operations for the agricultural implements business were as
follows (in thousands):

|                                     
|-------------------------------------
|July 2, 2005                         
|Net sales                            
|Pretax income (loss) from            
|discontinued operations              
|Pretax loss on disposal of           
|discontinued operations              
|Income tax benefit                   
|                                     
|Net loss from discontinued operations
|                                     

The
assets of the agricultural implements business are reflected as net assets of discontinued
operations in the Condensed Consolidated Balance Sheets and were as follows (in
thousands):

|                                       | June 30, 2006
|-------------------------------------- | -------------
|Accounts receivable, net               |              
|Inventories                            |              
|Property, plant, and equipment, net    |              
|                                      
|Assets of discontinued operations, net |              
|                                      

# Note 4 
Stock-Based Compensation

The
Company maintains equity incentive plans for certain of its directors, officers and key
employees. The Company currently has three primary equity incentive plans: the 2004 Equity
Incentive Plan, the 2000 Equity Incentive Plan, and the 1995 Stock Option Plan. The 2004
Equity Incentive Plan, which was adopted in April 2004 and amended in April 2006,
authorizes the granting of awards with respect to up to 737,500 shares of the
Companys common stock. During April 2000, the 2000 Equity Incentive Plan was
adopted, which authorizes the granting of awards with respect to up to 812,771 shares of
the Companys common stock. An award is defined within the 2004 and 2000 Equity
Incentive Plan as a stock option, stock appreciation right, restricted stock or
performance share. In April 1996, the 1995 Stock Option Plan was adopted, which authorizes
the granting of options to purchase up to 726,627 shares of the Companys common
stock. These plans provide that options be granted at an exercise price not less than fair
market value on the date the options are granted and that the options generally vest
ratably over a period not exceeding three years after the grant date. The option period
may not be more than ten years after the grant date.

-8-

---

Stock option activity under all of
the Companys equity incentive plans since December 31, 2005 is summarized as
follows:

|                              
|------------------------------
|Outstanding, December 31, 2005
|Granted                       
|Exercised                     
|Cancelled                     
|                              
|Outstanding, June 30, 2006    
|                              

In
the three- and six-month periods ended June 30, 2006, the Company awarded 21,000 and
129,284 stock options, respectively, to purchase common stock to certain officers, key
employees and directors. Awards of stock options under the plans are subject to certain
vesting requirements. There were 24,000 options granted in the three- and six-month
periods ended July 2, 2005. The options granted in the three- and six-month periods ended
June 30, 2006 had a weighted average grant date fair value of $13.90 and $13.80,
respectively. The aggregate intrinsic value of the options exercised during three- and
six-month periods ended June 30, 2006 totaled $2.9 million and $3.1 million, respectively.

Options outstanding under the plans
at June 30, 2006 were as follows:

|Range of Exercise
Prices | Outstanding at
June 30, 2006 | Weighted Average
Remaining
Contractual
Life (years) | Weighted Average
Exercise Price
per Share | Aggregate
Intrinsic
Value (000s)
|------------------------ | ---------------------------- | --------------------------------------------------- | ----------------------------------------- | ---------------------------------
|$  5.00 - $  9.99        |                              |                                                     |                                           | 386,631                          
|$  10.00 - $14.99        |                              |                                                     |                                           | 154,500                          
|$  15.00 - $19.99        |                              |                                                     |                                           | 138,575                          
|$  30.00 - $35.99        |                              |                                                     |                                           | 129,284                          
|                        

Options exercisable under the plan at
June 30, 2006 were as follows:

|Range of Exercise
Prices | Exercisable Shares
at
June 30, 2006 | Weighted Average
Exercise Price
per Share at
June 30, 2006 | Aggregate
Intrinsic
Value (000s)
|------------------------ | ----------------------------------- | ---------------------------------------------------------- | ---------------------------------
|$  5.00 - $  9.99        |                                     |                                                            |                                  
|$  10.00 - $14.99        |                                     |                                                            |                                  
|$  15.00 - $19.99        |                                     |                                                            |                                  

-9-

---

In
2006 and 2005, the Company awarded restricted shares under the 2004 Equity Incentive Plan
to certain officers and key employees. Awards of restricted stock under the plan are
subject to certain vesting requirements ranging from three to five years. Following is a
summary of restricted stock activity in the 2004 Equity Incentive Plan for the six-month
period ended June 30, 2006:

|                                         
|-----------------------------------------
|Outstanding (unvested), December 31, 2005
|Granted                                  
|Vested                                   
|Forfeited                                
|                                         
|Outstanding (unvested), June 30, 2006    
|                                         

Effective
January 1, 2006, the Company adopted the provisions of SFAS No. 123R which establishes
accounting for equity instruments exchanged for employee services. Under the provisions of
SFAS No. 123R, share-based compensation cost is measured at the grant date, based on a
calculated fair value of the award, and is recognized as an expense over the
employees requisite service period (vesting period of the equity grant). Prior to
January 1, 2006, the Company accounted for share-based compensation to employees in
accordance with APB No. 25 and related interpretations. The Company also followed the
disclosure requirements of SFAS No. 123 as amended by SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure (SFAS No.
148). The Company elected to adopt the modified prospective transition method as
provided by SFAS No. 123R and, accordingly, financial statement amounts for the prior
periods presented in this Form 10-Q have not been restated to reflect the fair value
method of expensing share-based compensation.

The
Company estimates the fair value of stock options using the Black-Scholes valuation model.
Key input assumptions used to estimate the fair value of stock options include the
exercise price of the award, the expected option term, the expected volatility of the
Companys stock over the options expected term, the risk-free interest rate
over the options expected term, and the Companys expected annual dividend
yield. The Company believes that the valuation technique and the approach utilized to
develop the underlying assumptions are appropriate in calculating the fair values of the
Companys stock options granted in the three- and six-month periods ended June 30,
2006. Estimates of fair value are not intended to predict actual future events or the
value ultimately realized by persons who receive equity awards.

-10-

---

The
fair value of the option grants during the three- and six-months ended June 30, 2006 were
estimated on the grant date using the Black-Scholes option-pricing model with the
following assumptions:

|                              
|------------------------------
|Expected option term (1)      
|Expected volatility factor (2)
|Risk-free interest rate (3)   
|Expected annual dividend yield

| | (1) | The
option term was determined using the simplified method for estimating option
               life under Staff Accounting Bulletin No. 107 Share-Based Payment,               which
expresses the SEC staffs views regarding the interaction between
               SFAS No. 123R and certain SEC rules including the valuation of share-based
               payments.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | The
stock volatility for each grant is based on the historical volatility of the
               Companys common stock over the most recent period equal to the
expected                option life of the grant.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (3) | The
risk-free interest rate for periods equal to the expected term of the share
               option is based on the 4.5-year U.S. Treasury Strip Rate in effect at the
date                of the grant.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For
the three- and six-month periods ended June 30, 2006, the Company recognized pre-tax
compensation expense of $0.3 million and $0.5 million, respectively, related to unvested
stock options. The after tax impact totaled $0.2 million and $0.3 million or $0.02 and
$0.03 per diluted share, respectively.

As
of June 30, 2006, there was $3.2 million of total unrecognized compensation cost related
to unvested share-based compensation arrangements granted under the Companys equity
incentive plans. That cost is expected to be recognized over a weighted-average period of
1.7 years.

The
Company did not recognize compensation expense for employee share-based awards for the six
months ended July 2, 2005, as the exercise price of the Companys employee stock
awards equaled the market price of the underlying stock on the date of grant. The Company
did recognize compensation expense under APB No. 25 relating to certain restricted stock
grants as the grants have no exercise price.

The
Company had previously adopted the provisions of SFAS No. 123 as amended by SFAS No. 148
through disclosure only. The following table illustrates the effects on net income and
earnings per share for the three- and six-months ended July 2, 2005 as if the Company had
applied the fair value recognition provisions of SFAS No. 123 to share based employee
awards (in thousands, except per share data).

-11-

---

|                                                 
|-------------------------------------------------
|Net income, as reported                          
|Add: stock-based compensation expense included in
|reported net income under APB No. 25, net of tax 
|Less: stock-based compensation expense determined
|based on fair value method, net of tax           
|                                                 
|Pro forma net income                             
|                                                 
|Diluted net income per share:                    
|As reported                                      
|Pro forma                                        
|Basic net income per share:                      
|As reported                                      
|Pro forma                                        
|                                                 

# Note 5  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 6  Finance
Contracts Receivable Financing

In
March 2006, the Company entered into an asset securitization facility (the
Securitization Facility) with a financial institution (the Purchaser)
whereby the Company can sell, through a revolving securitization facility, up to $300
million of retail and fleet installment sale contracts (installment sale
contracts or finance contracts receivable). The Securitization Facility
has a final maturity date in March 2009, subject to annual renewal by the Purchaser. Under
the Securitization Facility, the Company sells portfolios of its finance contracts
receivable to a wholly owned, bankruptcy-remote special purpose subsidiary
(SPE) which, in turn, sells each such portfolio to a wholly owned
bankruptcy-remote special purpose subsidiary of the SPE. The wholly-owned
bankruptcy-remote special purpose subsidiary of the SPE sells a participating interest in
each such portfolio of finance contracts receivable to the Purchaser (approximately 90% of
the discounted value of the finance contract receivable portfolio). The Purchaser has no
recourse against the Company for uncollectible finance contracts receivable, if any;
however, the Companys retained interest in the portfolio of finance contracts
receivable is subordinate to the Purchasers interest. The Company has retained
collection and administrative responsibilities for each sold portfolio of finance
contracts receivable. The Company incurred one-time transaction costs of $0.7 million,
which are included in other expense in the accompanying Condensed Consolidated Statement
of Income, related to the implementation of the Securitization Facility.

-12-

---

The
Securitization Facility replaced the previous $150 million revolving securitization
facility the Company terminated in February 2006. The participating interest in finance
contracts receivable that had been sold under the previous securitization facility was
purchased by the Purchaser in March 2006.

The
following summarizes the Companys sales of retail finance contracts receivable
through asset securitization facilities (in thousands):

|                                   
|-----------------------------------
|July 2, 2005                       
|Value of contracts sold            
|Cash received on sales of contracts
|                                   
|Retained interest in contracts sold
|                                   
|Cost of sales of finance contracts 
|                                   

The
Companys retained interest is recorded at fair value, which is calculated based on
the present value of estimated future cash flows and reflects prepayment and loss
assumptions, which are based on historical results. At June 30, 2006, the fair value of
the retained interest was calculated using an interpolated risk-free rate of return of
5.16% based on U.S. Treasury rates, an approximate 17 month weighted-average prepayable
portfolio life and an approximate 1.2% annual loss rate. Changes in any of these
assumptions could affect the calculated value of the retained interest. A 10% increase in
the discount rate would decrease the fair value of the retained interest by $0.2 million.
A 10% increase in the annual loss rate would decrease the fair value of the retained
interest by $0.7 million. Retained interest of $17.7 million was included in other current
assets and $10.9 million was included in other assets in the accompanying Condensed
Consolidated Balance Sheet at June 30, 2006.

The
total credit capacity under the 2006 Securitization Facility is $300 million, with finance
contracts receivable sold and being serviced by the Company totaling $180.1 million at
June 30, 2006. Of the $180.1 million in sold contracts receivable, $4.7 million were
greater than 60 days past due at June 30, 2006. There were no credit losses on contracts
sold through the Securitization Facility during the three- and six-month periods ended
June 30, 2006.

During
the three-month period ended July 2, 2005, the loss on sale of finance contracts was
impacted by a $0.7 million realized loss on interest rate swap contracts that were put in
place to hedge gains/losses on the sale of finance contracts receivable. During the
six-month period ended July 2, 2005, the net realized gain on these swaps totaled $0.4
million (see Note 12). The Company received $0.4 and $0.6 million in service fee income
during the three- and six-month periods ended June 30, 2006.

In
addition to the sale of finance contracts receivable through the asset securitization
program, the Company sold finance contracts through limited recourse arrangements during
2006 and 2005. Based on the terms of these sales, recourse to the Company is limited to 5%
of the sold portfolio of finance contracts receivable. Amounts to cover potential losses
on these sold finance contracts receivable are included in the allowance for doubtful
accounts.

-13-

---

The following table summarizes the
Companys sales of finance contracts receivable through these arrangements (in
thousands):

|                                   
|-----------------------------------
|July 2, 2005                       
|Value of contracts sold            
|Cash received on sales of contracts
|                                   
|Cost of sales of finance contracts 
|                                   

At
June 30, 2006, the Company serviced $318.6 million of sold finance contracts receivable of
which $180.1 million, $83.3 million and $55.2 million were sold through the Securitization
Facility, limited recourse arrangements and full recourse arrangements, respectively.

The
finance contracts require periodic installments of principal and interest over periods of
up to 66 months, with fixed interest rates based on market conditions at the time of
origination. The Company has retained the servicing of substantially all of these
contracts which generally have maturities of 12 to 60 months. The sales of finance
contracts receivable were accounted for as a sale in accordance with SFAS No. 140
Accounting for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilitiesa Replacement of FASB Statement No. 125. Sales of finance contracts
receivable are reflected as a reduction of finance contracts receivable in the
accompanying Condensed Consolidated Balance Sheets and the proceeds received are included
in cash flows from operating activities in the accompanying Condensed Consolidated
Statement of Cash Flows.

# Note 7  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):

|                            | June 30, 2006
|--------------------------- | -------------
|Raw materials and supplies  |              
|Work-in-process             |              
|Finished machines and parts |              
|                            |              
|Total current cost value    |              
|Adjustment to LIFO basis    |              
|                            |              
|                            |              
|                            |              

-14-

---

# Note 8  Product
Warranties and Other Guarantees

In
general, the Company provides warranty coverage on equipment for a period of up to twelve
months. The Companys reserve for warranty claims is established based on the best
estimate of the amounts necessary to settle future and existing claims on products sold as
of the balance sheet date. The Company records warranty expense as a component of selling,
general and administrative expense. While the Companys warranty costs have
historically been within its calculated estimates, it is possible that future warranty
costs could differ from those estimates. The changes in the carrying amount of the
Companys total product warranty liability for the six-month periods ended June 30,
2006 and July 2, 2005 were as follows (in thousands):

|                                                       
|-------------------------------------------------------
|July 2, 2005                                           
|Beginning balance                                      
|Accruals for warranties issued during the period       
|Accruals related to pre-existing warranties            
|(including changes in estimates)                       
|Settlements made (in cash or in kind) during the period
|                                                       
|Ending balance                                         
|                                                       

In
the 2005 second quarter, selling, general and administrative expenses included a $2.3
million charge related to a warranty issue that was resolved in the 2005 fourth quarter
resulting in the reversal of the charge in full.

# Note 9  Employee
Retirement Plans

The
Company sponsors two qualified defined benefit pension plans (pension plans)
for certain of its employees. The following table provides disclosure of the net periodic
benefit cost (in thousands):

|                                  
|----------------------------------
|July 2, 2005                      
|Service cost                      
|Interest cost                     
|Expected return on plan assets    
|Amortization of prior service cost
|Amortization of net loss          
|                                  
|Net periodic benefit cost         
|                                  

The
Company recorded a $0.7 million pension curtailment related to discontinued operations
(see Note 3, Discontinued Operations). The Company anticipates making $1.0
million of contributions to the pension plans during 2006. No contributions were made
during the three- or six-month periods ended June 30, 2006.

-15-

---

The
Company maintains an unfunded non-qualified supplemental retirement benefit plan for
certain management employees. The following table provides disclosure of the net periodic
benefit cost (in thousands):

|                                  
|----------------------------------
|July 2, 2005                      
|Service cost                      
|Interest cost                     
|Amortization of prior service cost
|Amortization of net loss          
|                                  
|Net periodic benefit cost         
|                                  

The
Company provides postemployment benefits to certain retirees, which includes subsidized
health insurance benefits for early retirees prior to their attaining age 65. The
following table provides disclosure of the net periodic benefit cost (in thousands):

|                                     
|-------------------------------------
|July 2, 2005                         
|Service cost                         
|Interest cost                        
|Amortization of transition obligation
|Amortization of net loss             
|                                     
|Net periodic benefit cost            
|                                     

# Note 10  Net
Income 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 that would arise from the exercise of stock options.

A reconciliation of the shares used
in the computation of earnings per share follows (in thousands):

|                              
|------------------------------
|July 2, 2005                  
|Basic shares                  
|Effect of options and unvested
|restricted stock              
|                              
|Diluted shares                
|                              

For
the three- and six-months ended June 30, 2006, 129,284 options to purchase common shares
and 26,257 restricted stock shares were antidilutive and, accordingly, excluded from the
effect of options and unvested restricted stock in the calculation of diluted EPS.

-16-

---

The components of comprehensive
income are as follows (in thousands):

|                               
|-------------------------------
|July 2, 2005                   
|Net income                     
|Foreign currency translation   
|adjustments                    
|Unrealized gains (losses)      
|                               
|Other comprehensive gain (loss)
|                               
|Comprehensive income           
|                               

# Note 11  Business
Segments

SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information,
establishes the standards for reporting information about operating segments in financial
statements.  Historically the Company had two operating and reportable segments,
construction equipment and agricultural equipment.  The products in the historical
agricultural equipment segment included material handling equipment (skid loaders,
telescopic handlers, compact excavators, compact track loaders and all-wheel-loaders) and
agricultural implement products for haymaking, forage harvesting, feedmaking and manure
handling.  In the first quarter of 2006, the Company re-evaluated its operating and
reportable segments in connection with the discontinuation of the manufacturing and
distribution of its agricultural implement business and determined that it now has only
one operating and reportable segment.  Sales of material handling equipment that were
previously included in the agricultural equipment segment and sales that were previously
included in the construction equipment segment are now combined for both internal and
external reporting purposes.

# Note 12  Financial
Instruments

The
Company selectively uses interest rate swaps to reduce market risk associated with changes
in interest rates. The use of derivatives is restricted to those intended for hedging
purposes.

The
Companys revolving credit facility is primarily London Interbank Offered Rate
(LIBOR) -based and is subject to interest rate changes. In order to manage
interest rate exposures, the Company entered into an interest rate swap agreement with a
financial institution to exchange variable rate interest obligations for fixed rate
obligations without the exchange of the underlying principal amounts. Effective January
2006, under this agreement, the Companys variable to fixed rate obligations are an
aggregate swapped notional amount of $40 million through January 2008. The aggregate
notional amount of the swap decreases to $30 million effective January 2008, $20 million
effective January 2009, $10 million effective January 2010 and expires in January 2011.
The Company pays a 4.89% fixed interest rate under the swap agreement and receives a 30
day LIBOR variable rate. The variable to fixed interest rate swap is designated as an
effective cash-flow hedge as defined by SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities (SFAS No. 133). Accordingly, the fair
value of the swap was recorded on the balance sheet, with changes in fair value included
in other comprehensive (loss) income in the amount of $0.4 million and $0.7 million,
respectively, for the three- and six-month periods ended June 30, 2006. Swap gains or
losses included in other comprehensive (loss) income are reclassified into earnings at the
time the related interest expense is recognized or settlement of the obligation occurs.

-17-

---

During
the three- and six-months ended July 2, 2005, the Company was a party to three interest
rate swap agreements. The swaps were hedges protecting against underlying changes in
interest rates and their impact on the gains/losses incurred upon the sale of finance
contracts receivable. Accordingly, the implied gains/losses associated with the fair
values of interest rate swaps would be offset by gains/losses on the sale of the
underlying retail finance contracts. Under the swaps, the Company received interest on a
variable 30 day LIBOR rate and pays on a fixed rate ranging from 3.18% to 3.41%. Although
the Company continued to own finance contracts during the term of the swaps, under the
provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, the swaps were deemed ineffective as of April 2, 2005 as the finance
contracts that were owned by the Company at the inception of the swaps had been sold
during the three-month period ended April 2, 2005. As a result, the Company recorded $1.1
million of other income in the three-month period ended April 2, 2005. The Company
terminated the swaps during the three-month period ended July 2, 2005 and recorded $0.7
million of other expense during such period. The Company realized a net gain of $0.4
million on these swaps for the six-month period ended July 2, 2005.

-18-

---

# Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations

# Discontinued Operations

During
March 2006, the Company decided to discontinue the manufacturing and distribution of its
agricultural implement products. The agricultural implement business included one
manufacturing facility and related manufacturing machinery and equipment. The reduction in
headcount totaled 140 employees, which includes both manufacturing and administrative
positions related to the agricultural implement business. As a result of this action, the
Condensed Consolidated Financial Statements and related notes have been restated to
present the results of the agricultural implement business as discontinued operations.

The
discontinuation of the agricultural implement business resulted in an after-tax charge to
the Companys earnings for the six-month period ended June 30, 2006 of $9.0 million,
or $0.73 per diluted share. Of the $9.0 million charge, $8.9 million, or $0.72 per diluted
share, was recorded in the three-month period ended March 31, 2006 and $0.1 million, or
$0.01 per diluted share, was recorded in the three-month period ended June 30, 2006. The
after-tax charge is comprised of non-cash asset impairment charges of $7.1 million related
to agricultural implement field and factory inventory and certain property, plant and
equipment, and cash charges related to severance and other employee termination costs of
$1.9 million. The Company does not anticipate any additional charges during the third or
fourth quarter of 2006.

The
Company has reflected the results of its agricultural implements business as discontinued
operations in the Condensed Consolidated Statements of Income and prior periods have been
restated. Summary results of operations for the agricultural implements business were as
follows (in thousands):

|                                       
|---------------------------------------
|July 2, 2005                           
|Net sales                              
|Pretax income (loss) from discontinued 
|operations                             
|Pretax loss on disposal of discontinued
|operations                             
|Income tax benefit                     
|                                       
|Net loss from discontinued operations  
|                                       

The
assets of the agricultural implements business are reflected as assets of discontinued
operations in the Condensed Consolidated Balance Sheets and were as follows (in
thousands):

|                                       | June 30, 2006
|-------------------------------------- | -------------
|Accounts receivable, net               |              
|Inventories                            |              
|Property, plant, and equipment, net    |              
|                                      
|Assets of discontinued operations, net |              
|                                      

-19-

---

# Business Segments

SFAS
No. 131, Disclosures about Segments of an Enterprise and Related Information,
establishes the standards for reporting information about operating segments in financial
statements.  Historically the Company had two operating and reportable segments,
construction equipment and agricultural equipment.  The products in the historical
agricultural equipment segment included material handling equipment (skid loaders,
telescopic handlers, compact excavators, compact track loaders and all-wheel-loaders) and
agricultural implement products for haymaking, forage harvesting, feedmaking and manure
handling.  In the first quarter of 2006, the Company re-evaluated its operating and
reportable segments in connection with the discontinuation of the manufacturing and
distribution of its agricultural implement business and determined that it now has only
one operating and reportable segment.  Sales of material handling equipment that were
previously included in the agricultural equipment segment and sales that were previously
included in the construction equipment segment are now combined for both internal and
external reporting purposes.

# Results of Operations

# Three Months Ended June
30, 2006 Compared to Three Months Ended July 2, 2005

# Net Sales

Net
sales in the three months ended June 30, 2006 (2006 second quarter) were
$139.5 million compared to $128.3 million in the three months ended July 2, 2005
(2005 second quarter), an increase of $11.1 million, or 9%. Net sales, in
general, were favorably impacted by the continued strength of the Companys
construction markets. Sales of the Companys telescopic handlers, compact excavators
and compact track loaders during the 2006 second quarter increased 36%, 26% and 5%,
respectively, from the 2005 second quarter. Sales of the Companys skid loaders,
including sales of skid loaders by the Companys European subsidiary, Gehl Europe,
were consistent with the 2005 second quarter. The Companys attachment subsidiary, CE
Attachments, Inc., increased sales 23% from 2005. In addition to the increased sales noted
above, approximately two percentage points of the net sales increase was due to price
increases during 2005 and 2006.

Of
the Companys total net sales reported for the 2006 second quarter, $29.3 million
were made to customers residing outside of the United States compared with $21.2 million
in the 2005 second quarter. The increase in export sales was primarily due to increased
sales in Europe.

# Gross Profit

Gross
profit was $30.1 million in the 2006 second quarter compared to $26.7 million in the 2005
second quarter, an increase of $3.4 million, or 13%. Gross profit as a percentage of net
sales (gross margin) was 21.6% in the 2006 second quarter compared to 20.8% in
the 2005 second quarter. Gross margin in the 2006 second quarter was favorably impacted by
approximately 1.7 percentage points due to 2005 and 2006 price increases. The favorable
impact of these price increases was partially offset by sales incentives paid on increased
retail settlement activity in the 2006 second quarter compared to the 2005 second quarter
(approximately 0.4 percentage points) as well as the impact of changes in product mix and
increases in the cost of utilities and freight (approximately 0.5 percentage points).

-20-

---

# Selling, General and
Administrative Expenses

Selling,
general and administrative expenses were $15.3 million, or 10.9% of net sales, in the 2006
second quarter compared to $15.2 million, or 11.8% of net sales, in the 2005 second
quarter. Selling, general and administrative expenses in the 2005 second quarter included
a $2.3 million, or 1.8% of net sales, charge related to a warranty issue that was resolved
in the 2005 fourth quarter resulting in the reversal of the charge in full. The favorable
comparison impact of the 2005 second quarter warranty charge on year over year selling,
general and administrative expenses was offset by increased expenses related to items that
vary with sales levels, compensation expense related to stock-based awards recorded in the
period due to the adoption of FASB Statement No. 123R in 2006 and higher employment levels
in 2006 vs. 2005.

# Income from Operations

Income
from operations in the 2006 second quarter was $14.9 million, or 10.7% of net sales,
compared to income from operations of $11.5 million, or 9.0% of net sales, in the 2005
second quarter, an increase of $3.3 million, or 29%. The 2005 second quarter income from
continuing operations includes the previously discussed warranty charge of $2.3 million,
or 1.8% of net sales.

# Interest Expense

Interest
expense was $0.8 million in the 2006 second quarter compared to $1.6 million in the 2005
second quarter, a decrease of $0.8 million. The decrease in interest expense was due to a
decrease in the average outstanding debt during the 2006 second quarter compared to the
2005 second quarter (see Financial Condition below for discussion of changes
in outstanding debt).

# Interest Income

Interest
income was $0.8 million in the 2006 second quarter compared to $1.1 million in the 2005
second quarter, a decrease of $0.3 million. This decrease was primarily due to the
decrease in average finance contracts receivable in the 2006 second quarter compared to
the 2005 second quarter.

# Net Other Expense

The
Company recorded net other expense of $0.7 million and $2.2 million in the 2006 second
quarter and 2005 second quarter, respectively. In the 2005 second quarter, the Company
terminated interest rate swaps associated with unsold finance contracts receivable.
Although the Company realized an overall $0.4 million gain on the swaps in the first half
of 2005, the Company did incur a $0.7 million loss on the swaps in the 2005 second
quarter. In addition to the swap loss in the quarter, The Company incurred one-time
securitization costs of $0.3 million in the second quarter of 2005. The remaining change
from the 2005 second quarter is due to foreign currency gains in the 2006 second quarter
compared to foreign currency losses in the 2005 second quarter.

-21-

---

# Income from Continuing
Operations

Income
from continuing operations in the 2006 second quarter was $9.4 million, or 6.7% of net
sales, compared to income from continuing operations of $5.8 million, or 4.5% of net
sales, in the 2005 second quarter, an increase of $3.6 million, or 61%. The 2005 second
quarter income from continuing operations includes the previously discussed after-tax
warranty charge of $1.5 million, or 1.2% of net sales.

# Income(Loss) from
Discontinued Operations, Net of Tax

The
Company recorded income from discontinued operations, net of tax of $37,000 in the 2006
second quarter compared to a loss from discontinued operations, net of tax of $201,000 in
the 2005 second quarter.

# Loss on Disposal of
Discontinued Operations, Net of Tax

The
Company recorded an additional $0.1 million loss on the disposal of discontinued
operations, net of tax in the 2006 second quarter. See Discontinued Operations
above for additional discussion.

# Net Income

The
Company recorded net income in the 2006 second quarter of $9.3 million compared to net
income of $5.6 million in the 2005 second quarter. The 2006 second quarter net income
included a $0.1 million loss on disposal of discontinued operations as noted above.

# Six Months Ended June
30, 2006 Compared to Six Months Ended July 2, 2005

# Net Sales

Net
sales in the six months ended June 30, 2006 (2006 six months) were $261.6
million compared to $237.2 million in the six months ended July 2, 2005 (2005 six
months), an increase of $24.4 million, or 10%. Net sales, in general, were favorably
impacted by the continued strength of the Companys construction markets. Demand for
the Companys telescopic handlers and compact track loaders remained robust during
the 2006 six months as sales increased 44% and 10%, respectively, from the 2005 six
months. Sales of the Companys skid loaders, including sales of skid loaders by the
Companys European subsidiary, Gehl Europe, were consistent with the 2005 six months.
The Companys attachment subsidiary, CE Attachments, Inc., increased sales 22% from
2005. In addition to the increased sales noted above, approximately two percentage points
of the net sales increase was due to price increases during 2005 and 2006. These increases
in net sales were partially offset by a 13% reduction in sales of compact excavators
during the 2006 six months as increased competitive pricing pressure adversely impacted
sales in the 2006 first quarter. The Company increased sales incentives on compact
excavators for the second quarter of 2006 resulting in a second quarter increase in sales
of 26% as discussed above.

Of
the Companys total net sales reported for the 2006 six months, $52.9 million were
made to customers residing outside of the United States compared with $37.4 million in the
2005 six months. The increase in export sales was primarily due to increased sales in
Europe.

-22-

---

# Gross Profit

Gross
profit was $56.4 million in the 2006 six months compared to $49.8 million in the 2005 six
months, an increase of $6.6 million, or 13%. Gross margin was 21.6% in the 2006 six months
compared to 21.0% in the 2005 six months. Gross margin in the 2006 six months was
favorably impacted by approximately 1.6 percentage points due to 2005 and 2006 price
increases. The favorable impact of these price increases was partially offset by sales
incentives paid on increased retail settlement activity in the 2006 six months compared to
the 2005 six months (approximately 0.5 percentage points) as well as the impact of changes
in product mix and increases in the cost of utilities and freight (approximately 0.5
percentage points).

# Selling, General and
Administrative Expenses

Selling,
general and administrative expenses were $30.2 million, or 11.6% of net sales, in the 2006
six months compared to $29.8 million, or 12.6% of net sales, in the 2005 six months.
Selling, general and administrative expenses in the 2005 six months included a $2.3
million, or 1.0% of net sales, charge related to a warranty issue that was resolved in the
2005 fourth quarter resulting in the reversal of the charge in full. The favorable
comparison impact of the 2005 six months warranty charge on year over year SG&A
expenses was offset by increased expenses related to items that vary with sales levels,
compensation expense related to stock-based awards recorded in the period due to the
adoption of FASB Statement No. 123R in 2006 and higher employment levels in 2006 vs. 2005.

# Income from Operations

Income
from operations in the 2006 six months was $26.1 million, or 10.0% of net sales, compared
to income from operations of $19.9 million, or 8.4% of net sales, in the 2005 six months,
an increase of $6.2 million, or 31%. The 2005 six months income from continuing operations
includes the previously discussed warranty charge of $2.3 million, or 1.0% of net sales.

# Interest Expense

Interest
expense was $1.9 million in the 2006 six months compared to $3.0 million in the 2005 six
months, a decrease of $1.1 million. The decrease in interest expense was due to a decrease
in the average outstanding debt during the 2006 six months compared to the 2005 six months
(see Financial Condition below for discussion of changes in outstanding debt).

# Interest Income

Interest
income was $2.0 million in the 2006 six months compared to $2.2 million in the 2005 six
months, a decrease of $0.2 million. This decrease was primarily due to the decrease in
average finance contract receivables in the 2006 six months compared to the 2005 six
months.

# Net Other Expense

The
Company recorded net other expense of $2.2 million and $2.9 million in the 2006 six months
and 2005 six months, respectively. The change in net other expense was primarily due to
the Company recognizing approximately $0.6 million in foreign currency gains in the 2006
six months compared to $0.5 million in foreign currency losses in the 2005 six months.
These gains were offset, in part, by a $0.4 million unrealized gain on an interest rate
swap contract that was in place during the 2005 six months.

-23-

---

# Income from Continuing
Operations

Income
from continuing operations in the 2006 six months was $15.8 million, or 6.0% of net sales,
compared to income from continuing operations of $10.7 million, or 4.5% of net sales, in
the 2005 six months, an increase of $5.0 million, or 47%. The 2005 six months income from
continuing operations includes the previously discussed after-tax warranty charge of $1.5
million, or 0.6% of net sales.

# Income(Loss) from
Discontinued Operations, Net of Tax

The
Company recorded a loss from discontinued operations, net of tax of $79,000 in the 2006
six months compared to a loss from discontinued operations, net of tax of $190,000 in the
2005 six months.

# Loss on Disposal of
Discontinued Operations, Net of Tax

The
Company recorded a $9.0 million loss on the disposal of discontinued operations, net of
tax in the 2006 six months. See Discontinued Operations above for additional
discussion.

# Net Income

The
Company recorded net income in the 2006 six months of $6.7 million compared to net income
of $10.5 million in the 2005 six months. The 2006 six months net loss included a $9.0
million loss on disposal of discontinued operations noted above.

# Financial Condition

# Working Capital

The
Companys working capital was $217.7 million at June 30, 2006 as compared to $212.6
million at December 31, 2005 and $199.6 million at July 2, 2005. The change in working
capital at June 30, 2006 from December 31, 2005 was primarily due to reductions in finance
contracts receivable, discontinued operations net assets and an increase in accounts
receivable and accounts payable. Finance contracts receivable decreased from December 31,
2005 due to the timing of the sale of contracts through the Companys asset
securitization facility. Discontinued operations net assets decreased from December 31,
2005 due to the decline in production and sales of agricultural implements as well as the
recording of the asset impairment charge associated with the discontinued operations
during the 2006 first quarter. The increase in accounts payable was due to increased
production resulting from strong sales as well as the timing of payments resulting from a
change in the mix of vendors. Accounts receivable increased from December 31, 2005
primarily due to increased sales during the 2006 six months.

The
change in working capital at June 30, 2006 from July 2, 2005 was primarily due to an
increase in accounts receivable, inventories, and prepaid expenses and other current
assets, offset in part, by a decrease in finance contracts receivable and discontinued
operations net assets, as well as, an increase in accounts payable. Accounts receivable
increased primarily due to strong sales from July 2, 2005. The increase in inventories was
primarily to meet the rising demand for the Companys products. Prepaid expenses and
other current assets increased primarily due to an increase in retained interest related
to the sale of finance contracts into the Securitization Facility. Finance contracts
receivable decreased from July 2, 2005 due to the timing of the sale of contracts through
the Companys asset securitization facility. Discontinued operations net assets
decreased from December 31, 2005 due to the decline in production and sales of
agricultural implements as well as the recording of the asset impairment charge associated
with the discontinued operations during the 2006 first quarter. The increase in accounts
payable was due to increased production resulting from strong sales as well as the timing
of payments resulting from a change in the mix of vendors.

-24-

---

# Capital Expenditures

Capital
expenditures for property, plant and equipment during the 2006 six months were
approximately $2.0 million. On May 1, 2006, the Company announced a $6.5 million expansion
of its Yankton, South Dakota telescopic handler production facility. The project includes
a 30,000 square foot expansion of the facility as well as further investment in
technological production enhancements, including increased laser cutting, robotics and a
new paint system. The project is expected to be completed in January 2007 and will
increase telescopic handler production by approximately 50% from 2006 second quarter
levels. In addition to the expansion of the Yankton, South Dakota facility, the Company
plans to make an additional $6.5 million of capital expenditures in 2006, primarily to
enhance manufacturing and information technology capabilities and maintain and upgrade
machinery and equipment. The Company believes its Madison, South Dakota skid loader
production facility will operate near full capacity for the balance of 2006. The Company
believes its present Yankton, South Dakota facility will operate at, or near, full
capacity up to the completion of the previously discussed expansion in January 2007.

# Debt and Equity

The
Company maintains a $125 million revolving credit facility (the Facility) with
a syndicate of commercial bank lenders. The credit commitment under the facility is for a
five-year period expiring June 3, 2010. At any time during the term of the Facility, the
Company has the option to request an increase in the credit commitment under the Facility
to $175 million from the current syndicate of commercial bank lenders or any other
commercial bank lender(s) selected by the Company. Borrowings under the Facility are
secured by the Companys accounts receivable, inventory and the capital stock of
certain wholly-owned subsidiaries. The Company may borrow up to $25 million under the
Facility in a currency other than the U.S. Dollar. The Company may elect to pay interest
on U.S. Dollar borrowings under the Facility at a rate of either (1) the 30 day LIBOR plus
0.75% to 1.50% or (2) a base rate defined as the prime commercial rate less 0.0% to 1.0%.
The Companys actual borrowing costs for LIBOR or base rate borrowings is determined
by reference to a pricing grid based on the Companys ratio of funded debt to total
capitalization. Interest on amounts borrowed under the Facility in currencies other than
the U.S. Dollar will be priced at a rate equal to LIBOR plus 0.75% to 1.50%. As of June
30, 2006, the weighted average interest rate on Company borrowings outstanding under the
Facility was 6.05%.

The
Facility requires the Company to maintain compliance with certain financial covenants
related to total capitalization, interest expense coverage, tangible net worth, capital
expenditures and operating lease spending. The Company was in compliance with all
covenants as of June 30, 2006.

Borrowings
under the Facility and the previous asset-based senior secured debt facility (the Facility
replaced the Companys previous asset-based senior secured debt facility on June 3,
2005) were $46.3 million, $51.5 million and $95.0 million at June 30, 2006, December 31,
2005 and July 2, 2005, respectively. Available unused borrowings under the Facility and
the previous asset-based senior secured debt facility were $78.7 million, $73.5 million
and $30.0 million at June 30, 2006, December 31, 2005 and July 2, 2005, respectively.

-25-

---

In
October 2005, the Company entered into a $15 million committed line of credit facility
with a commercial bank lender. The facility was amended during July 2006 reducing the
commited line of credit to $10 million. Borrowings under this facility bear interest at
1.15% above the LIBOR for 30 day deposits reset monthly and are secured by a first
priority lien on an assigned pool of retail finance contracts receivable. This facility
expires on April 30, 2007. There were no borrowings outstanding under this facility at
June 30, 2006.

In
addition, the Company has access to a 2.5 million committed foreign short-term
credit facility. Borrowings of 1.4 million were outstanding at a weighted average
interest rate of 4.35% at June 30, 2006.

The
Company believes it has adequate capital resources and borrowing capacity to meet its
projected capital requirements for the foreseeable future. Requirements for working
capital, capital expenditures, pension fund contributions and debt maturities in fiscal
2006 will continue to be funded by operations and the Companys borrowing
arrangements.

At
June 30, 2006, shareholders equity had increased $69.8 million to $218.6 million
from $148.8 at July 2, 2005. This increase primarily reflects the impact of the $46.1
million in proceeds received from the sale of the Companys common stock in September
2005, net income of $17.9 million and $1.4 million related to the exercise of stock
options.

In
September 2001, the Companys Board of Directors authorized a stock repurchase plan
providing for the repurchase of up to 500,000 shares of the Companys outstanding
common stock. No shares were repurchased under this authorization during the 2006 six
months or 2005 six months. As of June 30, 2006, the Company has repurchased an aggregate
of 227,850 shares under this authorization. All treasury stock acquired by the Company has
been cancelled and returned to the status of authorized but unissued shares.

# Contractual Obligations

Other
than the changes in the outstanding borrowings and capital commitments, as described
above, there have been no material changes to the annual maturities of debt obligations,
future minimum, non-cancelable operating lease payments and capital commitments as
disclosed in Managements Discussion and Analysis of Financial Condition and Results
of Operations and Notes 6 and 14 of Notes to Consolidated Financial Statements in the
Companys Annual Report on Form 10-K for the year ended December 31, 2005 as filed
with the Securities and Exchange Commission.

# Off-Balance Sheet
Arrangements  Sales of Finance Contracts Receivable

The
sale of finance contracts is an important component of the Companys overall
liquidity. In March 2006, the Company entered into an asset securitization facility
(the Securitization Facility) with a financial institution (the
Purchaser) whereby the Company can sell, through a revolving securitization
facility, up to $300 million of retail and fleet installment sale contracts
(installment sale contracts or finance contracts receivable). The
Securitization Facility has a final maturity date in March 2009, subject to annual renewal
by the Purchaser. Under the Securitization Facility, the Company sells portfolios of its
finance contracts receivable to a wholly owned, bankruptcy-remote special purpose
subsidiary (SPE) which, in turn, sells each such portfolio to a wholly owned
bankruptcy-remote special purpose subsidiary of the SPE. The wholly-owned
bankruptcy-remote special purpose subsidiary of the SPE sells a participating interest in
each such portfolio of finance contracts receivable to the Purchaser (approximately 90% of
the discounted value of the finance contract receivable portfolio). The Purchaser has no
recourse against the Company for uncollectible finance contracts receivable, if any;
however, the Companys retained interest in the portfolio of finance contracts
receivable is subordinate to the Purchasers interest. The Securitization Facility
replaced the previous $150 million revolving securitization facility the Company
terminated in February 2006. The participating interest in finance contracts receivable
that had been sold under the previous securitization facility was purchased by Purchaser
in March 2006. At June 30, 2006, the Company had available unused capacity of $150.2
million under the Securitization Facility.

-26-

---

In
addition to the Securitization Facility, the Company has arrangements with multiple
financial institutions to sell its finance contracts receivable with 5% limited recourse
on the sold portfolio of retail finance contracts. Prior to 2005, the Company sold certain
finance contracts receivable to various financial institutions on a full recourse basis.
The Company continues to service substantially all contracts, whether or not sold. At June
30, 2006, the Company serviced $318.6 million of sold finance contracts receivable of
which $180.1 million, $83.3 million and $55.2 million were sold through the Securitization
Facility, limited recourse arrangements and full recourse arrangements, respectively. It
is the intention of the Company to continue to sell substantially all of its existing as
well as future finance contracts through an asset securitization program or limited
recourse arrangements. The Company believes that it will be able to arrange sufficient
capacity to sell its finance contracts for the foreseeable future.

# Critical Accounting
Policies and Estimates

The
preparation of the Companys consolidated financial statements requires the Company
to make estimates and judgments that affect the reported amounts of assets, liabilities,
net sales and expenses. The Company bases its estimates on historical experience and on
various other assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions and materially
impact the carrying value of the assets and liabilities. The Company believes the
following accounting policies are critical to the Companys business operations and
the understanding of the Companys results of operations and financial condition.

Allowance for Doubtful Accounts

The
Companys accounts receivable are reduced by an allowance for amounts that may be
uncollectible in the future. In circumstances where the Company is aware of a specific
customers inability to meet its financial obligations, a specific reserve for bad
debts is recorded against the accounts receivable balance to reduce the amount due to the
net amount reasonably expected to be collected. Additionally, a general percentage of past
due receivables is reserved, based on the Companys past experience of
collectibility. If circumstances change (i.e., higher than expected defaults or an
unexpected material adverse change in a major customers ability to meet its
financial obligations), estimates of the recoverability of amounts due could be reduced by
a material amount.

-27-

---

Inventories

Inventories
are valued at the lower of cost or market value. Cost is determined using the last-in,
first-out (LIFO) method for the majority of the Companys inventories. In valuing
inventory, management is required to make assumptions regarding the level of reserves
required to value potentially obsolete or slow moving items to the lower of cost or market
value. Inventory reserves are established taking into account inventory age and frequency
of use or sale. While calculations are made involving these factors, significant
management judgment regarding expectations for future events is involved. Future events
that could significantly influence managements judgment and related estimates
include general economic conditions in markets where the Companys products are sold,
as well as new products and design changes introduced by the Company.

Accrued Warranty

The
Company establishes reserves related to the warranties provided on its products. Specific
reserves are maintained for programs related to known machine safety and reliability
issues. When establishing specific reserves, estimates are made regarding the size of the
population, the type of program, costs to be incurred and estimated participation.
Additionally, general reserves are maintained based on the historical percentage
relationships of warranty costs to machine sales and applied to current equipment sales.
If these estimates and related assumptions change, reserve levels may require adjustment.

Accrued Product Liability

The
Company records a general reserve for potential product liability claims based on the
Companys prior claim experience and specific reserves for known product liability
claims. Specific reserves for known claims are valued based upon the Companys prior
claims experience, including consideration of the jurisdiction, circumstances of the
accident, type of loss or injury, identity of plaintiff, other potential responsible
parties, analysis of outside counsel, and analysis of internal product liability counsel.
Actual product liability costs could be different due to a number of variables, including
decisions of juries or judges.

Goodwill Impairment

In
connection with SFAS No. 142, Goodwill and Other Intangible Assets, the
Company is required to perform goodwill impairment reviews, at least annually, using a
fair-value-based approach. The Company performs its annual impairment review as of
December 31. As part of the annual impairment review, an estimate of the fair value of the
Company, primarily by using a discounted cash flow analysis, is performed. Significant
assumptions used in this analysis include: expected future revenue growth rates, operating
profit margins, working capital levels and a weighted average cost of capital. Changes in
assumptions could significantly impact the estimate of the fair value of the Company,
which could result in a goodwill impairment charge and could have a significant impact on
the consolidated financial statements.

Pension and Postretirement
Benefits

Pension
and postretirement benefit costs and obligations are dependent on assumptions used in
calculation of these amounts. These assumptions, used by actuaries, include discount
rates, expected return on plan assets for funded plans, rate of salary increases, health
care cost trend rates, mortality rates and other factors. In accordance with accounting
principles generally accepted in the United States, actual results that differ from the
actuarial assumptions are accumulated and amortized to future periods and therefore affect
recognized expense and recorded obligations in future periods. While the Company believes
that the assumptions used are appropriate, differences in actual experience or changes in
assumptions may materially effect its financial position or results of operations.

-28-

---

# Forward-Looking
Statements

Certain
statements included in this filing 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 are
forward-looking statements. When used in this filing, 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 filing. Factors
that could cause such a variance include, but are not limited to, those risk factors cited
in the Companys filings with the Securities and Exchange Commission, any adverse
change in general economic conditions, unanticipated changes in capital market conditions,
the Companys ability to implement successfully its strategic initiatives (including
cost reduction initiatives), unanticipated expenses associated with the discontinuance of
the Companys agricultural implement lines, market acceptance of newly introduced
products, unexpected issues related to the pricing and availability of raw materials
(including steel) and component parts, unanticipated difficulties in securing product from
third party manufacturing sources, the ability of the Company to increase its prices to
reflect higher prices for raw materials and component parts, 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 or interest rates, the
Companys ability to secure sources of liquidity necessary to fund its operations,
changes in environmental laws, the impact of any strategic transactions 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 filing are only made as of the date of this
filing, 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 2006 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.

-29-

---

# 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, 2005 as
filed with the Securities and Exchange Commission.

# Item 4. Controls and
Procedures

# Disclosure Controls and
Procedures

The
Companys management, with the participation of the Companys principal
executive officer and its principal financial officer, has evaluated the Companys
disclosure controls and procedures as of June 30, 2006. Based upon that evaluation, the
Companys principal executive officer and its principal financial officer have
concluded that the Companys disclosure controls and procedures were effective as of
June 30, 2006.

# Changes in Internal
Control Over Financial Reporting

There
was no change in the Companys internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred
during the three months ended June 30, 2006, that has materially affected, or is
reasonably likely to materially affect, the Companys internal control over financial
reporting.

-30-

---

# PART II  Other
Information

# Item 1A. Risk Factors

You
should carefully consider each of the risks described below, together with all of the
other information contained in this Quarterly Report on Form 10-Q, before making an
investment decision with respect to our securities. If any of the following risks develop
into actual events, our business, financial condition or results from operations could be
materially and adversely affected and you may lose all or part of your investment.

# We operate in cyclical
industries, which could adversely affect our growth and results of operations.

Our
business depends upon general activity levels in the construction and agricultural
industries. Historically, these industries have been cyclical. As a result, our operating
profits are susceptible to a number of industry-specific factors, including:

| |  | prevailing
levels of construction, especially housing starts, and levels of industrial production;
| | - | --------------------------------------------------------------------------------------------------

| |  | public
spending on infrastructure;
| | - | ----------------------------------

| |  | market
interest rates;
| | - | ----------------------

| |  | volatility
of sales to rental companies;
| | - | ----------------------------------------

| |  | real
estate values;
| | - | -------------------

| |  | consumer
confidence;
| | - | --------------------

| |  | changes
in farm income and farmland value;
| | - | ------------------------------------------

| |  | the
level of worldwide farm output and demand for farm products;
| | - | ----------------------------------------------------------------

| |  | commodity
prices;
| | - | -----------------

| |  | energy
prices;
| | - | --------------

| |  | government
agricultural policies and subsidies;
| | - | -----------------------------------------------

| |  | animal
diseases and crop pests; and
| | - | -----------------------------------

| |  | weather.
| | - | --------

As
a result of these and other factors, including related effects on us and our
customers access to and cost of credit and dealer inventory management, a downturn
in demand for our products can occur suddenly, resulting in excess inventories,
under-utilized production capacity and reduced sales prices for our products. These
downturns may be prolonged and may result in lower net sales and earnings. Equipment
manufacturers, including us, have responded to downturns in the past by reducing
production and discounting product prices. These actions have resulted in restructuring
charges and lower earnings for us in past affected periods. In the event of future
downturns, we may take similar actions.

-31-

---

# Our dependence on, and
the price and availability of, raw materials and component parts may adversely affect our
profits.

We
are exposed to fluctuations in market prices for commodities, such as steel and rubber, as
well as component parts, including engines. In recent years, the prices of various raw
materials and component parts have increased significantly, and we have been unable to
avoid exposure to global price fluctuations and supply limitations, such as occurred in
2004 and 2005 with the cost and availability of steel and related products. In addition,
our products are designed to work with particular components. As a result, our products,
in certain cases, rely on a single source of supply for certain components. If we are
unable to purchase the raw materials and components we require or are unable to pass on
price increases to our customers, our future profitability may be adversely affected.

# The construction and
agricultural industries in which we operate are competitive, and competitors offerings
of new products or services or lower prices could result in a decrease in our net sales
and earnings.

We
compete with global full-line suppliers (including Caterpillar Inc., Deere & Company,
Case Construction Equipment and Komatsu Ltd.) with a presence in every market and a broad
range of products as well as with product line specialists (including JLG Industries,
Inc., Ingersoll-Rand Company (Bobcat) and Takeuchi Mfg. Co. Ltd.). Some of our competitors
are larger than us and have greater financial, manufacturing, marketing and distribution
resources. Competitive pricing, product initiatives and other actions taken by our
competitors could cause us to lose customers or force us to decrease our sales prices,
resulting in lower net sales and earnings.

# We source some of our
products from third parties and any interruption in the supply of these products could
adversely affect our net sales and profitability.

We
source compact excavators and compact track loaders from third-party foreign suppliers.
Any interruption in the supply of these products or any material increase in prices could
adversely affect our net sales and profitability. We are exposed to foreign currency risk
with respect to the prices of these products. Any material change in the value of the
United States dollar versus other currencies could adversely impact our net sales and
profitability.

# Our success depends in
part on the introduction of new products, and the failure to introduce new products on a
timely basis could adversely affect our net sales and profitability.

Our
long-term results depend upon our ability to secure, introduce and market new products
successfully. Our success in this area will depend on a number of factors, including our
ability to develop new products internally or source new products from third-party
suppliers, product quality, competition, customer acceptance of new products and the
strength of our dealer networks. Any difficulties in developing or identifying and
sourcing new products, any manufacturing delays or problems with new product launches, or
any increased warranty costs from new products could adversely affect our operating
results. The introduction of new products could also result in a decrease in revenues from
our existing products. The internal development and refinement of products also consumes a
substantial amount of capital. We may need more capital for product development and
refinement than is available to us, which could adversely affect our net sales and
profitability.

-32-

---

# Cyclical and structural
declines in the demand for products we offer may cause us to undertake product line and
facility rationalization initiatives that could result in restructuring charges and lower
net sales and earnings.

The
construction and agricultural industries are continually evolving and undergoing cyclical
and structural changes that impact the demand for the products we offer. We have
historically reviewed these cyclical and structural changes in demand and have taken
action to rationalize our product offerings and production facilities in light of market
conditions. We expect to continue these reviews and to take appropriate action based on
future conditions. Those actions could result in restructuring charges and lower net sales
and earnings.

During
March 2006, we decided to discontinue the manufacturing and distribution of our
agricultural implement products. As a result, we recorded a $7.1 million after-tax
non-cash impairment charge related to agricultural implement field and factory inventory
and certain property, plant and equipment and a $1.9 million after-tax cash charge related
to severance and other termination costs. See Item 2. Managements Discussion
and Analysis of Financial Condition and Results of Operations  Discontinued
Operations. If we incur additional unanticipated expenses associated with the
discontinuation of our implement business, then our net income could be adversely affected
in future periods.

# Our leverage could
adversely affect our financial health and make us vulnerable to adverse economic and
industry conditions.

At
times, we may incur indebtedness that is substantial relative to our shareholders
equity. Our indebtedness has important consequences. For example, it could:

| |  | make
it difficult for us to fulfill our obligations under our credit agreement;
| | - | -------------------------------------------------------------------------------

| |  | make
it more challenging for us to obtain additional financing to fund our business strategy,
debt service requirements, capital expenditures and working capital;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | increase
our vulnerability to interest rate changes and general adverse economic and industry
conditions;
| | - | ---------------------------------------------------------------------------------------------------------

| |  | require
us to dedicate a substantial portion of our cash flow from operations to service
indebtedness, thereby reducing the availability of cash flow to fund working capital,
capital expenditures, research and development efforts and other general corporate
activities;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | limit
our flexibility in planning for, or reacting to, changes in our business and markets; and
| | - | -----------------------------------------------------------------------------------------------

| |  | place
us at a competitive disadvantage relative to our competitors that have less debt.
| | - | ---------------------------------------------------------------------------------------

In
addition, our credit facility requires us to maintain specified financial ratios and
satisfy certain financial condition tests, which may require that we take action to reduce
our debt or to act in a manner contrary to our long-term business objectives.

-33-

---

# We are subject to risks
and associated changes in the business climate that could limit our access to capital.

Our
business is capital intensive and the fulfillment of our strategic plan depends, at least
in part, upon our ability to access capital at attractive rates and terms. If access to
capital becomes significantly constrained because of changes in the business climate or
other factors, then our results of operations and financial condition could be
significantly adversely affected.

# We are subject to
significant environmental, health and safety laws and regulations and related compliance
expenditures and  liabilities.

We
are subject to various laws and regulations relating to the protection of the environment
and human health and safety and have incurred and will continue to incur capital and other
expenditures to comply with these regulations. If we fail to comply with any environmental
regulations, then we could be subject to future liabilities, fines or penalties or the
suspension of production at our manufacturing facilities. If unexpected obligations at
these or other sites or more stringent environmental laws are imposed in the future, our
future profitability may be adversely affected.

# Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds

In
September 2001, the Companys Board of Directors authorized a stock repurchase plan
providing for the repurchase of up to 500,000 shares of the Companys outstanding
common stock in open market or privately negotiated transactions. The plan does not have
an expiration date. No shares were repurchased under the plan during the three- and
six-month periods ended June 30, 2006. As of June 30, 2006, the Company had authority to
repurchase 272,150 shares under the plan.

# Item 4. Submission of
Matters to a Vote of Security Holders

At
the Companys 2006 annual meeting of shareholders held on April 28, 2006, John T.
Byrnes, Richard J. Fotsch and Dr. Herman Viets were re-elected as directors of the Company
for terms expiring at the 2009 annual meeting of shareholders:

|Name of Nominee   | Shares Voted For | Shares Withholding Authority
|----------------- | ---------------- | ----------------------------
|John T. Byrnes    | 10,666,862       | 58,724                      
|Richard J. Fotsch | 10,698,514       | 27,072                      
|Dr. Herman Viets  | 9,897,725        | 827,861                     

The
following table sets forth the other directors of the Company whose terms of office
continued after the 2006 annual meeting:

|Name of Director    | Year in Which Term Expires
|------------------- | --------------------------
|Marcel-Claude Braud | 2007                      
|William D. Gehl     | 2007                      
|John W. Splude      | 2007                      
|Nicholas C. Babson  | 2008                      
|Thomas J. Boldt     | 2008                      

-34-

---

In
addition, at the 2006 annual meeting, shareholders approved the appointment of
PricewaterhouseCoopers LLP as the Companys independent registered public accounting
firm for fiscal year 2006. With respect to such approval, the number of shares voted for
and against were 10,670,161 and 45,567, respectively. The number of shares abstaining was
9,856.

Also at the 2006 annual meeting,
shareholders approved the Gehl Company 2004 Equity Incentive Plan, as amended. With
respect to such approval, the number of shares voted For and Against were 8,271,873 and
1,192,696, respectively. The number of shares abstaining and the number of shares subject
to broker non-votes were 26,128 and 1,234,889, respectively.

# Item 6. Exhibits

| | Exhibit No. | Document Description
| | ----------- | --------------------

| | 10.1 | Gehl
Company 2004 Equity Incentive Plan, as amended [Incorporated by reference to Appendix A
to the Companys Proxy Statement for the 2006 Annual Meeting of Shareholders and by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed on April
26, 2006]
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Certification
of the Chief Executive Officer pursuant to section 302 of the
                       Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of the Chief Financial Officer pursuant to section 302 of the
                       Sarbanes-Oxley Act of 2002.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------

| | 32.1 | Certification
of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer
pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

# 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:  August 9, 2006 | By:  /s/ William D. Gehl   
|                      | William D. Gehl            
|                      | Chairman of the Board      
|                      | and Chief Executive Officer
|Date:  August 9, 2006 | By:  /s/ Thomas M. Rettler 
|                      | Thomas M. Rettler          
|                      | Vice President and         
|                      | Chief Financial Officer    
|                      | (Principal Financial and   
|                      | Accounting Officer)        

-35-

---

# GEHL COMPANY

# INDEX TO EXHIBITS

| | Exhibit No. | Document Description
| | ----------- | --------------------

| | 10.1 | Gehl
Company 2004 Equity Incentive Plan, as amended [Incorporated by reference to Appendix A
to the Companys Proxy Statement for the 2006 Annual Meeting of Shareholders and by
reference to Exhibit 10.1 of the Companys Current Report on Form 8-K filed on April
26, 2006]
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Certification
of the Chief Executive Officer pursuant to section 302 of
                                the Sarbanes-Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 31.2 | Certification
of the Chief Financial Officer pursuant to section 302 of
                                the Sarbanes-Oxley Act of 2002.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------

| | 32.1 | Certification
of Periodic Financial Report by the Chief Executive Officer and Chief Financial Officer
pursuant to section 906 of the Sarbanes-Oxley Act of 2002.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

-36-