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 March 30, 1996 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 April 30, 1996: 409,503 Class B Common Stock Outstanding as of April 30, 1996: 8,428,960
OSHKOSH TRUCK CORPORATION FORM 10-Q INDEX FOR QUARTER ENDED 3/30/96 Page PART I. Financial Information Item 1. Financial Statements Condensed Consolidated Statements of Income . . . . . . 3 Condensed Consolidated Balance Sheets . . . . . . . . . 4 Condensed Consolidated Statement of Shareholders' Equity . . . . . . . . . . . . . . . . . . 5 Condensed Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . 6 Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 7 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . . . . . 8 PART II. Other Information . . . . . . . . . . . . . . . . . . . 11 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PART I. FINANCIAL INFORMATION OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Six Months Ended March 30, April 1, March 30, April 1, 1996 1995 1996 1995 (In thousands, except per share amounts) Net sales $103,139 $107,440 $183,672 $202,857 Cost of sales 89,303 93,564 158,384 176,642 -------- -------- -------- -------- Gross income 13,836 13,876 25,288 26,215 Operating expenses: Selling, general and administrative 9,221 8,518 17,186 15,487 Engineering, research and development 1,406 1,625 2,733 3,128 -------- -------- -------- -------- Total operating expenses 10,627 10,143 19,919 18,615 -------- -------- -------- -------- Income from continuing operations 3,209 3,733 5,369 7,600 Other income (expense): Interest expense (33) (229) (70) (279) Interest income 306 137 788 383 Miscellaneous, net (52) (515) (100) (514) -------- -------- -------- -------- 221 (607) 618 (410) -------- -------- -------- -------- Income from continuing operations before taxes 3,430 3,126 5,987 7,190 Income taxes 1,200 1,364 2,185 2,929 -------- -------- -------- -------- Income from continuing operations 2,230 1,762 3,802 4,261 Loss from discontinued operations, net of income tax benefit - (423) - (1,411) -------- -------- -------- -------- Net income $ 2,230 $ 1,339 $ 3,802 $ 2,850 ======== ======== ======== ======== Earnings per common share: Income from continuing operations $ 0.25 $ 0.21 $ 0.43 $ 0.50 Discontinued operations - (0.05) - (0.17) -------- -------- -------- -------- Net income $ 0.25 $ 0.16 $ 0.43 $ 0.33 ======== ======== ======== ======== Cash dividends per common share: Class A $0.10875 $0.10875 $0.21750 $0.21750 Class B $0.12500 $0.12500 $0.25000 $0.25000
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 30, September 30, 1996 1995 (In thousands) ASSETS Current assets: Cash and cash equivalents $ 18,236 $ 29,716 Receivables, net of allowance for doubtful accounts 55,347 58,110 Inventories 65,508 45,781 Prepaid expenses 2,394 3,627 Deferred and refundable income taxes 5,399 4,681 Net current assets of discontinued operations - 3,273 -------- ------- Total current assets 146,884 145,188 Deferred charges 2,728 2,978 Deferred income taxes 2,383 2,389 Other long-term assets 13,016 10,437 Property, plant, and equipment: Land 5,853 5,522 Buildings 30,240 30,118 Machinery and equipment 68,088 68,630 -------- ------- 104,181 104,270 Less accumulated depreciation (65,362) (64,346) Net property, plant, and equipment 38,819 39,924 -------- ------- Total assets $203,830 $200,916 ========= ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 32,653 $ 28,266 Payroll-related obligations 6,267 5,526 Accrued warranty 2,138 3,084 Other current liabilities 14,742 16,535 -------- ------- Total current liabilities 55,800 53,411 Postretirement benefit obligations 9,268 8,839 Other long-term liabilities 5,245 5,026 Net long-term liabilities of discontinued operations 310 227 Shareholders' equity: Preferred stock - - Common stock: Class A 4 4 Class B 89 89 Paid-in capital 16,763 16,533 Retained earnings 123,297 121,697 -------- ------- 140,153 138,323 Cost of Class B common stock in treasury (5,439) (3,403) Pension liability adjustment (1,507) (1,507) -------- ------- Total shareholders' equity 133,207 133,413 -------- ------- Total liabilities and shareholders' equity $203,830 $200,916 ========= =========
<TABLE> OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY SIX MONTHS ENDED MARCH 30, 1996 (Unaudited) <CAPTION> Pension Common Paid-in Retained Treasury Liability Stock Capital Earnings Stock Adjustment Total (In thousands) <S> <C> <C> <C> <C> <C> <C> Balance at September 30, 1995 $93 $16,533 $121,697 $(3,403) $(1,507) $133,413 Net income - - 3,802 - - 3,802 Cash dividends: Class A common stock - - (87) - - (87) Class B common stock - - (2,115) - - (2,115) Purchase of treasury stock - - - (2,142) - (2,142) Exercise of stock options - 15 - 106 - 121 Incentive compensation awards - 215 - - - 215 ------ ------- -------- ------- -------- -------- Balance at March 30, 1996 $93 $16,763 $123,297 $(5,439) $(1,507) $133,207 ====== ======= ========= ======== ======== ======== </TABLE>
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended March 30, April 1, 1996 1995 (In thousands) Operating activities: Net income from continuing operations $ 3,802 $ 4,261 Adjustments to reconcile net income to net cash used by operating activities: Depreciation and amortization 4,000 4,115 Deferred income taxes 6 (1,155) Loss on disposal of property, plant, and equipment 103 21 Changes in operating assets and liabilities (13,894) (22,211) ------- ------- Total adjustments (9,785) (19,230) ------- ------- Net cash used by operating activities (5,983) (14,969) ------- ------- Investing activities: Additions to property, plant, and equipment (4,508) (2,532) Proceeds from sale of property, plant, and equipment 2,020 - Increase in other long-term assets (3,089) (173) ------- ------- Net cash used by investing activities (5,577) (2,705) ------- ------- Net cash from discontinued operations 4,321 1,883 Financing activities: Net borrowings on lines of credit - 2,463 Purchase of treasury stock and proceeds from exercise of stock options, net (2,021) 36 Dividends paid (2,220) (2,163) ------- ------- Net cash provided from (used by) financing activities (4,241) 336 ------- ------- Decrease in cash and cash equivalents (11,480) (15,455) Cash and cash equivalents at beginning of period 29,716 15,836 -------- -------- Cash and cash equivalents at end of period $18,236 $ 381 ======== ======== Supplementary disclosures: Cash paid for interest: Continuing operations $ 70 $ 292 Discontinued operations - 512 Cash paid for income taxes 2,903 829
OSHKOSH TRUCK CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The condensed 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 condensed consolidated financial statements. Certain reclassifications have been made to the 1995 condensed consolidated financial statements to conform to the 1996 presentation. 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. 2. INVENTORIES Inventories consist of the following: March 30, 1996 September 30, 1995 (In thousands) Finished products $ 9,269 $ 3,368 Products in process 28,617 15,132 Raw materials 36,864 35,106 ------- ------- Inventories at FIFO cost 74,750 53,606 Less: Progress payments on U.S. Government contracts 1,909 852 Allowance for reduction to LIFO cost 7,333 6,973 ------- -------- $65,508 $45,781 ======= ======= Title to all inventories related to U.S. Government contracts which provide for progress payments vests with the government to the extent of unliquidated progress payments. 3. EARNINGS PER COMMON SHARE Earnings per common share is computed by dividing net income by the weighted average number of shares outstanding. The average number of shares outstanding was 8,871,816 and 8,711,342, respectively, for the three month periods and 8,902,703 and 8,710,239, respectively, for the six month periods ended March 30,1996 and April 1, 1995. Stock options, warrants and stock issuable under incentive compensation awards were not dilutive in any of the periods presented.
OSHKOSH TRUCK CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS Second Quarter 1996 Compared to 1995 Net income for the second quarter of the 1996 fiscal year was $2.2 million or $.25 per share compared to net income of $1.3 million or $.16 per share in 1995. Net income in the second quarter of the 1995 fiscal year was reduced by a charge of $.4 million or $.05 per share related to discontinued operations of the company's U.S. and Mexico chassis businesses which were sold in June 1995. Net sales for the current quarter were $103.1 million compared to $107.4 million in the quarter ended March 1995. Defense sales increased to $56.3 million in the second quarter of fiscal 1996 from $54.3 million in the second quarter of the 1995 fiscal year. Commercial sales decreased to $46.8 million in the second quarter of fiscal 1996 from $53.1 million in the second quarter of fiscal 1995 due to a decline in trailer sales of $11.4 million resulting from continuing softness in the trailer industry partially offset by an increase in construction vehicle sales. Gross income was $13.8 million or 13.4% of sales in the second quarter of the 1996 fiscal year compared to $13.9 million or 12.9% of sales in the 1995 fiscal year. The improved margins are due to improved pricing, continued productivity improvements, and material cost control on commercial products. Operating expenses totaled $10.6 million in the second quarter of the 1996 fiscal year compared to $10.1 million in the comparable period of the 1995 fiscal year. The increase is primarily attributable to higher marketing and developments costs in support of international sales and the company's entry into the rear discharge concrete mixer business. Interest income (expense), net improved by $365,000 as a result of the company's higher average investments in the 1996 fiscal year. Miscellaneous expense declined by $463,000 largely due to the impact on 1995 results of $418,000 of expenses related to the company's equity investment in a Mexican bus manufacturer. The effective income tax rate declined to 35.0% in the second quarter of the 1996 fiscal year from 43.6% in 1995. The 1995 rate was adversely impacted by non-deductible losses related to the company's equity investment in a Mexican bus manufacturer. RESULTS OF OPERATIONS First Six Months 1996 Compared to 1995 Net income for the first half of the 1996 fiscal year was $3.8 million or $.43 per share compared to net income of $2.9 million or $.33 per share in 1995. Net income in the 1995 fiscal year period was reduced by a charge of $1.4 million or $.17 per share related to discontinued operations of the company's U.S. and Mexico chassis businesses which were sold in June 1995. Net sales for the six months ended March 1996 were $183.7 million compared to $202.9 million in the six months ended March 1995. Defense sales totaled $114.1 million for the first six months of fiscal 1996, substantially unchanged from $115.4 million in the first half of the 1995 fiscal year. Commercial sales decreased to $69.6 million in the first half of fiscal 1996 from $87.5 million in the first half of fiscal 1995 largely due to a decline in trailer sales of $19.2 million. Gross income was $25.3 million or 13.8% of sales in the first half of the 1996 fiscal year compared to $26.2 million or 12.9% of sales in the 1995 fiscal year. The improved margins are due to improved pricing, continued productivity improvements, and material cost control on commercial products. Operating expenses totaled $19.9 million in the first six months of the 1996 fiscal year compared to $18.6 million in the comparable period of the 1995 fiscal year. The increase is primarily attributable to higher marketing and development costs in support of international sales and the company's entry into the rear discharge concrete mixer business. Interest income (expense), net improved by $614,000 as a result of the company's higher average investments in the 1996 fiscal year. Miscellaneous expense declined by $414,000 largely due to the impact on 1995 results of $418,000 of expenses related to the company's equity investment in a Mexican bus manufacturer. The effective income tax rate declined to 36.5% in the first six months of the 1996 fiscal year from 40.7% in the first half of the 1995 fiscal year. The 1995 rate was adversely impacted by non-deductible losses related to the company's equity investment in a Mexican bus manufacturer. LIQUIDITY AND CAPITAL RESOURCES During the first six months of fiscal 1996, cash and cash equivalents decreased by $11.5 million. Cash of $6.0 million was used in operations principally to fund a $19.7 million increase in inventories related to customer orders scheduled to ship in the second half of fiscal 1996. The increase in inventories was partially offset by earnings in the period, a $4.4 million increase in accounts payable related to the inventory build and the realization of $3.3 million of current assets of discontinued operations. Working capital requirements are anticipated to remain at high levels through the remainder of the 1996 fiscal year. Capital additions and increases in other assets totaling $7.6 million during the first six months of fiscal 1996 principally related to investments to enter the rear discharge concrete mixer business. Dividends and stock repurchases totaled $4.2 million in the first six months of fiscal 1996. Partially offsetting these requirements was $2.0 million of cash proceeds from the sale of property, plant, and equipment, principally related to the sale of the company's airplane. Effective March 13, 1996, the company re-negotiated its bank credit agreement to increase its revolving credit facility from $45 million to $55 million on substantially the same terms as the previous facility. The company believes its internally generated cash flow, supplemented by progress payments when available, and the existing credit facility 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 March 30, 1996 was $304 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. STOCK BUY BACK In July 1995, the company's board of directors authorized the repurchase of up to 1,000,000 shares of Class B common stock. As of April 30, 1996, the company has purchased 246,100 shares under this program at a cost of $3.5 million or $14.29 per share. ALLIANCE Implementation of the Strategic Alliance with Freightliner Corporation continued in the second quarter. The company had 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. Significant incremental volumes are not expected to be achieved under the Distribution Agreement during the 1996 fiscal year. The company expects to spend up to $2.0 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 awarded a $49.5 million defense contract for 269 U.S. Army M916 and M917 series of trucks. The company is currently working with Freightliner Corporation to novate the U.S. Army M916 and M917 contract to Oshkosh, in which case production would begin in Oshkosh in the first quarter of the 1997 fiscal year.
OSHKOSH TRUCK CORPORATION PART II. OTHER INFORMATION FORM 10-Q March 30, 1996 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS At the annual meeting of shareholders held on January 22, 1996, all of the persons nominated as directors were elected. The following table sets forth certain information with respect to such election. Shares Shares Other Shares Name of Nominee Voted For Withholding Authority Not Voted Class A Nominees R.E. Goodson 386,372 0 23,911 S.P. Mosling 386,372 0 23,911 J.P. Mosling, Jr. 386,372 0 23,911 J.W. Andersen 386,372 0 23,911 M.W. Grebe 386,372 0 23,911 R.G. Bohn 386,372 0 23,911 Class B Nominees D.T. Carroll 7,433,472 95,517 947,876 J.H. Hebe 7,407,961 121,028 947,876 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 4.1 - Credit Agreement by and among Oshkosh Truck Corporation and Firstar Bank Milwaukee, N.A., Bank One, Milwaukee, N.A., NationsBank, N.A., and Harris Trust and Savings Bank, dated as of March 13, 1996. 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 March 30, 1996.
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: May 13, 1996 /s/ R. Eugene Goodson R. Eugene Goodson Chairman and Chief Executive Officer DATE: May 13, 1996 /s/ Charles L. Szews Charles L. Szews Vice President and Chief Financial Officer (Principal Financial Officer) DATE: May 13, 1996 /s/ Peter F. Mueller Corporate Controller (Principal Accounting Officer)
EXHIBIT INDEX Exhibit No. Description 4.1 Credit Agreement by and among Oshkosh Truck Corporation and Firstar Bank Milwaukee, N.A., Bank One, Milwaukee, N.A., NationsBank, N.A., and Harris Trust and Savings Bank, dated as of March 13, 1996. 27 Financial Data Schedule