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 31, 1997 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) of 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 May 5, 1997: 407,116 Class B Common Stock Outstanding as of May 5, 1997: 7,888,077
OSHKOSH TRUCK CORPORATION FORM 10-Q INDEX FOR THE QUARTER ENDED MARCH 31, 1997 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 . . . . . . . . . . . . . . . . . . . .13 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
<TABLE> PART I. FINANCIAL INFORMATION OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <CAPTION> Three Months Ended Six Months Ended Mar. 31, Mar.30, Mar. 31, Mar. 30, 1997 1996 1997 1996 (In thousands, except per share amounts) <S> <C> <C> <C> <C> Net sales $170,465 $103,139 $320,785 $183,522 Cost of sales 147,597 90,359 278,334 160,138 -------- -------- ------- -------- Gross income 22,868 12,780 42,451 23,384 Operating expenses: Selling, general and administrative 12,616 8,138 22,641 15,228 Engineering, research & development 1,753 1,406 3,746 2,733 Amortization of goodwill and other intangibles 1,103 -- 2,235 -- ------- ------ ------ ------ 15,472 9,544 28,622 17,961 ------- ------ ------ ------ Total operating expenses Income from operations 7,396 3,236 13,829 5,423 Other income (expense): Interest expense (3,165) (60) (6,723) (124) Interest income 148 306 354 788 Miscellaneous, net (60) (52) (69) (100) ------- ------ ------- ------ (3,077) 194 (6,438) 564 Income before income taxes 4,319 3,430 7,391 5,987 Provision for income taxes 1,845 1,200 3,293 2,185 ------- ------ ------ ------ Net income $ 2,474 $ 2,230 $ 4,098 $ 3,802 ======= ======= ====== ====== Earnings per common share: $ 0.28 $ 0.25 $ 0.47 $ 0.43 ======= ======= ====== ====== 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 The accompanying notes are an integral part of these condensed consolidated financial statements. </TABLE>
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) Mar. 31, Sept. 30, 1997 1996 ASSETS (In thousands) Current assets: Cash and cash equivalents $ 113 $ 127 Receivables, net 78,513 76,624 Inventories 111,650 106,289 Prepaid expenses 3,253 3,619 Refundable income taxes 2,596 6,483 Deferred income taxes 7,055 7,055 -------- -------- Total current assets 203,180 200,197 Deferred charges 1,906 2,645 Other long-term assets 7,394 7,834 Property, plant, and equipment: Land 7,062 7,131 Buildings 41,134 40,421 Machinery and equipment 79,156 77,485 -------- -------- 127,352 125,037 Less accumulated depreciation (70,962) (67,002) -------- -------- Net property, plant, and equipment 56,390 58,035 Goodwill and other intangible assets, net 164,215 166,450 -------- -------- Total assets $433,085 $435,161 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 49,380 $ 49,178 Customer advances 31,278 27,793 Payroll-related obligations 12,446 12,843 Accrued warranty 9,536 8,942 Other current liabilities 20,942 18,972 Current maturities of long-term debt -- 15,000 -------- -------- Total current liabilities 123,582 132,728 Long-term debt 148,528 142,882 Postretirement benefit obligations 9,775 9,517 Other long-term liabilities 3,910 4,424 Deferred income taxes 23,653 24,008 Shareholders' equity: Common stock: Class A 4 4 Class B 89 89 Paid-in capital 16,074 16,059 Retained earnings 116,196 114,246 -------- -------- 132,363 130,398 Cost of Class B common stock in treasury (8,726) (8,796) -------- -------- Total shareholders' equity 123,637 121,602 -------- -------- Total liabilities and shareholders' equity $433,085 $435,161 ======== ======== The accompanying notes are an integral part of these condensed consolidated financial statements.
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY SIX MONTHS ENDED MARCH 31, 1997 (Unaudited) <TABLE> <CAPTION> Common Paid-in Retained Treasury Stock Capital Earnings Stock Total (In thousands) <S> <C> <C> <C> <C> <C> Balance at September 30, 1996 $93 $16,059 $114,246 $(8,796) $121,602 Net income -- -- 4,098 -- 4,098 Cash dividends: Class A common stock -- -- (89) -- (89) Class B common stock -- -- (2,059) -- (2,059) Exercise of stock options -- 15 -- 70 85 ------ ------ ------ ------ ------ Balance at March 31, 1997 $93 $16,074 $116,196 $(8,726) $123,637 ======= ======= ======= ======= ======= The accompanying notes are an integral part of these condensed consolidated financial statements. </TABLE>
OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended Mar. 31, Mar. 30, 1997 1996 (In thousands) Operating activities: Net income $ 4,098 $ 3,802 Depreciation and amortization 7,045 4,000 Deferred income taxes (355) 6 Loss on disposal of property, plant, and equipment 3 103 Changes in operating assets and liabilities 4,035 (13,482) -------- ------- Net cash provided from (used for) operations 14,826 (5,571) Investing activities: Acquisitions of businesses, net of cash acquired -- (3,912) Additions to property, plant, and equipment (2,907) (3,158) Proceeds from sale of property, plant, and equipment 314 2,020 Increase in other long-term assets (135) (939) ------- ------- Net cash used for investing activities (2,728) (5,989) Net cash provided from (used for) discontinued operations (695) 4,321 Financing activities: Net repayments of long-term debt (9,354) -- Purchase of treasury stock and proceeds from exercise of stock options, net 85 (2,021) Dividends paid (2,148) (2,220) ------- ------- Net cash used for financing activities (11,417) (4,241) ------- ------- Decrease in cash and cash equivalents (14) (11,480) Cash and cash equivalents at beginning of period 127 29,716 ------- ------- Cash and cash equivalents at end of period $ 113 $18,236 ======= ======= Supplementary disclosures: Cash paid for interest $ 6,059 $ 202 Cash paid (refunded) for income taxes (239) 2,903 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 Oshkosh Truck Corporation (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. 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 8,645,193 and 8,871,816, respectively, for the three month periods and 8,645,149 and 8,902,703, respectively, for the six month periods ended March 31, 1997 and March 30, 1996. Stock options, warrants and stock issuable under incentive compensation awards were not dilutive in any of the periods presented. 3. INVENTORIES Inventories consist of the following: Mar. 31, Sept. 30, 1997 1996 (In thousands) Finished products $ 12,685 $ 15,208 Partially finished products 44,893 51,533 Raw materials 65,104 47,580 -------- -------- Inventories at FIFO cost 122,682 114,321 Less: Progress payments on U.S. Government contracts (2,398) -- Excess of FIFO cost over LIFO cost (8,634) (8,032) -------- -------- $111,650 $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. 4. LONG-TERM DEBT At March 31, 1997, $13.5 million of borrowings and $5.6 million of letters of credit reduced available capacity under the company's revolving credit facility to $30.9 million. 5. 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 six months ended March 31, 1997. As of March 31, 1997 and May 5, 1997, the company has repurchased 461,535 shares under this program at a total cost of $6.6 million. The repurchase of 350,000 shares of Class B common stock from Freightliner Corporation (Freightliner) on May 2, 1997 (see Note 7) does not impact the number of shares available for repurchase under this program. 6. CONTINGENCIES The company is engaged in litigation against Super Steel Products Corp. (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 Manufacturing Inc. (Pierce), a wholly-owned subsidiary of the company, has guaranteed certain customers' obligations under deferred payment contracts and lease purchase agreements totaling $8.5 million at March 31, 1997. Pierce and the company also are contingently liable under bid and performance bonds totaling approximately $107 million at March 31, 1997. 7. SUBSEQUENT EVENT On May 2, 1997, the company and Freightliner agreed to a formal termination of the Strategic Alliance formed on June 2, 1995. The company repurchased from Freightliner 350,000 shares of its Class B common stock and 1,250,000 warrants for the purchase of additional shares of Class B common stock for the total sum of $6.8 million. The company and Freightliner will continue to supply each other with parts and components.
Oshkosh Truck Corporation Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations Results of Operations Second Quarter 1997 Compared to 1996 Oshkosh Truck Corporation (the company) reported net income of $2.5 million, or $0.28 per share, on sales of $170.5 million for the second quarter of fiscal 1997, compared to net income of $2.2 million, or $0.25 per share, on sales of $103.1 million for the second quarter of fiscal 1996. Sales of both commercial and defense products increased in the second quarter of fiscal 1997 compared to the second quarter of fiscal 1996. Commercial sales in the second quarter of fiscal 1997 increased $60.2 million or 128.4% from the second quarter of fiscal 1996 to $107.0 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. Sales of construction, airport rescue and fire fighting (ARFF), and refuse vehicles also increased during the quarter. Sales of defense products totaled $63.5 million in the first quarter of fiscal 1997, an increase of $7.2 million or 12.8% as compared to the second quarter of fiscal 1996. The increase in defense sales principally resulted from the sale of ISO-Compatible Palletized Flatracks (IPF) which are being produced by Steeltech Manufacturing, Inc. (Steeltech) under a subcontract from the company. Gross income in the second quarter of fiscal 1997 totaled $22.9 million or 13.4% of sales compared to $12.8 million or 12.4% of sales in the second quarter of fiscal 1996. The increase in gross income in the second quarter of fiscal 1997 was principally due to increased sales volume as a result of the acquisition of Pierce and in the company's other product lines. Operating expenses totaled $15.5 million or 9.1% of sales in the second quarter of fiscal 1997 compared to $9.5 million or 9.3% of sales in the second quarter of fiscal 1996. The increase in operating expenses in the second 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. Interest expense increased to $3.2 million in the second quarter of fiscal 1997 compared to $0.1 million in the second 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 second quarter of fiscal 1997 was 42.7% compared to 35.0% for the second quarter of fiscal 1996. The effective income tax rate for the second quarter of fiscal 1997 was adversely affected by non-deductible goodwill of $0.6 million. First Six Months 1997 Compared to 1996 The company reported net income of $4.1 million, or $0.47 per share, on sales of $320.8 million for the first six months of fiscal 1997, compared to net income of $3.8 million, or $0.43 per share, on sales of $183.5 million for the first six months of fiscal 1996. Sales of both commercial and defense products increased in the first six months of fiscal 1997 compared to the first six months of fiscal 1996. Commercial sales in the first six months of fiscal 1997 increased $120.6 million or 173.3% from the first six months of fiscal 1996 to $190.2 million principally due to sales of fire trucks and other fire apparatus as a result of the acquisition of Pierce, and increased sales of refuse vehicles. Sales of defense products totaled $130.6 million in the first six months of fiscal 1997, an increase of $16.7 million or 14.7% as compared to the first six months of fiscal 1996. The increase in defense sales principally resulted from sales of Heavy Expanded Mobility Tactical Trucks (HEMTTs) to a foreign government and from the sale of IPFs to the U.S. Government. Gross income in the first six months of fiscal 1997 totaled $42.5 million or 13.2% of sales compared to $23.4 million or 12.7% of sales in the first six months of fiscal 1996. The increase in gross income in the first six months of fiscal 1997 was principally due to increased sales volume as a result of the acquisition of Pierce. Operating expenses totaled $28.6 million or 8.9% of sales in the first six months of fiscal 1997 compared to $18.0 million or 9.8% of sales in the first six months of fiscal 1996. The increase in operating expenses in the first six months 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 six months of fiscal 1997 compared to 1996 due to operating efficiencies resulting from the combination of Pierce and the company. Interest expense increased to $6.7 million in the first six months of fiscal 1997 compared to $0.1 million in the first six months 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 six months of fiscal 1997 was 44.6% compared to 36.5% for the first six months of fiscal 1996. The effective income tax rate for the first six months of fiscal 1997 was adversely affected by non- deductible goodwill of $1.3 million. Financial Condition First Six Months 1997 During the first six months of fiscal 1997, cash remained virtually unchanged. Cash provided from operations of $14.8 million was used to fund the repayment of long-term debt of $9.4 million, capital additions of $2.9 million, and dividends of $2.1 million. First Six Months 1996 During the first six months of fiscal 1996, cash decreased $11.5 million. Cash was required for operations of $5.6 million, principally to fund an increase in inventories, for the acquisition of Friesz Manufacturing Company of $3.9 million, for capital additions of $2.9 million, for stock repurchases of $2.0 million and for dividends of $2.2 million. Discontinued operations and proceeds from the sale of property, plant and equipment provided cash of $4.3 million and $2.0 million, respectively, for the first six months of fiscal 1996. 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 March 31, 1997, $13.5 million of borrowings and $5.6 million of letters of credit reduced available capacity under the company's revolving credit facility to $30.9 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 March 31, 1997 was $390 million, compared to $304 million at March 30, 1996. The backlog at March 31, 1997 includes $222 million with respect to U.S. Government contracts, $129 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 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 in the first six months of fiscal 1997. As of March 31, 1997 and May 5, 1997, the company has repurchased 461,535 shares under this program at a cost of $6.6 million. The repurchase of 350,000 shares of Class B common stock from Freightliner Corporation (Freightliner) on May 2, 1997 (see below) does not impact the number of shares available for repurchase under this program. Strategic Alliance On May 2, 1997, the company and Freightliner agreed to a formal termination of the Strategic Alliance formed on June 2, 1995. The company repurchased from Freightliner 350,000 shares of Class B common stock and 1,250,000 warrants for the purchase of additional shares of Class B common stock for the total sum of $6.8 million. The company and Freightliner will continue to supply each other with parts and components. New Accounting Standard In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings Per Share, which is required to be adopted effective for both interim and annual financial statements for periods ending after December 15, 1997. Among other provisions, the dilutive effect of stock options must be excluded under the new requirements for calculating basic earnings per share, which will replace primary earnings per share. This change is not expected to materially impact the company's fully diluted earnings per share calculations.
OSHKOSH TRUCK CORPORATION PART II. OTHER INFORMATION FORM 10-Q March 31, 1997 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS At the annual meeting of shareholders held on February 3, 1997, all of the persons nominated as directors were elected. The following table sets forth certain information with respect to such election. Shares Shares Withholding Other Shares Name of Nominee Voted For Authority Not Voted Class A Nominees R.E. Goodson 384,846 6,580 15,690 S.P. Mosling 384,846 6,580 15,690 J.P. Mosling, Jr. 384,846 6,580 15,690 J.W. Andersen 384,846 6,580 15,690 R.G. Bohn 384,846 6,580 15,690 Class B Nominees D.T. Carroll 5,997,438 135,608 2,106,810 M.W. Grebe 5,998,353 134,693 2,106,810 Also at the annual meeting, shareholders approved a proposal to amend and restate the Restated Articles of Incorporation. The following summarizes the vote results. Shares Shares Broker Voted For Voted Against Abstentions Non-votes Class A 382,446 658 8,322 0 Class B 6,031,052 28,175 73,819 0 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 March 31, 1997.
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, 1997 /s/ R. Eugene Goodson R. Eugene Goodson Chairman and Chief Executive Officer (Principal Executive Officer) DATE: May 13, 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