Oshkosh Truck Reports Income From Continuing Operations Up 5 Percent in Fiscal 2001; Re-confirms Fiscal 2002 EPS Estimate
OSHKOSH, Wis.--Nov. 1, 2001--Oshkosh Truck Corporation (NASDAQ--OTRKB), a leading manufacturer of specialty trucks and truck bodies, today reported that income from continuing operations increased 5 percent to $50.9 million, or $2.98 per share, for its fiscal year ended September 30, 2001, on sales of $1,445 million. This compares to income from continuing operations of $48.5 million, or $2.96 per share, for fiscal 2000 on sales of $1,330 million. For the fourth quarter of fiscal 2001, the company reported that income from continuing operations increased 21 percent to $17.6 million, or $1.03 per share, on sales of $414 million. This compares to net income of $14.6 million, or $0.86 per share, for the fourth quarter of fiscal 2000 on sales of $359 million. Earnings in the fourth quarter of fiscal 2001 benefited from a one-time gain of $0.10 per share related to a foreign currency exchange gain arising from the purchase of Euros in anticipation of the acquisition of the Geesink Norba Group in July 2001. Excluding this one-time gain, earnings per share was $0.08 higher than Oshkosh's fourth quarter earnings estimate reported on July 27, 2001."We are quite pleased with the fiscal 2001 results in the context of the current economic environment. This company's diversification continues to be the foundation for sustainable, long-term growth and has mitigated our economic sensitivity. Even though we were helped by a one-time foreign currency exchange gain, our base business was up 8 percent in the fourth quarter. The challenge will continue in fiscal 2002 with the potential for a recessionary economy, but we believe production increases under our U.S. Marine Corps' Medium Tactical Vehicle Replacement ("MTVR") contract and relative stability in municipal markets should buffer continued softness in our concrete placement business," said Robert G. Bohn, chairman, president and chief executive officer, commenting on fiscal 2001 performance and the current outlook.
Oshkosh also re-confirmed its earnings per share estimate of $2.60 for fiscal 2002 under its historic accounting practices. Oshkosh anticipates that adoption of new accounting rules relative to goodwill and other intangible assets, effective October 1, 2001, will increase reported earnings per share by $0.38 in fiscal 2002, bringing the company's estimate to $2.98 under the new accounting rules.
"While the tragic events of September 11 intensified the softening in several of our markets, we hold firm on our fiscal 2002 earnings estimates, since we had already assumed a moderate recession. However, if economic conditions continue to deteriorate, we may reduce estimates in future quarters," stated Bohn.
Bohn continued, "Like other U.S. businesses, we are adjusting our staffing and other expenses, cutting back inventory levels and curtailing capital spending. We are more focused on improving our returns on invested capital in all our segments. But, we are continuing to make investments in new product development that we hope will create significant earnings leverage when the economy recovers."
Net sales for the quarter increased 15 percent compared to the prior year. Operating income increased 14 percent to $32.0 million, or 7.7 percent of sales, compared to $28.0 million, or 7.8 percent of sales, in the prior year's fourth quarter. Double-digit sales and operating income growth in fire and emergency and defense segments were tempered by continued sales weakness in the company's concrete placement business.
Factors affecting fourth quarter results for the company's business segments included:
Fire and emergency--Sales increased by 15 percent (10 percent excluding the impact of the acquisition of Medtec Ambulance Corporation) to $125.3 million for the quarter. Operating income was up 34 percent (28 percent excluding the impact of the acquisition of Medtec) to $13.4 million, or 10.7 percent of sales, compared to prior year operating income of $10.0 million, or 9.2 percent of sales.
Defense segment--Fourth quarter sales increased 39 percent to $149.8 million due to strong export sales and the ramp-up to full-rate production under the company's contract to supply medium trucks to the U.S. Marines under the MTVR contract.
Operating income increased 18 percent to $15.5 million, or 10.3 percent of sales, compared to prior year operating income of $13.2 million, or 12.2 percent of sales. Operating income margins for the segment were negatively impacted by the increased sales volume under the MTVR contract, which carries significantly lower margins than the segment's other products. Operating income performance of these other defense products was strong due to production efficiencies arising from higher sales volumes.
Commercial segment--Fourth quarter sales decreased 3 percent (16 percent excluding the impact of the Geesink Norba Group acquisition) to $139.1 million for the quarter. U.S. refuse products sales growth of 7 percent was more than offset by a 27 percent reduction in concrete placement product sales. U.S. refuse products sales growth was attributable to strong sales with the three largest U.S. waste haulers and municipal accounts.
Operating income decreased 24 percent (37 percent exclusive of the impact of the Geesink Norba Group acquisition) to $7.2 million, or 5.2 percent of sales, compared to prior year operating income of $9.4 million, or 6.6 percent of sales. As expected, the July 25, 2001 acquisition of the Geesink Norba Group was dilutive to earnings by $0.02 per share. August is typically a very slow period for Geesink Norba's business due to vacations in Europe.
"In our first two months of ownership of Geesink Norba, we achieved our sales and earnings expectations for the business. More importantly, we began the integration program to drive synergies. We expect Geesink Norba to be a strong platform for future growth," commented Bohn.
Corporate and other--Corporate expenses and inter-segment profit elimination decreased from $4.6 million to $4.0 million. Non-operating income increased from $0.1 million to $1.8 million. Current year results include a $1.7 million one-time foreign currency exchange gain incurred in connection with funds borrowed to acquire the Geesink Norba Group. Net interest expense for the quarter increased to $6.5 million compared to $4.4 million in the prior year quarter as interest costs on borrowings used to fund the Geesink Norba acquisition were partially offset by lower short-term interest rates.
Total debt rose to $359 million at September 30, 2001 compared to $163 million at September 30, 2000. The increase is primarily attributable to debt incurred with respect to acquisitions, plus working capital requirements associated with the ramp up of the MTVR contract. Total debt exceeded previously reported estimates of $320 million as of September 30, 2001, primarily because the collection of certain defense receivables was delayed until October 2001. Oshkosh's total debt approximated $335 million at October 31, 2001.
Full Year Results
The company reported that income from continuing operations increased 5 percent to $50.9 million, or $2.98 per share, for the year on sales of $1,445 million compared to income from continuing operations of $48.5 million, or $2.96 per share, for fiscal 2000, on sales of $1,330 million. Operating income rose slightly to $98.3 million, or 6.8 percent of sales, compared to $98.1 million, or 7.4 percent of sales, in fiscal 2000.
Factors affecting fiscal 2001 results for the company's business segments included:
Fire and emergency--Sales increased 19 percent (13 percent excluding the impact of the Medtec acquisition) to $464 million compared to $391 million in the prior year. Strong unit shipments and a positive mix of higher-value trucks contributed to the growth in sales. Operating income increased 39 percent (32 percent excluding the impact of the Medtec acquisition) to $45.8 million, or 9.9 percent of sales, compared to $32.9 million, or 8.4 percent of sales, in the prior year. Cost reduction efforts and favorable overhead absorption at the company's Oshkosh manufacturing facilities contributed to operating income margin improvement.
Defense--Sales increased 53 percent, to $423 million, compared to $276 million in the prior year. The company commenced full-rate production under its MTVR contract with the U.S. Marines in the third quarter of fiscal 2001. This contributed $112 million of the sales increase. The company also recorded higher export shipments and parts sales. Operating income increased 31 percent to $39.5 million, or 9.3 percent of sales, compared to $30.1 million, or 10.9 percent of sales, in the prior year. Increased shipments of lower margin MTVR units and increased development and bid and proposal costs contributed to the decline in the operating income margins compared to the prior year.
Commercial--Sales decreased 16 percent (19 percent exclusive of Geesink Norba sales) to $560 million, compared to $664 million in the prior year. The company reported sales increases in domestic service parts and refuse products, which were more than offset by reductions in sales of both front and rear-discharge concrete placement products. Operating income decreased 45 percent (48 percent exclusive of Geesink Norba results) to $29.9 million, or 5.3 percent of sales, compared to $54.7 million, or 8.2 percent of sales, in the prior year.
Corporate and other--Corporate expenses and inter-segment profit elimination decreased $2.7 million to $17.0 million. Current year results also include a $1.7 million one-time foreign currency exchange gain incurred in connection with funds borrowed to acquire the Geesink Norba Group. Reductions in incentive compensation expense and the impact of overall cost reduction efforts contributed to the decline in corporate expenses compared to the prior year. Net interest expense increased $1.2 million to $21.2 million. The favorable impact of lower interest rates on variable rate debt was more than offset by additional interest to fund the acquisitions of Medtec and Geesink Norba during the year.
Dividend Announcement
Oshkosh Truck Corporation's Board of Director 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 November 13, 2001, to shareholders of record as of November 6, 2001.
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, Norba and Kiggen brand names. Oshkosh's products are valued worldwide by fire and emergency units, defense forces, municipal and airport support services, 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 fourth quarter earnings and their current outlook for fiscal 2002 during a live conference call at 11:00 a.m. Eastern Standard Time today. The 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.
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 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 2002 are based in part on certain assumptions made by the company, including those relating to concrete placement activity; the performance of the U.S. economy generally; when the company will receive sales orders and payments; achieving cost reductions; production and margin levels under the MTVR contract, the Family of Heavy Tactical Vehicles 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 interest costs. 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.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
------------------ -----------------
2001 2000 2001 2000
------- ------- ------- -------
(In thousands, except per share amounts)
Net sales (a) $413,608 $359,181 $1,445,293 $1,329,516
Cost of sales 349,205 304,787 1,230,800 1,126,582
--------- -------- ---------- ----------
Gross income 64,403 54,394 214,493 202,934
Operating expenses:
Selling, general and
administrative 29,196 23,599 104,022 93,724
Amortization of goodwill
and other intangibles 3,228 2,835 12,175 11,159
--------- -------- ---------- ----------
Total operating expenses 32,424 26,434 116,197 104,883
--------- -------- ---------- ----------
Operating income 31,979 27,960 98,296 98,051
Other income (expense):
Interest expense (6,858) (4,642) (22,286) (20,956)
Interest income 343 253 1,050 893
Miscellaneous, net 1,829 132 1,753 661
--------- -------- ---------- ----------
(4,686) (4,257) (19,483) (19,402)
--------- -------- ---------- ----------
Income before items noted
below 27,293 23,703 78,813 78,649
Provision for income taxes 10,017 9,389 29,361 31,346
--------- -------- ---------- ----------
17,276 14,314 49,452 47,303
Equity in earnings of
unconsolidated partnership,
net of income taxes 372 311 1,412 1,205
--------- -------- ---------- ----------
Income from continuing
operations 17,648 14,625 50,864 48,508
Gain on disposal of
discontinued operations, net
of income taxes of $1,235 - - - 2,015
Extraordinary charge for early
retirement of debt, net of
income tax benefit of $356 - (239) - (820)
--------- -------- ---------- ----------
Net income $17,648 $14,386 $50,864 $49,703
========= ======== ========== ==========
Earnings (loss) per share:
Continuing operations $ 1.06 $ 0.87 $ 3.05 $ 3.01
Discontinued operations - - - 0.13
Extraordinary charge - (0.01) - (0.05)
--------- -------- ---------- ----------
Net income $ 1.06 $ 0.86 $ 3.05 $ 3.09
========= ======== ========== ==========
Earnings (loss) per share
assuming dilution:
Continuing operations $ 1.03 $ 0.86 $ 2.98 $ 2.96
Discontinued operations - - - 0.12
Extraordinary charge - (0.01) - (0.05)
--------- -------- ---------- ----------
Net income $ 1.03 $ 0.85 $ 2.98 $ 3.03
========= ======== ========== ==========
Weighted average shares
outstanding:
Basic 16,690 16,647 16,681 16,074
Assuming dilution 17,077 17,009 17,088 16,404
Cash dividends:
Class A Common Stock $0.07500 $0.07500 $ 0.30000 $ 0.30000
Common Stock $0.08625 $0.08625 $ 0.34500 $ 0.34500
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, September 30,
2001 2000
------------- -------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 11,312 $ 13,569
Receivables, net 211,405 106,517
Inventories 258,038 201,210
Prepaid expenses 6,673 5,424
Deferred income taxes 15,722 14,708
------------- -------------
Total current assets 503,150 341,428
Investment in unconsolidated partnership 18,637 15,179
Other long-term assets 10,276 10,283
Property, plant and equipment 244,166 206,507
Less accumulated depreciation (102,238) (87,748)
------------- -------------
Net property, plant and equipment 141,928 118,759
Goodwill and other intangible assets, net 415,277 310,731
------------- -------------
Total assets $1,089,268 $ 796,380
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 107,864 $ 84,215
Floor plan notes payable 19,271 23,925
Customer advances 58,070 58,493
Payroll-related obligations 27,084 23,465
Accrued warranty 18,338 15,519
Other current liabilities 71,543 50,767
Revolving credit facility and
current maturities
of long-term debt 77,031 8,544
------------- -------------
Total current liabilities 379,201 264,928
Long-term debt 282,249 154,238
Deferred income taxes 40,334 46,414
Other long-term liabilities 40,458 29,743
Commitments and contingencies
Shareholders' equity 347,026 301,057
------------- -------------
Total liabilities and shareholders' equity $1,089,268 $ 796,380
============= =============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
September 30,
------------------------------------
2001 2000
----------------- --------------
(In thousands)
Operating activities:
Income from continuing operations $ 50,864 $ 48,508
Non-cash adjustments 23,507 24,540
Changes in operating assets and
liabilities (82,741) (23,365)
----------------- --------------
Net cash provided from (used for)
operating activities (8,370) 49,683
Investing activities:
Acquisition of businesses, net of
cash acquired (160,241) (7,147)
Additions to property, plant and
equipment (18,493) (22,647)
Proceeds from sale of property,
plant and equipment 238 52
Increase in other long-term
assets (4,867) (2,417)
------------- --------------
Net cash used for investing
activities (183,363) (32,159)
Net cash provided from
discontinued operations - 2,015
Financing activities:
Net borrowings under revolving
credit facility 65,200 (5,000)
Proceeds from issuance of
long-term debt 140,000 30,913
Repayment of long-term debt (8,908) (124,595)
Debt issuance costs (1,183) (795)
Proceeds from Common Stock
offering - 93,736
Costs of Common Stock offering - (334)
Dividends paid (5,735) (5,392)
Other 480 360
-------------- --------------
Net cash provided from (used for)
financing activities 189,854 (11,107)
Effect of exchange rate changes on
cash (378) -
-------------- --------------
Increase (decrease) in cash and cash
equivalents (2,257) 8,432
Cash and cash equivalents at
beginning of period 13,569 5,137
----------------- --------------
Cash and cash equivalents at end
of period $ 11,312 $ 13,569
================= ==============
Supplementary disclosure:
Depreciation and amortization $ 28,497 $ 24,218
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
---------------------- ---------------------------
2001 2000 2001 2000
----------- --------- ------------- ------------
Net sales to unaffiliated
customers:
Commercial (a) $ 139,121 $ 143,058 $ 559,871 $ 663,819
Fire and emergency 125,316 108,796 463,919 390,659
Defense 149,776 107,730 423,132 275,841
Corporate and other (605) (403) (1,629) (803)
----------- ---------- ------------- ------------
Consolidated $ 413,608 $ 359,181 $ 1,445,293 $ 1,329,516
=========== ========== ============= ============
Operating income (expense):
Commercial $ 7,181 $ 9,440 $ 29,891 $ 54,654
Fire and emergency 13,355 10,006 45,841 32,922
Defense 15,490 13,156 39,545 30,119
Corporate and other (4,047) (4,642) (16,981) (19,644)
----------- ---------- ------------- ------------
Consolidated $ 31,979 $ 27,960 $ 98,296 $ 98,051
=========== ========== ============= ============
Backlog:
Commercial $ 134,439 $ 99,131
Fire and emergency 251,317 216,861
Defense 413,743 291,541
------------- ------------
Consolidated $ 799,499 $ 607,533
============= ============
(a) In the fourth quarter of fiscal 2001, the company adopted
provisions of the Emerging Issues Task Force (EITF) of the
Financial Accounting Standards Board (FASB) Abstract No. 00-10,
"Accounting for Shipping and Handling Fees and Costs." Adoption of
provisions of EITF 00-10 resulted in a reclassification of
shipping fee revenue from cost of sales, where it had been
classified as a reduction of shipping costs, to sales. Amounts
reclassified only impacted the commercial segment and totaled
$1,520 and $5,470 for the three months and fiscal year ended
September 30, 2001 and $1,213 and $5,490 for the three months and
fiscal year ended September 30, 2000, respectively.