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, 2000
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 or 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 (920) 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 April 15, 2000: 422,609
- --------------------------------------------------------------------
Common Stock Outstanding as of April 15, 2000: 16,205,798
- --------------------------------------------------------------------
<PAGE>
OSHKOSH TRUCK CORPORATION
FORM 10-Q INDEX
FOR THE QUARTER ENDED MARCH 31, 2000
Page
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Statements of Income
- Three Months Ended March 31, 2000 and 1999;
Six Months Ended March 31, 2000 and 1999 ..............3
Condensed Consolidated Balance Sheets
- March 31, 2000 and September 30, 1999...................4
Condensed Consolidated Statement of Shareholders' Equity
- Six Months Ended March 31, 2000 ........................5
Condensed Consolidated Statements of Cash Flows
- Six Months Ended March 31, 2000 and 1999 ...............6
Notes to Condensed Consolidated Financial Statements
- March 31, 2000 .........................................7
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations ............20
Item 3. Quantitative and Qualitative Disclosure of Market Risk .....27
Part II. Other Information
Item 1. Legal Proceedings ..........................................28
Item 4. Submission of Matters to Vote of Security Holders ..........28
Item 6. Exhibits and Reports on Form 8-K ...........................28
Signatures ...................................................................29
2
<PAGE>
<TABLE>
PART I. ITEM 1. FINANCIAL INFORMATION
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
---- ---- ---- ----
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
Net sales $330,524 $298,534 $574,391 $521,227
Cost of sales 280,763 254,014 484,653 444,599
-------- -------- -------- --------
Gross income 49,761 44,520 89,738 76,628
Operating expenses:
Selling, general and administrative 22,334 24,754 42,912 41,299
Amortization of goodwill and other intangibles 2,772 2,890 5,544 5,625
-------- -------- -------- --------
Total operating expenses 25,106 27,644 48,456 46,924
-------- -------- -------- --------
Operating income 24,655 16,876 41,282 29,704
Other income (expense):
Interest expense (5,412) (6,645) (11,198) (13,226)
Interest income 188 241 354 427
Miscellaneous, net 171 198 285 340
-------- -------- -------- --------
(5,053) (6,206) (10,559) (12,459)
-------- -------- -------- --------
Income from continuing operations before income
taxes, equity in earnings of unconsolidated
partnership and extraordinary item 19,602 10,670 30,723 17,245
Provision for income taxes 7,964 4,501 12,704 7,501
-------- -------- -------- --------
11,638 6,169 18,019 9,744
Equity in earnings of unconsolidated
partnership, net of income taxes 275 380 590 717
-------- -------- -------- --------
Income from continuing operations before
extraordinary item 11,913 6,549 18,609 10,461
Gain from discontinued operations, net of
income taxes of $1,235 2,015 -- 2,015 --
Extraordinary charge for early retirement of debt,
net of income tax benefit of $356 -- -- (581) --
-------- -------- -------- --------
Net income $ 13,928 $ 6,549 $ 20,043 $ 10,461
======== ======== ======== ========
Earnings per share:
Income from continuing operations before
extraordinary item $ 0.72 $ 0.51 $ 1.20 $ 0.83
Net income $ 0.84 $ 0.51 $ 1.29 $ 0.83
Earnings per share assuming dilution:
Income from continuing operations before
extraordinary item $ 0.70 $ 0.50 $ 1.18 $ 0.81
Net income $ 0.82 $ 0.50 $ 1.27 $ 0.81
Cash dividends:
Class A Common Stock $0.07500 $0.07250 $0.15000 $0.14500
Common Stock $0.08625 $0.08333 $0.17250 $0.16667
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
3
<PAGE>
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
2000 1999
--------- -------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 4,659 $ 5,137
Receivables, net 105,374 93,186
Inventories 249,392 198,446
Prepaid expenses 6,182 4,963
Deferred income taxes 12,378 14,558
---------- ----------
Total current assets 377,985 316,290
Investment in unconsolidated partnership 13,885 12,335
Other long-term assets 22,441 20,853
Property, plant and equipment 166,493 154,597
Less accumulated depreciation (75,355) (70,606)
---------- ----------
Net property, plant and equipment 91,138 83,991
Goodwill and other intangible assets, net 314,277 319,821
---------- ----------
Total assets $ 819,726 $ 753,290
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 100,316 $ 84,727
Floor plan notes payable 37,861 26,616
Customer advances 66,040 68,364
Payroll-related obligations 21,987 24,734
Accrued warranty 14,492 14,623
Other current liabilities 44,869 48,462
Revolving credit facility and current
maturities of long-term debt 42,030 5,259
---------- ----------
Total current liabilities 327,595 272,785
Long-term debt 157,976 255,289
Deferred income taxes 42,053 44,265
Other long-term liabilities 18,581 18,071
Commitments and contingencies -- --
Shareholders' equity 273,521 162,880
---------- ----------
Total liabilities and shareholders' equity $ 819,726 $ 753,290
========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED MARCH 31, 2000
(Unaudited)
<CAPTION>
Common Paid-in Retained Cost of Common
Stock Capital Earnings Stock in Treasury Total
------ ------- -------- ----------------- -----
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1999 $ 140 $ 15,997 $ 157,810 $ (11,067) $ 162,880
Net income and comprehensive
income --- --- 20,043 --- 20,043
Proceeds from Common Stock
offering, net of expenses 38 93,364 --- --- 93,402
Cash dividends:
Class A Common Stock --- --- (64) --- (64)
Common Stock --- --- (2,795) --- (2,795)
Other --- 24 --- 31 55
----- --------- --------- --------- ---------
Balance at March 31, 2000 $ 178 $ 109,385 $ 174,994 $ (11,036) $ 273,521
===== ========= ========= ========= =========
The accompanying notes are an integral part of these condensed consolidated financial statements.
</TABLE>
5
<PAGE>
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
March 31,
2000 1999
---- ----
(In thousands)
Operating activities:
Income from continuing operations before
extraordinary item $ 18,609 $ 10,461
Non-cash adjustments 10,500 4,252
Changes in operating assets and liabilities (45,425) (18,560)
--------- ---------
Net cash used for operating activities (16,316) (3,847)
Investing activities:
Acquisition of business (5,625) --
Additions to property, plant and equipment (8,676) (4,712)
Proceeds from sale of property, plant and
equipment 46 30
Increase in other long-term assets (2,282) (2,482)
--------- ----------
Net cash used for investing activities (16,537) (7,164)
Net cash provided from discontinued operations 2,015 --
Financing activities:
Net borrowings under revolving credit facility 33,200 13,300
Repayments of long-term debt (93,742) (241)
Proceeds from Common Stock offering 93,736 --
Costs of Common Stock offering (334) --
Dividends paid (2,531) (2,103)
Other 31 819
--------- ---------
Net cash provided from financing activities 30,360 11,775
--------- ---------
Increase (decrease) in cash and cash equivalents (478) 764
Cash and cash equivalents at beginning of period 5,137 3,622
--------- ---------
Cash and cash equivalents at end of period $ 4,659 $ 4,386
========= =========
Supplementary disclosures:
Depreciation and amortization $ 11,515 $ 11,085
Cash paid for interest 12,014 12,986
Cash paid for income taxes 9,258 14,028
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<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 financial 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 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. These consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's 1999 annual report to shareholders.
2. EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted weighted
average shares used in the denominator of the per share calculations:
Three Months Ended Six Months Ended
March 31, March 31,
------------------ -----------------
2000 1999 2000 1999
---- ---- ---- ----
Denominator for basic
earnings per share 16,628,316 12,700,368 15,507,527 12,667,757
Effect of dilutive options
and incentive compensation
awards 314,625 304,943 312,581 289,582
---------- ---------- ---------- ----------
Denominator for dilutive
earnings per share 16,942,941 13,005,311 15,820,108 12,957,339
========== ========== ========== ==========
3. INVENTORIES
Inventories consist of the following:
March 31, September 30,
2000 1999
--------- -------------
(In thousands)
Finished products $ 74,125 $ 59,649
Partially finished products 95,415 62,047
Raw materials 100,042 89,417
--------- ---------
Inventories at FIFO cost 269,582 211,113
Less: Progress payments on U.S. government
contracts (9,191) (2,951)
Excess of FIFO cost over LIFO cost (10,999) (9,716)
--------- ---------
$ 249,392 $ 198,446
========= =========
Title to all inventories related to government contracts, which provide for
progress payments, vests with the government to the extent of unliquidated
progress payments.
7
<PAGE>
4. ACQUISITIONS/DISPOSITIONS
In January 2000, the Company entered into a technology transfer agreement and
collected certain previously written-off receivables from a foreign affiliate,
as a part of the disposition of a business that the Company exited in 1995.
Gross proceeds of $3.2 million, less taxes of $1.2 million, or net proceeds of
$2.0 million, have been recorded as a gain from discontinued operations.
On November 1, 1999, the Company acquired the manufacturing assets of Kewaunee
Engineering Corporation ("Kewaunee") for $5.6 million in cash plus the
assumption of certain liabilities aggregating approximately $2.2 million.
Kewaunee is a fabricator of heavy-steel components for cranes, aerial devices
and other equipment. The acquisition was financed from borrowings under the
Company's senior credit facility.
The acquisition was accounted for using the purchase method of accounting and,
accordingly, the operating results of Kewaunee are included in the Company's
consolidated statements of income beginning November 1, 1999. The purchase
price, including acquisition costs, approximated the estimated fair value of the
assets acquired and liabilities assumed as of the acquisition date.
Had the acquisition occurred on October 1, 1999 or 1998, there would have been
no material pro forma impact on the Company's consolidated net sales, net income
or earnings per share in fiscal 2000 or 1999.
5. LONG-TERM DEBT
The Company has outstanding a senior credit facility and $100.0 million of 8.75%
senior subordinated notes due March 1, 2008. The senior credit facility consists
of a six year $100.0 million revolving credit facility ("Revolving Credit
Facility") and three term loan facilities ("Term Loan A", "Term Loan B", and
"Term Loan C"). The outstanding balances as of March 31, 2000 on the Revolving
Credit Facility, Term Loan A, Term Loan B, and Term Loan C are $38.2 million,
$32.5 million, $13.5 million, and $13.5 million, respectively.
At March 31, 2000, outstanding borrowings of $38.2 million and $9.2 million of
outstanding letters of credit reduced available capacity under the Revolving
Credit Facility to $52.6 million.
Substantially all the tangible and intangible assets of the Company and its
subsidiaries (including the stock of certain subsidiaries) are pledged as
collateral under the senior credit facility. The senior credit facility includes
customary affirmative and negative covenants and requires mandatory prepayments
to the extent of "excess cash flows" as defined in the senior credit facility.
The senior subordinated notes were issued pursuant to an Indenture dated
February 26, 1998 (the "Indenture"), between the Company, the Subsidiary
Guarantors (as defined below) and Firstar Trust Company, as trustee. The
Indenture contains customary affirmative and negative covenants. The Subsidiary
Guarantors fully, unconditionally, jointly and severally guarantee the Company's
obligations under the senior subordinated notes.
8
<PAGE>
6. COMMON STOCK OFFERING
On November 24, 1999, the Company sold 3,795,000 shares of its Common Stock at
$26.00 per share. Proceeds from the offering, net of underwriting discounts and
commissions, totaled $93.7 million with $93.5 million used to repay indebtedness
under the Company's senior credit facility.
Pro forma unaudited earnings per share of the Company, assuming that the net
proceeds to the Company from the offering were used to repay term debt as of
October 1, 1999 and 1998, are summarized below:
Six Months Ended
March 31,
2000 1999
---- ----
Earnings per share from continuing operations
before extraordinary item
Basic $ 1.16 $ 0.77
Assuming dilution 1.14 0.75
Weighted average shares
Basic 16,627,364 16,462,757
Assuming dilution 16,939,945 16,752,339
7. COMMITMENTS AND CONTINGENCIES
McNeilus Companies, Inc. ("McNeilus") was a defendant in litigation commenced in
1993 prior to the acquisition of McNeilus by the Company, which was brought by
The Heil Co. ("Heil"), a McNeilus competitor. This litigation sought damages and
made claims that McNeilus infringed certain aspects of one of its patents. A
settlement of the matter was reached in January 2000.
As part of its routine business operations, the Company disposes of and recycles
or reclaims certain industrial waste materials, chemicals and solvents at third
party disposal and recycling facilities, which are licensed by appropriate
governmental agencies. In some instances, these facilities have been and may be
designated by the United States Environmental Protection Agency ("EPA") or a
state environmental agency for remediation. Under the Comprehensive
Environmental Response, Compensation, and Liability Act (the "Superfund" law)
and similar state laws, each potentially responsible party ("PRP") that
contributed hazardous substances may be jointly and severally liable for the
costs associated with cleaning up the site. Typically, PRPs negotiate a
resolution with the EPA and/or the state environmental agencies. PRPs also
negotiate with each other regarding allocation of the cleanup cost.
As to one such Superfund site, Pierce Manufacturing Inc. ("Pierce") is one of
431 PRPs participating in the costs of addressing the site and has been assigned
an allocation share of approximately 0.04%. Currently, a report of the remedial
investigation/ feasibility study is being completed, and as such, an estimate
for the total cost of the remediation of this site has not been made to date.
However, based on estimates and the assigned allocations, the Company believes
its liability at the site will not be material and its share is adequately
covered through reserves established by the Company at March 31, 2000. Actual
liability could vary based on
9
<PAGE>
results of the study, the resources of other PRPs, and the Company's final share
of liability.
The Company is addressing a regional trichloroethylene ("TCE") groundwater plume
on the south side of Oshkosh, Wisconsin. The Company believes there may be
multiple sources in the area. TCE was detected at the Company's North Plant
facility with testing showing the highest concentrations in a monitoring well
located on the upgradient property line. Because the investigation process is
still ongoing, it is not possible for the Company to estimate its long-term
total liability associated with this issue at this time. Also, as part of the
regional TCE groundwater investigation, the Company conducted a groundwater
investigation of a former landfill located on Company property. The landfill,
acquired by the Company in 1972, is approximately 2.0 acres in size and is
believed to have been used for the disposal of household waste. Based on the
investigation, the Company does not believe the landfill is one of the sources
of the TCE contamination. Based upon current knowledge, the Company believes its
liability associated with the TCE issue will not be material and that it has
established adequate reserves for the matter as of March 31, 2000. However, this
may change as investigations proceed by the Company, other unrelated property
owners, and the government.
The Company is subject to other environmental matters and legal proceedings and
claims, including patent, antitrust, product liability and state dealership
regulation compliance proceedings, that arise in the ordinary course of
business. Although the final results of all such matters and claims cannot be
predicted with certainty, management believes that the ultimate resolution of
all such matters and claims, after taking into account the liabilities accrued
with respect to such matters and claims, will not have a material adverse effect
on the Company's financial condition or results of operations. Actual results
could vary, among other things, due to the uncertainties involved in litigation.
The Company has guaranteed certain customers' obligations under deferred payment
contracts and lease purchase agreements totaling approximately $1.0 million at
March 31, 2000. The Company is also contingently liable under bid, performance
and specialty bonds totaling approximately $148.6 million and open standby
letters of credit issued by the Company's bank in favor of third parties
totaling approximately $9.2 million at March 31, 2000.
10
<PAGE>
8. BUSINESS SEGMENT INFORMATION
Three Months Ended Six Months Ended
March 31, March 31,
--------- ---------
2000 1999 2000 1999
---- ---- ---- ----
(In thousands)
Net sales to unaffiliated
customers:
Commercial $181,873 $168,848 $297,267 $265,667
Fire and emergency 102,804 85,781 178,381 159,630
Defense 45,847 44,405 98,743 96,430
Corporate and other -- (500) -- (500)
-------- -------- -------- --------
Consolidated net sales $330,524 $298,534 $574,391 $521,227
======== ======== ======== ========
Operating income (loss):
Commercial $ 17,809 $ 13,624 $ 26,863 $ 18,418
Fire and emergency 9,478 6,878 13,393 11,697
Defense 2,163 4,605 9,658 10,769
Corporate and other (4,795) (8,231) (8,632) (11,180)
-------- -------- -------- --------
Consolidated operating income 24,655 16,876 41,282 29,704
Net interest expense (5,224) (6,404) (10,844) (12,799)
Miscellaneous other 171 198 285 340
-------- -------- -------- -------
Income from continuing
operations before income
taxes, equity in earnings
of unconsolidated partnership
and extraordinary item $ 19,602 $ 10,670 $ 30,723 $ 17,245
======== ======== ======== ========
March 31, September 30,
2000 1999
--------- -------------
(In thusands)
Identifiable assets:
Commercial $ 442,127 $ 381,199
Fire and emergency 295,638 276,692
Defense 76,593 85,796
Corporate and other 5,368 9,603
--------- ---------
Consolidated identifiable assets $ 819,726 $ 753,290
========= =========
9. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The following tables present condensed consolidating financial information for:
(a) the Company; (b) on a combined basis, the guarantors of the senior
subordinated notes, which include all wholly-owned subsidiaries of the Company
("Subsidiary Guarantors") other than McNeilus Financial Services, Inc. and
Oshkosh/McNeilus Financial Services, Inc., which are the only non-guarantor
subsidiaries of the Company ("Non-Guarantor Subsidiaries"), and (c) on a
combined basis, the Non-Guarantor Subsidiaries. Separate financial statements of
the Subsidiary Guarantors are not presented because the Subsidiary Guarantors
are jointly, severally and unconditionally liable under the guarantees, and the
Company believes separate financial statements and other disclosures regarding
the Subsidiary Guarantors are not material to investors.
The Company is comprised of Wisconsin and Florida manufacturing operations and
certain corporate management, information services and finance functions.
Borrowings and related interest expense under the senior credit facility and the
senior subordinated notes are charged to the Company. The Company has allocated
a portion of this interest expense to certain Subsidiary Guarantors through
formal lending arrangements. There are no management fee arrangements between
the Company and its Non-Guarantor Subsidiaries.
11
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Statements of Income
For the Three Months Ended March 31, 2000
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net sales $ 109,843 $ 225,691 $ -- $ (5,010) $ 330,524
Cost of sales 97,941 187,832 -- (5,010) 280,763
--------- --------- ------- ---------- ---------
Gross income 11,902 37,859 -- -- 49,761
Operating expenses:
Selling, general and
administrative 10,333 11,899 102 -- 22,334
Amortization of goodwill and
other intangibles -- 2,772 -- -- 2,772
--------- --------- ------- --------- ---------
Total operating expenses 10,333 14,671 102 -- 25,106
--------- --------- ------- --------- ---------
Operating income (loss) 1,569 23,188 (102) -- 24,655
Other income (expense):
Interest expense (4,717) (2,270) -- 1,575 (5,412)
Interest income 56 1,706 1 (1,575) 188
Miscellaneous, net (60) 100 131 -- 171
--------- --------- ------- --------- ---------
(4,721) (464) 132 -- (5,053)
---------- ---------- ------- --------- ----------
Income (loss) from continuing
operations before income taxes
and equity in earnings of
subsidiaries and unconsolidated
partnership (3,152) 22,724 30 -- 19,602
Provision (credit) for income taxes (1,198) 9,150 12 -- 7,964
---------- --------- ------- --------- ---------
(1,954) 13,574 18 -- 11,638
Equity in earnings of subsidiaries
and unconsolidated partnership,
net of income taxes 13,867 -- 275 (13,867) 275
--------- --------- ------- ---------- ---------
Income from continuing operations 11,913 13,574 293 (13,867) 11,913
Discontinued operations, net 2,015 -- -- -- 2,015
--------- --------- ------- --------- ---------
Net income $ 13,928 $ 13,574 $ 293 $ (13,867) $ 13,928
========= ========= ======= ========== =========
</TABLE>
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<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Statements of Income
For the Three Months Ended March 31, 1999
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net sales $ 101,360 $ 198,635 $ -- $ (1,461) $ 298,534
Cost of sales 89,187 166,288 -- (1,461) 254,014
--------- ---------- ------- ---------- ---------
Gross income 12,173 32,347 -- -- 44,520
Operating expenses:
Selling, general and
administrative 12,458 12,196 100 -- 24,754
Amortization of goodwill and
other intangibles -- 2,890 -- -- 2,890
--------- ---------- ------- --------- ---------
Total operating expenses 12,458 15,086 100 -- 27,644
--------- ---------- ------- --------- ---------
Operating income (loss) (285) 17,261 (100) -- 16,876
Other income (expense):
Interest expense (6,158) (2,062) -- 1,575 (6,645)
Interest income 123 1,671 22 (1,575) 241
Miscellaneous, net 39 35 124 -- 198
--------- ---------- ------- --------- ---------
(5,996) (356) 146 -- (6,206)
---------- ----------- ------- --------- ----------
Income (loss) before income taxes
and equity in earnings of
subsidiaries and unconsolidated
partnership (6,281) 16,905 46 -- 10,670
Provision (credit) for income taxes (2,499) 6,982 18 -- 4,501
---------- ---------- ------- --------- ---------
(3,782) 9,923 28 -- 6,169
Equity in earnings of subsidiaries
and unconsolidated partnership,
net of income taxes 10,331 -- 380 (10,331) 380
--------- ---------- ------- ---------- ---------
Net income $ 6,549 $ 9,923 $ 408 $ (10,331) $ 6,549
========= ========== ======= ========== =========
</TABLE>
13
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Statements of Income
For the Six Months Ended March 31, 2000
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net sales $ 190,637 $ 393,405 $ -- $ (9,651) $ 574,391
Cost of sales 165,934 328,370 -- (9,651) 484,653
--------- --------- ------- ---------- ---------
Gross income 24,703 65,035 -- -- 89,738
Operating expenses:
Selling, general and
administrative 18,731 23,995 186 -- 42,912
Amortization of goodwill and
other intangibles -- 5,544 -- -- 5,544
--------- --------- ------- --------- ---------
Total operating expenses 18,731 29,539 186 -- 48,456
--------- --------- ------- --------- ---------
Operating income (loss) 5,972 35,496 (186) -- 41,282
Other income (expense):
Interest expense (10,123) (4,225) -- 3,150 (11,198)
Interest income 88 3,374 42 (3,150) 354
Miscellaneous, net (52) 88 249 -- 285
--------- --------- ------- --------- ---------
(10,087) (763) 291 -- (10,559)
---------- ---------- ------- --------- ----------
Income (loss) from continuing
operations before income taxes,
equity in earnings of
subsidiaries and unconsolidated
partnership and extraordinary
item (4,115) 34,733 105 -- 30,723
Provision (credit) for income taxes (1,564) 14,228 40 -- 12,704
---------- --------- ------- --------- ---------
(2,551) 20,505 65 -- 18,019
Equity in earnings of subsidiaries
and unconsolidated partnership,
net of income taxes 21,160 -- 590 (21,160) 590
--------- --------- ------- ---------- ---------
Income from continuing operations
before extraordinary item 18,609 20,505 655 (21,160) 18,609
Discontinued operations, net 2,015 -- -- -- 2,015
Extraordinary item, net (581) -- -- -- (581)
--------- --------- ------- --------- ----------
Net income $ 20,043 $ 20,505 $ 655 $ (21,160) $ 20,043
========= ========= ======= ========== =========
</TABLE>
14
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Statements of Income
For the Six Months Ended March 31, 1999
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Net sales $ 178,094 $ 345,574 $ -- $ (2,441) $ 521,227
Cost of sales 155,529 291,511 -- (2,441) 444,599
--------- --------- ------- ---------- ---------
Gross income 22,565 54,063 -- -- 76,628
Operating expenses:
Selling, general and
administrative 19,756 21,400 143 -- 41,299
Amortization of goodwill and
other intangibles -- 5,625 -- -- 5,625
--------- --------- ------- --------- ---------
Total operating expenses 19,756 27,025 143 -- 46,924
--------- --------- ------- --------- ---------
Operating income (loss) 2,809 27,038 (143) -- 29,704
Other income (expense):
Interest expense (12,342) (4,034) -- 3,150 (13,226)
Interest income 197 3,346 34 (3,150) 427
Miscellaneous, net 111 73 156 -- 340
--------- --------- ------- --------- ---------
(12,034) (615) 190 -- (12,459)
---------- ---------- ------- --------- ----------
Income (loss) before income taxes
and equity in earnings of
subsidiaries and unconsolidated
partnership (9,225) 26,423 47 -- 17,245
Provision (credit) for income taxes (3,618) 11,101 18 -- 7,501
---------- --------- ------- --------- ---------
(5,607) 15,322 29 -- 9,744
Equity in earnings of subsidiaries
and unconsolidated partnership,
net of income taxes 16,068 -- 717 (16,068) 717
--------- --------- ------- ---------- ---------
Net income $ 10,461 $ 15,322 $ 746 $ (16,068) $ 10,461
========= ========= ======= ========== =========
</TABLE>
15
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Balance Sheets
March 31, 2000
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,550 $ 1,099 $ 10 $ -- $ 4,659
Receivables, net 49,792 57,634 (19) (2,033) 105,374
Inventories 76,747 172,645 -- -- 249,392
Prepaid expenses 4,833 1,349 -- -- 6,182
Deferred income taxes 5,447 3,638 3,293 -- 12,378
--------- --------- -------- ---------- ---------
Total current assets 140,369 236,365 3,284 (2,033) 377,985
Investment in and advances to:
Subsidiaries 390,701 (2,705) -- (387,996) --
Unconsolidated partnership -- -- 13,885 -- 13,885
Other long-term assets 13,372 9,015 54 -- 22,441
Net property, plant and equipment 22,935 68,203 -- -- 91,138
Goodwill and other intangible
assets, net -- 314,277 -- -- 314,277
--------- --------- -------- ---------- ---------
Total assets $ 567,377 $ 625,155 $ 17,223 $ (390,029) $ 819,726
========= ========= ======== =========== =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42,631 $ 58,254 $ 32 $ (601) $ 100,316
Floor plan notes payable -- 39,293 -- (1,432) 37,861
Customer advances 3,101 62,939 -- -- 66,040
Payroll-related obligations 8,674 13,282 31 -- 21,987
Accrued warranty 7,237 7,255 -- -- 14,492
Other current liabilities 22,721 13,881 8,267 -- 44,869
Revolving credit facility and
current maturities of long-term
debt 41,796 234 -- -- 42,030
--------- --------- -------- ---------- ---------
Total current liabilities 126,160 195,138 8,330 (2,033) 327,595
Long-term debt 155,904 2,072 -- -- 157,976
Deferred income taxes (6,146) 36,601 11,598 -- 42,053
Other long-term liabilities 17,938 643 -- -- 18,581
Commitments and contingencies -- -- -- -- --
Investments by and advances from
(to) parent -- 390,701 (2,705) (387,996) --
Shareholders' equity 273,521 -- -- -- 273,521
--------- --------- -------- ---------- ---------
Total liabilities and shareholders'
equity $ 567,377 $ 625,155 $ 17,223 $ (390,029) $ 819,726
========= ========= ======== =========== =========
</TABLE>
16
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Balance Sheets
September 30, 1999
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,698 $ 1,337 $ 102 $ -- $ 5,137
Receivables, net 49,311 43,837 38 -- 93,186
Inventories 49,988 148,458 -- -- 198,446
Prepaid expenses 3,791 1,172 -- -- 4,963
Deferred income taxes 3,818 6,523 4,217 -- 14,558
--------- --------- -------- ---------- ----------
Total current assets 110,606 201,327 4,357 -- 316,290
Investment in and advances to:
Subsidiaries 357,575 (7,590) -- (349,985) --
Unconsolidated partnership -- -- 12,335 -- 12,335
Other long-term assets 11,902 8,899 52 -- 20,853
Net property, plant and equipment 22,803 61,188 -- -- 83,991
Goodwill and other intangible
assets, net -- 319,821 -- -- 319,821
--------- --------- -------- ---------- ----------
Total assets $ 502,886 $ 583,645 $ 16,744 $ (349,985) $ 753,290
========= ========= ======== =========== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,261 $ 50,234 $ 232 $ -- $ 84,727
Floor plan notes payable -- 26,616 -- -- 26,616
Customer advances 1,669 66,695 -- -- 68,364
Payroll-related obligations 9,172 15,532 30 -- 24,734
Accrued warranty 6,785 7,838 -- -- 14,623
Other current liabilities 17,940 19,894 10,628 -- 48,462
Revolving credit facility and
current maturities of long-term
debt 5,000 259 -- -- 5,259
--------- --------- -------- ---------- ----------
Total current liabilities 74,827 187,068 10,890 -- 272,785
Long-term debt 253,000 2,289 -- -- 255,289
Deferred income taxes (5,407) 36,228 13,444 -- 44,265
Other long-term liabilities 17,586 485 -- -- 18,071
Commitments and contingencies -- -- -- -- --
Investments by and advances from
(to) parent -- 357,575 (7,590) (349,985) --
Shareholders' equity 162,880 -- -- -- 162,880
--------- --------- -------- ---------- ----------
Total liabilities and shareholders'
equity $ 502,886 $ 583,645 $ 16,744 $ (349,985) $ 753,290
========= ========= ======== ========== ==========
</TABLE>
17
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Statements of Cash Flows
For the Six Months Ended March 31, 2000
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Operating activities:
Income from continuing operations
before extraordinary item $ 18,609 $ 20,505 $ 655 $ (21,160) $ 18,609
Non-cash adjustments 266 12,122 (1,888) -- 10,500
Changes in operating assets and
liabilities (15,320) (27,602) (2,503) -- (45,425)
---------- ---------- --------- --------- ----------
Net cash provided from (used
for) operating activities 3,555 5,025 (3,736) (21,160) (16,316)
Investing activities:
Acquisition of business (5,625) -- -- -- (5,625)
Investments in and advances to
subsidiaries (27,501) 2,111 4,230 21,160 --
Additions to property, plant and
equipment (2,080) (6,596) -- -- (8,676)
Other (1,114) (536) (586) -- (2,236)
---------- ---------- --------- --------- ----------
Net cash provided from (used
for) investing activities (36,320) (5,021) 3,644 21,160 (16,537)
Net cash provided from discontinued
operations 2,015 -- -- -- 2,015
Financing activities:
Net borrowings under revolving
credit facility 33,200 -- -- -- 33,200
Repayments of long-term debt (93,500) (242) -- -- (93,742)
Proceeds from Common Stock
offering 93,736 -- -- -- 93,736
Costs of Common Stock offering (334) -- -- -- (334)
Dividends paid (2,531) -- -- -- (2,531)
Other 31 -- -- -- 31
--------- --------- -------- --------- ---------
Net cash provided from (used
for) financing activities 30,602 (242) -- -- 30,360
--------- ---------- -------- --------- ---------
Decrease in cash and cash
equivalents (148) (238) (92) -- (478)
Cash and cash equivalents at
beginning of period 3,698 1,337 102 -- 5,137
--------- --------- -------- --------- ---------
Cash and cash equivalents at end of
period $ 3,550 $ 1,099 $ 10 $ -- $ 4,659
========= ========= ======== ========= =========
</TABLE>
18
<PAGE>
<TABLE>
OSHKOSH TRUCK CORPORATION
Condensed Consolidating Statements of Cash Flows
For the Six Months Ended March 31, 1999
(Unaudited)
<CAPTION>
Subsidiary Non-Guarantor
Company Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------- ------------ ------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income $ 10,461 $ 15,322 $ 746 $ (16,068) $ 10,461
Non-cash adjustments (1,048) 8,816 (3,516) -- 4,252
Changes in operating assets and
liabilities (21,210) 3,624 (974) -- (18,560)
--------- --------- --------- --------- ----------
Net cash provided from (used for)
operating activities (11,797) 27,762 (3,744) (16,068) (3,847)
Investing activities:
Investments in and advances to
subsidiaries 1,868 (21,745) 3,809 16,068 --
Additions to property, plant and
equipment (1,867) (2,845) -- -- (4,712)
Other (310) (2,232) 90 -- (2,452)
--------- ---------- -------- --------- ----------
Net cash provided from (used for)
investing activities (309) (26,822) 3,899 16,068 (7,164)
Financing activities:
Net borrowings under revolving
credit facility 13,300 -- -- -- 13,300
Repayments of long term debt -- (241) -- -- (241)
Dividends paid (2,103) -- -- -- (2,103)
Other 819 -- -- -- 819
--------- --------- -------- --------- ----------
Net cash provided from (used for)
financing activities 12,016 (241) -- -- 11,775
--------- ---------- -------- --------- ----------
Increase (decrease) in cash and cash
equivalents (90) 699 155 -- 764
Cash and cash equivalents at
beginning of period 1,065 979 1,578 -- 3,622
--------- --------- -------- --------- ----------
Cash and cash equivalents at end of
period $ 975 $ 1,678 $ 1,733 $ -- $ 4,386
========= ========= ======== ========= ==========
</TABLE>
19
<PAGE>
Item 2. Oshkosh Truck Corporation
Management's Discussion and Analysis of
Consolidated Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Consolidated Financial Condition
and Results of Operations and other sections of this Form 10-Q contain
"forward-looking statements" that are believed to be within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact included in this report, including, without
limitation, statements regarding Oshkosh Truck Corporation's (the "Company" or
"Oshkosh") future financial position, business strategy, budgets, targets,
projected costs and plans and objectives of management for future operations are
forward-looking statements. In addition, forward-looking statements generally
can be identified by the use of forward-looking terminology such as "may",
"will", "expect", "intend", "estimates", "anticipate", "believe", "should",
"plans", or "continue", or the negative thereof or variations thereon or similar
terminology. Although the Company believes the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations include,
without limitation, the following: (1) the cyclical nature of the concrete
placement industry; (2) the risks related to reductions or changes in government
expenditures; (3) the potential for actual costs to exceed projected costs with
long-term, fixed-price government contracts; (4) the uncertainty inherent in
government contracts; (5) the challenges of identifying, completing and
integrating future acquisitions; (6) competition; (7) disruptions in the supply
of parts or components from sole source suppliers and subcontractors; (8)
product liability and warranty claims; and (9) labor relations and market
conditions. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements is
contained from time to time in the Company's SEC filings, including, but not
limited to, the Company's prospectus dated November 18, 1999 included in the
Company's Registration Statement on Form S-3 No. 333-87149. All subsequent
written and oral forward-looking statements attributable to the Company, or
persons acting on its behalf, are expressly qualified in their entirety by these
cautionary statements.
General
The major products manufactured and marketed by each of the Company's business
segments are as follows:
Commercial -- concrete mixer systems, refuse truck bodies, portable concrete
batch plants and truck components sold to commercial ready-mix companies and
commercial and municipal waste haulers in the U. S. and abroad.
Fire and emergency -- commercial and custom fire trucks, aircraft rescue and
firefighting trucks, snow removal trucks and other emergency vehicles primarily
sold to fire departments, airports and other governmental units in the U. S. and
abroad.
20
<PAGE>
Defense -- heavy-and medium-payload tactical trucks and supply parts sold to the
U. S. military and to other militaries around the world.
Results of Operations
Analysis of Consolidated Net Sales
The following table presents net sales by business segment:
Second Quarter Fiscal First Six Months Fiscal
--------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
(In thousands)
Net sales to unaffiliated
customers:
Commercial $ 181,873 $ 168,848 $ 297,267 $ 265,667
Fire and emergency 102,804 85,781 178,381 159,630
Defense 45,847 44,405 98,743 96,430
Corporate and other -- (500) -- (500)
--------- --------- --------- ---------
Consolidated net
sales $ 330,524 $ 298,534 $ 574,391 $ 521,227
========= ========= ========= =========
Second Quarter Fiscal 2000 Compared to 1999
Consolidated net sales increased $32.0 million, or 10.7%, to $330.5 million for
the second quarter of fiscal 2000 compared to the second quarter of fiscal 1999.
Commercial segment net sales increased $13.0 million, or 7.7%, to $181.9 million
for the second quarter of fiscal 2000 compared to the second quarter of fiscal
1999. Continued strong end-markets in the concrete placement industry, the
growing popularity of Oshkosh's front-discharge concrete mixer and sales,
marketing and distribution synergies created through the February 1998
acquisition of McNeilus Companies, Inc. ("McNeilus") contributed to an 11.6%
increase in concrete mixer sales for the second quarter of fiscal 2000 compared
to the second quarter of fiscal 1999. Refuse packer sales decreased 4.1% for the
second quarter of fiscal 2000 compared to the second quarter of fiscal 1999 on a
lower mix of packer body and chassis package sales. Refuse packer unit volume in
the quarter was flat as municipal sales increases offset significantly lower
packer shipments to the U.S.'s largest waste haulers.
Fire and emergency segment net sales increased $17.0 million, or 19.8%, to
$102.8 million for the second quarter of fiscal 2000 compared to the second
quarter of fiscal 1999, on a strong mix of custom pumpers and aerials. The
Company believes production inefficiencies resulting from the installation of an
enterprise-wide resource planning ("ERP") system at Pierce Manufacturing
Inc.("Pierce") have largely been resolved.
Defense segment net sales increased $1.4 million, or 3.2%, to $45.8 million for
the second quarter of fiscal 2000 compared to the second quarter of fiscal 1999.
A slight decrease in defense vehicle sales was offset by an increase in parts
sales. Vehicle sales under the Medium Tactical Vehicle Replacement ("MTVR")
contract awarded to Oshkosh in
21
<PAGE>
December 1998 began in the second quarter of fiscal 2000. The Company expects
sales under this contract to increase throughout fiscal 2000.
First Six Months of Fiscal 2000 Compared to 1999
Consolidated net sales increased $53.2 million, or 10.2%, to $574.4 million for
the first six months of fiscal 2000 compared to the first six months of fiscal
1999.
Commercial segment net sales increased $31.6 million, or 11.9%, to $297.3
million for the first six months of fiscal 2000 compared to the first six months
of fiscal 1999. Continued strong end-markets in the concrete placement industry,
the growing popularity of Oshkosh's front-discharge concrete mixer and sales,
marketing and distribution synergies created through the February 1998
acquisition of McNeilus contributed to a 13.7% increase in concrete mixer sales
for the first six months of fiscal 2000 compared to the first six months of
fiscal 1999. Refuse packer sales increased 7.3% for the first six months of
fiscal 2000 compared to the first six months of fiscal 1999, generally as a
result of increases in sales to municipal and international customers.
Fire and emergency segment net sales increased $18.8 million, or 11.7%, to
$178.4 million for the first six months of fiscal 2000 compared to the first six
months of fiscal 1999. Pierce comprises a substantial majority of the revenue of
this segment. Pierce's sales increased 12.7% during the period, which is in line
with Pierce's long-term sales growth rate of 11% per annum since 1980. The
Company believes production inefficiencies resulting from the installation of an
ERP system at Pierce have largely been resolved.
Defense segment net sales increased $2.3 million, or 2.4%, to $98.7 million for
the first six months of fiscal 2000 compared to the first six months of fiscal
1999. Vehicle sales under the MTVR contract awarded to Oshkosh in December 1998
began in the second quarter of fiscal 2000. The Company expects defense segment
sales to increase substantially in the second half of fiscal 2000 as MTVR sales
ramp up and as Oshkosh's heavy tactical truck sales are more heavily weighted to
the second half of the year.
Analysis of Consolidated Operating Income
The following table presents operating income by business segment:
Second Quarter Fiscal First Six Months Fiscal
--------------------- -----------------------
2000 1999 2000 1999
---- ---- ---- ----
(In thousands)
Operating income (loss):
Commercial $ 17,809 $ 13,624 $ 26,863 $ 18,418
Fire and emergency 9,478 6,878 13,393 11,697
Defense 2,163 4,605 9,658 10,769
Corporate and other (4,795) (8,231) (8,632) (11,180)
-------- -------- -------- ---------
Consolidated operating
income $ 24,655 $ 16,876 $ 41,282 $ 29,704
======== ======== ======== =========
22
<PAGE>
Second Quarter Fiscal 2000 Compared to 1999
Consolidated operating income increased $7.8 million, or 46.1%, for the second
quarter of fiscal 2000 compared to the second quarter of fiscal 1999.
Commercial segment operating income increased $4.2 million, or 30.7%, for the
second quarter of fiscal 2000 compared to the second quarter of fiscal 1999.
Operating income as a percent of segment sales ("operating income margin")
increased to 9.8% of commercial segment sales for the second quarter of fiscal
2000 compared to 8.1% of commercial segment sales for the second quarter of
fiscal 1999. Increased concrete mixer unit volume and continued cost reduction
activities contributed to the improvement in the operating income margin.
Fire and emergency segment operating income increased $2.6 million, or 37.8%,
for the second quarter of fiscal 2000 compared to the second quarter of fiscal
1999. The operating income margin increased from 8.0% to 9.2% during this same
time period. Increased operating income margins were primarily attributable to
increased sales volume and improved production efficiencies as operations
stabilized under Pierce's new ERP system. The Company believes that any
lingering effects from the system conversion have been substantially resolved.
Defense segment operating income decreased $2.4 million, or 53.0%, for the
second quarter of fiscal 2000 compared to the second quarter of fiscal 1999. The
defense operating income margin decreased to 4.7% of defense segment sales for
the second quarter of fiscal 2000 compared to 10.4% of defense segment sales for
the second quarter of fiscal 1999. Second quarter 2000 operating income was
adversely impacted by an unfavorable truck sales mix and higher bid and proposal
spending compared to the second quarter of fiscal 1999.
Corporate and other expenses decreased $3.4 million to $4.8 million, or 1.5% of
consolidated net sales, for the second quarter of fiscal 2000 from $8.2 million,
or 2.8% of consolidated net sales, for the second quarter of fiscal 1999.
Results for the second quarter of fiscal 1999 included a $3.8 million charge for
litigation. Excluding that charge, corporate expenses increased $0.4 million
generally due to increased staffing to support the Company's higher level of
sales.
First Six Months of Fiscal 2000 Compared to 1999
Consolidated operating income increased $11.6 million, or 39.0%, for the first
six months of fiscal 2000 compared to the first six months of fiscal 1999.
Commercial segment operating income increased $8.4 million, or 45.9%, for the
first six months of fiscal 2000 compared to the first six months of fiscal 1999.
The commercial operating income margin increased to 9.0% of commercial segment
sales for the first six months of fiscal 2000 compared to 6.9% of commercial
segment sales for the first six months of fiscal 1999. Increased concrete mixer
unit volume and continued cost reduction activities contributed to the
improvement in the operating income margin.
23
<PAGE>
Fire and emergency segment operating income increased $1.7 million, or 14.5%,
for the first six months of fiscal 2000 compared to the first six months of
fiscal 1999. The operating income margin increased from 7.3% to 7.5% during this
same time period. Increased operating income margins were attributable to the
resolution of the first quarter production inefficiencies following the
installation at Pierce of the final modules of a new ERP system.
Defense segment operating income decreased $1.1 million, or 10.3%, for the first
six months of fiscal 2000 compared to the first six months of fiscal 1999. The
defense operating income margin decreased to 9.8% of defense segment sales for
the first six months of fiscal 2000 compared to 11.2% of defense segment sales
for the first six months of fiscal 1999. Increases in parts and MTVR sales with
lower margins and higher bid and proposal spending contributed to the decreased
operating income margins for the first six months of fiscal 2000 compared to the
first six months of fiscal 1999.
Corporate and other expenses decreased $2.5 million to $8.6 million, or 1.5% of
consolidated net sales, for the first six months of fiscal 2000 from $11.2
million, or 2.1% of consolidated net sales, for the first six months of fiscal
1999. Results for the first six months of fiscal 1999 included a $3.8 million
pre-tax charge for litigation. Excluding that charge, corporate expenses
increased $1.3 million generally due to increased staffing to support the higher
level of sales.
Analysis of Non-Operating Income Statement Items
Second Quarter of Fiscal 2000 Compared to 1999
Net interest expense decreased $1.2 million, or 18.4%, in the second quarter of
fiscal 2000 compared to the second quarter of fiscal 1999. Prepayment of $93.5
million of term debt from proceeds of the Company's November 24, 1999 public
offering of Common Stock resulted in a $1.9 million reduction in interest
expense for the quarter. Increased borrowings to fund the acquisition of
Kewaunee Engineering Corporation ("Kewaunee") and to support the seasonal
working capital requirements of the commercial segment contributed to the
increase in interest expense after consideration of the debt prepayment.
The effective tax rate for combined federal and state income taxes for the
second quarter of fiscal 2000 was 40.6% compared to 42.2% in the second quarter
of fiscal 1999. Excluding the impact of $1.4 million of nondeductible goodwill
in the second quarter of fiscal 2000 and $1.5 million in the second quarter of
fiscal 1999, the Company's effective income tax rate was 38% in both periods.
Equity in earnings of an unconsolidated partnership of $0.3 million in the
second quarter of fiscal 2000 and $0.4 million in the second quarter of fiscal
1999 represents the Company's equity interest in its lease financing
partnership.
In January 2000, the Company entered into a technology transfer agreement and
collected certain previously written-off receivables from a foreign affiliate,
which was part of a business that the Company exited in 1995.
24
<PAGE>
Gross proceeds of $3.2 million, less taxes of $1.2 million, or net proceeds of
$2.0 million, have been recorded as a gain from discontinued operations in the
second quarter of fiscal 2000
First Six Months of Fiscal 2000 Compared to 1999
Net interest expense decreased $2.0 million, or 15.3%, in the first six months
of fiscal 2000 compared to the first six months of fiscal 1999. Prepayment of
$93.5 million of term debt from proceeds of the Company's November 24, 1999
public offering of Common Stock resulted in a $2.9 million reduction in interest
expense for the period. Increased working capital borrowings to fund the
Kewaunee acquisition and to support overall sales growth contributed to the
increase in net interest expense after consideration of the debt prepayment.
The effective tax rate for combined federal and state income taxes for the first
six months of fiscal 2000 was 41.4% compared to 43.5% for the first six months
of fiscal 1999. Excluding the impact of $2.7 million of nondeductible goodwill
in the first six months of fiscal 2000 and $2.8 million in the first six months
of fiscal 1999, the Company's effective income tax rate was 38% for both
periods.
Equity in earnings of an unconsolidated partnership of $0.6 million in the first
six months of fiscal 2000 and $0.7 million in the first six months of fiscal
1999 represents the Company's equity in earnings of its lease financing
partnership.
Financial Condition
First Six Months of Fiscal 2000
During the first six months of fiscal 2000, cash decreased by $0.5 million to
$4.7 million at March 31, 2000. Cash used in operating activities of $16.3
million, capital expenditures of $8.7 million, an increase in long-term assets
of $2.3 million, dividend payments of $2.5 million and the acquisition of
Kewaunee for $5.6 million were funded by net borrowings of $33.2 million. In
November 1999, the Company completed a public offering of 3,795,000 shares of
Common Stock at $26.00 per share, before commissions and expenses. Proceeds to
the Company, net of underwriting discounts and commissions, were used to prepay
$93.5 million of term debt under the Company's senior credit facility. During
the period, inventory increased $50.9 million, including $36.6 million in the
commercial segment as a result of seasonal build requirements. Fire and
emergency inventories increased $17.1 million during the period, generally as a
result of earlier commercial chassis and systems-related production
inefficiencies at Pierce. Defense segment inventories were down slightly due to
timing of inventory purchases. Increases in inventory were partially offset by
increased trade payables of $15.6 million and a $11.2 million increase in floor
plan notes payable related to commercial segment chassis purchases.
First Six Months of Fiscal 1999
During the first six months of fiscal 1999, cash increased by $0.8 million. Cash
used in operations during the period of $3.8 million, equipment and
25
<PAGE>
software purchases of $7.2 million and dividend and scheduled debt payments of
$2.1 million and $0.2 million, respectively, were funded by a $13.3 million
increase in borrowings under the Company's revolving credit facility and $0.8
million of proceeds from exercise of Common Stock options under the Company's
Incentive Stock Plan.
Liquidity and Capital Resources
The Company had $52.6 million of unused availability under the terms of its
revolving credit facility as of March 31, 2000. The Company's primary cash
requirements include working capital, interest and principal payments on
indebtedness, capital expenditures, dividends, and, potentially, future
acquisitions. The primary sources of cash are expected to be cash flow from
operations and borrowings under the Company's senior credit facility.
As indicated above, in November 1999, the Company completed the sale of
3,795,000 shares of Common Stock. Proceeds to the Company, net of underwriting
discounts and commissions, were used to prepay $93.5 million of term
indebtedness under the Company's senior credit facility. In addition, the
Company purchased the manufacturing assets of Kewaunee. The Kewaunee acquisition
was financed through borrowings under the Company's revolving credit facility.
The senior credit facility requires prepayment of indebtedness to the extent of
"excess cash flows" as defined in the senior credit agreement. Based upon
current and anticipated future operations, management believes that capital
resources will be adequate to meet future working capital, debt service and
other capital requirements for fiscal 2000, including the working capital
requirements associated with the start-up of production under the MTVR contract
and the acquisition of Kewaunee.
The Company's cash flow from operations has fluctuated, and will likely continue
to fluctuate, significantly from quarter to quarter due to changes in working
capital arising principally from seasonal fluctuations in sales.
Capital expenditures are expected to approximate $20 million in fiscal 2000 and
$15 million in fiscal 2001. Fiscal 2000 capital expenditures include
approximately $4 million of an $8 million expansion of the Company's production
facilities in Oshkosh. The remaining $4 million of the expansion will occur
early in fiscal 2001.
New Accounting Standards
The Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which was amended by SFAS No. 137. Provisions of these
standards are required to be adopted in years beginning after June 15, 2000.
Because of the Company's minimal use of derivatives, management does not
anticipate that the adoption of the new statement will have a significant effect
on the Company's financial condition, profitability or cash flows.
26
<PAGE>
Customers and Backlog
Sales to the U. S. Department of Defense comprised approximately 17% of the
Company's net sales in the first six months of fiscal 2000. No other single
customer accounted for more than 10% of the Company's net sales for this period.
A substantial majority of the Company's net sales are derived from customer
orders prior to commencing production.
The Company's backlog at March 31, 2000 increased 29.3% to $739.9 million
compared to $572.2 million at March 31, 1999. The commercial segment backlog
decreased by $19.4 million, or 10.3%, to $168.3 million at March 31, 2000
compared to March 31, 1999. The fire and emergency segment backlog increased
$29.7 million, or 14.9%, to $228.8 million at March 31, 2000 compared to March
31, 1999. The defense segment backlog increased by $157.4 million, or 84.9%, to
$342.8 million at March 31, 2000 compared to March 31, 1999, reflecting the
funding of the second year of the MTVR contract. Approximately 30% of the
aggregate March 31, 2000 backlog is not expected to be filled in fiscal 2000.
Reported backlog excludes purchase options and announced orders for which
definitive contracts have not been executed. Additionally, backlog excludes
unfunded portions of the U. S. Department of Defense long-term family and MTVR
contracts. Backlog information and comparisons thereof as of different dates may
not be accurate indicators of future sales or the ratio of the Company's future
sales to the U. S. Department of Defense versus its sales to other customers.
Item 3. Quantitative and Qualitative Disclosure of Market Risk
The Company's quantitative and qualitative disclosures about market risk for
changes in interest rates and foreign exchange risk are incorporated by
reference in Item 7A of the Company's Annual Report on Form 10-K for the year
ended September 30, 1999 and have not materially changed since that report was
filed.
27
<PAGE>
OSHKOSH TRUCK CORPORATION
PART II. OTHER INFORMATION
FORM 10-Q
MARCH 31, 2000
ITEM 1 LEGAL PROCEEDINGS
McNeilus was a defendant in litigation, which was commenced in 1998 prior to the
acquisition of McNeilus by the Company, in the U.S. District court for the
Northern District of Alabama. The litigation, which was brought by The Heil Co.
("Heil"), a McNeilus competitor, sought damages and claims that McNeilus
infringed certain aspects of one of its patents. A settlement of the matter was
reached on January 12, 2000. The settlement included a payment to Heil, the
amount of which was fully reserved for at December 31, 1999.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
At the annual meeting of shareholders held on January 31, 2000, 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 Common Stock Nominees
- -----------------------------
J.W. Andersen 228,138 0 197,844
R.G. Bohn 228,138 0 197,844
F.M. Franks 228,138 0 197,844
M.W. Grebe 228,138 0 197,844
K.J. Hempel 228,138 0 197,844
S.P. Mosling 228,134 4 197,844
J.P. Mosling, Jr. 228,134 4 197,844
Common Stock Nominees
- -----------------------------
D.T. Carroll 12,914,263 50,024 3,236,886
R.G. Sim 12,912,660 51,627 3,236,886
Also at the annual meeting, shareholders approved a proposal to amend the
Company's Restated Articles of Incorporation to increase the number of shares of
Common Stock that the Company is authorized to issue from 18,000,000 to
60,000,000. The following table sets forth certain information with respect to
such vote.
Shares Abstentions
Shares Voted and Broker
Voted For Against Non-Votes
--------- ------- -----------
Class A Common Stock 225,844 0 200,138
Common Stock 8,865,413 4,055,126 3,280,634
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are filed herewith:
3.1 Form of Amendment to Restated Articles of Incorporation
of Oshkosh Truck Corporation.
3.2 Restated Articles of Incorporation of Oshkosh Truck
Corporation, as amended.
10.1 Oshkosh Truck Corporation Executive Retirement Plan
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
28
<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
April 26, 2000 /S/ R. G. Bohn
--------------------------------------------
R. G. Bohn
Chairman, President and
Chief Executive Officer
(Principal Executive Officer)
April 26, 2000 /S/ C. L. Szews
--------------------------------------------
C. L. Szews
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
April 26, 2000 /S/ T. J. Polnaszek
--------------------------------------------
T. J. Polnaszek
Vice President and Controller
(Principal Accounting Officer)
29
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Form of Amendment to Restated Articles of Incorporation of
Oshkosh Truck Corporation.
3.2 Restated Articles of Incorporation of Oshkosh Truck Corporation,
as amended.
10.1 Oshkosh Truck Corporation Executive Retirement Plan
27 Financial Data Schedule
30
ARTICLES OF AMENDMENT
TO
RESTATED ARTICLES OF INCORPORATION
OF
OSHKOSH TRUCK CORPORATION
1. Paragraph A of Article Third of the Corporation's Restated Articles of
Incorporation is amended to read in its entirety as follows:
A. STOCK
The total number of shares of stock which the corporation shall have
the authority to issue is sixty-three million (63,000,000) shares itemized
by classes as follows:
1. Sixty-one million (61,000,000) shares of common stock, one
cent ($.01) par value, divided into the following classes: (a) one
million (1,000,000) shares of Class A Common Stock (the "Class A
Common Stock"); and (b) sixty million (60,000,000) shares of Common
Stock (the "Common Stock").
2. Two million (2,000,000) shares of preferred stock, one cent
($.01) par value (the "Preferred Stock").
2. Paragraph AA of Article Third of the Corporation's Restated Articles of
Incorporation is amended to read in its entirety as follows:
AA. STOCK
The total number of shares of stock which the corporation shall have
the authority to issue is sixty-three million (63,000,000) shares itemized
by classes as follows:
1. Sixty-one million (61,000,000) shares of common stock, one
cent ($.01) par value, divided into the following classes: (a) one
million (1,000,000) shares of Class A Common Stock (the "Class A
Common Stock"); and (b) sixty million (60,000,000) shares of Common
Stock (the "Common Stock") (the Class A Common Stock and the Common
Stock are hereinafter collectively referred to as the "Common
Shares").
2. Two million (2,000,000) shares of preferred stock, one cent
($.01) par value (the "Preferred Stock").
RESTATED
ARTICLES OF INCORPORATION
OF
OSHKOSH TRUCK CORPORATION
Pursuant to Section 180.1007 of the Wisconsin Business Corporation
Law, these Restated Articles of Incorporation shall supersede and take the place
of the Corporation's heretofore existing Restated Articles of Incorporation and
all amendments thereto.
First: The name of the corporation is OSHKOSH TRUCK CORPORATION.
Second: The purpose for which the corporation is organized is to
engage in any lawful activity within the purposes of which corporations may be
organized under Chapter 180 of the Wisconsin Statutes.
Third: As of December 18, 1996, the authorized, issued and
outstanding common stock, one cent ($.01) par value, of the corporation consists
of Class A Common Stock ("Class A Common Stock") and Class B Common Stock
("Class B Common Stock"). Upon the effectiveness of these Restated Articles of
Incorporation, each issued and outstanding share of Class B Common Stock shall
immediately and automatically be redesignated without further act on anyone's
part as a share of "Common Stock" ("Common Stock"), and stock certificates
representing outstanding shares of Class B Common Stock shall thereupon and
thereafter be deemed to represent a like number of shares of Common Stock.
Until such time as no shares of Class A Common Stock are issued and
outstanding, Sections AA through DD of this Third Article shall govern and be
applicable. From and after such time as no shares of Class A Common Stock are
issued and outstanding, Sections A through D of this Third Article shall govern
and be applicable.
At such time as Sections AA through DD of this Third Article shall no
longer govern and apply, the appropriate officers of the corporation shall
promptly (i) cause to be prepared and duly filed with the Wisconsin Department
of Financial Institutions such documents as are necessary to restate these
Amended and Restated Articles to eliminate Sections AA through DD of this Third
Article and any other words, sentences, clauses or paragraphs contained in this
Third Article providing for or relating to Class A Common Stock and/or the
conversion of shares of Class A Common Stock into shares of Common Stock and
(ii) cause to be prepared and sent to registered holders of Common Stock a
notice to the effect that such action has been taken.
A. STOCK
The total number of shares of stock which the corporation shall have
the authority to issue is sixty-three million (63,000,000) shares itemized by
classes as follows:
<PAGE>
1. Sixty-one million (61,000,000) shares of common stock, one
cent ($.01) par value, divided into the following classes: (a) one million
(1,000,000) shares of Class A Common Stock (the "Class A Common Stock"); and (b)
sixty million (60,000,000) shares of Common Stock (the "Common Stock").
2. Two million (2,000,000) shares of preferred stock, one cent
($.01) par value (the "Preferred Stock").
B. THE COMMON STOCK AND THE CLASS A COMMON STOCK
1. The holders of Common Stock shall be entitled to receive
dividends when and if declared by the Board of Directors out of any funds
legally available for the payment of such dividends; provided, however, that if
a share of Class A Common Stock shall be converted into Common Stock pursuant to
Paragraph 10.f of Section BB of this Third Article subsequent to the record date
for payment of a dividend or other distribution on shares of Class A Common
stock but prior to such payment, then the registered holder of such share at the
close of business on such record date shall be entitled to receive the dividend
or other distribution payable in the amount declared per share of Class A Common
Stock on the date set for payment of such dividend or other distribution
notwithstanding the conversion thereof or the corporation's default in payment
of the dividend or distribution due on such date.
2. Each share of Common Stock shall be entitled to one vote on
each matter submitted to a vote of holders of Common Stock; provided, however,
that if shares of Class A Common Stock shall be converted into Common Stock
pursuant to Paragraph 10.f of Section BB of this Third Article subsequent to the
record date for the determination of shareholders entitled to vote at a meeting
of shareholders or upon a matter otherwise presented for a shareholder vote, but
prior to such meeting or vote, then the registered holder of each share of Class
A Common Stock and Common Stock at the close of business on such record date
shall be entitled to one vote for each such share at such meeting or for such
vote on each matter presented for a vote by the holders of Class A Common Stock
and/or Common Stock.
3. In case of any voluntary or involuntary liquidation,
dissolution or winding up of the corporation, the holders of Common Stock shall
be entitled to receive on a pro rata basis the proceeds of any remaining assets
of the corporation.
4. No holders of shares of Common Stock shall have a preemptive
right to acquire unissued shares of stock of the corporation or securities
convertible into such shares or carrying a right to subscribe to or acquire such
shares.
5. The rights of the Common Stock under this Section B of this
Third Article of these Restated Articles of Incorporation are subject to the
provisions of Section C below concerning the Preferred Stock.
6. From and after such time as no shares of Class A Common Stock
are issued and outstanding, the corporation shall not issue any shares of Class
A Common Stock.
-2-
<PAGE>
C. THE PREFERRED STOCK
The Preferred Stock may be issued in series, and authority is vested
in the Board of Directors, from time to time, to establish and designate series
and to fix the variations in the powers, preferences, rights, qualifications,
limitations or restrictions of any series of the Preferred Stock, but only with
respect to:
1. the dividend rate or rates and the preferences, if any, over
any other class or series (or of any other class or series over such class or
series) with respect to dividends, the terms and conditions upon which and the
periods in respect of which dividends shall be payable, whether and upon what
conditions such dividends shall be cumulative and, if cumulative, the date or
dates from which dividends shall accumulate;
2. the price and terms and conditions on which shares may be
redeemed;
3. the amount payable upon shares in the event of voluntary or
involuntary liquidation;
4. sinking fund provisions for the redemption or purchase of
shares;
5. the terms and conditions on which shares may be converted into
shares of any other class or series of the same or any other class of stock of
the Corporation, if the shares of any series are issued with the privilege of
conversion; and
6. voting rights, if any.
Except as to the matters expressly set forth above, all series of the
Preferred Sock shall have the same preference, limitations and relative rights
and shall rank equally, share ratably and be identical in all respects as to all
matters. All shares of any one series of the Preferred Stock shall be alike in
every particular.
D. GENERAL
1. Where approval by holders of shares of one or more classes of
the Common Stock and/or the Preferred Stock is required under the laws of the
State of Wisconsin to effect an amendment to these Restated Articles of
Incorporation, a merger or consolidation, a sale of the corporation's assets,
dissolution or otherwise, the affirmative vote of the holders of a majority of
the outstanding shares of each class entitled to vote on such matter, in class
votes where appropriate, shall be sufficient to approve the action.
AA. STOCK
The total number of shares of stock which the corporation shall have
the authority to issue is sixty-three million (63,000,000) shares itemized by
classes as follows:
1. Sixty-one million (61,000,000) shares of common stock, one
cent ($.01) par value, divided into the following classes: (a) one million
(1,000,000) shares of Class A
-3-
<PAGE>
Common Stock (the "Class A Common Stock"); and (b) sixty million (60,000,000)
shares of Common Stock (the "Common Stock") (the Class A Common Stock and the
Common Stock are hereinafter collectively referred to as the "Common Shares").
2. Two million (2,000,000) shares of preferred stock, one cent
($.01) par value (the "Preferred Stock").
BB. THE COMMON SHARES
1. Whenever any Dividend shall be paid by the corporation on the
Common Shares, such Dividend shall be paid so that the Dividend per share for
the Common Stock shall equal one hundred fifteen percent (115%) of the Dividend
per share for the Class A Common Stock. As used herein, the term "Dividend"
shall mean any dividend paid by the corporation in cash or other assets except
as a dividend payable solely in shares of any class of the capital stock of this
corporation. In calculating the amount of any Dividend payable on the Common
Stock, such Dividend shall be rounded to the closest one quarter of one cent
($.0025).
2. The holders of Common Stock shall not be entitled to any vote
on any matters except: (a) as may be required by law; and (b) that the Common
Stock shall have one vote for each share for the election and removal of the
Common Directors voting as a separate class. The "Common Directors" shall be
that number of Directors which constitutes twenty five percent (25%) of the
authorized number of members of the Board of Directors, including, for all
purposes, the Common Directors and any Directors which are entitled to be
elected by the holders of any Preferred Stock. If twenty five percent (25%) of
the authorized number of Directors is not a whole number, then the number of
Common Directors shall be rounded to the closest whole number of Directors, but
not less than one (1). In determining the closest whole number, any number which
includes a fraction equal to .5 shall be deemed to be the next highest whole
number.
3. The holders of Class A Common Stock shall be entitled to one
vote for each share of Class A Common Stock on all matters except the election
of Common Directors.
4. In case of voluntary or involuntary liquidation, dissolution
or winding up of the corporation, the holders of Common Stock shall be entitled
to receive out of the assets of the corporation in money or money's worth the
sum of Seven and 50/100 Dollars ($7.50) per share (the "First Common Payment"),
subject to adjustment in the event of any subdivisions, combinations, stock
splits or stock dividends involving shares of the Common Stock, before any of
such assets shall be paid or distributed to holders of Class A Common Stock, and
if the assets of the corporation shall be insufficient to pay the holders of all
of the Common Stock then outstanding the entire First Common Payment, the
holders of each outstanding share of the Common Stock shall share ratably in
such assets in proportion to the amounts which would be payable with respect to
Common Stock if the First Common Payment was paid in full.
5. After payment in full of the First Common Payment, the holders
of Class A Common Stock shall be entitled to receive out of the remaining assets
of the corporation in money or money's worth the sum of Seven and 50/100 Dollars
($7.50) per
-4-
<PAGE>
share (the "Second Common Payment"), subject to adjustment in the event of any
subdivisions, combinations, stock splits or stock dividends involving shares of
the Class A Common Stock, before any of such remaining assets shall be paid or
distributed to holders of the Common Stock, and if the remaining assets of the
corporation shall be insufficient to pay the holders of all of the Class A
Common Stock then outstanding the entire Second Common Payment, the holders of
each outstanding share of the Class A Common Stock shall share ratably in such
assets in proportion to the amounts which would be payable with respect to Class
A Common Stock if the Second Common Payment was paid in full.
6. After payment in full of the First Common Payment and the
Second Common Payment, any further payments on the liquidation, dissolution or
winding up of the business of the corporation shall be on an equal basis as to
all of the Common Shares then outstanding.
7. Except as to the matters expressly set forth above, the Class
A Common Stock and the Common Stock shall be identical in all respects.
8. No holders of Common Shares shall have a preemptive right to
acquire unissued shares of stock of the corporation or securities convertible
into such shares or carrying a right to subscribe to or acquire such shares.
9. The rights of the Common Shares under this Section BB of this
Third Article of these Restated Articles of Incorporation are subject to the
provisions of Section CC below concerning the Preferred Stock.
10. Shares of Class A Common Stock shall be convertible into
shares of Common Stock as provided below:
a. Each shares of Class A Common Stock may at any time or
from time to time, at the option of the respective holder thereof, be
converted into one (1) fully paid and nonassessable share of Common Stock.
Such conversion right shall be exercised by the surrender of the
certificate representing such share of Class A Common Stock to be converted
to the corporation at any time during normal business hours at the
principal executive offices of the corporation (to the attention of the
Secretary of the corporation), or if an agent for the registration or
transfer of shares of Class A Common Stock is then duly appointed and
acting (said agent being referred to in this Article as the "Transfer
Agent"), then at the office of the Transfer Agent, accompanied by a written
notice of the election by the holder thereof to convert, and (if so
required by the corporation or the Transfer Agent) by instruments of
transfer, in each case in form satisfactory to the corporation and to the
Transfer Agent, duly executed by such holder or his duly authorized
attorney, and transfer tax stamps or funds therefor, if required pursuant
to Paragraph 10.e. below.
b. As promptly as practicable after the surrender for
conversion of a certificate representing shares of Class A Common Stock in
the manner provided in Paragraph 10.a. above, and the payment to the
corporation in cash of any amount
-5-
<PAGE>
required by the provisions of Paragraph 10.e., the corporation will deliver
or cause to be delivered at the office of the Transfer Agent to, or, if no
Transfer Agent has been appointed, upon the written order of, the holder of
such certificate a certificate or certificates representing the number of
full shares of Common Stock issuable upon such conversion, issued in such
name or names as such holder may direct. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of
the surrender of the certificate representing shares of Class A Common
Stock, and all rights of the holder of such shares as such holder shall
cease at such time, and the person or persons in whose name or names the
certificate or certificates representing the shares of Common Stock are to
be issued shall be treated for all purposes as having become the record
holder or holders of such shares of Common Stock at such time; provided,
however, that any such surrender and payment on any date when the stock
transfer records of the corporation shall be closed shall constitute the
person or persons in whose name or names the certificate or certificates
representing shares of Common Stock are to be issued as the record holder
or holders thereof for all purposes immediately prior to the close of
business on the next succeeding day on which such stock transfer records
are open.
c. No adjustments in respect of dividends shall be made upon
the conversion of any share of Class A Common Stock; provided, however,
that if a share shall be converted subsequent to the record date for the
payment of a dividend or other distribution on shares of Class A Common
Stock but prior to such payment, the registered holder of such share at the
close of business on such record date shall be entitled to receive the
dividend or other distribution payable in the amount declared per share of
Class A Common Stock on the date set for payment of such dividend or other
distribution notwithstanding the conversion thereof or the corporation's
default in payment of the dividend or distribution due on such date.
d. The corporation will at all times reserve and keep
available, solely for the purpose of issuance upon conversion of the
outstanding shares of Class A Common Stock, such number of shares of Common
Stock as shall be issuable upon the conversion of all such outstanding
shares; provided, that nothing contained herein shall be construed to
preclude the corporation from satisfying its obligations in respect of the
conversion of the outstanding shares of Class A Common Stock by delivery of
purchased shares of Common Stock which are held in the treasury of the
corporation.
e. The issuance of certificates for shares of Common Stock
upon conversion of shares of Class A Common Stock shall be made without
charge for any stamp or other similar tax in respect of such issuance.
However, if any such certificate is to be issued in a name other than that
of the holder of the share or shares of Class A Common Stock to be
converted, the person or persons requesting the issuance thereof shall pay
to the corporation the amount of any tax that may be payable in respect of
any transfer involved in such issuance or shall establish to the
satisfaction of the corporation that such tax has been paid.
-6-
<PAGE>
f. If at any time the number of outstanding shares of Class A
Common Stock that the Moslings (as defined below) beneficially own (as
defined below) is less than 150,000 shares, then the outstanding shares of
Class A Common Stock shall be deemed without further act on anyone's part
to be immediately and automatically converted into shares of Common Stock,
and stock certificates formerly representing outstanding shares of Class A
Common Stock shall thereupon and thereafter be deemed to represent a like
number of shares of Common Stock. For purposes hereof, "Moslings" shall
mean (a) Mr. J. Peter Mosling, Jr., (b) Stephen P. Mosling or (c) any
trustee, guardian or custodian for, or any executor, administrator or other
legal representative of the estate of, J. Peter Mosling, Jr. and/or Stephen
P. Mosling. For purposes hereof, a person shall be deemed to "beneficially
own" shares of Class A Common Stock if such person, directly or indirectly,
has or shares voting power that includes the power to vote, or to direct
the voting of, such shares.
11. From and after the effectiveness of these Restated Articles of
Incorporation, the Board of Directors of the corporation may only issue shares
of Class A Common Stock in the form of a dividend or other distribution payable
solely in shares of Class A Common Stock on or split-up of the shares of Class A
Common Stock and only to the then holders of the outstanding shares of Class A
Common Stock in conjunction with and in the same ratio as a stock dividend or
distribution on or split-up of the shares of Common Stock. Except as provided in
this Paragraph 11, the corporation shall not issue additional shares of Class A
Common Stock after the effectiveness of these Restated Articles of
Incorporation, and all shares of Class A Common Stock surrendered for conversion
in accordance with Paragraph 10 shall be retired, unless otherwise approved by a
vote of the holders of the outstanding shares of Class A Common Stock and Common
Stock, each voting as a separate class.
CC. THE PREFERRED STOCK
The Preferred Stock may be issued in series, and authority is vested
in the Board of Directors, from time to time, to establish and designate series
and to fix the variations in the powers, preferences, rights, qualifications,
limitations or restrictions of any series of the Preferred Stock, but only with
respect to:
1. the dividend rate or rates and the preferences, if any, over
any other class or series (or of any other class or series over such class or
series) with respect to dividends, the terms and conditions upon which and the
periods in respect of which dividends shall be payable, whether and upon what
conditions such dividends shall be cumulative and, if cumulative, the date or
dates from which dividends shall accumulate;
2. the price and terms and conditions on which shares may be
redeemed;
3. the amount payable upon shares in the event of voluntary or
involuntary liquidation;
4. sinking fund provisions for the redemption or purchase of
shares;
-7-
<PAGE>
5. the terms and conditions on which shares may be converted into
shares of any other class or series of the same or any other class of stock of
the corporation, if the shares of any series are issued with the privilege of
conversion; and
6. voting rights, if any.
Except as to the matters expressly set forth above, all series of
the Preferred Stock shall have the same preferences, limitations and relative
rights and shall rank equally, share ratably and be identical in all respects as
to all matters. All shares of any one series of the Preferred Stock shall be
alike in every particular.
DD. GENERAL
1. The number of authorized shares of any class of the capital
stock of the corporation may be increased or decreased (but not below the number
of shares of such class then outstanding) by the affirmative vote of the holders
of a majority of the outstanding Class A Common Stock.
2. Where approval by holders of shares of one or more classes of
the Common Shares or the Preferred Stock is required under the laws of the State
of Wisconsin to effect an amendment to these Restated Articles of Incorporation,
a merger or consolidation, a sale of the corporation's assets, dissolution or
otherwise, the affirmative vote of the holders of a majority of the outstanding
shares of each class entitled to vote on such matter, in class votes where
appropriate, shall be sufficient to approve the action.
3. Section 180.1150 of the Wisconsin Business Corporation Law
shall not apply to the corporation.
Fourth: The address of the registered office is:
2307 Oregon Street
Oshkosh, Wisconsin 54901
Fifth: The name of the registered agent at such address is:
Timothy M. Dempsey
Sixth: The number of directors constituting the Board of Directors
shall be such number as is fixed from time to time by the By-Laws.
Seventh: These Restated Articles of Incorporation supersede and take
the place of the heretofore existing Articles of Incorporation and Amendments
thereto.
Eighth: These articles may be amended in the manner authorized by law
at the time of amendment.
-8-
OSHKOSH TRUCK CORPORATION
EXECUTIVE RETIREMENT PLAN
Final
1/12/2000
<PAGE>
OSHKOSH TRUCK CORPORATION
EXECUTIVE RETIREMENT PLAN
PREAMBLE
The principal objective of this Oshkosh Truck Corporation Executive Retirement
Plan is to ensure the payment of a competitive level of retirement income in
order to attract, retain and motivate selected executives.
This Plan is designed to provide a benefit which, when added to other retirement
income of the executive, will meet the objective described above. Eligibility
for participation in this Plan shall be limited to executives selected by the
Chief Executive Officer and approved by the Human Resources Committee or its
successor in function of the Board of Directors. This Plan became effective on
January 31, 2000, after approval by the Board of Directors.
Final - January 12, 2000 2
<PAGE>
OSHKOSH TRUCK CORPORATION
EXECUTIVE RETIREMENT PLAN
ARTICLE I
DEFINITIONS
Whenever used herein with the initial letter capitalized, words and phrases
shall have the meanings stated below unless a different meaning is plainly
required by the context. All masculine terms shall include the feminine and all
singular terms shall include the plural in all cases in which they could thus be
applied unless the context clearly indicates the gender or the number.
1.1 "Accrued Normal Retirement Benefit" means the amount of a Participant's
Retirement Benefit, determined as of his date of termination of
employment, commencing as of the first day of the month following the
month in which the Participant attains his Normal Retirement Date, and
payable in the form of a single life annuity (or the Actuarial Equivalent
of such amount when commencing at any other day or payable in another
form). The amount of the Accrued Normal Retirement Benefit is defined in
section 3.1.
1.2 "Actuarial Equivalent" means a benefit payable at a particular time and in
a particular form which has the same value as another benefit payable in
another form or at another time. Such Actuarial Equivalent shall be
determined on the basis of a 7-1/2 percent interest rate and the 1971
Group Annuity Table, with male annuity factors weighted 70 percent and
female annuity factors weighted 30 percent. With respect to lump sum
distributions pursuant to section 6.4, the mortality and interest rate
assumptions shall be as prescribed in such section.
1.3 "Affiliate" means: (1) a corporation which is a member of the same
controlled group of corporations (within the meaning of Internal Revenue
Code section 414(b) as the Employer; (2) an unincorporated trade or
business which is under common control with the Employer (as determined
under Code section 414(c); (3) an organization which, together with the
Employer, is a member of the same affiliated service group (as determined
under Code section 414(m); and (4) any other entity required to be
aggregated under Code section 414(o).
1.4 "Beneficiary" means--
(a) the Spouse if the Preretirement Spouse's Death Benefit, the Joint and
50 Percent Spouse's Annuity, or the Joint and 100 Percent Spouse's
Annuity is payable;
(b) the person or persons (who may be named contingently or
successively), including a trust or an estate, designated by a
Participant, to whom a death benefit is to be paid in the event of
his death.
Each designation will revoke all prior designations by the same
Participant. A designation shall be made on a form prescribed by the
Employer, and will be effective only when filed in writing with the
Employer. If no Beneficiary is designated or a designation is revoked
in whole or in part, or if a designated Beneficiary does not survive,
the lump sum Actuarial Equivalent of the death benefit (if any) shall
be payable to the estate of the last to survive the Participant or the
Beneficiary.
Final - January 12, 2000 3
<PAGE>
1.5 "Board" means the Board of Directors of the Company.
1.6 "Change in Control" means a change in management or a change in ownership
of the corporation as defined in the Participant's Key Executive
Employment and Severance Agreement ("KEESA") in effect on the date that
such a change in control occurs or, in the absence of such an agreement,
as defined in Exhibit B, attached to this Plan and incorporated here by
reference.
1.7 "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.
1.8 "Committee" means the Human Resources Committee of the Board or its
successor in substantial functions.
1.9 "Company" means Oshkosh Truck Corporation.
1.10 "Company Matching Contribution Benefit" means Oshkosh Truck Corporation's
matching contribution to (1) a Participant's Oshkosh Truck Corporation Tax
Deferred Investment Plan Account, or a Participant Account in a Tax
Deferred Savings Plan sponsored by an Affiliate, as defined in the
governing documents for such Plans, as amended from time to time, and
(2)any related investment earnings. To the extent that a Participant has
withdrawn Company Matching Contributions, such contributions along with
imputed income thereon, shall be added to the Participant's accumulated
Company Matching Contribution Benefit. For purposes of this section 1.10,
a Participant's accumulated Company Matching Contribution Benefit will be
converted into an annual benefit amount payable as a single life annuity
commencing as of the Participant's Retirement Date using the interest and
mortality assumptions set forth in section 1.2.
1.11 "Compensation" means a Participant's base pay, including base pay amounts
deferred pursuant to a compensation reduction agreement under Code section
125 or Code section 401(k). The annual compensation limit set forth in
Code section 401(a)(17) shall not apply.
1.12 "Compensation Year" means each 12-month period used to determine
compensation for purposes of this Plan which coincides with the calendar
year which ends on or prior to the date as of which the Participant's
Accrued Normal Retirement Benefit is determined.
1.13 "Completed Compensation Year" means any Compensation Year in which an
employee is employed through the entire 12-month period.
1.14 "Early Retirement Date" means the first day of the month following the
date on which a Participant retires prior to the Participant's Normal
Retirement Date; provided that the Participant shall have attained age 55,
shall have completed at least five Years of Officer Service, and shall
have provided the Company with written notice of the Participant's
election to take early retirement.
1.15 "Employee" means any person in the employ of the Company or an Affiliate,
except for a person compensated solely on a retainer or fee basis.
1.16 "Employer" means the Company and any Affiliates, which employ or employed
any Participant.
1.17 "Final Average Compensation" means the sum of the three highest
consecutive Completed Compensation Years' Compensation paid to the
Participant prior to the Participant's separation
Final - January 12, 2000 4
<PAGE>
from service, divided by three. If a Participant has less than three
Completed Compensation Years, Final Average Compensation will be based on
all Completed Compensation Years divided by the number of such years.
1.18 "Funded Plan" means the Oshkosh Truck Corporation Salaried and Clerical
Employees Retirement Plan or any qualified defined benefit plan sponsored
by an Affiliate.
1.19 "Funded Plan Benefit" means the annual benefit payable under (1) the
Oshkosh Truck Corporation Salaried and Clerical Employees Retirement Plan,
and (2) any qualified defined benefit pension plan sponsored by an
Affiliate, as provided by the governing documents for such Plans, as
amended from time to time. For purposes of this section 1.19, a
Participant's annual benefit will be calculated as a single life annuity
commencing as of the Participant's Retirement Date.
1.20 "Late Retirement Date" means the first day of the month following a
Participant's termination date where the Participant continues to serve as
an Officer of the Company after his Normal Retirement Date.
1.21 "Normal Retirement Date" means the first day of the month following a
Participant's 62nd birthday (without regard to the Participant's Years of
Service at that time).
1.22 "Officer" means any individual who is elected by the Board of Directors to
an officer of the company as a Vice President, Executive Vice President,
President, Chief Executive Officer, or Chairman.
1.23 "Officer Service" means an individual's Years of Service as an Officer of
Oshkosh Truck Corporation including service before this Plan's effective
date as set forth on Exhibit A, but excluding Years of Service with the
Company or an Affiliate in any other capacity.
1.24 "Participant" means any person who has become eligible to participate in
the Plan in accordance with Article II, and who has not ceased to have
rights to a Retirement Benefit hereunder.
1.25 "Plan" means the Oshkosh Truck Corporation Executive Retirement Plan, as
set forth herein, and as it may be amended from time to time.
1.26 "Plan Effective Date" means January 31, 2000.
1.27 "Plan Year" means the 12 consecutive month period for maintaining records
for this Plan and will be the consecutive 12-month period beginning each
March 1 and ending on the last day of February, except the first Plan Year
shall run from the Plan Effective Date until the last day February.
1.28 "Retirement Benefit" means a pension or any other payment or payments
payable under the terms of this Plan to a Participant, the Participant's
Spouse, or Beneficiary.
1.29 "Retirement Date" means the date on which a Participant's Retirement
Benefit commences.
1.30 "Social Security Benefit" means, for the purpose of determining the
Accrued Normal Retirement Benefit as of a Participant's Normal Retirement
Date or Early Retirement Date, the estimated monthly old-age benefit to
which the Participant would be entitled beginning immediately upon his
achieving his Normal Retirement Date under the provisions of the Social
Final - January 12, 2000 5
<PAGE>
Security Act in effect on the date of his termination and assuming that he
will continue to receive until he attains his Normal Retirement Date
compensation that would be treated as wages for purposes of the Social
Security Act at the same rate as was in effect for him immediately prior
to his termination. For purposes of determining the Accrued Normal
Retirement Benefit as of a Participant's Late Retirement Date, "Social
Security Benefit" means the estimated monthly old-age benefit to which the
Participant would be entitled based on his age as of the date of his
termination.
In estimating wages for purposes of determining the Social Security
Benefit, it shall be assumed that the Participant's compensation prior to
date of termination has increased annually at the same rates as the
Average Total Wages for Adjusting Earnings to use in Computing Social
Security Benefits as published by the Social Security Administration. For
the calendar year subsequent to the last year published by the Social
Security Administration, the same rate of increase as applicable to the
last published year shall be used.
The Social Security Benefit shall be determined in accordance with rules
adopted by the Employer and applied in a nondiscriminatory manner. Each
Participant will be provided with clear written notice of his right to
supply to the Employer his actual wage history and of the financial
consequences of failing to supply such history.
1.31 "Spouse" means an individual who is legally married to a Participant as of
the earlier of the date of the Participant's death or the Participant's
Retirement Date.
1.32 "Years of Credited Service" means the Years of Service an Employee
completed while employed by the Company or an Affiliate to a maximum of 20
Years.
1.33 "Years of Service" means the aggregate of all periods of employment by an
Employee of the Employer, each such period to be calculated in completed
years and months.
1.34 "Years of Officer Service" means the aggregate of all periods of
employment as an Officer of Oshkosh Truck Corporation, but excluding
periods of employment with Oshkosh Truck Corporation or any Affiliate in
any other capacity.
Final - January 12, 2000 6
<PAGE>
ARTICLE II
PARTICIPATION
2.1 Participating Employees. Each executive selected by the Chief Executive
Officer ("CEO") and approved by the Committee to participate in the Plan
shall become a Participant on the date specified by the Committee, as set
forth in Exhibit A or as subsequently established by the Committee for new
participants. Each Participant's right to benefits under this Plan shall
vest in accordance with Article V hereof.
2.2 Cessation of Participation. A Participant shall cease to be an active
Participant in this Plan and such Participant shall become an inactive
Participant as of the date such Participant ceases to be an Employee of
the Company, if they are not vested in accordance with Article V.
Final - January 12, 2000 7
<PAGE>
ARTICLE III
FORM AND AMOUNT OF RETIREMENT BENEFITS
3.1 Accrued Normal Retirement Benefit. The Accrued Normal Retirement Benefit
payable to a Participant who retires on or after the Participant's Normal
Retirement Date shall be a monthly Retirement Benefit commencing on the
Participant's Retirement Date and payable during the Participant's
lifetime and ceasing with the last payment due on the first day of the
month in which the Participant dies. The monthly Accrued Normal Retirement
Benefit shall be equal to one-twelfth of the excess, if any, of (a) less
the sum of (b), (c), and (d) where:
(a) equals two (2) percent of the Participant's Final Average
Compensation multiplied by the Participant's Years of Credited
Service,
(b) equals one-half of the Participant's annual Social Security Benefit,
(c) equals the Participant's annual Company Matching Contribution
Benefit, and
(d) equals Participant's annual Funded Plan Benefit.
3.2 Early Retirement Benefit. Each Participant who retires prior to the
Participant's Normal Retirement Date shall receive a monthly Early
Retirement Benefit commencing on the Participant's Early Retirement Date
and payable under the normal form in accordance with section 3.1. The
monthly Early Retirement Benefit shall be equal to one-twelfth of the
excess, if any, of (a) less the sum of (b), (c), and (d) where:
(a) equals two (2) percent of the Participant's Final Average
Compensation multiplied by the Participant's Years of Credited
Service and reduced by a factor based on the number of years by which
the Retirement Date precedes the Participant's Normal Retirement
Date, as shown in the following schedule:
Number of years* by which
the Retirement Date Precedes
the Participant's Normal Portion of Retirement
Retirement Date Benefit Payable
7 60.00%
6 63.33%
5 66.67%
4 73.33%
3 80.00%
2 86.67%
1 93.33%
0 100.00%
* For a period that is not an integral number of years, the portion
to be applied will be obtained by arithmetic interpolation between
the appropriate percentages set out above.
(b) equals one-half of the Participant's annual Social Security Benefit,
reduced by .4167 percent for each month by which Participant's Early
Retirement Date precedes the Participant's Normal Retirement Date,
Final - January 12, 2000 8
<PAGE>
(c) equals the Participant's annual Company Matching Contribution Benefit
payable at the Early Retirement Date, and
(d) equals the annual Funded Plan Benefit payable at the Early Retirement
Date.
3.3 Form and Timing of Benefit. The benefit payable to or on behalf of a
Participant under this Plan shall be paid in the normal form as provided
by the Funded Plan or, as elected by the Participant (or his Spouse, in
the event of the Participant's death while employed), on a basis
consistent with all elections made by the Participant and/or Spouse under
the Funded Plan. Any conversions to an optional method of payment
permitted under the Funded Plan shall be the Actuarial Equivalent of such
normal form of payment. Benefits due under this Section III shall be paid
coincident with the payment date of benefits under the Funded Plan.
3.4 Treatment of Plan Payments Under Other Plans. Benefits earned by a
Participant under this Plan shall not be considered "Compensation" as that
term is defined in other plans sponsored by the Employer.
Final - January 12, 2000 9
<PAGE>
ARTICLE IV
DEATH BENEFITS BEFORE RETIREMENT
4.1 Death of a Participant Before Commencement of Retirement Benefit. If a
Participant dies before the date Retirement Benefits commence hereunder,
no benefits shall be payable under this Plan, except as to otherwise
provided in section 4.2.
4.2 Preretirement Spouse's Death Benefit.
(a) In the case of a Participant who has a nonforfeitable right to his
Accrued Normal Retirement Benefit, who has a surviving Spouse and who
dies prior to his Retirement Date (whether or not such Participant is
employed by the Employer or an Affiliate) there shall be payable to
his surviving Spouse a Preretirement Spouse's Death Benefit.
(b) The monthly payments to a surviving Spouse under the Preretirement
Spouse's Death Benefit shall equal the amounts which would have been
payable as a survivor annuity under the Joint and 50 Percent Spouse's
Annuity if--
(1) in the case of a Participant who dies after attaining his Early
Retirement Date, such Participant had retired with an immediate
Joint and 50 Percent Spouse's Annuity on the day before the
Participant's death, or
(2) in the case of a Participant who dies on or before attaining his
Early Retirement Date, such Participant had terminated
employment on the date of death (if his employment had not
terminated), survived to his Early Retirement Date, retired with
an immediate Joint and 50 Percent Spouse's Annuity on his Early
Retirement Date, and died on the day after the date on which
such Participant would have attained his Early Retirement Date.
If, pursuant to subsection (c) below, a Spouse elects to defer
the commencement of the Preretirement Spouse's Death Benefit,
the amount of the benefit payable thereunder shall be increased
to reflect such deferral.
(c) Payment of the Preretirement Spouse's Death Benefit to a
Participant's Spouse shall commence on the date selected by the
surviving Spouse. Such date shall occur no earlier than the date on
which a deceased Participant would have attained his Early Retirement
Date (in the case of a Participant who dies prior to attaining his
Early Retirement Date), or the date of the Participant's death (in
the case of a Participant who dies on or after attaining his Early
Retirement Date), and no later than the first day of the month next
following the date the Participant would have attained age 62.
Final - January 12, 2000 10
<PAGE>
ARTICLE V
VESTING
5.1 Vesting. A Participant shall vest over a period of ten years of Officer
Service according to the following vesting schedule:
Years of Officer Service Vested Percentage
0 - 5 0%
6 20%
7 40%
8 60%
9 80%
10 100%
5.2 Effect of Change in Control. Notwithstanding any other provision of this
Plan to the contrary, in the event of a Change in Control, all
Participants who are employed by the Company at the time of a Change in
Control shall become fully vested in their entire Accrued Normal
Retirement Benefit under this Plan. Moreover, in the event of a Change in
Control, each Participant shall be entitled to receive an immediate single
sum distribution of the entire present value of the Participant's Accrued
Normal Retirement Benefit vested in accordance with this Article V within
60 days after the Participant's termination of employment for any reason.
(Any Participant who terminated employment before such Change in Control
shall receive the present value of the Participant's then remaining vested
Accrued Normal Retirement Benefit within 60 days after the Change in
Control.) For purposes of this provision, the present value of a
Participant's Accrued Normal Retirement Benefit shall be determined using
the Actuarial Assumption in section 6.4.
Final - January 12, 2000 11
<PAGE>
ARTICLE VI
PAYMENT OF RETIREMENT BENEFIT
6.1 Survival. Payment of any Retirement Benefit hereunder which is contingent
upon the survival of the payee shall cease with the last payment due the
payee before the payee's death.
6.2 Administrative Powers Relating to Payments. If a Participant or Spouse is
under a legal disability or, by reason of illness or mental or physical
disability, is unable, in the opinion of the Committee, to attend properly
to such Participant's personal financial matters, the Committee may make
such payments in such of the following ways as the Committee shall direct:
(a) Directly to such Participant or Spouse;
(b) To the legal representative of such Participant or Spouse; or
(c) To some relative by blood or marriage, or friend, for the benefit of
such Participant or Spouse.
Any payment made pursuant to this section 6.2 shall be in complete
discharge of the obligation for such payment under the Plan.
6.3 Missing Persons.
(a) The Company shall be deemed to have made adequate tender of payment
of any benefit payable hereunder to a person if payment is made by
check or by money order, and mailed to the last address of such
person furnished to the Company.
(b) If a person shall fail to claim or collect any such tender for a
period of three months from the date thereof, the Company may stop
payment on such tender and on any other tenders subsequent to the
tender not claimed or collected and may suspend any further benefit
payments hereunder until the Company can ascertain whether such
person was living at the time any such tender was made and whether
any benefit payments are due hereunder to a person. Upon such
suspension of payments, a written notice thereof and of the
provisions of this section 6.3 shall be mailed by the Company to the
last address known to it of the person entitled to such payment or
payments.
(c) If such person shall fail to claim any such payment for a period of
three years after such written notice is mailed, such person for all
purposes of the Plan be deemed to have died on the day immediately
preceding the date of the first such tender which has not been
claimed or collected.
Final - January 12, 2000 12
<PAGE>
6.4 Lump Sum Cash-Out. If the lump sum Actuarial Equivalent value of:(1) a
Participant's vested Accrued Normal Retirement Benefit upon termination of
employment or (2) the Preretirement Spouse's Death Benefit upon the
Participant's death is equal to or less than $50,000, the Plan shall make
a lump sum payment of: (1) the Accrued Normal Retirement Benefit to the
Participant or (2) the Preretirement Spouse's Death Benefit to the
Participant's surviving Spouse. For the purpose of determining the lump
sum Actuarial Equivalent under this section, the Employer shall use an
interest rate equal to the annual interest rate on 30-year Treasury
securities for the January (the "look back month") immediately preceding
the Plan Year ("the stability period") in which the Participant's
Retirement Date or termination date (if earlier) occurs, as specified by
the Commissioner of Internal Revenue in revenue rulings, notices, or other
guidance, published in the Internal Revenue Bulletin. The applicable
mortality table shall be the mortality table based on the prevailing
commissioners' standard table (described in Code section 807(d)(5(A)) used
to determine reserves for group annuity contracts issued on the date of
which present value is being determined (without regard to any other
subparagraph of section 807(d)(5)), that is prescribed by the Commissioner
of Internal Revenue in revenue rulings, notices, or other guidance,
published in the Internal Revenue Bulletin.
Final - January 12, 2000 13
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
7.1 Funding. The Plan is intended as an unfunded plan of deferred
compensation. The Company intends to establish appropriate reserves for
the Plan on its books of account in accordance with generally accepted
accounting principles. Such reserves shall be, for all purposes, part of
the beneficial funds of the Company and no Participant, Spouse or other
person claiming a right under the Plan shall have any interest, right or
title to such reserves.
7.2 Continuation of the Plan. The Plan shall be binding upon the Company and
any successors or assigns of the Company including any corporation with or
into which the Company or its successors or assigns shall consolidate or
merge and any transfer of substantially all of the assets of the Company
or its successors or assigns.
7.3 Right to Amend, Suspend or Terminate. The Company reserves the right at
any time and from time to time to amend, suspend or terminate the Plan by
action of its Board of Directors without the consent of any Participant,
Spouse, or other persons claiming a right under the Plan. No amendment of
the Plan shall reduce the benefits of any Participant below the amount to
which such Participant has become vested pursuant to section 5.1 prior to
the date of amendment.
7.4 Rights to Benefits. No person shall have any right to a benefit under the
Plan except as such benefit has accrued to such person in accordance with
the terms of the Plan, and that such right shall be no greater than the
rights of any unsecured general creditors of the Company. Notwithstanding
any other provisions of this Plan, if a Participant shall be terminated
for Cause, all of such Participant's rights to benefits under this Plan
shall be forfeited. For purposes of this Plan, the Company may terminate
the Participant's employment after the Plan Effective Date for "Cause"
only if the conditions set forth in paragraphs (i) and (ii) have been met:
(i) (A) the Participant has committed any act of fraud,
embezzlement or theft in connection with the
Participant's duties as an Officer or in the course
of employment with the Company and/or its
subsidiaries; or
(B) the Participant has willfully and continually failed
to perform substantially the Participant's duties
with the Company or any of its Affiliates (other than
any such failure resulting from incapacity due to
physical or mental illness or injury, regardless of
whether such illness or injury is job-related) for an
appropriate period, which shall not be less than 30
days, after the Chief Executive Officer of the
Company (or, if the Participant is then Chief
Executive Officer, the Board) has delivered a written
demand for performance to the Participant that
specifically identifies the manner in which the Chief
Executive Officer (or the Board, as the case may be)
believes the Participant has not substantially
performed the Participant's duties; or
(C) the Participant has willfully engaged in illegal
conduct or gross misconduct that is materially and
demonstrably injurious to the Company; or
(D) the Participant has willfully and wrongfully
disclosed any trade secret or other confidential
information of the Company or any of its Affiliates;
or
(E) the Participant has engaged in any competitive
activity; and in any such case the act or omission
shall have been determined by the Board to have been
materially harmful to
Final - January 12, 2000 14
<PAGE>
the Company and its subsidiaries taken as a whole.
For purposes of the provision, (1) no act or failure
to act on the part of the Participant shall be
considered "willful" unless it is done, or omitted
to be done, by the Participant in bad faith or
without reasonable belief that the Participant's
action or omission was in the best interests of the
Company and (2) any act, or failure to act, based
upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the
Chief Executive Officer or a senior officer of the
Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done,
or omitted to be done, by the Participant in good
faith and in the best interests of the Company.
(ii) (A) The Company terminates the Participant's employment
by delivering a Notice of Termination to the
Participant, and
(B) prior to the time the Company has terminated the
Participant's employment pursuant to a Notice of
Termination, the Board, by the affirmative vote of
not less than three-quarters (3/4) of the entire
membership of the Board, has adopted a resolution
finding that the Participant was guilty of conduct
set forth in this definition of Cause, and specifying
the particulars thereof in detail, at a meeting of
the Board called and held for the purpose of
considering such termination (after reasonable notice
to the Participant and an opportunity for the
Participant, together with the Participant's counsel,
to be heard before the Board), and
(C) the Company delivers a copy of such resolution to the
Participant with the Notice of Termination at the
time the Participant's employment is terminated.
In the event of a dispute regarding whether the
Participant's employment has been terminated for
Cause, no claim by the Company that the Company has
terminated the Participant's employment for Cause in
accordance with this Agreement shall be given effect
unless the Company establishes by clear and
convincing evidence that the Company has complied
with the requirements of this Section 7.4 to
terminate the Participant's employment for Cause.
7.5 Titles. The titles of the Articles and sections herein are included for
convenience of reference only and shall not be construed as part of this
Plan, or have any effect upon the meaning of the provisions hereof.
7.6 Separability. If any term or provision of this Plan as presently in effect
or as amended from time to time, or the application thereof to any
payments or circumstances, shall to any extent be invalid or
unenforceable, the remainder of the Plan, and the application of such term
or provisions to payments or circumstances other than those as to which it
is invalid or unenforceable, shall not be affected thereby, and each term
or provision of the Plan shall be valid and enforced to the fullest extent
permitted by law.
Final - January 12, 2000 15
<PAGE>
7.7 Authorized Officers. Whenever the Company under the terms of the Plan is
permitted or required to do or to perform any act or matter or thing, it
shall be done and performed by any Officer duly authorized by the Board of
Directors of the Company, provided that the authority to approve
Participants shall be vested in the Committee.
7.8 No Contract of Employment. Nothing herein contained shall be construed to
constitute a contract of employment between any Employer and any Employee.
7.9 Data. It shall be a condition precedent to the payment of all benefits
under the Plan that each Participant, former Participant and Spouse must
furnish to the Company such documents, evidence or information as the
Company considers necessary or desirable for the purpose of administering
the Plan, or to protect the Company.
7.10 Restrictions Upon Assignments and Creditors' Claims. Except as in the Plan
otherwise provided, no Participant, former Participant or any Spouse, or
the state of any such person, shall have the power to assign, pledge,
encumber or transfer any interest in the Plan while the same shall be
possession of the Company. Any such attempt at alienation shall be void.
No such interest shall be subject to attachment, garnishment, execution,
levy or any other legal equitable proceeding or process and any attempt to
so such interest shall be void.
7.11 Applicable Law. The Plan shall be construed and administered in accordance
with the laws of Wisconsin to the extent such laws are not preempted by
ERISA.
Final - January 12, 2000 16
<PAGE>
<TABLE>
EXHIBIT A
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Oshkosh Truck Date of
Date of Plan Corporation Officer
Officer's Name Title Participation Hire Date Appointment
- ----------------- ---------------------------------------- ------------- ----------------- -----------
<S> <C> <C> <C> <C>
Charles Szews Executive Vice President and Chief 1/31/2000 3/29/96 3/29/96
Financial Officer
Matthew Zolnowski Executive Vice President, Corporate 1/31/2000 1/27/92 1/27/92
Administration
Daniel Lanzdorf Executive Vice President and President, 1/31/2000 6/12/73 (orig) 9/30/96
McNeilus Companies, Inc. 11/12/79 (rehire)
Timothy Dempsey Executive Vice President and Corporate 1/31/2000 10/1/95 10/1/95
General Counsel, and Secretary
John Randjelovic Executive Vice President and President, 1/31/2000 10/26/92 10/26/92
Pierce Manufacturing Inc.
Paul Hollowell Executive Vice President and President, 1/31/2000 4/1/89 4/1/89
Defense Business
Donald Verhoff Vice President, Technology 1/31/2000 5/14/73 7/25/97
Mark Meaders Vice President, Operations and Corporate 1/31/2000 7/1/93 (orig) 1/1/98
Purchasing, Materials, and Logistics 1/1/98 (rehire)
Ted Henson Vice President, International Sales 1/31/2000 1/29/90 5/1/97
Michael Wuest Vice President and General Manager, 1/31/2000 11/2/81 4/20/98
Operations, Pierce Manufacturing Inc.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Final - January 12, 2000 17
<PAGE>
Exhibit B
DEFINITION OF "CHANGE IN CONTROL" AND RELATED TERMS
A "Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
(i) at any time that either no shares of Class A Common
Stock of the Company are issued and outstanding or Excluded Persons
have ceased to beneficially own a majority of the outstanding shares
of Class A Common Stock of the Company, any Person (as defined below)
(other than (A) the Company or any of its subsidiaries, (B) a trustee
or other fiduciary holding securities under any employee benefit plan
of the Company or any of its subsidiaries, (C) an underwriter
temporarily holding securities pursuant to an offering of such
securities, (D) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportions as
their ownership of stock in the Company or (E) an Exempt Person (as
defined below) ("Excluded Persons")) is or becomes the "Beneficial
Owner" (as such term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Act")), directly or indirectly,
of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates (as defined below) after January
31, 2000, pursuant to express authorization by the Board that refers
to this exception) representing 25% or more of (A) the combined voting
power of the Company's then outstanding voting securities or (B) the
then outstanding shares of common stock of the Company; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on January 31, 2000, constituted the Board and any
new director (other than a director whose initial assumption of office
is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A under the Act) whose appointment or election
by the Board or nomination for election by the Company's shareholders
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors on January 31, 2000 or
whose appointment, election or nomination for election was previously
so approved; or
(iii) the shareholders of the Company approve a merger,
consolidation or share exchange of the Company with any other
corporation or approve the issuance of voting securities of the
Company in connection with a merger, consolidation or share exchange
of the Company (or any direct or indirect subsidiary of the Company)
pursuant to applicable stock exchange requirements, other than (A) a
merger, consolidation or share exchange that would result in the
voting securities of the Company outstanding immediately prior to such
merger, consolidation or share exchange continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 50%
of the combined voting power of the voting securities of the Company
or such surviving entity or any parent thereof outstanding immediately
after such merger,
Final - January 12, 2000 18
<PAGE>
consolidation or share exchange, (B) a merger, consolidation or share
exchange effected to implement a recapitalization of the Company (or
similar transaction) in which no Person (other than an Excluded
Person) is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its Affiliates after January 31, 2000, pursuant to
express authorization by the Board that refers to this exception)
representing 25% or more of (1) the combined voting power of the
Company's then outstanding voting securities or (2) the then
outstanding shares of common stock of the Company or (C) a merger,
consolidation or share exchange immediately following the
effectiveness of which shares of Class A Common Stock of the Company
will remain issued and outstanding and Excluded Persons will continue
to beneficially own a majority of the outstanding shares of Class A
Common Stock of the Company; or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an agreement for
the sale or disposition by the Company of all or substantially all of
the Company's assets (in one transaction or a series of related
transactions within any period of 24 consecutive months), other than a
sale or disposition by the Company of all or substantially all of the
Company's assets to an entity at least 75% of the combined voting
power of the voting securities of which are owned by Persons in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed
to have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
that owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For purposes of this Exhibit B, the term "Affiliate" shall have the
meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations
of the Act.
For purposes of this Exhibit B, the term "Exempt Person" shall mean
(i) J. Peter Mosling, Jr.; (ii) Stephen P. Mosling; (iii) any transferee to
which the Persons identified in clause (i) and (ii) above (the "Moslings") have
lawfully transferred or may lawfully transfer shares of Class A Common Stock of
the Company pursuant to the provisions of the Stock Purchase Agreement dated
April 26th, 1996, by and among the Company and the Moslings, as the same may be
amended from time to time; and (iv) any trustee, guardian, custodian, executor,
administrator, fiduciary or other legal representative of the Persons identified
in clauses (i), (ii) and (iii) above or the estates of the Moslings, in their
capacity as such.
For purposes of this Exhibit B, the term "Person" shall have the
meaning given in Section 3(a)(9) of the Act, as modified and used in Sections
13(d) and 14(d) thereof.
Final - January 12, 2000 19
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0
0
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