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 26, 1994
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 March 26, 1994: 449,370
Class B Common Stock Outstanding as of March 26, 1994: 8,256,928
<PAGE>
OSHKOSH TRUCK CORPORATION
FORM 10-Q INDEX
FOR QUARTER ENDED 03/26/94
Page
PART I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet . . . . . . . . 3
Consolidated Statement of Operations . . . 4
Condensed Consolidated Statement of
Cash Flows . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial Statements . 6, 7
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition. . . . . . . . . . . . . . . . 8, 9, 10
PART II. Other Information. . . . . . . . . . . . . 11
Signatures. . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE>
OSHKOSH TRUCK CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands except share and per share amounts)
03/26/94 9/25/93
ASSETS (unaudited)
Current assets:
Cash $ 190 $ 592
Receivables 92,966 97,429
Inventories (Note 2) 72,367 68,801
Prepaid expenses 4,596 5,672
Deferred income taxes 8,844 6,166
-------- --------
Total current assets 178,963 178,660
Deferred charges 4,172 8,128
Other assets 11,643 11,887
Property, plant, & equipment, at cost:
Land & improvements 7,911 7,788
Buildings 34,305 33,302
Machinery & equipment 69,824 68,580
-------- --------
112,040 109,670
Less accumulated depreciation 59,100 55,246
-------- --------
Net property, plant & equipment 52,940 54,424
-------- --------
Total assets $247,718 $253,099
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 57,977 $ 52,881
Federal excise taxes 729 774
Payroll-related obligations 7,486 6,127
Accrued warranty 5,222 4,542
Income taxes -- 620
Other liabilities 15,318 12,749
-------- --------
Total current liabilities 86,732 77,693
Long-term debt (Note 3) 26,898 47,819
Postretirement benefit obligations 8,084 7,726
Other long-term liabilities 9,439 7,094
Deferred income taxes 304 763
Shareholders' equity:
Preferred stock, par value $.01 per
share, authorized 2,000,000 shares,
none issued -- --
Common stock, par value $.01 per share:
Class A, authorized 1,000,000
shares, issued and outstanding
449,370 shares 4 4
Class B, authorized 18,000,000
shares, issued 8,558,795 shares 86 86
Additional paid-in capital 7,434 7,399
Retained earnings 112,217 108,158
-------- --------
119,741 115,647
Less: Cost of Class B common stock
in treasury; 301,867 and 321,117
shares at 03/26/94 and 9/25/93,
respectively 2,604 2,767
Pension liability adjustment 876 876
-------- --------
Total shareholders' equity 116,261 112,004
-------- --------
Total liabilities and shareholders'
equity $247,718 $253,099
======== ========
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OSHKOSH TRUCK CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited/in thousands except per share amounts)
Three months ended Six months ended
03/26/94 03/27/93 03/26/94 03/27/93
Net shipments $192,891 $154,345 $355,216 $298,644
Cost of goods sold 170,873 134,870 313.988 263,840
-------- ------- -------- --------
Gross profit 22,018 19,475 41,228 34,804
Operating expenses:
Selling, general & administrative 15,464 12,463 26,354 23,258
Engineering, research & development 1,756 2,851 4,124 5,281
-------- ------- ------- -------
Total operating expenses 17,220 15,314 30,478 28,539
Income from operations 4,798 4,161 10,750 6,265
Other income (expense):
Interest expense (558) (1,219) (1,008) (2,265)
Interest income 140 29 338 59
Miscellaneous, net 143 18 120 5
------- ------- -------- -------
(275) (1,172) (550) (2,201)
------- -------- ------- -------
Income before income taxes and
cumulative effect of change
in accounting principle 4,523 2,989 10,200 4,064
Provision for income taxes 1,764 1,015 3,978 1,422
------- ------- ------- -------
Income before cumulative effect of
change in accounting principle 2,759 1,974 6,222 2,642
Cumulative effect of change in method
of accounting for postretirement benefits,
net of tax benefit of $2,726 - - - (4,088)
------- -------- -------- --------
Net income $ 2,759 $ 1,974 $ 6,222 $(1,446)
======== ======== ======== ========
Net earnings per common share:
Before cumulative effect of
accounting change $0.32 $0.23 $0.72 $0.30
Cumulative effect of change in method
of accounting for postretirement
benefits, net of taxes 0.00 0.00 0.00 (0.47)
----- ----- ----- -------
$0.32 $0.23 $0.72 $(0.17)
===== ===== ===== =======
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
<PAGE>
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited/In thousands)
Six months ended
03/26/94 03/27/93
Operating activities:
Net income (loss) $ 6,222 $(1,446)
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 4,768 4,343
Deferred income taxes (3,137) (2,726)
Cumulative effect of change in
accounting principle - 6,814
Other 11 21
Changes in operating assets and
liabilities 17,666 (14,904)
------- -------
Total adjustments 19,308 (6,452)
Net cash provided (used) by operating
activities 25,530 (7,898)
------- -------
Investing activities:
Additions to property, plant &
equipment (2,797) (3,098)
Less amount capitalized under
financing leases - 450
Net additions to property, plant
& equipment (2,797) (2,648)
Increase in other assets (254) (4,543)
------- -------
Net cash used by investing activities (3,051) (7,191)
------- -------
Financing activities:
Net borrowings (payments) on
lines of credit (20,921) 16,037
------- -------
Sales of common stock in treasury 198 2
Dividends paid (2,158) (1,079)
------- -------
Net cash provided (used) by
financing activities (22,881) 14,960
------- -------
Decrease in cash and cash equivalents (402) (129)
Cash at beginning of period 592 221
------- -------
Cash at end of period $ 190 $ 92
======= =======
Supplementary disclosures:
Cash paid for interest $ 1,051 $ 2,161
Cash paid for income taxes $ 7,729 $ 876
<PAGE>
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 March 26, 1994 and September 25, 1993, the
results of operations for the three and six month periods ended March 26,
1994 and March 27, 1993, and cash flows for the six month periods ended
March 26, 1994 and March 27, 1993.
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 to be read in
conjunction with the financial statements and notes thereto included in
the company's 1993 annual report to shareholders.
NOTE 2 INVENTORIES
Inventories consist of the following:
03/26/94 09/25/93
Finished products $10,418 $ 8,912
Products in process 25,554 17,495
Raw material 43,401 48,900
------- -------
79,373 75,307
Less:
Allowance for reduction to
LIFO cost 7,006 6,506
------- -------
$72,367 $68,801
======= =======
NOTE 3 LONG-TERM DEBT
Long-Term Debt consists of the following:
03/26/94 09/25/93
Revolving Credit Facility $18,000 $38,500
Industrial Revenue Bonds 8,700 8,700
Other 198 619
------- -------
$26,898 $47,819
======= =======
NOTE 4 NET INCOME PER COMMON SHARE
Net income per common share is computed by dividing net income by the
weighted average number of shares outstanding. Average number of shares
outstanding was 8,697,221 and 8,686,920, respectively, for the three month
periods and was 8,692,671 and 8,686,900, respectively, for the six month
periods ended March 26, 1994 and March 27, 1993. Stock options are not
presently dilutive.
NOTE 5 RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 condensed
consolidated financial statements to conform to the 1994 presentation.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
------------------------------------------------------------------------
Results of Operations
For the Three Months Ended March 1994
Compared to the Three Months Ended March 1993
Net income for the quarter ended March 1994 was $2.8 million, or $.32 per
share, including charges of $2.0 million after tax, or $.23 per share, for
work force downsizing related to reduced defense business. This compares
to net income of $2.0 million, or $.23 per share in the second quarter of
the 1993 fiscal year.
Shipments for the three months ended March 1994 were $192.9 million
compared to $154.3 million in the 1993 fiscal second quarter.
Net shipments increased due to improved unit volumes in both defense and
commercial products compared to the same period a year ago. Fiscal 1994
shipments of defense products increased by $23.9 million, or 25.7% to
$116.7 million in comparison to $92.8 million in the second quarter of the
1993 fiscal year. This increase is attributable to substantial increases
in the level of shipments under the U.S. Army palletized load system (PLS)
and new generation Army heavy equipment transporters (HET M1070). These
two programs more than offset the reduction in shipments resulting from
completion of HEMTT production in April 1993. The PLS and HET M1070
account for substantially all of the company's defense shipments in the
second quarter of the 1994 fiscal year. Under current contracts the HET
M1070 production will extend through September 1994 and PLS production
will extend through August 1996.
Net shipments of commercial products improved by $14.7 million to $76.2
million in the second quarter of the 1994 fiscal year, in comparison to
the 1993 fiscal period, attributable to strong markets for the companys
stripped motorized chassis and van trailer products. Virtually all of the
company's revenue are derived from firm customer orders prior to
commencing production.
Gross profits for the three month period ended March 1994 were $22.0
million improved from $19.5 million in the 1993 fiscal period, in line
with increased volumes. Gross profits expressed as a percentage of sales
decreased to 11.4% in fiscal 1994 from 12.6% in the fiscal 1993 period.
This decrease is attributable to amortization of engineering costs related
to HET M1070 and PLS shipments in the 1994 fiscal period.
Operating expenses totaled $17.2 million in the quarter ended March, 1994
including $3.3 million in charges associated with work force reductions
relating to reduced defense business. This compares to $15.3 million in
the same period a year earlier. Engineering research and development
expenditures decreased by $1.1 million to $1.8 million in the fiscal 1994
second quarter, in line with downsizing of work force relating to reduced
defense business.
Interest expense net of interest income and other totaled $0.3 million in
the second quarter of the 1994 fiscal year compared to $1.2 million in the
1993 fiscal period. This decrease is attributable to working capital needs
to support defense export shipments during the 1993 fiscal period.
The effective income tax rate for combined federal and state income taxes
in the current period was 39.0% increased from 34.0% in fiscal 1993. The
increase is due to decreased export shipments as compared to a year
earlier and 1.0% is attributable to increased statutory rates.
Results of Operations
For Six Months Ended March 1994
Compared to Six Months Ended March 1993
Net income for the first six months of 1994 fiscal year was $6.2 million,
or $.72 per share, including charges of $2.0 million after tax, or $.23
per share for work force downsizing related to reduced defense business.
During the first half of its 1993 fiscal year the company had income,
before cumulative effect of accounting change for the adoption of
Statement of Financial Accounting Standards (SFAS) No. 106 "Employers
Accounting for Postretirement Benefits Other Than Pensions", of $2.6
million, or $.30 per share. This included charges of $1.6 million after
tax pertaining to settlement with the U.S. Government of long standing
cost accounting issues. The company incurred a net loss for the first six
months of the 1993 fiscal year of $1.4 million, or $.17 per share,
inclusive of the non-cash SFAS No. 106 charge of $4.1 million. Net
shipments for the six months ended March 1994 were $355.2 million, an
increase of $56.6 million, or 18.9% over the same period of the 1993
fiscal year.
Net shipments increased due to improved unit volumes in both defense and
commercial products compared to the same period a year ago. Fiscal 1994
shipments of defense products increased by $36.9 million, or 19.0% to
$230.2 million in comparison to $193.3 million in the first half of the
1993 fiscal year. This increase is attributable to the same factors as
the first quarter period.
Gross profits for the six month period ended March 1994 were $41.2 million
compared to $34.8 million in the 1993 fiscal period in line with increased
volumes. Gross profits expressed as a percentage of sales were 11.61% and
11.65% during the 1994 and 1993 fiscal periods, respectively.
Operating expenses were $30.5 million in the first six months of the 1994
fiscal year, increased from $28.5 million in the 1993 fiscal period. The
1994 first half includes $3.3 million for non-recurring charges associated
with work force reductions related to reduced defense business. The 1994
fiscal period expenditures for engineering, research, and development have
decreased by $1.2 million to $4.1 million. This decrease is in line with
downsizing of the work force related to decreased defense business.
Interest expense net of interest income and other is sharply lower,
totaling $0.5 million in the first six months of the 1994 fiscal year
compared to $2.2 million a year earlier. This decrease is a function of
decreased working capital needs. The 1993 fiscal period saw higher
borrowing levels in support of export defense shipments.
The effective income tax rate for combined federal and state income taxes
in the current period was 39.0% increased from 35.0% in fiscal 1993. The
increase is due to decreased export shipments as compared to a year
earlier and 1.0% is attributable to increased statutory rates.
Liquidity and Capital Resources
Working capital was $92.2 million at March 26, 1994, a decline from $101.0
million at September 25, 1993. This decrease has occurred while shipment
volumes have increased. Inventory and receivable levels have remained
relatively constant, while trade payable has increased with volume levels,
and other current liabilities have increased due to non-cash charges
associated with the companys reduction in force.
The company achieved favorable cash flow performance in the first half of
the 1994 fiscal year generating $25.5 million in cash provided by
operations and the exercise of stock options, which funded dividend
payments of $2.2 million, $20.9 million reduction in long-term debt to
$26.9 million at March 26, 1994, and capital additions and investing
activities of $3.0 million. The company currently has an $85.0 million
committed revolving credit agreement with a group of banks. The company
believes its internally generated cash flow, supplemented by progress
payments and the existing credit facilities, will be adequate to meet the
working capital and other operating and capital requirements of the
company in the foreseeable future.
Under the current circumstances, the company believes that recent changes
in the overall level of defense spending will not necessarily have a
material impact on the company's operations since such changes do not have
an immediate or direct correlation with the company's existing contracts.
The company is substantially dependent on its shipments to the U.S.
Government and shipments of defense products as evidenced by shipments of
66% and 71% of total shipments during fiscal 1993 and 1992, respectively.
Substantial decreases in the company's volume of defense business from
current levels could have an adverse effect on the company's
profitability. The company has negotiated a modification to the PLS
contract to extend, at reduced levels, production of existing contractual
quantities through approximately August 1996, at which time additional
funding may be available to meet future government requirements, thus
providing stable long-term production. PLS production without this
modification would have concluded in August 1995. The company continues
actively working on several international sales opportunities for defense
vehicles, which are major.
Inflation
The company believes that the risks of inflation are minimized by the
nature of its businesses. All of the revenues derived by the company from
its contracts with the U.S. Government were received under firm fixed-
price contracts. The company prices major government programs and
contracts on a current basis that takes into account cost increases
expected to occur during performance of the contract. Generally, major
suppliers receive terms from the company similar to what the company
receives under its contracts with the U.S. Government. Commercial
business is performed on the basis of pricing specific orders. Any impact
from inflation will be minimized by the company's ability to include the
inflationary cost increases in prices.
Backlog
The company's current backlog is $617 million, compared to $459 million as
of September 25, 1993. The change in backlog represents delivery of
products on long-term contracts net of additional funding received.
Backlog on U.S. Government contracts comprises $513 million of the current
backlog with the remainder being commercial.
Environmental
The company is currently engaged in environmental activities that include
both investigation and remediation. The company acquired a business and
subsequently discovered hazardous material had been improperly disposed of
on the premises. Investigation of the matter is continuing and it has not
been determined whether any remediation will be required. The company is
relying on a contractual representation as well as state law to recover
costs from the former owner. In addition, the company is investigating
hazardous material discharges at its Wisconsin facility. Remediation, if
required, will begin after the completion of the investigation. Estimated
costs related to these activties have been made and accrued in current
operations. The company does not anticipate the costs relating to
environmental activities will have a material adverse impact on the
company's financial condition.
<PAGE>
OSHKOSH TRUCK CORPORATION
PART II - OTHER INFORMATION
FORM 10-Q
MARCH 26, 1994
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The company was not required to file a report on Form 8-K during the
quarter ended March 26, 1994.
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 10, 1994 R. EUGENE GOODSON
R. Eugene Goodson
Chairman and Chief Executive Officer
DATE: May 10, 1994 FRED S. SCHULTE
Fred S. Schulte
Vice President, Chief Financial
Officer and Treasurer
