Oshkosh Truck Reports Fiscal Year 2002 EPS of $3.45; Affirms Fiscal Year 2003 EPS Estimate of $3.70
OSHKOSH, Wis.--Oct. 29, 2002--Oshkosh Truck Corporation , a leading manufacturer of specialty trucks and truck bodies, today reported that net income increased 17.2 percent to $59.6 million, or $3.45 per share, for its fiscal year ended September 30, 2002, on sales of $1.74 billion. This compares to net income of $50.9 million, or $2.98 per share, for fiscal 2001 on sales of $1.45 billion. Had the company adopted a new accounting standard that eliminated amortization of goodwill and other indefinite-lived intangible assets ($0.39 per share after tax in fiscal 2001) effective in fiscal 2001 rather than in fiscal 2002, earnings per share would have been up $0.08 per share, or 2.4 percent, in fiscal 2002. These results exceeded Oshkosh's most recent earnings expectations of $3.35 per share for fiscal 2002. Oshkosh also affirmed its previous expectations for fiscal 2003 earnings per share of $3.70.Sales increased 15.3 percent in the fourth quarter to $477.0 million. Net income was down 2.3 percent in the fourth quarter to $17.2 million, or $0.99 per share, compared to $17.6 million, or $1.03 per share, in the prior year quarter. Significant bid and proposal costs, higher legal defense costs and lower sales of defense trucks to export markets contributed to lower net income. The acceleration of defense parts sales of $0.09 per share from the fourth to the third quarter of fiscal 2002 to meet customer requirements affected the year over year comparison. 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. Such earnings also included a charge of $0.10 per share for amortization of goodwill and certain intangible assets that was eliminated from fiscal 2002 results due to adoption of the new accounting standard.
"Improved earnings in fiscal 2002 in a sluggish economy reflect the success of our balanced diversification strategy. We invested heavily in fiscal 2002 on bid and proposal spending on large, multi-year defense truck procurement competitions. We launched several new products and technologies such as our Revolution(TM) composite mixer drum. We believe that these investments have strengthened our company, and they cause me to look forward to fiscal 2003 with cautious optimism," commented Robert G. Bohn, chairman, president and chief executive officer.
Bohn continued, "Our stated commitment to debt reduction has been very successful. We repaid $209 million of debt throughout fiscal 2002. I'm pleased with the financial flexibility this affords us in fiscal 2003."
Factors affecting fourth quarter results for the company's business segments included:
Fire and emergency segment--Sales increased by 9.0 percent to $136.6 million for the quarter. Operating income was up 13.5 percent to $15.2 million, or 11.1 percent of sales, compared to prior year operating income of $13.4 million, or 10.7 percent of sales. Excluding the impact of non-amortization of goodwill, operating income was up 7.3 percent. Favorable manufacturing cost performance during the quarter was offset in part by a slightly unfavorable product mix associated with the sales increase.
Defense segment--Fourth quarter defense sales increased 12.4 percent to $168.4 million due to full-rate production for the entire quarter under the company's contract to supply medium payload trucks to the U.S. Marines Corps under the Medium Tactical Vehicle Replacement ("MTVR") contract. In the prior year fourth quarter, the company was in the process of ramping up to full-rate production under the MTVR contract. The prior year fourth quarter results also included strong export sales.
Operating income decreased 18.5 percent to $12.6 million, or 7.5 percent of sales, compared to prior year operating income of $15.5 million, or 10.3 percent of sales. Operating income margins for the segment were negatively impacted by increased spending during the quarter for bid and proposal activities in connection with multi-year truck procurement competitions for the U.S. Army and U.K. Ministry of Defence. Lower sales of higher-margin trucks to export markets and increased sales volume under the lower-margin MTVR contract also adversely impacted defense margins during the fourth quarter.
Commercial segment--Fourth quarter commercial sales increased 25.4 percent (15.7 percent excluding the impact of the Geesink Norba Group acquisition) to $174.4 million. U.S. refuse products sales declined 12.4 percent during the quarter, but concrete placement product sales rose 35.3 percent, primarily due to a higher mix of chassis and concrete mixer package sales in advance of a change in engine emission requirements effective October 1, 2002.
Operating income increased 38.8 percent (22.6 percent exclusive of the impact of the Geesink Norba Group acquisition and non-amortization of goodwill) to $10.0 million, or 5.7 percent of sales, compared to prior year operating income of $7.2 million, or 5.2 percent of sales. Favorable product mix contributed to the increase in operating income margin.
Corporate and other--Corporate expenses and inter-segment profit elimination increased from $4.0 million to $6.4 million largely as a result of higher variable incentive compensation, higher legal defense costs and investments in people and services. Non-operating income in the fourth quarter of fiscal 2001 included 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 decreased to $3.8 million compared to $6.5 million in the prior year quarter. Strong operating cash flow combined with substantially lower interest rates reduced interest costs during the quarter.
Total debt decreased to $150.0 million at September 30, 2002 compared to $359.3 million at September 30, 2001. The decrease is primarily attributable to strong operating cash flow and higher performance-based payments on defense contracts.
Full Year Results
The company also reported that net income increased 17.2 percent to $59.6 million, or $3.45 per share, for the year on sales of $1.74 billion compared to net income of $50.9 million, or $2.98 per share, for fiscal 2001, on sales of $1.45 billion. Operating income rose 13.0 percent to $111.1 million, or 6.4 percent of sales, compared to $98.3 million, or 6.8 percent of sales, in fiscal 2001. Excluding the impact of the non-amortization of goodwill and certain intangible assets and of the Geesink Norba Group acquisition, operating income would have declined 1.2 percent in fiscal 2002.
Factors affecting fiscal 2002 results for the company's business segments included:
Fire and emergency segment--Sales increased 2.6 percent to $476.1 million for the year. Operating income increased 6.9 percent (decreased 0.1 percent excluding the impact of the non-amortization of goodwill) to $49.0 million, or 10.3 percent of sales, compared to prior year operating income of $45.8 million, or 9.9% of sales. Operating results were flat due to the impact of the recession on municipal spending for fire and emergency products.
Defense segment--Sales increased 40.6 percent to $594.9 million during the year. The company commenced full-rate production under its MTVR contract with the U.S. Marines in the fourth quarter of fiscal 2001. This contributed most of the sales increase in fiscal 2002. Operating income increased 3.0 percent to $40.7 million, or 6.8 percent of sales, compared to prior year operating income of $39.5 million, or 9.3 percent of sales. Fiscal 2002 results included a $4.8 million benefit from a change in estimated operating income margins from 3.3 percent recorded in fiscal 2001 to 4.3 percent recorded in fiscal 2002, including $1.7 million related to previous year's sales. Increased bid and proposal costs, lower sales of higher-margin export trucks and higher sales of lower-margin MTVR trucks contributed to the decline in the operating income margins compared to the prior year.
Commercial segment--Sales increased 21.2 percent (0.2 percent exclusive of Geesink Norba Group sales) to $678.3 million during the year. The company reported a 0.6 percent decrease in concrete placement sales in fiscal 2002, offset by a 1.8 percent increase in domestic refuse sales. Operating income increased 57.8 percent (19.8 percent exclusive of the impact of the Geesink Norba Group acquisition and the non-amortization of goodwill) to $47.2 million, or 7.0 percent of sales, during the year compared to prior year operating income of $29.9 million, or 5.3 percent of sales. The increase in operating income, excluding the impact of the acquisition of the Geesink Norba Group and of the non-amortization of goodwill, was primarily due to favorable manufacturing cost performance and lower workers compensation costs.
Corporate and other--Corporate expenses and inter-segment profit elimination increased $8.8 million to $25.8 million in fiscal 2002 due to higher variable incentive compensation, higher legal defense costs and investments in people and services. Non-operating income in fiscal 2001 included a $1.7 million one-time foreign currency exchange gain. Net interest expense decreased $1.1 million to $20.1 million in fiscal 2002. The favorable impact of lower interest rates on variable rate debt and reductions in debt due to strong operating cash flow and receipt of performance-based payments on defense contracts more than offset additional interest incurred to fund the acquisition of the Geesink Norba Group.
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 November 13, 2002, to shareholders of record as of November 6, 2002.
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, 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 2003 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. 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 the outcome of defense truck procurement competitions, the extent of economic recovery, if any, in 2003 in the U.S. and Europe, 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 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 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,
--------------------- ---------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
(In thousands, except per share amounts)
Net sales $ 476,962 $ 413,608 $1,743,592 $1,445,293
Cost of sales 405,276 349,205 1,483,126 1,230,800
---------- ---------- ---------- ----------
Gross income 71,686 64,403 260,466 214,493
Operating expenses:
Selling, general
and administrative 38,694 29,196 143,330 104,022
Amortization of goodwill
and purchased
intangibles 1,597 3,228 6,018 12,175
---------- ---------- ---------- ----------
Total operating expenses 40,291 32,424 149,348 116,197
---------- ---------- ---------- ----------
Operating income 31,395 31,979 111,118 98,296
Other income (expense):
Interest expense (4,018) (6,858) (21,266) (22,286)
Interest income 260 343 1,160 1,050
Miscellaneous, net (1,182) 1,829 (1,555) 1,753
---------- ---------- ---------- ----------
(4,940) (4,686) (21,661) (19,483)
---------- ---------- ---------- ----------
Income before income
taxes and equity
in earnings of
unconsolidated
partnership 26,455 27,293 89,457 78,813
Provision for income taxes 9,999 10,017 32,285 29,361
---------- ---------- ---------- ----------
16,456 17,276 57,172 49,452
Equity in earnings
of unconsolidated
partnership, net of
income taxes 793 372 2,426 1,412
---------- ---------- ---------- ----------
Net income $ 17,249 $ 17,648 $ 59,598 $ 50,864
========== ========== ========== ==========
Earnings per share $ 1.02 $ 1.06 $ 3.54 $ 3.05
Earnings per share
assuming dilution $ 0.99 $ 1.03 $ 3.45 $ 2.98
Weighted average
shares outstanding:
Basic 16,897 16,690 16,821 16,681
Assuming dilution 17,351 17,077 17,285 17,088
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,
2002 2001
------------ ------------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 40,039 $ 11,312
Receivables, net 142,709 211,405
Inventories 210,866 258,038
Prepaid expenses 7,414 6,673
Deferred income taxes 26,008 15,722
------------ ------------
Total current assets 427,036 503,150
Investment in unconsolidated partnership 22,274 18,637
Other long-term assets 11,625 8,626
Property, plant and equipment 261,045 244,166
Less accumulated depreciation (120,684) (102,238)
------------ ------------
Net property, plant and equipment 140,361 141,928
Purchased intangible assets, net 104,316 124,787
Goodwill 318,717 292,140
------------ ------------
Total assets $ 1,024,329 $ 1,089,268
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 116,422 $ 107,864
Floor plan notes payable 23,801 19,271
Customer advances 119,764 58,070
Payroll-related obligations 34,474 27,084
Income taxes 8,597 25,221
Accrued warranty 24,015 18,338
Other current liabilities 47,754 46,322
Revolving credit facility
and current maturities
of long-term debt 18,245 77,031
------------ ------------
Total current liabilities 393,072 379,201
Long-term debt 131,713 282,249
Deferred income taxes 39,303 40,334
Other long-term liabilities 50,481 40,458
Commitments and contingencies
Shareholders' equity 409,760 347,026
------------ ------------
Total liabilities and shareholders' equity $ 1,024,329 $ 1,089,268
============ ============
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
September 30,
---------------------------
2002 2001
------------ ------------
(In thousands)
Operating activities:
Net income $ 59,598 $ 50,864
Non-cash adjustments 19,656 23,507
Changes in operating
assets and liabilities 184,714 (82,741)
------------ ------------
Net cash provided from (used for)
operating activities 263,968 (8,370)
Investing activities:
Acquisition of businesses,
net of cash acquired - (160,241)
Additions to property,
plant and equipment (15,619) (18,493)
Proceeds from sale of property,
plant and equipment 8 238
Increase in other long-term assets (7,824) (4,867)
------------ ------------
Net cash used for investing activities (23,435) (183,363)
Financing activities:
Net borrowings (repayments) under
revolving credit facility (65,200) 65,200
Proceeds from issuance of long-term debt - 140,000
Repayment of long-term debt (144,134) (8,908)
Debt issuance costs - (1,183)
Dividends paid (5,777) (5,735)
Other 2,254 480
------------ ------------
Net cash provided from (used for)
financing activities (212,857) 189,854
Effect of exchange rate changes on cash 1,051 (378)
------------ ------------
Increase (decrease) in cash
and cash equivalents 28,727 (2,257)
Cash and cash equivalents
at beginning of period 11,312 13,569
------------ ------------
Cash and cash equivalents at end of period $ 40,039 $ 11,312
============ ============
Supplementary disclosure:
Depreciation and amortization $ 25,392 $ 28,497
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
--------------------- ---------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
(In thousands)
Net sales to unaffiliated
customers:
Commercial $ 174,392 $ 139,121 $ 678,334 $ 559,871
Fire and emergency 136,644 125,316 476,148 463,919
Defense 168,381 149,776 594,856 423,132
Intersegment
eliminations (2,455) (605) (5,746) (1,629)
---------- ---------- ---------- ----------
Consolidated $ 476,962 $ 413,608 $1,743,592 $1,445,293
========== ========== ========== ==========
Operating income (expense):
Commercial $ 9,967 $ 7,181 $ 47,171 $ 29,891
Fire and emergency 15,164 13,355 48,988 45,841
Defense 12,626 15,490 40,720 39,545
Corporate and other (6,362) (4,047) (25,761) (16,981)
---------- ---------- ---------- ----------
Consolidated $ 31,395 $ 31,979 $ 111,118 $ 98,296
========== ========== ========== ==========
Period-end backlog:
Commercial $ 139,001 $ 134,439
Fire and emergency 285,548 251,317
Defense 483,297 413,743
---------- ----------
Consolidated $ 907,846 $ 799,499
========== ==========