Oshkosh Truck Reports Fourth Quarter EPS up 48.0%
OSHKOSH, Wis.--Oct. 2, 20038, 2003--Oshkosh Truck Corporation , a leading manufacturer of specialty trucks and truck bodies, today reported that net income increased 26.9 percent to $75.6 million, or $2.16 per share, for its fiscal year ended September 30, 2003, on sales of $1.93 billion. This compares with net income of $59.6 million, or $1.72 per share, on sales of $1.74 billion for fiscal 2002. These results exceeded Oshkosh's most recent earnings expectations of $2.00 per share for fiscal 2003. Oshkosh also increased its earnings estimate for fiscal 2004 results to $2.45 per share.Sales increased 6.5 percent in the fourth quarter of fiscal 2003 to $508.1 million. Operating income increased 38.7 percent to $43.6 million, or 8.6 percent of sales, compared to $31.4 million, or 6.6 percent of sales, in the prior year's fourth quarter. Net income was up 50.8 percent in the fourth quarter to $26.0 million, or $0.74 per share, compared to $17.2 million, or $0.50 per share, in the prior year quarter. Significant factors impacting fourth quarter results included a cumulative adjustment to increase margins on the Company's long-term Medium Tactical Vehicle Replacement ("MTVR") contract with the U.S. Marine Corps from 4.3% to 5.5% ($0.17 per share) and a favorable income tax audit settlement concluded in the quarter ($0.10 per share) which were partially offset by charges related to the early retirement of the Company's $100.0 million 8 3/4% senior subordinated notes ($0.11 per share) and engineering and development costs for the continued roll-out of the Revolution(TM) drum ($0.07 per share).
Robert G. Bohn, chairman, president and chief executive officer, stated, "Fourth quarter operating results were strong, with particularly noteworthy contribution from our defense business. During the quarter, defense operating income benefited from production cost reduction initiatives implemented during fiscal 2003 that supported a margin increase on the MTVR contract, and, from the increased sales volume in parts attributable to the high-use truck environment during the current conflicts in Iraq and Afghanistan. In light of the suppressed municipal market, our fire and emergency business delivered strong results, higher orders and increased backlog. In our concrete placement business, we have seen a stabilization effect in recent months, and I'm hopeful this is the first indication of a modest market rebound for fiscal 2004. On a less positive note, the fundamentals in the refuse hauling markets in the U.S. and Europe remain difficult. Overall, fiscal 2003 performance speaks to the validity of our diversified business model."
"To put our 2003 product development accomplishments into perspective, we introduced the first side roll protection system in the fire service, finalized the design, material composition and testing for the first-ever composite concrete mixer drum, are in the midst of engineering a production-ready version of the first hybrid electric drive for heavy trucks, and introduced a new refuse hauling body design to the European market. All provide reason to be optimistic regarding sales and margin performance in fiscal 2004," said Bohn.
Factors affecting fourth quarter results for the Company's business segments included:
Fire and emergency--Fire and emergency segment sales declined 3.3 percent, to $132.1 million for the quarter. Operating income was down 23.4 percent to $11.6 million, or 8.8 percent of sales, compared to prior year operating income of $15.2 million, or 11.1 percent of sales. The lower sales and earnings resulted from lower spending by municipal and state governments due to budget constraints and an adverse product mix.
Defense--Defense sales increased 18.3 percent to $199.2 million for the quarter, largely due to shipments of the Heavy Equipment Transporter to the U.K. Ministry of Defence and increased parts sales during the quarter. Operating income in the fourth quarter was up 180.8 percent to $35.5 million, or 17.8 percent of sales, compared to prior year operating income of $12.6 million, or 7.5 percent of sales. Earnings for the current year quarter reflect a $9.2 million cumulative catch-up adjustment to operating income on the Company's MTVR contract as a result of positive cost performance. The Company increased MTVR margins during the quarter to 5.5 percent compared to the previous 4.3 percent rate. Earnings for the current year quarter also benefited from increased sales of higher-margin parts and heavy trucks, as well as lower bid and proposal spending.
Commercial--Commercial sales increased 2.7 percent to $179.1 million for the quarter. Operating income decreased 38.4 percent to $6.1 million, or 3.4 percent of sales, compared to 5.7 percent of sales in the prior year quarter. Unit sales volumes declined in all product lines during the fourth quarter, but segment sales increased due to a higher mix of package sales of truck bodies and purchased chassis. All of the decline in operating income for the quarter resulted from substantial investments in engineering and development related to the planned roll-out of the Company's Revolution(TM) composite concrete mixer drum technology to new markets.
Corporate and other--Operating expenses and inter-segment profit elimination increased $3.3 million to $9.7 million, largely due to higher variable incentive compensation expense, costs to implement the requirements of the Sarbanes-Oxley Act and investments in additional personnel and services. Net interest expense for the quarter decreased $1.0 million to $2.8 million, compared to the prior year quarter. Lower interest costs were largely due to debt reduction resulting from "performance-based" payments received on the multi-year MTVR and Family of Heavy Tactical Vehicles contracts and cash flow from operations. Non-operating income in the fourth quarter of fiscal 2003 includes a $6.3 million charge related to the early retirement of the Company's $100.0 million 8 3/4 percent senior subordinated notes due March 2008. The debt prepayment was made from available cash and borrowings under the Company's revolving credit facility. Fiscal 2003 income tax expense includes a $3.4 million reduction as a result of a favorable settlement of an income tax audit which was concluded during the fourth quarter of fiscal 2003.
Following the early repayment of the senior subordinated notes, total debt declined to $53.1 million at September 30, 2003, a reduction of $96.8 million since September 30, 2002.
Full Year Results
The Company reported that net income increased 26.9 percent to $75.6 million, or $2.16 per share, for the year on sales of $1.93 billion compared to $59.6 million, or $1.72 per share, for fiscal 2002, on sales of $1.74 billion. Operating income rose 16.3 percent to $129.2 million, or 6.7 percent of sales, compared to $111.1 million, or 6.4 percent of sales, in fiscal 2002.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.05 per share for Class A Common Stock and $0.0575 per share for Common Stock. These dividends, unchanged from the immediately preceding quarter, will be payable November 13, 2003, to shareholders of record as of November 6, 2003.
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
------------------- -----------------------
2003 2002 2003 2002
--------- --------- ----------- -----------
(In thousands, except per share amounts)
Net sales $508,114 $476,962 $1,926,010 $1,743,592
Cost of sales 421,242 405,276 1,634,095 1,483,126
--------- --------- ----------- -----------
Gross income 86,872 71,686 291,915 260,466
Operating expenses:
Selling, general and
administrative 41,693 38,694 156,266 143,330
Amortization of
purchased intangibles 1,620 1,597 6,450 6,018
--------- --------- ----------- -----------
Total operating expenses 43,313 40,291 162,716 149,348
--------- --------- ----------- -----------
Operating income 43,559 31,395 129,199 111,118
Other income (expense):
Interest expense (3,316) (4,018) (13,495) (21,266)
Interest income 558 260 1,358 1,160
Miscellaneous, net (6,442) (1,182) (6,582) (1,555)
--------- --------- ----------- -----------
(9,200) (4,940) (18,719) (21,661)
--------- --------- ----------- -----------
Income before provision
for income taxes and
equity in earnings
of unconsolidated
partnership 34,359 26,455 110,480 89,457
Provision for income
taxes 8,953 9,999 37,131 32,285
--------- --------- ----------- -----------
Income before equity in
earnings of
unconsolidated
partnership 25,406 16,456 73,349 57,172
Equity in earnings of
unconsolidated
partnership, net of
income taxes 599 793 2,271 2,426
--------- --------- ----------- -----------
Net income $ 26,005 $ 17,249 $ 75,620 $ 59,598
========= ========= =========== ===========
Earnings per share $ 0.75 $ 0.51 $ 2.22 $ 1.77
Earnings per share
assuming dilution $ 0.74 $ 0.50 $ 2.16 $ 1.72
Weighted average shares
outstanding:
Basic 34,504 33,795 34,099 33,642
Assuming dilution 35,355 34,703 34,985 34,570
Cash dividends:
Class A Common Stock $0.05000 $0.03750 $0.17500 $0.15000
Common Stock $0.05750 $0.04313 $0.20125 $0.17250
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September September
30, 30,
2003 2002
----------- -----------
(Unaudited)
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 19,245 $ 40,039
Receivables, net 159,752 142,709
Inventories 242,076 210,866
Prepaid expenses 10,393 7,414
Deferred income taxes 35,092 26,008
----------- -----------
Total current assets 466,558 427,036
Investment in unconsolidated partnership 21,977 22,274
Other long-term assets 7,852 11,625
Property, plant and equipment 285,270 261,045
Less accumulated depreciation (138,801) (120,684)
----------- -----------
Net property, plant and equipment 146,469 140,361
Purchased intangible assets, net 102,460 104,316
Goodwill 337,816 318,717
----------- -----------
Total assets $1,083,132 $1,024,329
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 115,739 $ 116,422
Floor plan notes payable 18,730 23,801
Customer advances 164,460 119,764
Payroll-related obligations 33,712 34,474
Income taxes 263 8,597
Accrued warranty 29,172 24,015
Other current liabilities 54,293 47,754
Revolving credit facility and current
maturities of long-term debt 51,625 18,245
----------- -----------
Total current liabilities 467,994 393,072
Long-term debt 1,510 131,713
Deferred income taxes 47,619 39,303
Other long-term liabilities 47,146 50,481
Commitments and contingencies
Shareholders' equity 518,863 409,760
----------- -----------
Total liabilities and shareholders' equity $1,083,132 $1,024,329
=========== ===========
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
September 30,
-------------------
2003 2002
--------- ---------
(In thousands)
Operating activities:
Net income $ 75,620 $ 59,598
Non-cash and other adjustments 29,952 19,656
Changes in operating assets and liabilities (306) 184,714
--------- ---------
Net cash provided from operating activities 105,266 263,968
Investing activities:
Additions to property, plant and equipment (24,673) (15,619)
Proceeds from sale of assets 3,777 8
Increase in other long-term assets (7,286) (7,824)
--------- ---------
Net cash used for investing activities (28,182) (23,435)
Financing activities:
Net borrowings (repayments) under revolving
credit facility 51,400 (65,200)
Repayment of long-term debt (148,247) (144,134)
Early extinguishment of debt (4,658) -
Dividends paid (6,390) (5,777)
Other 9,565 2,254
--------- ---------
Net cash used for financing activities (98,330) (212,857)
Effect of exchange rate changes on cash 452 1,051
--------- ---------
Increase (decrease) in cash and cash equivalents (20,794) 28,727
Cash and cash equivalents at beginning of year 40,039 11,312
--------- ---------
Cash and cash equivalents at end of year $ 19,245 $ 40,039
========= =========
Supplementary disclosure:
Depreciation and amortization $ 26,120 $ 25,392
OSHKOSH TRUCK CORPORATION
SEGMENT INFORMATION
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
---------------------- -----------------------
2003 2002 2003 2002
----------- ---------- ----------- -----------
(In thousands)
Net sales to
unaffiliated customers:
Commercial $ 179,144 $ 174,392 $ 741,878 $ 678,334
Fire and emergency 132,068 136,644 534,955 476,148
Defense 199,155 168,381 657,094 594,856
Intersegment
eliminations (2,253) (2,455) (7,917) (5,746)
----------- ---------- ----------- -----------
Consolidated $ 508,114 $ 476,962 $1,926,010 $1,743,592
=========== ========== =========== ===========
Operating income
(expense):
Commercial $ 6,141 $ 9,967 $ 40,188 $ 47,171
Fire and emergency 11,619 15,164 52,072 48,988
Defense 35,458 12,626 68,697 40,720
Corporate and other (9,659) (6,362) (31,758) (25,761)
----------- ---------- ----------- -----------
Consolidated $ 43,559 $ 31,395 $ 129,199 $ 111,118
=========== ========== =========== ===========
Period-end backlog:
Commercial $ 147,132 $ 139,001
Fire and emergency 322,901 285,548
Defense 734,534 483,297
----------- -----------
Consolidated $1,204,567 $ 907,846
=========== ===========