-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NxISl9K1q/zeaxobeg94SorJYKOVyENvhUi0AmaWgWQRolTL0iLVqd4Sz+vdKf5T wX6AH7xK+sjTU97evAfF0A== 0000897069-03-000091.txt : 20030123 0000897069-03-000091.hdr.sgml : 20030123 20030123085824 ACCESSION NUMBER: 0000897069-03-000091 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20030123 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20030123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OSHKOSH TRUCK CORP CENTRAL INDEX KEY: 0000775158 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 390520270 STATE OF INCORPORATION: WI FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31371 FILM NUMBER: 03521555 BUSINESS ADDRESS: STREET 1: 2307 OREGON ST STREET 2: P O BOX 2566 CITY: OSHKOSH STATE: WI ZIP: 54903 BUSINESS PHONE: 4142359151 MAIL ADDRESS: STREET 1: 2307 OREGON ST P O BOX 2566 STREET 2: 2307 OREGON ST P O BOX 2566 CITY: OSHKOSH STATE: WI ZIP: 54903 8-K 1 irm111.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________ FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 _______________________ Date of Report (Date of earliest event reported): January 23, 2003 Oshkosh Truck Corporation ------------------------------------------------------ (Exact name of registrant as specified in its charter) Wisconsin 1-31371 39-0520270 - --------------- ---------------- ------------------- (State or other (Commission File (IRS Employer jurisdiction of Number) Identification No.) incorporation) P.O. Box 2566, Oshkosh, Wisconsin 54903 ------------------------------------------------------------ (Address of principal executive offices, including zip code) (920) 235-9151 ------------------------------- (Registrant's telephone number) Item 7. Financial Statements and Exhibits. (a) Not applicable. (b) Not applicable. (c) Exhibits. The following exhibits are being filed herewith: (99.1) Oshkosh Truck Corporation Press Release dated January 23, 2003. (99.2) Script for Conference Call Held January 23, 2003. Item 9. Regulation FD Disclosure. On January 23, 2003, Oshkosh Truck Corporation (the "Company") issued a press release (the "Press Release") announcing its earnings for the first quarter ended December 31, 2002, its outlook for fiscal 2003 and a quarterly dividend. A copy of such press release is filed as Exhibit 99.1 and is incorporated by reference herein. On January 23, 2003, the Company held a conference call in connection with the Company's announcement of its earnings for the first quarter ended December 31, 2002. A copy of the script (the "Script") for such conference call is filed as Exhibit 99.2 and is incorporated by reference herein. An audio replay of such conference call and the related question and answer session will be available for thirty days on the Company's web site at www.oshkoshtruck.com. The information, including without limitation all forward-looking statements, contained in the Press Release and the Script or provided in the conference call and related question and answer session speaks only as of January 23, 2003. The Company has adopted a policy that if the Company makes a determination that it expects earnings for future periods for which projections are contained in the Press Release and the Script or provided in the conference call and related question and answer session to be lower than those projections, then the Company will publicly announce that fact. The Company's policy also provides that the Company does not intend to make such a public announcement if the Company makes a determination that it expects earnings for future periods to be at or above the projections contained in the Press Release and the Script. Except as set forth above, the Company assumes no obligation, and disclaims any obligation, to update information contained in the Press Release and the Script or provided in the conference call and related question and answer session. Investors should be aware that the Company may not update such information until the Company's next quarterly conference call, if at all. The Press Release and the Script contain, and representatives of the Company made, during the conference call and the related question and answer session, statements that the Company believes to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in the Press Release and the Script or made during the conference call and related question and answer session, including, without limitation, statements regarding the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures and debt levels, 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" or "plans," or the -2- negative thereof or variations thereon or similar terminology. The Company cannot provide any 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: Accuracy of Assumptions. The expectations reflected in the forward-looking statements, in particular those with respect to projected sales, costs, earnings and debt levels, are based in part on certain assumptions made by the Company, some of which are referred to in, or as part of, the forward-looking statements. Such assumptions include, without limitation, no economic recovery or new recession in U.S. and European economies; the Company's estimates for concrete placement activity, housing starts and mortgage rates; the Company's expectations as to timing of receipt of sales orders and payments and execution and funding of defense contracts; the Company's ability to achieve cost reductions; the anticipated level of sales and margins associated with the Medium Tactical Vehicle Replacement ("MTVR") contract and the Family of Heavy Tactical Vehicles ("FHTV") contract and international defense truck sales; the Company's planned spending on product development, bid and proposal activities and pre-contract costs with respect to defense truck procurement competitions and the outcome of such competitions; the Company's estimates for capital expenditures of municipalities for fire and emergency and refuse products, of airports for fire and rescue products and of commercial waste haulers; the expected level of sales and operating income of the Geesink Norba Group; the Company's ability to sustain market share gains by its fire and emergency and refuse products businesses; anticipated levels of sales of, and capital expenditures associated with, the Revolution(TM) composite mixer drum; the Company's estimates for insurance, steel and litigation costs; the impact of environmental regulations relating to diesel engines on sales of the Company's commercial and fire and emergency products; and the Company's estimates for debt levels, interest costs and working capital needs. The Company cannot provide any assurance that the assumptions referred to in the forward-looking statements or otherwise are accurate or will prove to have been correct. Any assumptions that are inaccurate or do not prove to be correct could have a material adverse effect on the Company's ability to achieve the forward-looking statements. Cyclical Markets. A further decline beyond current assumptions in overall customer demand in the Company's cyclical commercial or fire and emergency markets could have a material adverse effect on the Company's operating performance. The ready-mix concrete market that the Company serves is highly cyclical and impacted by the strength of the economy generally, by prevailing mortgage and other interest rates, by the number of housing starts and by other factors that may have an effect on the level of concrete placement activity, either regionally or nationally. The U.S. and European economies generally remain weak. In particular, the concrete placement industry continues to experience a downturn, which is materially and adversely affecting the net sales, profitability and cash flows of suppliers to the concrete placement industry, including the Company. In addition, customers of the Company such as municipalities and commercial waste haulers have been reducing their expenditures for fire and emergency and refuse equipment. The Company cannot provide any assurance that these downturns will not continue or become more severe. Government Contracts. The Company is dependent on U.S. and foreign government contracts for a substantial portion of its business. That business is subject to the following risks, among others, that could have a material adverse effect on the Company's operating performance: -3- o The Company's business is susceptible to changes in the U.S. and the U.K. defense budgets, which may reduce revenues expected from the Company's defense business. o The U.S. government may not appropriate expected funding for the Company's U.S. government contracts, which may prevent the Company from realizing revenues under current contracts. o Most of the Company's government contracts, including its contract for the MTVR program, are fixed-price contracts, and the Company's actual costs may exceed its projected costs, which could result in lower profits or net losses under these contracts. o The Company is required to spend significant sums on product development and testing, bid and proposal activities and pre-contract engineering, tooling and design activities in competitions to have the opportunity to be awarded these contracts. The Company has made significant expenditures on these activities relating to the U.S. Family of Medium Tactical Vehicles Competitive Rebuy program and the U.K. wheeled tanker and cargo support vehicle programs, which the Company expects to have a negative impact on the Company's margins and earnings in fiscal 2003. o Competitions for the award of defense truck contracts are intense, and the Company cannot provide any assurance that it will be successful in the defense truck procurement competitions in which it participates. o Certain of the Company's government contracts could be suspended or terminated or could expire in the future and not be replaced, which could reduce expected revenues from these contracts. o The Company's government contracts are subject to audit, which could result in adjustments of the Company's costs and prices under these contracts. Completion and Financing of Acquisitions. A substantial portion of the Company's growth in the past seven years has come through acquisitions, and the Company's growth strategy is based in part upon acquisitions. The Company may not be able to identify suitable acquisition candidates, obtain financing for future acquisitions or complete future acquisitions, which could adversely affect the Company's future growth. The Company may not be able to integrate or operate profitably businesses the Company acquires in the future. Any such future acquisitions could be dilutive to the Company's earnings per share. The Company's level of indebtedness may increase in the future if the Company finances acquisitions with debt, which would cause the Company to incur additional interest expense and could increase the Company's vulnerability to general adverse economic and industry conditions and limit the Company's ability to obtain additional financing. If the Company issues shares of its stock as currency in any future acquisitions, then the Company's earnings per share may be diluted as a result of the issuance of such stock. International Business. For the fiscal year ended September 30, 2002, approximately 12% of the Company's net sales were attributable to products sold outside of the United States, and expanding international sales is a part of the Company's growth strategy. International -4- operations and sales are subject to various risks, including political, religious and economic instability, local labor market conditions, the imposition of foreign tariffs and other trade barriers, the impact of foreign government regulations and the effects of income and withholding taxes, governmental expropriation and differences in business practices. The Company may incur increased costs and experience delays or disruptions in product deliveries and payments in connection with international manufacturing and sales that could cause loss of revenues and earnings. Unfavorable changes in the political, regulatory and business climate could have a material adverse effect on the Company's financial condition, profitability and cash flows. Foreign Currency Fluctuations. The results of operations and financial condition of the Company's subsidiaries that conduct operations in foreign countries will be reported in the relevant foreign currencies and then translated into U.S. dollars at the applicable exchange rates for inclusion in the Company's consolidated financial statements, which are stated in U.S. dollars. The exchange rates between many of these currencies and the U.S. dollar have fluctuated significantly in recent years and may fluctuate significantly in the future. Such fluctuations, in particular those with respect to the Euro and the U.K. Pound Sterling, may have a material effect on the Company's financial condition, profitability and cash flows and may significantly affect the comparability of the Company's results between financial periods. Interruptions in the Supply of Parts and Components. The Company may in the future experience significant disruption or termination of the supply of some of the Company's parts, materials, components and final assemblies that the Company obtains from sole source suppliers or subcontractors or incur a significant increase in the cost of these parts, materials, components or final assemblies. Such disruptions, terminations or cost increases could delay sales of the Company's trucks and truck bodies and could result in a material adverse effect on the Company's financial condition, profitability and cash flows. Competition. The Company operates in highly competitive industries. Several of the Company's competitors have greater financial, marketing, manufacturing and distribution resources than the Company. The Company's products may not continue to compete successfully with the products of competitors, and the Company may not be able to retain or increase its customer base or to improve or maintain its profit margins on sales to its customers, all of which could adversely affect the Company's financial condition, profitability and cash flows. 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 filings with the Securities and Exchange Commission. -5- SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. OSHKOSH TRUCK CORPORATION Date: January 23, 2003 By: /s/ Charles L. Szews ----------------------------- Charles L. Szews Executive Vice President and Chief Financial Officer -6- OSHKOSH TRUCK CORPORATION Exhibit Index to Current Report on Form 8-K Dated January 23, 2003 Exhibit Number - ------ (99.1) Oshkosh Truck Corporation Press Release dated January 23, 2003. (99.2) Script for Conference Call Held January 23, 2003. -7- EX-99.1 3 irm111a.txt EARNINGS REPORT FOR IMMEDIATE RELEASE For more information contact: Financial: Charles L. Szews Executive Vice President and Chief Financial Officer (920) 235-9151, Ext. 2332 Media: Kirsten Skyba Vice President, Communications (920) 233-9621 OSHKOSH TRUCK REPORTS SALES UP 17.9% AND NET INCOME UP 31.2% IN FIRST QUARTER; AFFIRMS FISCAL YEAR 2003 EPS ESTIMATE OF $3.70 OSHKOSH, WIS. (January 23, 2003) - Oshkosh Truck Corporation [NYSE: OSK], a leading manufacturer of specialty trucks and truck bodies, today reported that first quarter net income increased 31.2 percent to $11.3 million, or $0.65 per share, on sales of $426.3 million for the quarter ended December 31, 2002. This compares with net income of $8.6 million, or $0.50 per share, on sales of $361.5 million for last year's first quarter. Sales increased 17.9 percent in the first quarter on increases in all segments, but especially in the commercial segment due to a much higher mix of chassis and truck body "package" sales. Operating income increased 14.5 percent to $20.4 million, or 4.8 percent of sales, compared to $17.8 million, or 4.9 percent of sales, in the prior year's first quarter. Net interest expense declined $2.9 million to $3.2 million to further contribute to higher reported net income in the first quarter of fiscal 2003. "Several recent developments are instrumental to Oshkosh's long-term financial performance. Our selection as preferred bidder for the U.K. Ministry of Defence Wheeled -Continued- Tanker program reflects Oshkosh's ability to engineer and deliver top-performance military vehicles and provide the best value for money. In addition, we broke ground and are on schedule for a new U.S. manufacturing facility for our Revolution(TM) composite mixer drum which is expected to be operational late this fiscal year," commented Robert G. Bohn, chairman, president and chief executive officer. Bohn continued, "Higher sales and operating income in each business segment reflect aggressive performance initiatives we implemented across the corporation. We also benefited in the quarter from lower interest expense resulting from a continuing focus on working capital management and prior year debt reduction. Our outlook for the year remains positive; however, we remain guarded as to the direction of the global economy. We re-affirm our estimate of fiscal year 2003 earnings per share of about $3.70." Factors affecting first quarter results for the company's business segments included: Fire and emergency--Fire and emergency segment sales increased 17.8 percent to $113.0 million for the quarter. Operating income was up 29.3 percent to $10.0 million, or 8.9 percent of sales, compared to prior year income of $7.8 million, or 8.1 percent of sales. Increased sales volume, improved product sales mix and favorable manufacturing cost performance at the company's Pierce Manufacturing Inc. subsidiary were responsible for most of the improved earnings in this segment compared to results in the prior year quarter. Defense--Defense sales increased 8.8 percent to $148.6 million for the quarter as a result of increased sales of heavy-payload vehicles under the company's Family of Heavy Tactical Vehicles ("FHTV") contract, which were partially offset by lower parts sales. Operating income increased 19.2 percent to $9.6 million, or 6.5 percent of sales, compared to prior year income of $8.0 million, or 5.9 percent of sales. Increased sales of higher- -Continued- margin, heavy-payload vehicles under the FHTV contract contributed to the increase in operating income in the quarter compared to the prior year. Margins on the Company's Medium Tactical Vehicle Replacement ("MTVR") contract were 3.3 percent in the first quarter of fiscal 2002. Margins on the MTVR contract were increased in the third quarter of fiscal 2002 to 4.3 percent and have remained at that level since then, including the first quarter. The difference in the margin percentage added approximately $0.7 million to the defense segment operating income in the first quarter compared to the prior year quarter. Bid and proposal spending continued at a high rate during the first quarter as the Company submitted its initial bid on the multi-year Family of Medium Tactical Vehicles ("FMTV") contract in November 2002 and pursued other defense programs in the United Kingdom. Commercial--Commercial sales increased 28.8 percent to $166.8 million for the first quarter. Concrete placement and refuse product sales were up 66.8 percent and 4.1 percent, respectively, from first quarter 2002 results. Increased chassis and truck body "package" sales compared to "body-only" sales drove the revenue increases. Domestic refuse sales decreased 9.4 percent due to substantially lower shipments to large, commercial waste haulers in spite of a higher mix of "package" sales. While European refuse sales were up 26.7% compared to the prior year's first quarter, most of the increase also resulted from higher "package" sales. Operating income increased 4.9 percent to $7.7 million, or 4.6 percent of sales, compared to prior year income of $7.3 million, or 5.6 percent of sales. Operating income margins declined largely due to the increase in "package" sales compared to "body-only" sales. Margins on "package" sales are lower because they include a purchased commercial chassis. First quarter results in fiscal 2003 also benefited from a $0.5 million gain on the sale of certain operating equipment. -Continued- Corporate and other--Operating expenses and inter-segment profit elimination increased from $5.3 million to $6.9 million in the first quarter of fiscal 2003, consistent with a previously reported plan to increase investments in people and services. Net interest expense for the quarter decreased $2.9 million to $3.2 million, compared to the prior year quarter. Lower interest costs were largely due to prior year debt reduction resulting from "performance-based" payments received on the multi-year MTVR and FHTV contracts and free cash flow from operations. Also, first quarter results in fiscal 2002 included a $0.9 million credit, or $0.05 per share, related to a settlement of certain tax audits. Dividend Announcement - --------------------- Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.07500 per share for Class A Common Stock and $0.08625 per share for Common Stock. These dividends, unchanged from the prior quarter, will be payable February 13, 2003 to shareholders of record as of February 6, 2003. Oshkosh Truck Corporation is a leading designer, manufacturer and marketer of a broad range of specialty commercial, fire and emergency and military trucks and truck bodies under the Oshkosh, McNeilus, Pierce, Medtec, Geesink and Norba brand names. Oshkosh's products are valued worldwide by fire and emergency units, defense forces, municipal and airport support services, and concrete placement and refuse businesses where high quality, superior performance, rugged reliability and long-term value are paramount. Oshkosh Truck Corporation officials will comment on first quarter earnings and their current outlook for fiscal 2003, including a discussion of the factors underlying the 2003 earnings estimates, during a live conference call at 10:00 a.m. Eastern Standard Time today. The -Continued- call will be available simultaneously via a webcast over the Internet as a service to investors. It will be listen-only format for on-line listeners. To access the webcast, investors should go to www.oshkoshtruck.com at least 15 minutes prior to the event and follow instructions for listening to the broadcast. An audio replay of such conference call and related question and answer session will be available for thirty days at this website. Forward-Looking Statements - -------------------------- This press release contains statements that the company believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding the company's future financial position, business strategy, targets, projected sales, costs, earnings, capital spending and debt levels, and plans and objectives of management for future operations, are forward-looking statements. When used in this press release, words such as the company "expects," "intends," "estimates," "anticipates," or "believes" and similar expressions are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the company's control, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, without limitation, the outcome of defense truck procurement competitions, the cyclical nature of the company's commercial and fire and emergency markets, risks related to reductions in government expenditures, the uncertainty of government contracts, the challenges of identifying acquisition candidates and integrating acquired businesses and risks associated with international operations and sales, including foreign currency fluctuations. In addition, the company's expectations for fiscal 2003 are based in part on certain assumptions made by the company, including, without limitation, those relating to concrete placement activity; the performance of the U.S. and European economies generally; when the company will receive sales orders and payments; achieving cost reductions; production and margin levels under the MTVR contract, the FHTV contract and for international defense trucks; capital expenditures of municipalities and large waste haulers; targets for Geesink Norba sales and operating income; spending on bid and proposal activities and pre-contract costs; interest costs; and that the company does not complete any acquisitions. Additional information concerning these and other factors is contained in the company's filings with the Securities and Exchange Commission, including the Form 8-K filed today. -Continued- OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended December 31, ------------------------------ 2002 2001 -------------- -------------- (In thousands, except per share amounts) Net sales $ 426,336 $ 361,493 Cost of sales 368,697 311,469 --------------- ------------- Gross income 57,639 50,024 Operating expenses: Selling, general and administrative 35,675 30,805 Amortization of purchased intangibles 1,602 1,440 --------------- ------------- Total operating expenses 37,277 32,245 --------------- ------------- Operating income 20,362 17,779 Other income (expense): Interest expense (3,409) (6,422) Interest income 187 285 Miscellaneous, net (276) (250) --------------- ------------- (3,498) (6,387) --------------- ------------- Income before provision for income taxes and equity in earnings of unconsolidated partnership 16,864 11,392 Provision for income taxes 6,204 3,304 --------------- ------------- Income before equity in earnings of unconsolidated partnership 10,660 8,088 Equity in earnings of unconsolidated partnership, net of income taxes 632 520 --------------- ------------- Net income $ 11,292 $ 8,608 =============== ============= Earnings per share $ 0.67 $ 0.51 Earnings per share assuming dilution $ 0.65 $ 0.50 Weighted average shares outstanding: Basic 16,941 16,716 Assuming dilution 17,392 17,123 Cash dividends: Class A Common Stock $ 0.07500 $ 0.07500 Common Stock $ 0.08625 $ 0.08625 -Continued- OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS December 31, September 30, 2002 2002 ------------ ------------- (Unaudited) (In thousands) ASSETS Current assets: Cash and cash equivalents $ 19,367 $ 40,039 Receivables, net 138,668 142,709 Inventories 233,214 210,866 Prepaid expenses 8,255 7,414 Deferred income taxes 31,155 26,008 ------------ -------------- Total current assets 430,659 427,036 Investment in unconsolidated partnership 23,088 22,274 Other long-term assets 11,013 11,625 Property, plant and equipment 265,277 261,045 Less accumulated depreciation (123,964) (120,684) ------------ -------------- Net property, plant and equipment 141,313 140,361 Purchased intangible assets, net 103,309 104,316 Goodwill 326,009 318,717 ------------ -------------- Total assets $ 1,035,391 $ 1,024,329 ============ ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 101,084 $ 116,422 Floor plan notes payable 29,474 23,801 Customer advances 125,758 119,764 Payroll-related obligations 25,891 34,474 Income taxes 17,534 8,597 Accrued warranty 25,088 24,015 Other current liabilities 51,089 47,754 Revolving credit facility and current maturities of long-term debt 9,777 18,245 ------------ -------------- Total current liabilities 385,695 393,072 Long-term debt 127,997 131,713 Deferred income taxes 40,332 39,303 Other long-term liabilities 48,375 50,481 Commitments and contingencies Shareholders' equity 432,992 409,760 ------------ -------------- Total liabilities and shareholders' equity $ 1,035,391 $ 1,024,329 ============ ============== -Continued- OSHKOSH TRUCK CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended December 31, ------------------------------------------ 2002 2001 ------------------ ------------------ (In thousands) Operating activities: Net income $ 11,292 $ 8,608 Non-cash adjustments 49 3,000 Changes in operating assets and liabilities (16,962) 31,516 ----------------- ------------------ Net cash provided from (used for) operating activities (5,621) 43,124 Investing activities: Additions to property, plant and equipment (5,174) (1,727) Proceeds from sale of property, plant and equipment 1,879 - Decrease (increase) in other long-term assets 743 (757) ------------------ ------------------ Net cash used for investing activities (2,552) (2,484) Financing activities: Net repayments under revolving credit facility - (37,200) Repayment of long-term debt (12,194) (3,242) Dividends paid (1,459) (1,437) Other 893 5 ------------------ ------------------ Net cash used for financing activities (12,760) (41,874) Effect of exchange rate changes on cash 261 (131) ------------------ ------------------ Decrease in cash and cash equivalents (20,672) (1,365) Cash and cash equivalents at beginning of period 40,039 11,312 ------------------ ------------------ Cash and cash equivalents at end of period $ 19,367 $ 9,947 ================== ================== Supplementary disclosure: Depreciation and amortization $ 6,106 $ 6,072
-Continued- OSHKOSH TRUCK CORPORATION SEGMENT INFORMATION (Unaudited) Three Months Ended December 31, ---------------------------- 2002 2001 ------------- ------------ (In thousands) Net sales to unaffiliated customers: Commercial $ 166,751 $ 129,429 Fire and emergency 112,956 95,866 Defense 148,609 136,575 Intersegment eliminations (1,980) (377) ------------- ------------ Consolidated $ 426,336 $ 361,493 ============= ============ Operating income (expense): Commercial $ 7,652 $ 7,296 Fire and emergency 10,025 7,753 Defense 9,588 8,042 Corporate and other (6,903) (5,312) ------------- ------------ Consolidated $ 20,362 $ 17,779 ============= ============ Period-end backlog: Commercial $ 152,412 $ 134,412 Fire and emergency 315,811 307,871 Defense 606,040 407,381 ------------- ------------ Consolidated $ 1,074,263 $ 849,664 ============= ============ ### EX-99.2 4 irm111b.txt FIRST QUARTER EARNINGS First Quarter 2003 Earnings Conference Call January 23, 2003 9:00 a.m. CST Charlie: Welcome. Our remarks that follow, including answers to your questions, include statements that we believe to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings with the SEC. Except as described in the Form 8-K, we disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all. Earlier this morning, we reported results for the first quarter of our fiscal year 2003 of $0.65 per share, or $0.20 per share better than our estimates reported in our October 29, 2002 Form 8-K filing, on sales of $426.3 million. Hereafter, I will refer to estimates in that filing as our previous estimates. This compares to earnings per share of $0.50 in the first quarter of fiscal 2002 on sales of $361.5 million. All our segments contributed to the 17.9% sales increase in the first quarter. Operating income rose 14.5% to $20.4 million during the first quarter. Once again, all segments contributed to the higher operating income. Net interest expense fell $2.9 million to $3.2 million during the first quarter of fiscal 2003, which further contributed to the higher reported earnings per share. Our outlook for the full fiscal year 2003 remains positive; however, we remain guarded as to the direction of the global economy. We therefore re-affirmed this morning, our estimate of annual earnings per share of about $3.70 in fiscal 2003, in spite of the strong performance in the first quarter. This estimate also assumes no margin increase this year on the Medium Tactical Vehicle Replacement ("MTVR") contract in fiscal 2003 from the current margins of 4.3%, although we continue to target 6.0% to 6.5% margins under the contract. 1 With few signs of strength in the economy, we controlled our typical inventory build in the first quarter. This permitted us to close the first quarter with $137.8 million of debt compared to our previous estimate of $175.0 million. Net debt, less cash on hand of $19.4 million, increased slightly from $109.9 million at September 30, 2002 to $118.4 million at December 31, 2002. Let me expand on individual business segment results. Fire and Emergency First, fire and emergency sales rose 17.8% to $113.0 million in the first quarter, and operating income was up 29.3% to $10.0 million, or 8.9% of sales. The first quarter is always challenging due to the large number of holidays that limit truck deliveries. This year, we were able to manage deliveries better than in previous years, leading to the higher sales in the quarter. A strong product mix and favorable manufacturing cost performance also contributed to the higher operating income compared to the prior year. Pierce's backlog was flat at up 0.2% at December 31, 2002, compared to December 31, 2001. That's down from September 30 when Pierce's backlog was up 15.2% compared to the prior year. During the first fiscal quarter, we believe that municipal spending on fire apparatus began to slow. We also believe that we lost some orders during the last six months as Pierce increased prices much faster than competitors to pass through engine price increases resulting from new environmental regulations that became effective on October 1, 2002. We expect this order slowdown to have minimal effect on fiscal 2003 results because our backlog at Pierce extends through mid-August for most products and into September for many products. Defense In defense, sales were up 8.8% to $148.6 million in the first quarter due to higher shipments under the Company's Family of Heavy Tactical Vehicles ("FHTV") contract, which were partially offset by lower parts sales. Operating income increased 19.2% in the first quarter to $9.6 million, reflecting the increased sales of the higher-margin, heavy-payload vehicles 2 under the FHTV contract. The quarter also benefited from the increase in the MTVR margins from 3.3% to 4.3% that occurred in the third quarter of fiscal 2002. This increase added about $0.7 million to earnings in the first quarter compared to the prior year. Commercial Compared to the prior year, sales in the commercial segment were up 28.8% in the first quarter to $166.8 million, while operating income was up 4.9% to $7.7 million. Concrete placement sales were up 66.8%, and European refuse sales were up 26.7%, in each case primarily due to higher package sales of chassis and truck bodies. In the U.S., we believe the availability of Company-owned commercial chassis purchased prior to the October 1, 2002 effective date of new environmental regulations affecting diesel engines contributed to the higher concrete placement package sales. In Europe, the Company has begun to emphasize higher package sales. Domestic refuse sales declined 9.4% in spite of a higher mix of package sales compared to body-only sales, due to substantially lower body sales to the largest U.S. commercial waste haulers. Margins fell in the first quarter of fiscal 2003, primarily due to lower margins on package sales. First quarter results in fiscal 2003 also benefited from a $0.5 million gain on the sale of certain operating equipment. Concrete placement orders stabilized in the first quarter, but due to heavy first quarter shipments, rear-discharge unit backlog was down 10.3% at December 31, 2002 compared to December 31, 2001. Our front-discharge unit backlog remained strong at up 73.6% over December 31, 2001. Our domestic refuse unit backlog was down 25.0% at December 31, 2002 compared to December 31, 2001 levels. And, our Geesink Norba Group unit backlog was up 1.5% at December 31, 2002 compared to December 31, 2001. Corporate At the corporate level, our expenses were up $1.6 million in the first quarter compared to the prior year due to the Company's previously reported plan to increase investments in people and services to build a stronger foundation to target future growth opportunities. Net interest expense declined $2.9 million during the quarter due to lower borrowings and substantially lower 3 interest rates. Also, last year the Company reported a $0.05 per share gain in the first quarter due to the settlement of certain tax audits. Fiscal 2003 Outlook Turning to fiscal 2003, our estimate of earnings per share remains at $3.70, but some of the factors underlying the estimate have changed. Our estimates assume no acquisitions. We continue to estimate consolidated sales of $1.8 billion, up 3.2% from fiscal 2002 sales. We continue to expect fire and emergency sales to be up 7.1% to $510.0 million. We are continuing to project defense sales to increase to $610.0 million, or up 2.5%. And, in the commercial segment, we are continuing to project modest sales growth of 1.0% to $685.0 million; however, our assumptions relative to concrete placement and refuse sales differ from our previous estimates. In the U.S. concrete placement market, we are now projecting sales to increase 4.5% for fiscal 2003, compared to our previous estimate of a 2.0% increase. This increase reflects higher first quarter package sales and a softer outlook for the second half of the fiscal year. In U.S. refuse, we continue to estimate a 2.0% decline in sales in fiscal 2003. Our refuse body sales estimate has declined from previous estimates, but we expect our refuse parts sales to be stronger than we previously estimated. In European refuse, we now are estimating sales to decline 4.5%, compared to our previous estimate of a 3.0% increase. Several European refuse markets, most notably Germany, have weakened sharply in the last three months. By quarter in fiscal 2003, we believe that these sales expectations by segment will result in consolidated sales of approximately $426.0 million in quarter two, $488.0 million in quarter three and $460.0 million in quarter four. With respect to operating income, we are lowering projected consolidated operating income by $2.0 million to $118.0 million in fiscal 2003, or up 6.2% compared to fiscal 2002. By segment, we are increasing projected fire and emergency operating income by $1.0 million to $53.0 million, or up 8.2%, in fiscal 2003. This increase reflects the higher earnings in the first quarter than previously estimated, offset by a small decrease in operating income expectations in the 4 fourth quarter due to lower orders received in the first quarter than previously estimated. We are continuing to project defense operating income to increase to $44.0 million, or up 8.1%, in fiscal 2003. We delayed about $1.0 million of bid and proposal costs from the first quarter into the second and third quarters as the timing of certain truck procurement competitions changed, and we now estimate significant pre-contract costs in the second quarter associated with the announcement that we were named the preferred bidder on the U.K. wheeled tanker contract. These costs will in part lower our consolidated earnings expectations for the second and third quarters. We don't expect shipments under the U.K. wheeled tanker contract to commence until fiscal 2004 and, of course, since we are only the preferred bidder, the possibility remains that we will not be awarded the contract. In July 2003, we hope to provide guidance regarding projected sales under the contract in fiscal 2004. Our defense operating income estimate assumes MTVR contract margins of 4.3% in fiscal 2003. We continue to target 6.0% to 6.5% margins over the contract life. Every one percentage point increase in MTVR margins in fiscal 2003 on a full-year basis would amount to $7.6 million in operating income, or $0.27 per share. Periodically, we will monitor manufacturing cost performance and durability of fielded trucks, among other factors, and adjust margins accordingly. Another important factor that may impact margins will be the status of the MTVR variant contract for wreckers. We signed a contract modification for MTVR dump bodies and wreckers in June 2002. The dump body modification has already been funded. The wreckers are complex vehicles that will undergo significant testing. The U.S. Marines have until January 2004 to fund the wrecker requirements under the contract. How these wreckers perform in testing, the timing and number of wreckers actually funded by the U.S. Marines and our cost performance on those trucks will be important factors in our ability to achieve our MTVR margin targets. In the commercial segment, we are lowering our projected operating income by $2.0 million to $49.0 million, or up about 3.9% in fiscal 2003 compared to fiscal 2002. We are now projecting concrete placement operating income to increase 3.5%, while our previous estimate assumed a 10.0% decrease. The improvement reflects a strong order rate for our front-discharge concrete mixers and favorable manufacturing cost performance. We now expect domestic refuse operating income to be down slightly in fiscal 2003 5 due to a weaker product mix involving more package sales of chassis and packer bodies and fewer body-only sales. Whereas previously we were expecting most of the increase in commercial segment operating income to come from cost reductions implemented at the Geesink Norba Group, we are now projecting Geesink Norba Group operating income to increase only about 16.0% in fiscal 2003. Most of the cost reduction implemented at the Geesink Norba Group in fiscal 2002 is being offset by weaker end markets. We expect corporate expenses to approximate $28.0 million in fiscal 2003, up from $25.8 million in fiscal 2002 and up from our previous estimate of $27.0 million. This increase reflects investments planned to build our team in preparation for additional acquisitions or defense contract awards. We are now projecting net interest costs to decline about $2.0 million to $18.0 million in fiscal 2003, reflecting our lower average debt estimates for the year. By quarter, we now expect net income to approximate $13.5 million in quarter two, $18.5 million in quarter three and $22.0 million in quarter four. Assuming 17,650,000 average diluted shares outstanding for the year, these net income estimates would translate to earnings per share estimates of $0.77 in quarter two, $1.05 in quarter three and $1.22 in quarter four. Our new estimates are lower than our previous estimates by $0.06 per share in the second quarter and $0.14 per share in the third quarter, and up $0.01 per share in the fourth quarter. These quarterly earnings estimates reflect declining earnings per share in the third quarter where we will be challenged by tough comparator earnings in fiscal 2002 when we raised our MTVR contract margins by one percentage point. Of course, there are downsides to every estimate. The world economy may enter a double dip recession - perhaps causing a steeper downturn in our commercial segment than estimated. And, we may not achieve our targeted cost performance. Upsides to these estimates primarily involve the opportunity to improve MTVR margins and an economic recovery. Please refer to our Form 8-K filed today for other potential risk factors. From a financial position standpoint, assuming no acquisitions, we estimate that debt will rise temporarily in the next two quarters due to the seasonal working capital demands of our concrete placement business. For the full year, we do not expect any debt reduction due to working capital 6 requirements of our U.K. tank transporter contract and potentially a U.K. wheeled tanker contract. Specific debt estimates are $175.0 million at March 31, 2003, $200.0 million at June 30, 2003 and $150.0 million at September 30, 2003. We expect capital spending to rise to about $30.0 million in fiscal 2003 due to the planned start-up of a U.S. production facility for the Revolution(TM) composite mixer drum. Now, Bob will provide his perspective of the quarter and our outlook. Bob: Good morning. Thank you all for joining us for our first quarter results. The new year has begun well for Oshkosh Truck Corporation. We are certainly pleased and encouraged by the financial performance during the period, with EPS reaching $0.65 per share against our estimate of $0.45 per share. In December, Standard & Poors upgraded Oshkosh to investment grade status of triple B minus. We view the upgrade as a very positive indication that our operating strategy is on target. We manage our money conservatively with good cash flow, which is important in this economy, and I think this upgrade reflects that. In addition, the January 10 announcement of our selection as preferred bidder for the United Kingdom Ministry of Defence's wheeled tanker program was welcome news. It carries particular importance for our ability to deliver solid financial results in fiscal 2004 through 2006, when deliveries under this program would occur if we are awarded the contract. Our outlook is positive, even in this economy, thanks largely to our defense business. We view our concrete placement business to be stable after more than two years of erosion. The fire and emergency market shows some signs of softening largely due to budgetary pressures on municipalities. This softening should have minimal effect on fiscal 2003 as orders to date have nearly filled out the year. Refuse continues to show signs of weakness both in the U.S. and Europe. That being said, we believe it appropriate to hold our EPS estimate of $3.70 per share for the fiscal year. Now, let us turn to our businesses' performance. 7 Fire & Emergency First quarter financial results of Oshkosh's fire and emergency business were excellent. Operating income rose approximately 29% on an increase in sales of about 18%. The product mix was favorable, and Pierce has done a particularly good job on improving operating efficiencies, resulting in a year-over-year operating income margin improvement of 80 basis points in this segment in the first quarter. As we look to our recent order rate, stiffening in municipal capital expenditures has become evident. In California, proposed budget cuts would reduce the city and county revenues received from vehicle-license fees. Early estimates from state firefighter groups put firefighter job losses at 18,000 statewide due to the proposed cut. And that's just one example of the tough budgetary battles many communities are facing in funding their fire service, including new apparatus purchases. Although the $360 million 2002 FIRE Act grant was the largest federal commitment to the fire service in history, these funds did not significantly impact apparatus sales in the industry. Up to 25% of the $360 million could be allocated for apparatus purchases. Through the end of December 2002, just $37 million had been awarded for fire apparatus, or 12% of total grants to date. We also believe that the timing of Pierce's price increase for new engines proved detrimental to our recent order trend, as it came approximately six months before any of our competitors' increases. Yet, despite the signs of weakness, Pierce is sold out through mid-August, with excellent visibility to the year-end. We look forward to a solid performance throughout fiscal 2003 at Pierce and believe that new product features scheduled to debut in early April will benefit fiscal 2004. Defense Moving to our defense business, obviously, we are very pleased to have another opportunity to serve the United Kingdom on a second major defense program, this time for their wheeled tanker fleet that supplies fuel and water on missions worldwide. We are in the midst of negotiating the final contract, which should take approximately two to three months. The 8 Ministry of Defence's estimated value of this contract is $250 million and includes parts sales over a 15-year period. At the conclusion of these negotiations, we'll be able to discuss the equipment value component of this contract and the sales impact in fiscal 2004 in more detail. We expect to issue estimates for fiscal 2004 in July. Other achievements in our defense business during the quarter were also noteworthy. We just re-submitted our bid for the U.K.'s cargo support vehicle program today. All bidders - Oshkosh, MAN, Mercedes and Stewart & Stevenson -- were asked to do so. This competition involves up to 8,500 vehicles to be produced in fiscal years 2005 through 2014. We expect preferred bidder selection to one of the competitors in the second half of this calendar year. Lastly, the U.S. Family of Medium Tactical Vehicles ("FMTV") Competitive Rebuy competition is proceeding largely on schedule. Both competitors are currently responding to questions, and we were recently advised that a final procurement revision to our bid is due March 3, which will move the contract award to March 26. This is just a minor move in the schedule, and a very typical procurement strategy for ensuring the most competitive proposals from the bidders. Commercial Concluding with our commercial businesses, it is in our refuse collection body business, frankly, that we've seen some softening - both domestically and in Europe. In the U.S., the largest commercial waste haulers have been very hesitant to release orders. However, on a positive note, sales of the StreetForce automated side loader are gaining momentum and McNeilus's manufacturing cost containment initiatives are performing to our established targets. The European economy remains weak, dampening our expectations of improvement in Geesink Norba Group's operating results even more. The German market's significant downturn can be attributed to severe economic conditions. The Spanish market for refuse collection bodies is showing signs of weakness as well, and in the Netherlands, municipalities have delayed capital investments until calendar year 2003 to avoid a 19% Value Added Tax. 9 Now, let's turn to concrete placement. Although non-residential building has been adversely affected in recent months, stable conditions prevail in rear-discharge mixer sales on the back of a strong housing sector. In front-discharge mixers, the order volume has been increasing. In regard to the Revolution(TM) composite mixer drum, the approximately 60 units in the field are performing well with only the typical product modifications that you'd expect in a newly launched product. Our Australian partner is meeting monthly deliveries, and most importantly, we are moving forward aggressively in establishing domestic production capacity for the Revolution composite mixer drum. Construction of the new facility near McNeilus headquarters in Minnesota is on schedule, and we expect to reach full-rate production during the first quarter of fiscal 2004. We anticipate positive contributions to earnings from the Revolution product in fiscal 2004 as well. The Revolution is one example of our on-going strategy of new product leadership. Our research and development efforts continue full force throughout the organization, and most notably, we expect they will bring new features to the fire apparatus market in April. Let me reiterate my earlier comments regarding our outlook. Oshkosh Truck Corporation is on track to achieve our $3.70 EPS estimate for fiscal 2003, despite the softening in the municipal and commercial markets that we've just discussed. And, I do consider the preferred bidder decision for the United Kingdom wheeled tanker contract to be crucial to our forward momentum in fiscal 2004. It is an important first step toward expansion of our operations in the United Kingdom and in Europe. Now, I'll turn this call over to our operator for your questions. 10 -----END PRIVACY-ENHANCED MESSAGE-----