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 31, 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 January 28, 1997: 407,116 Class B Common Stock Outstanding as of January 28, 1997: 8,238,077
OSHKOSH TRUCK CORPORATION FORM 10-Q INDEX FOR THE QUARTER ENDED DECEMBER 31, 1996 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 Consolidated Financial Condition and Results of Operations . . . . . . . . . . . . . . . . 9 PART II. Other Information . . . . . . . . . . . . . . . . . . . 12 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART I. FINANCIAL INFORMATION OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended Dec. 31, Dec. 30, 1996 1995 (In thousands, except per share amounts) Net sales $150,320 $ 80,383 Cost of sales 131,459 69,779 -------- -------- Gross income 18,861 10,604 Operating expenses: Selling, general and administrative 9,303 7,090 Engineering, research and development 1,993 1,327 Amortization of goodwill and other intangibles 1,132 -- -------- -------- Total operating expenses 12,428 8,417 -------- -------- Income from operations 6,433 2,187 Other income (expense): Interest expense (3,558) (64) Interest income 206 482 Miscellaneous, net (9) (48) -------- -------- (3,361) 370 -------- -------- Income before income taxes 3,072 2,557 Provision for income taxes 1,448 985 -------- -------- Net income $ 1,624 $ 1,572 ======== ======== Earnings per common share $ 0.19 $ 0.18 ======== ======== Cash dividends per common share: Class A $0.10875 $0.10875 Class B $0.12500 $0.12500 The accompanying notes are an integral part of these condensed consolidated financial statements.
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) Dec. 31, Sept. 30, 1996 1996 ASSETS (In thousands) Current assets: Cash and cash equivalents $ 4,845 $ 127 Receivables, net 55,652 76,624 Inventories 94,797 106,289 Prepaid expenses 3,214 3,619 Refundable income taxes 3,744 6,483 Deferred income taxes 7,055 7,055 -------- -------- Total current assets 169,307 200,197 Deferred charges 2,953 2,645 Other long-term assets 7,724 7,834 Property, plant, and equipment: Land 7,062 7,131 Buildings 40,268 40,421 Machinery and equipment 78,557 77,485 -------- -------- 125,887 125,037 Less accumulated depreciation (68,945) (67,002) -------- -------- Net property, plant, and equipment 56,942 58,035 Goodwill and other intangible assets, net 165,318 166,450 -------- -------- Total assets $402,244 $435,161 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 37,684 $ 49,178 Customer advances 27,035 27,793 Payroll-related obligations 9,722 12,843 Accrued warranty 9,520 8,942 Other current liabilities 18,301 18,972 Current maturities of long-term debt 5,000 15,000 -------- -------- Total current liabilities 107,262 132,728 Long-term debt 135,000 142,882 Postretirement benefit obligations 9,648 9,517 Other long-term liabilities 4,266 4,424 Deferred income taxes 23,831 24,008 Shareholders' equity: Common stock: Class A 4 4 Class B 89 89 Paid-in capital 16,074 16,059 Retained earnings 114,796 114,246 -------- -------- 130,963 130,398 Cost of Class B common stock in treasury (8,726) (8,796) -------- -------- Total shareholders' equity 122,237 121,602 -------- -------- Total liabilities and shareholders' equity $402,244 $435,161 ======== ======== The accompanying notes are an integral part of these condensed consolidated financial statements.
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY THREE MONTHS ENDED DECEMBER 31, 1996 (Unaudited) Common Paid-in Retained Treasury Stock Capital Earnings Stock Total (In thousands) Balance at September 30, 1996 $93 $16,059 $114,246 $(8,796) $121,602 Net income -- -- 1,624 -- 1,624 Cash dividends: Class A common stock -- -- (44) -- (44) Class B common stock -- -- (1,030) -- (1,030) Exercise of stock options -- 15 -- 70 85 ---- ------- -------- ------- -------- Balance at December 31, 1996 $93 $16,074 $114,796 $(8,726) $122,237 ===== ======= ======== ======= ======== The accompanying notes are an integral part of these condensed consolidated financial statements.
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended Dec. 31, Dec. 30, 1996 1995 (In thousands) Operating activities: Net income $ 1,624 $ 1,572 Depreciation and amortization 3,556 1,925 Deferred income taxes (177) -- Loss on disposal of property, plant, and equipment 6 53 Changes in operating assets and liabilities 20,133 (424) ------- ------ Net cash provided from operations 25,142 3,126 Investing activities: Acquisitions of businesses, net of cash acquired -- (3,912) Additions to property, plant, and equipment (1,342) (1,070) Proceeds from sale of property, plant, and equipment 289 1,956 Increase in other long-term assets (174) (515) ------- ------ Net cash used for investing activities (1,227) (3,541) Net cash provided from (used for) discontinued operations (326) 3,142 Financing activities: Net repayments of long-term debt (17,882) -- Purchase of treasury stock and proceeds from exercise of stock options, net 85 (1,785) Dividends paid (1,074) (1,119) ------- ------ Net cash used for financing activities (18,871) (2,904) ------- ------ Increase (decrease) in cash and cash equivalents 4,718 (177) Cash and cash equivalents at beginning of period 127 29,716 ------- ------ Cash and cash equivalents at end of period $ 4,845 $29,539 ======= ====== Supplementary disclosures: Cash paid for interest $ 3,451 $ 92 Cash paid (refunded) for income taxes (1,115) 360 The accompanying notes are an integral part of these condensed consolidated financial statements.
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 1996 condensed consolidated financial statements to conform to the 1997 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 consolidated financial statements and notes thereto included in the company's 1996 annual report to shareholders. 2. INVENTORIES Inventories consist of the following: Dec. 31, Sept. 30, 1996 1996 (In thousands) Finished products $ 9,858 $ 15,208 Partially finished products 40,288 51,533 Raw materials 58,647 47,580 -------- -------- Inventories at FIFO cost 108,793 114,321 Less: Progress payments on U.S. Government contracts (5,663) -- Excess of FIFO cost over LIFO cost (8,333) (8,032) -------- -------- $ 94,797 $106,289 ======== ======== Title to all inventories related to government contracts which provide for progress payments vests in the government to the extent of unliquidated progress payments. 3. EARNINGS PER SHARE Earnings per share is computed by dividing net income by the weighted average number of shares outstanding. The average number of shares outstanding was 8,645,106 and 8,932,732, respectively, for the three month periods ended December 31, 1996 and December 30, 1995. Stock options, warrants and stock issuable under incentive compensation awards were not dilutive in any of the periods presented. 4. 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. There were no stock repurchases during the three months ended December 31, 1996. As of December 31, 1996, the company has repurchased 461,535 shares under this program at a total cost of $6.6 million. 5. LONG-TERM DEBT At December 31, 1996, $5.3 million of letters of credit reduced available capacity under the company's revolving credit facility to $44.7 million. 6. CONTINGENCIES The company is engaged in litigation against Super Steel Products Corporation (SSPC), the company's former supplier of mixer systems for front discharge concrete mixer trucks under a long-term supply contract. SSPC sued the company in state court claiming the company breached the contract. The company counterclaimed for repudiation of contract. On July 26, 1996, a jury returned a verdict for SSPC awarding damages totaling approximately $4.5 million. On October 10, 1996, the state court judge overturned the verdict against the company, granted judgment for the company on its counterclaim, and ordered a new trial for damages on the company's counterclaim. Both SSPC and the company have appealed the state court judge's decision. The Wisconsin Court of Appeals has agreed to hear the case. Pierce has guaranteed certain customers' obligations under deferred payment contracts and lease purchase agreements totaling $6.2 million at December 31, 1996. Pierce and the company also are contingently liable under bid and performance bonds totaling approximately $83 million at December 31, 1996. Oshkosh Truck Corporation Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations Results of Operations First Quarter 1997 Compared to 1996 Oshkosh Truck Corporation (the company) reported net income of $1.6 million, or $0.19 per share, on sales of $150.3 million for the first quarter of fiscal 1997, compared to net income of $1.6 million, or $0.18 per share, on sales of $80.4 million for the first quarter of fiscal 1996. Sales of both commercial and defense products increased in the first quarter of fiscal 1997 compared to the first quarter of fiscal 1996. Commercial sales in the first quarter of fiscal 1997 increased $60.5 million or 265.9% from the first quarter of fiscal 1996 to $83.2 million principally due to sales of fire trucks and other fire apparatus as a result of the acquisition of Pierce Manufacturing Inc. (Pierce) on September 18, 1996, and increased sales of refuse vehicles. Sales of defense products totaled $67.1 million in the first quarter of fiscal 1997, an increase of $9.4 million or 16.4% as compared to the first quarter of fiscal 1996. The increase in defense sales principally results from sales of Heavy Expanded Mobility Tactical Trucks (HEMTTs) to a foreign government. Gross income in the first quarter of fiscal 1997 totaled $18.9 million or 12.5% of sales compared to $10.6 million or 13.2% of sales in the first quarter of fiscal 1996. The increase in gross income in the first quarter of fiscal 1997 was due to increased volume as a result of the acquisition of Pierce. Fiscal 1997 first quarter margins were adversely affected by increased warranty and other costs related to refuse vehicle sales. Operating expenses totaled $12.4 million or 8.3% of sales in the first quarter of fiscal 1997 compared to $8.4 million or 10.5% of sales in the first quarter of fiscal 1996. The increase in operating expenses in the first quarter of fiscal 1997 relates principally to the operating expenses of Pierce and amortization of goodwill and other intangibles associated with the acquisition of Pierce. The ratio of operating expenses to sales declined in the first quarter of fiscal 1997 compared to 1996 due to operating efficiencies resulting from the combination of Pierce and the company. Interest expense increased to $3.6 million in the first quarter of fiscal 1997 compared to $0.1 million in the first quarter of fiscal 1996 due to borrowings to finance the acquisition of Pierce. The effective income tax rate for combined federal and state income taxes for the first quarter of fiscal 1997 was 47.1% compared to 38.5% for the first quarter of fiscal 1996. The effective income tax rate for the first quarter of fiscal 1997 was adversely affected by non-deductible goodwill of $0.6 million. Financial Condition First Quarter 1997 During the first quarter of fiscal 1997, cash increased $4.7 million. Cash provided from operations of $25.1 million exceeded cash requirements for the repayment of long-term debt of $17.9 million, capital additions of $1.3 million, and dividends of $1.1 million. First Quarter 1996 During the first quarter of fiscal 1996, cash decreased $0.2 million. The acquisition of Friesz Manufacturing Company for $3.9 million, capital additions of $1.1 million, stock repurchases of $1.8 million, and dividends of $1.1 million, were funded principally from cash provided from operations of $3.1 million, $2.0 million of cash received from the sale of property, plant, and equipment, and cash provided from discontinued operations of $3.1 million. Liquidity and Capital Resources The company's principal uses of cash for the next several years will be interest and principal payments on long-term debt, capital expenditures and potential acquisitions. At December 31, 1996, $5.3 million of letters of credit reduced available capacity under the company's revolving credit facility to $44.7 million. The company believes its internally generated cash flow, supplemented by progress payments when applicable, and borrowings available under the existing bank credit agreement will be adequate to meet working capital and other operating and capital requirements of the company in the foreseeable future. Backlog The company's backlog as of December 31, 1996 was $398 million, compared to $337 million at December 30, 1995. The backlog at December 31, 1996 includes $225 million with respect to U.S. Government contracts, $122 million related to Pierce, and the remainder relates to other commercial products. Virtually all the company's revenues are derived from customer orders prior to commencing production. Stock Buyback In July 1995, the company's board of directors authorized the repurchase of up to 1,000,000 shares of Class B common stock. There were no stock repurchases in the first quarter of fiscal 1997. As of January 28, 1997, the company has repurchased 461,535 shares under this program at a cost of $6.6 million.
OSHKOSH TRUCK CORPORATION PART II. OTHER INFORMATION FORM 10-Q December 31, 1996 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K On October 2, 1996, the company filed a Current Report on Form 8-K dated September 18, 1996, reporting the company's acquisition of all of the issued and outstanding stock of Pierce Manufacturing Inc. (Pierce). On November 27, 1996, the company filed an amendment to the Current Report on Form 8-K/A which added the Pro Forma Financial Statements as a result of the company's acquisition of Pierce.
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 11, 1997 /s/ R. Eugene Goodson R. Eugene Goodson Chairman and Chief Executive Officer (Principal Executive Officer) DATE: February 11, 1997 /s/ Charles L. Szews Charles L. Szews Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
EXHIBIT INDEX Exhibit No. Description 27 Financial Data Schedule