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 June 25, 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 June 25, 1994: 449,370
Class B Common Stock Outstanding as of June 25, 1994: 8,256,928
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OSHKOSH TRUCK CORPORATION
FORM 10-Q INDEX
FOR QUARTER ENDED 06/25/94
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
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OSHKOSH TRUCK CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands except share and per share amounts)
06/25/94 09/25/93
ASSETS (unaudited)
------ ----------- --------
Current assets:
Cash $ 336 $ 592
Receivables 85,727 97,429
Inventories (Note 2) 62,304 68,801
Prepaid expenses 5,774 5,672
Deferred income taxes 9,908 6,166
--------- --------
Total current assets 164,049 178,660
Deferred charges 3,103 8,128
Other assets 10,752 11,887
Property, plant, & equipment, at cost:
Land & improvements 7,911 7,788
Buildings 34,285 33,302
Machinery & equipment 70,466 68,580
--------- --------
112,662 109,670
Less accumulated depreciation 61,212 55,246
--------- --------
Net property, plant & equipment 51,450 54,424
--------- --------
Total assets $229,354 $253,099
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 50,229 $ 52,881
Federal excise taxes 1,716 774
Payroll-related obligations 7,950 6,127
Accrued warranty 5,737 4,542
Income taxes 1,234 620
Other liabilities 13,664 12,749
--------- --------
Total current liabilities 80,530 77,693
Long-term debt (Note 3) 10,809 47,819
Postretirement benefit obligations 8,322 7,726
Other long-term liabilities 9,454 7,094
Deferred income taxes 1,283 763
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 7,532 7,399
Retained earnings 114,814 108,158
--------- --------
122,436 115,647
Less: Cost of Class B common stock
in treasury; 301,867 and 321,117
shares at 06/25/94 and 9/25/93,
respectively 2,604 2,767
Pension liability adjustment 876 876
--------- --------
Total shareholders' equity 118,956 112,004
--------- --------
Total liabilities and shareholders'
equity $229,354 $253,099
======== ========
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<TABLE>
OSHKOSH TRUCK CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited/in thousands except per share amounts)
<CAPTION>
Three months ended Nine months ended
06/25/94 06/30/93 06/25/94 06/30/93
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net shipments $187,011 $153,226 $542,227 $451,870
Cost of goods sold 164,045 135,315 478,033 399,155
-------- -------- -------- --------
Gross profit 22,966 17,911 64,194 52,715
Operating expenses:
Selling, general & administrative 13,250 12,755 39,604 36,013
Engineering, research & development 2,041 2,874 6,165 8,155
-------- -------- -------- --------
Total operating expenses 15,291 15,629 45,769 44,168
Income from operations 7,675 2,282 18,425 8,547
Other income (expense):
Interest expense (488) (1,145) (1,496) (3,410)
Interest income 55 20 393 79
Miscellaneous, net (767) (76) (647) (71)
-------- ------- -------- -------
(1,200) (1,201) (1,750) (3,402)
------- ------- -------- -------
Income before income taxes and
cumulative effect of change
in accounting principle 6,475 1,081 16,675 5,145
Provision for income taxes 2,801 378 6,779 1,800
------- ------ ------ ------
Income before cumulative effect of
change in accounting principle 3,674 703 9,896 3,345
Cumulative effect of change in method
of accounting for postretirement benefits,
net of tax benefit of $2,726 - - - (4,088)
------- ------ ------- -------
Net income $ 3,674 $ 703 $ 9,896 $ (743)
======== ======== ======== ========
Net earnings per common share:
Before cumulative effect of
accounting change $0.42 $0.08 $1.14 $0.38
Cumulative effect of change in method
of accounting for postretirement
benefits, net of taxes 0.00 0.00 0.00 (0.47)
----- ----- ----- ------
Net income $0.42 $0.08 $1.14 $(0.09)
===== ====== ===== =======
Cash dividends per common share:
Class A $0.10875 $0.10875 $0.32625 $0.32625
Class B $0.12500 $0.12500 $0.37500 $0.37500
</TABLE>
<PAGE>
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited/In thousands)
Nine months ended
06/25/94 06/30/93
-------- --------
Operating activities:
Net income (loss) $ 9,896 $ (743)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 7,252 6,665
Deferred income taxes (3,222) (2,726)
Cumulative effect of change in
accounting principle - 6,814
Other 185 111
Changes in operating assets and
liabilities 28,911 (2,296)
------- --------
Total adjustments 33,126 8,568
------- -------
Net cash provided by operating
activities 43,022 7,825
------- -------
Investing activities:
Additions to property, plant &
equipment (3,711) (4,271)
Less amount capitalized under
financing leases - 639
-------- -------
Net additions to property, plant
& equipment (3,711) (3,632)
(Increase) decrease in other assets 383 (7,424)
------- -------
Net cash used by investing activities (3,328) (11,056)
------- --------
Financing activities:
Net borrowings (payments) on
lines of credit (37,010) 6,520
Sales of common stock in treasury 296 2
Dividends paid (3,236) (3,236)
-------- -------
Net cash provided (used) by
financing activities (39,950) 3,286
Increase (decrease) in cash and cash
equivalents (256) 55
Cash at beginning of period 592 221
-------- -------
Cash at end of period $ 336 $ 276
======= =======
Supplementary disclosures:
Cash paid for interest $ 1,570 $ 3,366
Cash paid for income taxes $ 9,383 $ 931
<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 June 25, 1994 and September 25, 1993, the results
of operations for the three and nine month periods ended June 25, 1994 and
June 30, 1993, and cash flows for the nine month periods ended June 25,
1994 and June 30, 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 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:
06/25/94 09/25/93
-------- --------
Finished products $11,618 $ 8,912
Products in process 20,064 17,495
Raw material 37,628 48,900
------- -------
69,310 75,307
Less:
Allowance for reduction to
LIFO cost 7,006 6,506
------- -------
$62,304 $68,801
======= =======
NOTE 3 LONG-TERM DEBT
Long-Term Debt consists of the following:
06/25/94 09/25/93
-------- --------
Revolving Credit Facility $ 2,000 $38,500
Industrial Revenue Bonds 8,700 8,700
Other 109 619
------- -------
$10,809 $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 8,706,298 and 8,687,048, respectively, for the three month
periods and was 8,687,213 and 8,686,900, respectively, for the nine month
periods ended June 25, 1994 and June 30, 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 June 1994
Compared to the Three Months Ended June 1993
Net income for the quarter ended June 1994 was $3.7 million, or $.42 per
share, in comparison to net income of $0.7 million, or $.08 per share in
the third quarter of the 1993 fiscal year.
Shipments for the three months ended June 1994 were $187.0 million
increased from $153.2 million in the 1993 fiscal year third 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 $16.6 million, or 18.8% to
$104.8 million in comparison to $88.2 million in the third 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
third quarter of the 1994 fiscal year. Under current contracts, HET M1070
production will extend through September 1994 and PLS production will
extend through August 1996.
Net shipments of commercial products improved by $17.2 million to $82.2
million in the third quarter of the 1994 fiscal year, compared to the
1993 fiscal period, attributable to strong markets for the company's front
discharge concrete 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 June 1994 were $23.0
million improved from $17.9 million in the 1993 fiscal period, in line
with increased volumes. Gross profits expressed as a percentage of sales
increased to 12.3% in fiscal 1994 from 11.7% in the fiscal 1993 period.
This increase is attributable to increased volumes and related cost
efficiencies.
Operating expenses totaled $15.3 million in the quarter ended June 1994.
This compares to $15.6 million in the same period a year earlier.
Engineering research and development expenditures
decreased by $0.8 million to $2.0 million in the fiscal 1994 third
quarter, in line with downsizing of work force relating to reduced defense
business.
Interest expense net of interest income and other totaled $1.2 million in
the third quarter of the 1994 fiscal year comparable to $1.2 million in
the 1993 fiscal period. During the 1994 fiscal period interest expense,
net of interest income, declined by $0.7 million compared to a year
earlier. During the current period the company recorded $0.7 million
equity in operating losses of its Mexico ventures.
The effective income tax rate for combined federal and state income taxes
in the current period was 43.3% increased from 35.0% in fiscal 1993. The
increase is due to decreased export shipments as compared to a year
earlier, 1.0% attributable to increased statutory rates, and 4.3% is
attributable to the non deductible nature of equity in operating losses of
Mexico ventures
Results of Operations
For Nine Months Ended June 1994
Compared to Nine Months Ended June 1993
Net income for the first nine months of 1994 fiscal year was $9.9 million,
or $1.14 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 nine months 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 $3.3
million, or $.38 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
nine months of the 1993 fiscal year of $0.7 million, or $.09 per share,
inclusive of the non-cash SFAS No. 106 charge of $4.1 million.
Net shipments for the nine months ended June 1994 were $542.2 million, an
increase of $90.3 million, or 20.0% over 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 $53.4 million, or 19.0% to
$335.0 million in comparison to $281.6 million in the first nine months of
the 1993 fiscal year. This increase is attributable to the same factors
as the quarterly period. During the 1994 fiscal period, PLS and HET M1070
account for substantially all defense shipments comprising 56.3% and
38.0%, respectively.
Gross profits for the nine month period ended June 1994 were $64.2 million
compared to $52.7 million in the 1993 fiscal period in line with increased
volumes. Gross profits expressed as a percentage of sales were 11.8% and
11.7% during the 1994 and 1993 fiscal periods, respectively.
Operating expenses were $45.8 million in the first nine months of the 1994
fiscal year, increased from $44.2 million in the 1993 fiscal period. The
1994 period 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 $2.0 million to $6.2 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 $1.8 million in the first nine months of the 1994 fiscal year
compared to $3.4 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 40.7% increased from 35.0% in fiscal 1993. The
increase is due to decreased export shipments as compared to a year
earlier, 1.0% attributable to increased statutory rates, and 1.7% is
attributable to the non deductible status of equity in operating losses of
Mexico ventures.
Liquidity and Capital Resources
Working capital was $83.5 million at June 25, 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 dropped by
$18.2 million from the levels experienced at the end of the 1993 fiscal
year.
The company achieved favorable cash flow performance in the first nine
months of the 1994 fiscal year generating $43.3 million in cash provided
by operations and the exercise of stock options, which funded dividend
payments of $3.2 million, $37.0 million reduction in long-term debt to
$10.8 million at June 25, 1994, and capital additions and investing
activities of $3.3 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.
Forward Looking Information
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 will
complete production under the HET M1070 contract during September 1994.
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 $489 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 $426 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 activities 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
June 25, 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 June 25, 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: August 9, 1994 /S/ R. Eugene Goodson
------------------------------------
R. Eugene Goodson
Chairman and Chief Executive Officer
DATE: August 9, 1994 /S/ Fred S. Schulte
------------------------------------
Fred S. Schulte
Vice President, Chief Financial
Officer and Treasurer
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