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
<PAGE>
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
<PAGE>
<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>
<PAGE>
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.
<PAGE>
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>
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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)
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF OSHKOSH TRUCK CORPORATION
AS OF AND FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 113
<SECURITIES> 0
<RECEIVABLES> 79,655
<ALLOWANCES> 1,142
<INVENTORY> 111,650
<CURRENT-ASSETS> 203,180
<PP&E> 127,352
<DEPRECIATION> 70,962
<TOTAL-ASSETS> 433,085
<CURRENT-LIABILITIES> 123,582
<BONDS> 148,528
93
0
<COMMON> 0
<OTHER-SE> 123,544
<TOTAL-LIABILITY-AND-EQUITY> 433,085
<SALES> 320,785
<TOTAL-REVENUES> 320,785
<CGS> 278,334
<TOTAL-COSTS> 278,334
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 77
<INTEREST-EXPENSE> 6,723
<INCOME-PRETAX> 7,391
<INCOME-TAX> 3,293
<INCOME-CONTINUING> 4,098
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,098
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
