SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (x) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 30, 1995 or ( ) Transaction Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition period from to Commission File Number 0-13886 Oshkosh Truck Corporation [Exact name of registrant as specified in its charter] Wisconsin 39-0520270 [State of other jurisdiction of [I.R.S. Employer incorporation or organization] Identification No.] 2307 Oregon Street, P.O. Box 2566, Oshkosh, Wisconsin 54903 [Address of principal executive offices] [Zip Code] Registrant's telephone number, including area code (414) 235-9151 None [Former name, former address and former fiscal year, if changed since last report] Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) or the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Common Stock Outstanding as of December 30, 1995: 410,283 Class B Common Stock Outstanding as of December 30, 1995: 8,472,865
OSHKOSH TRUCK CORPORATION FORM 10-Q INDEX FOR QUARTER ENDED 12/30/95 Page PART I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets. . . . . . . . 3 Consolidated Statements of Income. . . . . 4 Consolidated Statement of Shareholders' Equity . . . . . . . . . . . 5 Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . 6 Notes to Consolidated Financial Statements. 7,8 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. . . . . . . . . . . . . . . . . 9,10,11 PART II. Other Information. . . . . . . . . . . . . 12 Signatures. . . . . . . . . . . . . . . . . . . . . . . . 12
OSHKOSH TRUCK CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) 12/30/95 09/30/95 ASSETS (unaudited) Current assets: Cash and cash equivalents $ 29,539 $ 29,716 Receivables, net of allowance for doubtful accounts 41,719 57,374 Inventories (Note 2) 52,199 45,781 Prepaid expenses 4,238 4,363 Deferred and refundable income taxes 4,516 4,681 Net current assets of discontinued operations (Note 5) 17 3,273 -------- ------- Total current assets 132,228 145,188 Deferred charges 2,871 2,978 Deferred income taxes 2,389 2,389 Other assets 12,846 10,437 Property, plant & equipment, at cost: Land 5,876 5,522 Buildings 30,416 30,118 Machinery & equipment 66,653 68,630 -------- ------- 102,945 104,270 Less accumulated depreciation (64,279) (64,346) -------- ------- Net property, plant & equipment 38,666 39,924 -------- ------- Total assets $189,000 $200,916 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 19,128 $ 28,266 Payroll-related obligations 4,624 5,526 Accrued warranty 2,183 3,084 Income taxes 429 - Other current liabilities 16,148 16,535 -------- ------- Total current liabilities 42,512 53,411 Postretirement benefit obligations 9,050 8,839 Other long-term liabilities 5,127 5,026 Net long-term liabilities of discontinued operations (Note 5) 113 227 Shareholders' equity: Preferred stock, par value $.01 per share, 2,000,000 shares authorized, none issued - - Common stock, par value $.01 per share: Class A, 1,000,000 shares authorized, 410,283 and 427,262 shares issued at 12/30/95 and 9/30/95, respectively 4 4 Class B, 18,000,000 shares authorized, 8,947,882 and 8,930,903 shares issued at 12/30/95 and 9/30/95, respectively 89 89 Paid-in capital 16,643 16,533 Retained earnings 122,165 121,697 -------- ------- 138,901 138,323 Cost of Class B common stock in treasury; 475,017 shares at 12/30/95 and 353,617 shares at 9/30/95 (5,196) (3,403) Pension liability adjustment (1,507) (1,507) -------- ------- Total shareholders' equity 132,198 133,413 -------- ------- Total liabilities and shareholders' equity $189,000 $200,916 ======== ========
OSHKOSH TRUCK CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in thousands, except per share amounts) Three Months Ended 12/30/95 12/31/94 Continuing operations: Net shipments $ 80,533 $ 95,417 Cost of goods sold 69,081 83,078 -------- -------- Gross profit 11,452 12,339 Operating expenses: Selling, general & administrative 7,965 6,969 Engineering, research & development 1,327 1,503 -------- -------- Total operating expenses 9,292 8,472 Income from operations 2,160 3,867 Other income (expense): Interest expense (37) (50) Interest income 482 246 Miscellaneous, net (48) 1 -------- -------- 397 197 -------- -------- Income from continuing operations before income taxes 2,557 4,064 Provision for income taxes 985 1,565 -------- -------- Income from continuing operations 1,572 2,499 Discontinued operations (Note 5): Loss from discontinued operations net of income tax benefit - (988) -------- -------- Net income $ 1,572 $ 1,511 ======== ======== Earnings per common share: Income from continuing operations $ 0.18 $ 0.29 Discontinued operations - (0.12) -------- -------- Net income $ 0.18 $ 0.17 ======== ======== Cash dividends per common share: Class A $0.10875 $0.10875 Class B $0.12500 $0.12500
<TABLE> OSHKOSH TRUCK CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY THREE MONTHS ENDED DECEMBER 30, 1995 (Unaudited, in thousands, except per share amounts) <CAPTION> Pension Paid-in Retained Treasury Liability Common Stock Capital Earnings Stock Adjustment Total <S> <C> <C> <C> <C> <C> <C> Balance at 9/30/95 $93 $16,533 $121,697 $(3,403) $(1,507) $133,413 Net income 1,572 1,572 Cash dividends: Class A common ($.10875 per share) (43) (43) Class B common ($.12500 per share) (1,061) (1,061) Purchase of treasury stock (1,844) (1,844) Exercise of stock options 8 51 59 Incentive compensation awards 102 102 ____ _______ ________ _______ _______ ________ Balance at 12/30/95 $93 $16,643 $122,165 $(5,196) $(1,507) $132,198 === ======= ======== ======== ======== ======== </TABLE>
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in thousands) Three Months Ended 12/30/95 12/31/94 Operating activities: Net income $ 1,572 $ 2,499 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,925 2,023 Deferred income taxes - (1,155) Loss on disposal of property, plant and equipment 53 12 Changes in operating assets and liabilities (836) (980) ------- ------- Total adjustments 1,142 (100) ------- ------- Net cash provided by operating activities 2,714 2,399 ------- ------- Investing activities: Additions to property, plant & equipment (2,420) (961) Proceeds from sale of property, plant and equipment 1,956 3 Increase in other assets (2,665) (384) ------- ------- Net cash used by investing activities (3,129) (1,342) ------- ------- Net cash from discontinued operations 3,142 2,518 Financing activities: Net payments on lines of credit - (33) Purchase of treasury stock and proceeds from exercise of stock options, net (1,785) 29 Dividends paid (1,119) (1,081) ------- ------- Net cash used by financing activities (2,904) (1,085) ------- ------- Increase (decrease) in cash and cash equivalents (177) 2,490 Cash and cash equivalents at beginning of period 29,716 15,836 ------- ------- Cash and cash equivalents at end of period $29,539 $18,326 ======= ======= Supplementary disclosures: Cash paid for interest: Continuing operations $ 36 $ 63 Discontinued operations $ - $ 244 Cash paid (refunded) for income taxes $ 360 $ (714)
OSHKOSH TRUCK CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except share amounts) NOTE 1 BASIS OF PRESENTATION The consolidated financial statements included herein have been prepared by the company without audit. However, the foregoing statements contain all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of company management, necessary to present fairly the financial position as of December 30, 1995 and September 30, 1995, the results of operations for the three month periods ended December 30, 1995 and December 31, 1994, and cash flows for the three month periods ended December 30, 1995 and December 31, 1994. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the company's 1995 annual report to shareholders. NOTE 2 INVENTORIES Inventories consist of the following: 12/30/95 09/30/95 Finished products $ 6,342 $ 3,368 Products in process 21,577 15,132 Raw materials 32,107 35,106 ------- ------- Inventories at FIFO cost 60,026 53,606 Less: Progress payments on U.S. Government contracts 674 852 Allowance for reduction to LIFO cost 7,153 6,973 ------- ------- $52,199 $45,781 ======= ======= Title to all inventories related to U.S. Government contracts which provide for progress payments vests in the government to the extent of unliquidated progress payments. NOTE 3 INCOME PER COMMON SHARE Income per common share is computed by dividing net income by the weighted average number of shares outstanding. Average number of shares outstanding was 8,932,732 and 8,709,148, respectively, for the three month periods ended December 30,1995 and December 31, 1994. Stock options, warrants and stock issuable under incentive compensation awards were not dilutive in any of the periods reported. NOTE 4 RECLASSIFICATIONS Certain reclassifications have been made to the 1995 condensed consolidated financial statements to conform to the 1996 presentation. NOTE 5 DISCONTINUED OPERATIONS On June 2, 1995, Freightliner Corporation acquired certain assets of the company's motor home, bus and van chassis business. The consideration included cash of $23,815 and the assumption by Freightliner of certain liabilities. The assets sold to Freightliner consisted of inventories, property, plant and equipment and the company's ownership interest in a Mexican chassis manufacturer. The liabilities assumed by Freightliner included warranty obligations related to previously produced chassis and the industrial revenue bonds that were secured by the underlying real estate. The disposition of the chassis business has been accounted for as a discontinued operation and accordingly, prior periods' financial statements have been restated to reflect the chassis business as a discontinued operation for all periods presented. Revenues of the chassis business for the three months ended December 31, 1994 were $16,891. Net assets or liabilities of the discontinued operation have been segregated in the consolidated balance sheets. Details of such amounts were as follows: 12/30/95 12/31/94 Receivables $ 1,299 $ 3,871 Inventories 497 1,421 Accounts payable and payroll-related obligations (257) (326) Accrued liabilities (1,000) (1,100) Other, net (522) (593) ------- ------- Net current assets of discontinued operations $ 17 $ 3,273 ======= ======= Receivable from joint venture in Mexico $ 2,922 $ 3,165 Accrued warranty (2,439) (2,694) Other, net (596) (698) ------- ------- Net long-term liabilities of discontinued operations $ (113) $ (227) ======= ======= The company has allocated interest on the debt which was assumed by Freightliner to discontinued operations. Interest expense included in discontinued operations totaled $253 for the three months ended December 31, 1994. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Results of Operations For the Three Months Ended December 1995 Compared to Three Months Ended December 1994 Net income for the first quarter of the 1996 fiscal year was $1.6 million, or $.18 per share. This compares to net income of $1.5 million, or $.17 per share, for the first quarter of fiscal 1995. Net income in the first quarter of the 1995 fiscal year was reduced by a loss of $1.0 million related to discontinued operations for the company's U.S. and Mexico chassis businesses sold to Freightliner Corporation in June 1995. Net shipments for the first quarter of fiscal 1996 were $80.5 million, compared to $95.4 million a year ago. Defense shipments totaled $57.8 million, 5.5% less than the $61.1 million in the first quarter of fiscal 1995. Commercial shipments were $22.7 million in the first quarter of the 1996 fiscal year compared to $34.3 million a year earlier. Van trailer shipments declined by $8.1 million year-over-year as the trailer industry slowed down late in the 1995 fiscal year. Virtually all of the company's revenues are derived from customer orders prior to commencing production. Gross profits were $11.5 million, or 14.2% of shipments in the first quarter of the 1996 fiscal year compared to $12.3 million, or 12.9% of shipments during the first quarter of the 1995 fiscal year. The improved margins are consistent for defense and commercial shipments and are due to continued productivity improvements and material cost control. Operating expenses totaled $9.3 million in the current quarter compared to $8.5 million in the first quarter of the 1995 fiscal year, and compared to an average of $9.7 million per quarter during the 1995 fiscal year. The 1996 fiscal quarter includes $0.4 million in costs related to development, marketing and other administrative activities related to products destined for distribution through the company's alliance partner, Freightliner Corporation. Interest income and other, net improved to $0.4 million in the 1996 fiscal year first quarter compared to $0.2 million a year earlier attributable to the company's higher investable cash position in the 1996 year. Liquidity and Capital Resources Working capital was $89.7 million at December 30, 1995, compared to $91.8 million at September 30, 1995. During the quarter, receivables decreased by $15.7 million to $41.7 million at December 30, 1995, in line with lower shipments. Inventories increased by $6.4 million to $52.2 million in line with higher shipment volumes expected to occur in the second fiscal quarter, and accounts payable decreased by $9.1 million as a result of the company's normal operations shutdown during the holidays. The company's cash and cash equivalent position was $29.5 million at December 30, 1995. Operations generated cash of $2.7 million, and collection of receivables related to the chassis sale generated an additional $3.1 million of cash. Capital additions and increases in other assets during the quarter totaled $5.1 million, and relate primarily to entry into the rear discharge concrete mixer business. This was offset by $2.0 million of cash received from the sale of property, plant and equipment, which relates primarily to the sale of the company jet. Dividends and stock repurchases totaled $2.9 million resulting in an overall decrease in cash and cash equivalents of $0.2 million in comparison to September 30, 1995. The company believes its internally generated cash flow, supplemented by progress payments when applicable, and the existing credit facilities will be adequate to meet working capital and other operating and capital requirements of the company in the foreseeable future. Backlog The backlog as of December 30, 1995 was $337 million compared to $350 million at September 30, 1995. Major United States Department of Defense trucks backlog consists of Palletized Load System (PLS) vehicles, Heavy Expanded Mobility Tactical Trucks (HEMTT), including the start of a HEMTT rebuild program, and Logistics Vehicle System (LVS) trucks. Dividend The Board of Directors declared a quarterly dividend of $.10875 per share for Class A common stock and $.125 per share for Class B common stock. These dividends, unchanged from the previous rate, will be payable February 12, 1996, to shareholders of record as of February 5, 1996. Stock Buyback In July 1995, the company's board of directors authorized repurchase of up to 1,000,000 shares of Class B common stock. As of January 29, 1996, the company has purchased 215,900 shares under this program at a cost of $3.1 million, or $14.23 per share. Alliance Implementation of the Strategic Alliance with Freightliner Corporation continued in the first quarter. The company signed a Distribution Agreement with Freightliner Corporation on December 13, 1995, under which seven models of Oshkosh construction, refuse and other heavy duty trucks will be sold through Freightliner dealers. Sales activity has already begun and it is anticipated that delivery will begin by the third quarter of the current fiscal year. Significant incremental volumes are not expected to be achieved during the 1996 fiscal year. The company expects to spend up to $1.0 million in the current fiscal year related to new product and market development related to products to be distributed through Freightliner dealers, and other associated administrative activities. Freightliner Corporation was recently awarded a $49.5 million defense contract for 269 U.S. Army M916 and M917 series of trucks. Options for additional vehicles over the next five years could bring total production to 1,000 trucks. The company is currently working with Freightliner to novate the U.S. Army M916 and M917 contract to Oshkosh, production of which is anticipated to begin in Oshkosh in the fourth quarter of the 1996 fiscal year. Forward Looking Information The company believes that full year revenues will be comparable to the 1995 fiscal year, even though the first quarter is lower. Delays in the production schedule for the defense business or the failure of commercial sales to reach the company's expectations would have an adverse effect on fiscal 1996 revenues. Results of continuing operations for the remainder of fiscal 1996 should continue to show improvements over the first quarter results, assuming projected full year revenues are attained. The company expects sales to the U.S. Government in fiscal 1996 to approximate the fiscal 1995 level. The PLS contract will remain in production through November 1996, and additional funding is expected. Additional defense orders could increase the current rate of production or extend the period of production. The company remains optimistic about its defense business prospects and its ability to sustain a reasonable level of business into the future. Insufficient defense budget funding by the U.S. Congress or the failure of the U.S. Government to seek to purchase the company's products in the future at the level the company now anticipates would have an adverse effect on future defense business. The company is dependent on its shipments of defense products to the U.S. Government as evidenced by shipments of 60% and 73% of total shipments during fiscal 1995 and 1994, respectively. Substantial decreases in the company's level of defense business from the current level could have an adverse effect on the company's profitability. The expected effect of any decline in defense shipments on operations is that profitability could be negatively impacted if the company were not to take corresponding measures to decrease operating expenses. The impact of a decline in defense shipments on the liquidity of the company would be to improve liquidity due to the reduction of working capital previously required in support of this business.
OSHKOSH TRUCK CORPORATION PART II - OTHER INFORMATION FORM 10-Q December 30, 1995 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K The company was not required to file a report on Form 8-K during the quarter ended December 30, 1995. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. OSHKOSH TRUCK CORPORATION DATE: February 13, 1996 /s/ R. Eugene Goodson R. Eugene Goodson Chairman and Chief Executive Officer DATE: February 13, 1996 /s/ Peter F. Mueller Peter F. Mueller Corporate Controller
EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule