Oshkosh Truck Net Income Climbs 50% for Fiscal 1998
2 November 1998
Oshkosh Truck Net Income Climbs 50% for Fiscal 1998; 59% in Fourth Quarter
OSHKOSH, Wis.--Nov. 2, 1998--Oshkosh Truck Corporation today reported that net income increased 59% to $5.0 million, or $.59 per share, for the fourth quarter of fiscal 1998 on sales of $243 million. This compares to net income of $3.1 million, or $.38 per share, for the fourth quarter of fiscal 1997 on sales of $186 million. For the full fiscal year 1998, net income rose 50% to $15.1 million, or $1.79 per share.Operating income rose 82.5% to $14.8 million in the fourth quarter, compared to $8.1 million in the fourth quarter of fiscal 1997. This increase includes McNeilus' sales and earnings for the entire quarter. McNeilus sales totaled $82 million in the fourth quarter, reflecting strong growth in refuse body sales. Pierce sales reached $73 million, a record level; and, defense sales declined $14 million to $51 million.
"The transformation of Oshkosh Truck Corporation into a diversified corporation with a clearly defined growth strategy has been a successful one. With the acquisition of two growth-platform companies, most recently McNeilus Companies, revenues for the corporation have climbed to $903 million for the year. Today, we have eight consecutive quarters of improved earnings momentum at our back. We are confident that fiscal 1999 will be another year of strong financial performance," stated Robert G. Bohn, president and chief executive officer of Oshkosh Truck Corporation.
Fire and Emergency
"In our fire and emergency business, strong customer demand for Pierce products drove sales and market share gains in an otherwise steady, slow-growth market," continued Bohn. "Sales increased 10.7% reaching a record level of $73 million. Earnings growth was 15.9% in the quarter even after a significant investment in the development of new products."
Defense
"Sales of heavy-duty defense vehicles fulfilled our expectations for the year, while we made progress in our efforts to expand into the medium-duty tactical segment. Oshkosh's MTTR prototype vehicles successfully completed testing during the year. The bid for the $1 billion contract was submitted in mid-September and an award to either Oshkosh, or its competitor, is scheduled to be announced in late December."
Commercial
"Record sales of refuse bodies during the fourth quarter resulted from pent-up demand following several acquisitions and mergers among commercial waste haulers. Refuse body sales balanced solid sales in the concrete mixer market, which traditionally experiences a slowdown in equipment purchases in July and August."
"In the area of new product development, the fourth quarter saw the introduction of a redesigned S-Series front-discharge concrete mixer. This new design represents the synergies between Oshkosh and our newest acquisition, McNeilus. The comfortable cab was developed by Oshkosh's engineering crew, while the mixer is the industry-leading McNeilus design with improved concrete discharge capabilities."
Net interest expense increased to $6.4 million in the fourth quarter of fiscal 1998 from $2.9 million in the fourth quarter of fiscal 1997 as a result of additional borrowings to acquire McNeilus.
Full Year Results
The company reported that net income increased 50% to $15.1 million, or $1.79 per share, for fiscal 1998 on sales of $903 million compared to net income of $10.0 million, or $1.18 per share, for fiscal 1997 on sales of $683 million. Excluding extraordinary charges associated with the early repayment of debt, net income would have been $16.3 million, or $1.93 per share, an increase of 63%.
Operating income rose 69.3% to $48.7 million in fiscal 1998 compared to $28.8 million in fiscal 1997, principally as a result of the acquisition of McNeilus.
Dividend Announcement
Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $.10875 per share for Class A Common Stock and $.125 per share for Common Stock. These dividends, unchanged from the previous rate, will be payable November 13, 1998, to shareholders of record as of November 6, 1998.
Oshkosh Truck Corporation serves fire and emergency, defense, and commercial markets with specialty trucks and truck bodies marketed under the Oshkosh, Pierce and McNeilus brand names. Oshkosh's products are valued worldwide by fire and emergency units, defense forces, municipal and airport support services, construction and refuse businesses where high quality, superior performance, rugged reliability, and long-term value are paramount.
--FINANCIAL TABLES TO FOLLOW--
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Year Ended
September 30, September 30,
__________ __________ _________ __________
1998 1997 1998 1997
__________ __________ _________ __________
(In thousands, except per share amounts)
Net sales $ 243,051 $ 185,853 $ 902,792 $ 683,234
Cost of sales 200,913 161,357 766,348 594,390
__________ __________ _________ __________
Gross income 42,138 24,496 136,444 88,844
Operating
expenses:
Selling,
general and
administrative 21,524 13,359 69,728 47,742
Engineering,
research &
development 3,025 1,890 9,681 7,847
Amortization
of goodwill
and other
intangibles 2,756 1,118 8,315 4,470
__________ __________ _________ __________
Total
operating
expenses 27,305 16,367 87,724 60,059
__________ __________ _________ __________
Income from
operations 14,833 8,129 48,720 28,785
Other income
(expense):
Interest expense (7,217) (3,151) (21,490) (12,722)
Interest income 782 233 1,326 717
Miscellaneous,
net 436 (185) 92 (278)
__________ __________ _________ __________
(5,999) (3,103) (20,072) (12,283)
__________ __________ _________ __________
Income from
operations
before income
taxes, equity
in earnings
of unconsolidated
partnership
and
extraordinary
item 8,834 5,026 28,648 16,502
Provision
for income
taxes 4,277 1,910 12,655 6,496
__________ __________ _________ __________
4,557 3,116 15,993 10,006
Equity in
earnings of
unconsolidated
partnership,
net of
income taxes 395 -- 260 --
__________ __________ _________ __________
Income before
extraordinary
item 4,952 3,116 16,253 10,006
Extraordinary
charge for
early
retirement of
debt, net of
income tax
benefit -- -- (1,185) --
__________ __________ _________ __________
Net income $ 4,952 $ 3,116 $ 15,068 $ 10,006
========= ========= ========= =========
Earnings per
share:
Before
extraordinary
item $ 0.59 $ 0.38 $ 1.93 $ 1.18
Extraordinary
item -- -- (0.14) --
__________ __________ _________ __________
Net income $ 0.59 $ 0.38 $ 1.79 $ 1.18
========= ========= ========= =========
Earnings per
share
assuming
dilution:
Before
extraordinary
item $ 0.58 $ 0.37 $ 1.91 $ 1.17
Extraordinary
item -- -- (0.14) --
__________ __________ _________ __________
Net income $ 0.58 $ 0.37 $ 1.77 $ 1.17
========= ========= ========= =========
Cash dividends:
Class A
Common Stock $ 0.10875 $ 0.10875 $ 0.43500 $ 0.43500
Common Stock $ 0.12500 $ 0.12500 $ 0.50000 $ 0.50000
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
Sept. 30, Sept. 30,
1998 1997
________________ ________________
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 3,622 $ 23,219
Receivables, net 80,982 81,235
Inventories 149,191 76,497
Prepaid expenses 3,768 3,405
Deferred income taxes 12,281 9,479
________________ ________________
Total current assets 249,844 193,835
Deferred charges 342 1,067
Other long-term assets 13,856 6,660
Investment in unconsolidated
partnership 13,496 -
Property, plant and equipment:
Land 7,574 7,172
Buildings 64,566 42,220
Machinery and equipment 84,643 78,270
________________ ________________
156,783 127,662
Less accumulated depreciation (75,947) (72,174)
________________ ________________
Net property, plant
and equipment 80,836 55,488
Goodwill and other intangible
assets, net 326,665 163,344
________________ ________________
Total assets $ 685,039 $ 420,394
================ ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 65,171 $ 48,220
Floor plan notes payable 11,645 -
Customer advances 44,915 30,124
Payroll-related obligations 24,124 15,157
Accrued warranty 15,887 12,320
Other current liabilities 43,498 22,901
Current maturities of
long-term debt 3,467 15,000
________________ ________________
Total current liabilities 208,707 143,722
Long-term debt 277,337 120,000
Postretirement benefit
obligations 10,935 10,147
Other long-term liabilities 8,932 3,173
Deferred income taxes 47,832 22,452
Shareholders' equity:
Class A Common Stock 3 4
Common Stock 90 89
Paid-in capital 14,712 13,591
Retained earnings 130,959 120,085
________________ ________________
145,764 133,769
Cost of Common Stock in treasury (12,664) (12,869)
Pension liability adjustment (1,804) -
________________ ________________
Total shareholders' equity 131,296 120,900
________________ ________________
Total liabilities and
shareholders' equity $ 685,039 $ 420,394
================ ================
OSHKOSH TRUCK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended
September 30,
_________________________
1998 1997
__________ __________
(In thousands)
Net cash provided from
operating activities $ 81,682 $ 65,782
Investing activities:
Acquisition of businesses,
net of cash acquired (221,144) -
Additions to property,
plant and equipment (8,555) (6,263)
Proceeds from sale of property,
plant and equipment 1,524 395
Increase in other long-term assets (2,183) (1,532)
__________ __________
Net cash used for investing activities (230,358) (7,400)
Net cash used for discontinued operations (1,093) (1,658)
Financing activities:
Net borrowings (repayments)
of long-term debt 142,951 (22,882)
Debt issuance costs (8,641) -
Purchase of Common Stock,
Common Stock warrants and
proceeds from exercise of
stock options, net 38 (6,541)
Dividends paid (4,176) (4,209)
Net cash provided from (used for) __________ __________
financing activities 130,172 (33,632)
__________ __________
Increase (decrease) in cash and
cash equivalents (19,597) 23,092
Cash and cash equivalents at
beginning of period 23,219 127
__________ __________
Cash and cash equivalents at end of period $ 3,622 $ 23,219
========== ==========
Supplementary disclosure:
Depreciation and amortization $ 18,698 $ 14,070
OSHKOSH TRUCK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years Ended September 30, 1998 and 1997
(In thousands, except per share amounts)
1. Included in selling, general and administrative expense for the
three and twelve month periods ended September 30, 1998 are
non-cash charges totaling $5,835 for the impairment of the
Company's Florida manufacturing facility ($3,900) and of
intangible assets associated with the acquisition of Friesz
Manufacturing Company ("Friesz") in December 1995 ($1,935),
offset in part by a gain of $3,375 on the sale of the Company's
5% interest in a Mexican bus manufacturer.
Following the acquisition of McNeilus Companies, Inc.,
("McNeilus") and an internal study conducted to determine how to
integrate the concrete mixer businesses of Oshkosh and McNeilus,
the Company revised its plans regarding the use of the Company's
Florida manufacturing facility and of the previously-acquired
technology of Friesz. As a result, the Company determined that
these assets were impaired and, as a result, recorded pre-tax
impairment charges totaling $5,835 in the fourth quarter of
fiscal 1998.
In September 1998, the Company completed the sale of a 5.0%
ownership interest in a Mexican bus manufacturer. The Company had
previously reported a charge to operating earnings in fiscal 1996
to write-off this investment as a result of several years of
losses and high leverage at this Mexican affiliate. The $3,375
pre-tax gain has been reflected as a reduction to selling,
general and administrative expense for the fourth quarter and
full year fiscal 1998 operating results.
2. In April 1998, the AICPA issued Statement of Position No. 98-5,
"Reporting on the Costs of Start-up Activities" ("SOP 98-5").
Prior to fiscal 1998, the Company had not capitalized any costs
covered by SOP 98-5. In February 1998, the leasing partnership
which the Company accounts for using the equity method, incurred
and capitalized approximately $1,466 of costs ($895 net of income
taxes) related to the organization of the partnership. In the
fourth quarter of fiscal 1998, the Company decided to early adopt
the provisions of SOP 98-5 which requires that adoption be as of
the beginning of the year. As a result, the Company has restated
the previously reported results for the second quarter to
write-off the costs previously capitalized by the partnership.
The charge has been included under the caption "Equity in
earnings of unconsolidated partnership, net of income taxes."