UNITED STATES 54903-2566 (Address of principal executive offices) (Zip Code)xý QUARTERLY REPORT PURSUANT TO SECTION13 OR 15 (d) 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934June 30,December 31, 2012File Number:file number:1-31371Wisconsin39-0520270Wisconsin 39-0520270 xý Yes oNoWeb site,Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months.months (or for such shorter period that the registrant was required to submit and post such files).xYes oNoxý NoJuly 20, 2012, 91,648,564January 22, 2013, 87,364,817 shares of the registrant’s Common Stock were outstanding.JUNE 30,DECEMBER 31, 2012PagePage 3456731424344444747484950—- FINANCIAL INFORMATION
Three Months Ended Nine Months Ended June 30, June 30, 2012 2011 2012 2011 Net sales $ 2,176.3 $ 2,022.9 $ 6,130.2 $ 5,469.3 Cost of sales 1,903.2 1,750.9 5,395.2 4,607.2 Gross income 273.1 272.0 735.0 862.1 Operating expenses: Selling, general and administrative 134.4 130.8 415.4 389.5 Amortization of purchased intangibles 14.2 15.2 43.9 45.5 Total operating expenses 148.6 146.0 459.3 435.0 Operating income 124.5 126.0 275.7 427.1 Other income (expense): Interest expense (18.5 ) (21.2 ) (57.3 ) (69.4 ) Interest income 0.4 0.8 1.6 2.6 Miscellaneous, net (0.8 ) (0.5 ) (5.1 ) (0.4 ) Income from operations before income taxes and equity in earnings of unconsolidated affiliates 105.6 105.1 214.9 359.9 Provision for income taxes 31.1 36.6 63.8 124.8 Income from operations before equity in earnings of unconsolidated affiliates 74.5 68.5 151.1 235.1 Equity in earnings of unconsolidated affiliates 1.2 0.1 1.9 0.3 Net income 75.7 68.6 153.0 235.4 Net (income) loss attributable to the noncontrolling interest — (0.2 ) (1.1 ) 0.5 Net income attributable to Oshkosh Corporation $ 75.7 $ 68.4 $ 151.9 $ 235.9 Earnings per share attributable to Oshkosh Corporation common shareholders: Basic $ 0.83 $ 0.75 $ 1.66 $ 2.60 Diluted 0.82 0.75 1.65 2.57 June 30, September 30, 2012 2011 Assets Current assets: Cash and cash equivalents $ 390.7 $ 428.5 Receivables, net 1,268.6 1,089.1 Inventories, net 901.6 786.8 Deferred income taxes 73.8 72.9 Other current assets 45.0 77.3 Total current assets 2,679.7 2,454.6 Investment in unconsolidated affiliates 18.4 31.8 Property, plant and equipment, net 359.1 388.7 Goodwill 1,030.3 1,041.5 Purchased intangible assets, net 790.6 838.7 Other long-term assets 59.4 71.6 Total assets $ 4,937.5 $ 4,826.9 Liabilities and Equity Current liabilities: Revolving credit facility and current maturities of long-term debt $ — $ 40.1 Accounts payable 725.6 768.9 Customer advances 464.5 468.6 Payroll-related obligations 113.9 110.7 Income taxes payable 8.1 5.3 Accrued warranty 87.6 75.0 Deferred revenue 143.8 38.4 Other current liabilities 181.2 184.8 Total current liabilities 1,724.7 1,691.8 Long-term debt, less current maturities 955.0 1,020.0 Deferred income taxes 140.5 171.3 Other long-term liabilities 369.6 347.2 Commitments and contingencies Equity: Preferred Stock ($.01 par value; 2,000,000 shares authorized; none issued and outstanding) — — Common Stock ($.01 par value; 300,000,000 shares authorized; 91,650,355 and 91,330,019 shares issued, respectively) 0.9 0.9 Additional paid-in capital 697.4 685.6 Retained earnings 1,184.7 1,032.7 Accumulated other comprehensive loss (135.2 ) (122.6 ) Common Stock in treasury, at cost (2,791 and 6,956 shares, respectively) (0.1 ) (0.1 ) Total Oshkosh Corporation shareholders’ equity 1,747.7 1,596.5 Noncontrolling interest — 0.1 Total equity 1,747.7 1,596.6 Total liabilities and equity $ 4,937.5 $ 4,826.9 Oshkosh Corporation’s Shareholders Accumulated Common Additional Other Stock in Non- Common Paid-In Retained Comprehensive Treasury Controlling Comprehensive Stock Capital Earnings Income (Loss) at Cost Interest Income Balance at September 30, 2010 $ 0.9 $ 659.7 $ 759.2 $ (93.2 ) $ — $ 0.2 Comprehensive income: Net income — — 235.9 — — (0.5 ) $ 235.4 Change in fair value of derivative instruments, net of tax of $4.2 — — — 7.3 — — 7.3 Employee pension and postretirement benefits, net of tax of $2.4 — — — 4.1 — — 4.1 Currency translation adjustments — — — 35.8 — — 35.8 Total comprehensive income $ 282.6 Exercise of stock options — 7.7 — — 0.2 — Stock-based compensation and award of nonvested shares — 11.5 — — — — Tax benefit related to stock-based compensation — 2.4 — — — — Other — 0.1 0.1 — (0.2 ) — Balance at June 30, 2011 $ 0.9 $ 681.4 $ 995.2 $ (46.0 ) $ — $ (0.3 ) Oshkosh Corporation’s Shareholders Accumulated Common Additional Other Stock in Non- Common Paid-In Retained Comprehensive Treasury Controlling Comprehensive Stock Capital Earnings Income (Loss) at Cost Interest Income Balance at September 30, 2011 $ 0.9 $ 685.6 $ 1,032.7 $ (122.6 ) $ (0.1 ) $ 0.1 Comprehensive income: Net income — — 151.9 — — 1.1 $ 153.0 Change in fair value of derivative instruments, net of tax of $0.8 — — — 1.4 — — 1.4 Employee pension and postretirement benefits, net of tax of $2.6 — — — 4.5 — — 4.5 Currency translation adjustments — — — (18.5 ) — — (18.5 ) Total comprehensive income $ 140.4 Exercise of stock options — 2.4 — — 0.7 — Stock-based compensation and award of nonvested shares — 9.0 — — — — Other — 0.4 0.1 — (0.7 ) (1.2 ) Balance at June 30, 2012 $ 0.9 $ 697.4 $ 1,184.7 $ (135.2 ) $ (0.1 ) $ — Nine Months Ended June 30, 2012 2011 Operating activities: Net income $ 153.0 $ 235.4 Depreciation and amortization 95.8 105.1 Stock-based compensation expense 9.0 11.5 Deferred income taxes (35.2 ) 11.5 Dividends from equity method investees 6.5 — Other non-cash adjustments 0.8 (3.6 ) Changes in operating assets and liabilities (155.6 ) (81.2 ) Net cash provided by operating activities 74.3 278.7 Investing activities: Additions to property, plant and equipment (33.9 ) (53.9 ) Additions to equipment held for rental (5.9 ) (3.1 ) Proceeds from sale of property, plant and equipment 7.5 1.0 Proceeds from sale of equipment held for rental 3.2 13.1 Proceeds from sale of equity method investments 8.7 — Other investing activities 7.2 (4.2 ) Net cash used by investing activities (13.2 ) (47.1 ) Financing activities: Repayment of long-term debt (105.0 ) (65.4 ) Net repayments under revolving credit facility — (125.0 ) Proceeds from exercise of stock options 3.1 7.9 Other financing activities (0.2 ) 1.9 Net cash used by financing activities (102.1 ) (180.6 ) Effect of exchange rate changes on cash 3.2 3.8 Increase (decrease) in cash and cash equivalents (37.8 ) 54.8 Cash and cash equivalents at beginning of period 428.5 339.0 Cash and cash equivalents at end of period $ 390.7 $ 393.8 Supplemental disclosures: Cash paid for interest $ 44.1 $ 55.0 Cash paid for income taxes 59.5 93.2 Three Months Ended December 31, 2012 2011 Net sales $ 1,761.0 $ 1,875.7 Cost of sales 1,514.7 1,654.2 Gross income 246.3 221.5 Operating expenses: Selling, general and administrative 151.1 131.4 Amortization of purchased intangibles 14.4 14.7 Total operating expenses 165.5 146.1 Operating income 80.8 75.4 Other income (expense): Interest expense (16.7 ) (20.6 ) Interest income 2.5 0.6 Miscellaneous, net 0.3 (5.6 ) Income from continuing operations before income taxes and equity in earnings of unconsolidated affiliates 66.9 49.8 Provision for income taxes 21.0 11.1 Income from continuing operations before equity in earnings of unconsolidated affiliates 45.9 38.7 Equity in earnings of unconsolidated affiliates 0.6 0.7 Income from continuing operations, net of tax 46.5 39.4 Income (loss) from discontinued operations, net of tax — (0.1 ) Net income 46.5 39.3 Net income attributable to noncontrolling interest — (0.4 ) Net income attributable to Oshkosh Corporation $ 46.5 $ 38.9 Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-basic: From continuing operations $ 0.51 $ 0.43 From discontinued operations — (0.01 ) $ 0.51 $ 0.42 Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-diluted: From continuing operations $ 0.51 $ 0.43 From discontinued operations — (0.01 ) $ 0.51 $ 0.42 millions, except share and per share amounts;millions; unaudited) Three Months Ended December 31, 2012 2011 Net income $ 46.5 $ 39.3 Other comprehensive income (loss), net of tax: Change in fair value of derivative instruments — 1.4 Employee pension and postretirement benefits 1.0 1.5 Currency translation adjustments 8.6 (8.1 ) Total other comprehensive income (loss), net of tax 9.6 (5.2 ) Comprehensive income 56.1 34.1 Comprehensive (income) loss attributable to noncontrolling interest — (0.4 ) Comprehensive income attributable to Oshkosh Corporation $ 56.1 $ 33.7 millions;millions, except share and per share amounts; unaudited) December 31, September 30, 2012 2012 Assets Current assets: Cash and cash equivalents $ 455.7 $ 540.7 Receivables, net 646.2 1,018.6 Inventories, net 1,056.9 937.5 Deferred income taxes 60.5 69.9 Prepaid income taxes 122.3 98.0 Other current assets 28.6 29.8 Total current assets 2,370.2 2,694.5 Investment in unconsolidated affiliates 19.7 18.8 Property, plant and equipment, net 358.0 369.9 Goodwill 1,038.9 1,033.8 Purchased intangible assets, net 762.0 775.4 Other long-term assets 55.1 55.4 Total assets $ 4,603.9 $ 4,947.8 Liabilities and Shareholders' Equity Current liabilities: Revolving credit facility and current maturities of long-term debt $ 16.3 $ — Accounts payable 532.6 683.3 Customer advances 481.7 510.4 Payroll-related obligations 87.8 130.1 Accrued warranty 90.5 95.0 Deferred revenue 34.2 113.0 Other current liabilities 193.8 172.7 Total current liabilities 1,436.9 1,704.5 Long-term debt, less current maturities 938.7 955.0 Deferred income taxes 119.9 129.6 Other long-term liabilities 320.5 305.2 Commitments and contingencies Shareholders' equity: Preferred Stock ($.01 par value; 2,000,000 shares authorized; none issued and outstanding) — — Common Stock ($.01 par value; 300,000,000 shares authorized; 92,091,465 and 92,086,465 shares issued, respectively) 0.9 0.9 Additional paid-in capital 706.1 703.5 Retained earnings 1,310.0 1,263.5 Accumulated other comprehensive loss (91.8 ) (101.4 ) Common Stock in treasury, at cost (4,744,210 and 528,695 shares, respectively) (137.3 ) (13.0 ) Total shareholders’ equity 1,787.9 1,853.5 Total liabilities and shareholders' equity $ 4,603.9 $ 4,947.8 Oshkosh Corporation’s Shareholders Balance at September 30, 2011 $ 0.9 $ 685.6 $ 1,032.7 $ (122.6 ) $ (0.1 ) $ 0.1 Net income — — 38.9 — — 0.4 Change in fair value of derivative instruments, net of tax of $0.8 — — — 1.4 — — Employee pension and postretirement benefits, net of tax of $0.9 — — — 1.5 — — Currency translation adjustments, net — — — (8.1 ) — — Exercise of stock options — — — — 0.7 — Stock-based compensation and award of nonvested shares — 2.6 — — — — Other — (0.2 ) 0.1 — (0.6 ) — Balance at December 31, 2011 $ 0.9 $ 688.0 $ 1,071.7 $ (127.8 ) $ — $ 0.5 Oshkosh Corporation’s Shareholders Balance at September 30, 2012 $ 0.9 $ 703.5 $ 1,263.5 $ (101.4 ) $ (13.0 ) $ — Net income — — 46.5 — — — Employee pension and postretirement benefits, net of tax of $0.6 — — — 1.0 — — Currency translation adjustments, net — — — 8.6 — — Repurchase of common stock — — — — (125.1 ) — Exercise of stock options — (0.3 ) — — 1.0 — Stock-based compensation and award of nonvested shares — 4.7 — — — — Tax benefit related to stock-based compensation — (1.8 ) — — — — Other — — — — (0.2 ) — Balance at December 31, 2012 $ 0.9 $ 706.1 $ 1,310.0 $ (91.8 ) $ (137.3 ) $ — Three Months Ended December 31, 2012 2011 Operating activities: Net income $ 46.5 $ 39.3 Depreciation and amortization 31.4 33.7 Deferred income taxes (2.5 ) 0.7 Other non-cash adjustments 0.4 2.1 Changes in operating assets and liabilities (30.7 ) (13.9 ) Net cash provided by operating activities 45.1 61.9 Investing activities: Additions to property, plant and equipment (8.3 ) (14.2 ) Additions to equipment held for rental (1.1 ) (3.5 ) Proceeds from sale of property, plant and equipment — 2.7 Proceeds from sale of equipment held for rental 3.5 1.1 Other investing activities — (0.3 ) Net cash used by investing activities (5.9 ) (14.2 ) Financing activities: Repayment of long-term debt — (40.0 ) Repurchases of common stock (125.1 ) — Proceeds from exercise of stock options 0.7 0.7 Other financing activities — (0.6 ) Net cash used by financing activities (124.4 ) (39.9 ) Effect of exchange rate changes on cash 0.2 4.0 Increase (decrease) in cash and cash equivalents (85.0 ) 11.8 Cash and cash equivalents at beginning of period 540.7 428.5 Cash and cash equivalents at end of period $ 455.7 $ 440.3 Supplemental disclosures: Cash paid for interest $ 4.7 $ 9.8 Cash paid for income taxes 47.2 11.3
(Unaudited)
June 30, September 30, 2012 2011 U.S. government: Amounts billed $ 216.0 $ 318.8 Costs and profits not billed 236.9 172.3 452.9 491.1 Other trade receivables 777.2 568.8 Finance receivables 9.7 23.6 Notes receivable 25.8 33.7 Other receivables 40.1 27.4 1,305.7 1,144.6 Less allowance for doubtful accounts (20.2 ) (29.5 ) $ 1,285.5 $ 1,115.1 Classification of receivables in the Condensed Consolidated Balance Sheets consisted of the following (in millions): June 30, September 30, 2012 2011 Current receivables $ 1,268.6 $ 1,089.1 Long-term receivables 16.9 26.0 $ 1,285.5 $ 1,115.1 June 30, September 30, 2012 2011 Finance receivables $ 10.5 $ 27.9 Less unearned income (0.8 ) (4.3 ) Net finance receivables 9.7 23.6 Less allowance for doubtful accounts (1.6 ) (11.5 ) $ 8.1 $ 12.1 Finance Receivables Notes Receivable June 30, September 30, June 30, September 30, 2012 2011 2012 2011 Aging of receivables that are past due: Greater than 30 days and less than 60 days $ 0.1 $ 0.5 $ — $ — Greater than 60 days and less than 90 days 0.1 0.1 — — Greater than 90 days 0.3 6.5 — 0.5 Receivables on nonaccrual status 3.6 17.6 19.3 20.8 Receivables past due 90 days or more and still accruing — — — — Receivables subject to general reserves 5.8 0.4 3.1 8.6 Allowance for doubtful accounts (0.1 ) — — (0.1 ) Receivables subject to specific reserves 3.9 23.2 22.7 25.1 Allowance for doubtful accounts (1.5 ) (11.5 ) (8.1 ) (8.8 ) Three Months Ended June 30, 2012 Three Months Ended June 30, 2011 Trade and Trade and Finance Notes Other Total Finance Notes Other Total Beginning balance $ 3.1 $ 8.5 $ 10.2 $ 21.8 $ 16.3 $ 10.2 $ 9.4 $ 35.9 Provision, net of recoveries (0.2 ) (0.1 ) 0.7 0.4 4.6 (0.9 ) (0.1 ) 3.6 Charge-offs (1.3 ) (0.3 ) (0.4 ) (2.0 ) (0.2 ) — — (0.2 ) Foreign currency translation — — — — — 0.1 0.2 0.3 Ending balance $ 1.6 $ 8.1 $ 10.5 $ 20.2 $ 20.7 $ 9.4 $ 9.5 $ 39.6 Nine Months Ended June 30, 2012 Nine Months Ended June 30, 2011 Trade and Trade and Finance Notes Other Total Finance Notes Other Total Beginning balance $ 11.5 $ 8.9 $ 9.1 $ 29.5 $ 20.9 $ 9.4 $ 11.7 $ 42.0 Provision, net of recoveries (3.3 ) (0.3 ) 3.0 (0.6 ) 5.5 1.9 0.2 7.6 Charge-offs (6.6 ) (0.5 ) (1.6 ) (8.7 ) (5.7 ) (2.1 ) (2.7 ) (10.5 ) Foreign currency translation — — — — — 0.2 0.3 0.5 Ending balance $ 1.6 $ 8.1 $ 10.5 $ 20.2 $ 20.7 $ 9.4 $ 9.5 $ 39.6 June 30, September 30, 2012 2011 Raw materials $ 503.9 $ 587.4 Partially finished products 305.4 377.7 Finished products 437.9 237.8 Inventories at FIFO cost 1,247.2 1,202.9 Less: Progress/performance-based payments on U.S. government contracts (266.1 ) (341.7 ) Excess of FIFO cost over LIFO cost (79.5 ) (74.4 ) $ 901.6 $ 786.8 Due to a shortage in tires at one of the Company's suppliers, the defense segment was unable to complete production of certain vehicles to recognize revenue in fiscal 2012. These vehicles were included in inventory at September 30, 2012. During the three months ended December 31, 2012, tires were obtained and the vehicles were completed and sold. Finished goods inventory at December 31, 2012 included approximately Percent- June 30, September 30, owned 2012 2011 OMFSP (U.S.) $ — $ 13.4 RiRent (The Netherlands) 50% 10.5 10.9 Other 7.9 7.5 $ 18.4 $ 31.8 June 30, September 30, 2012 2011 Land and land improvements $ 45.2 $ 46.2 Buildings 234.3 243.8 Machinery and equipment 528.8 521.5 Equipment on operating lease to others 22.4 23.0 830.7 834.5 Less accumulated depreciation (471.6 ) (445.8 ) $ 359.1 $ 388.7 Access Fire & Equipment Emergency Commercial Total Beginning balance $ 912.2 $ 107.9 $ 21.4 $ 1,041.5 Foreign currency translation (9.5 ) — 0.1 (9.4 ) Deconsolidation of variable interest entity — (1.8 ) — (1.8 ) Ending balance $ 902.7 $ 106.1 $ 21.5 $ 1,030.3 June 30, 2012 September 30, 2011 Accumulated Accumulated Gross Impairment Net Gross Impairment Net Access Equipment $ 1,834.8 $ (932.1 ) $ 902.7 $ 1,844.3 $ (932.1 ) $ 912.2 Fire & Emergency 180.3 (74.2 ) 106.1 182.1 (74.2 ) 107.9 Commercial 197.4 (175.9 ) 21.5 197.3 (175.9 ) 21.4 $ 2,212.5 $ (1,182.2 ) $ 1,030.3 $ 2,223.7 $ (1,182.2 ) $ 1,041.5 June 30, 2012 Weighted- Average Accumulated Life Gross Amortization Net Amortizable intangible assets: Distribution network 39.1 $ 55.4 $ (21.9 ) $ 33.5 Non-compete 10.5 56.8 (54.8 ) 2.0 Technology-related 11.7 104.7 (59.9 ) 44.8 Customer relationships 12.7 571.3 (262.5 ) 308.8 Other 16.5 16.6 (12.7 ) 3.9 14.3 804.8 (411.8 ) 393.0 Non-amortizable trade names 397.6 — 397.6 $ 1,202.4 $ (411.8 ) $ 790.6 September 30, 2011 Weighted- Average Accumulated Life Gross Amortization Net Amortizable intangible assets: Distribution network 39.1 $ 55.4 $ (20.8 ) $ 34.6 Non-compete 10.5 56.9 (53.0 ) 3.9 Technology-related 11.7 104.8 (53.3 ) 51.5 Customer relationships 12.7 576.7 (229.9 ) 346.8 Other 16.5 16.5 (12.2 ) 4.3 14.3 810.3 (369.2 ) 441.1 Non-amortizable trade names 397.6 — 397.6 $ 1,207.9 $ (369.2 ) $ 838.7 June 30, September 30, 2012 2011 Senior Secured Term Loan $ 455.0 $ 560.0 8¼% Senior notes due March 2017 250.0 250.0 8½% Senior notes due March 2020 250.0 250.0 Other long-term facilities — 0.1 955.0 1,060.1 Less current maturities — (40.1 ) $ 955.0 $ 1,020.0 Revolving line of credit $ — $ — Current maturities of long-term debt — 40.1 $ — $ 40.1 The Credit Agreement contains various restrictions and covenants, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions and make investments in joint ventures and foreign subsidiaries. 2.75 to 1.0. The Company was in compliance with the financial covenants contained in the Credit Agreement as of In March 2010, the Company issued 9. Warranties Nine Months Ended June 30, 2012 2011 Beginning balance $ 75.0 $ 90.5 Warranty provisions 43.8 31.3 Settlements made (40.2 ) (35.8 ) Changes in liability for pre-existing warranties, net 8.6 (12.7 ) Foreign currency translation 0.4 0.8 Ending balance $ 87.6 $ 74.1 Changes in the Three Months Ended Nine Months Ended June 30, June 30, 2012 2011 2012 2011 Beginning balance $ 4.5 $ 10.4 $ 6.4 $ 23.1 Provision for new credit guarantees 0.9 0.3 1.7 0.4 Settlements made (0.4 ) — (0.9 ) (3.0 ) Changes for pre-existing guarantees, net 0.3 (3.5 ) (1.4 ) (12.4 ) Amortization of previous guarantees (0.3 ) (0.1 ) (0.8 ) (1.0 ) Foreign currency translation (0.1 ) 0.1 (0.1 ) 0.1 Ending balance $ 4.9 $ 7.2 $ 4.9 $ 7.2 June 30, 2012 September 30, 2011 Other Other Other Other Current Current Current Current Assets Liabilities Assets Liabilities Designated as hedging instruments: Interest rate contracts $ — $ — $ — $ 2.1 Not designated as hedging instruments: Foreign exchange contracts — 3.0 0.8 0.2 $ — $ 3.0 $ 0.8 $ 2.3 Three Months Ended Nine Months Ended Classification of June 30, June 30, Gains (Losses) 2012 2011 2012 2011 Cash flow hedges: Reclassified from other comprehensive income (effective portion): Interest rate contracts Interest expense $ — $ (3.0 ) $ (2.2 ) $ (13.5 ) Not designated as hedges: Foreign exchange contracts Miscellaneous, net 3.8 (3.3 ) (3.1 ) (8.0 ) $ 3.8 $ (6.3 ) $ (5.3 ) $ (21.5 ) Measurement There were no transfers of assets between levels during the three months ended Level 1 Level 2 Level 3 Total Liabilities: Foreign exchange contracts (a) $ — $ 3.0 $ — $ 3.0 Corporation’sCorporation's (the “Company”) Annual Report on Form 10-K for the year ended September 30, 2011.2012. The interim results are not necessarily indicative of results for the full year.(“FASB”("FASB") amended Accounting Standards Codification (“ASC”("ASC") Topic 220, Comprehensive Income, to require all non-owner changes in shareholders’ equity to be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Under this amendment, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. An entity will no longer be permitted to present the components of other comprehensive income as part of the statement of equity. The Company will be required to adoptadopted the new presentation requirements as of October 1, 2012. The adoption of the new presentation willrequirements did not have a material impact on the Company’s financial condition, results of operations or cash flows. December 31, September 30, 2012 2012 U.S. government: Amounts billed $ 81.3 $ 99.2 Costs and profits not billed 58.2 251.7 139.5 350.9 Other trade receivables 474.5 633.0 Finance receivables 10.0 5.2 Notes receivable 23.8 24.6 Other receivables 30.2 35.6 678.0 1,049.3 Less allowance for doubtful accounts (18.5 ) (18.0 ) $ 659.5 $ 1,031.3 awardor change order even though the contract deliverables may have been met. Definitization of a change order on an existing long-term contract or a sole source contract begins when the U.S. government customer undertakes a detailed review of the Company’s submitted costs and proposed margin related to the contract and concludes with thea final change order or contract price subject to review.order. The Company recognizes revenue on undefinitized contracts to the extent that it can reasonably and reliably estimate the expected final contract price and when collectability is reasonably assured. At June 30,December 31, 2012, the Company had recorded $581.8$93.7 million of revenue on contracts which remained undefinitized as of that date. To the extent that contract definitization results in changes to previously estimated or incurred costs or revenues, the Company records those adjustments as a change inIn the third quarter of fiscal 2012, theThe Company updated its estimated costs under several undefinitized contractschange orders and recorded adjustments$3.5 million of revenue related to reduce sales and operatingsuch updates during the three months ended December 31, 2012. As all costs associated with these contracts had been previously expensed, the change increased net income on revenue recognized in prior quarters of $38.3by $2.2 million and $8.0 million, respectively.7, or $0.02 per share, for the three months ended December 31, 2012. OSHKOSH CORPORATIONNotes to Condensed Consolidated Financial Statements(Unaudited) December 31, September 30, 2012 2012 Current receivables $ 646.2 $ 1,018.6 Long-term receivables 13.3 12.7 $ 659.5 $ 1,031.3 Company’sCompany's products and the purchase of finance receivables from lenders pursuant to customer defaults under program agreements with finance companies. Finance receivables originated by the Company generally include a residual value component. Residual values are determined based on the expectation that the underlying equipment will have a minimum fair market value at the end of the lease term. This residual value accrues to the Company at the end of the lease. The Company uses its experience and knowledge as an original equipment manufacturer and participant in end markets for the related products along with third-party studies to estimate residual values. The Company monitors these values for impairment on a periodic basis and reflects any resulting reductions in value in current earnings. Finance receivables are written down if management determines that the specific borrower does not have the ability to repay the loan amounts due in full. December 31, September 30, 2012 2012 Finance receivables $ 10.7 $ 6.0 Less unearned income (0.7 ) (0.8 ) Net finance receivables 10.0 5.2 Less allowance for doubtful accounts (1.5 ) (1.4 ) $ 8.5 $ 3.8 June 30,December 31, 2012 were as follows: 20122013 (remaining threenine months) - $6.7 million; 2013$8.7 million; 2014 - $0.8 million; 2014$0.9 million; 2015 - $1.4 million; 2015$0.6 million; 2016 - $0.8 million; 2016$0.2 million; 2017 - $0.4 million; 2017$0.1 million; 2018 - $0.1 million;$0.1 million; and thereafter - $0.3 million.$0.1 million. Historically, obligors have paid off finance receivables prior to their contractual due dates, although actual repayment timing is impacted by a number of factors, including the economic environment at the time. As a result, contractual maturities are not to be regarded as a forecast of future cash flows.June 30,December 31, 2012, approximately 95%96% of the notes receivable balance outstanding was due from threetwo parties. The Company routinely evaluates the creditworthiness of its customers and establishes reserves where the Company believes collectability is no longer reasonably assured. Notes receivable are written down if management determines that the specific borrower does not have the ability to repay the loan in full. Certain notes receivable are collateralized by a security interest in the underlying assets and/or other assets owned by the debtor. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers’customers' financial obligations is not realized. Finance Receivables Notes Receivables December 31, 2012 September 30, 2012 December 31, 2012 September 30, 2012 Aging of receivables that are past due: Greater than 30 days and less than 60 days $ 0.1 $ 0.1 $ — $ — Greater than 60 days and less than 90 days — — — — Greater than 90 days 1.5 1.3 — — Receivables on nonaccrual status 3.2 3.4 19.5 19.0 Receivables past due 90 days or more and still accruing — — — — Receivables subject to general reserves 6.4 1.5 0.9 — Allowance for doubtful accounts (0.1 ) — — — Receivables subject to specific reserves 3.6 3.7 22.9 24.6 Allowance for doubtful accounts (1.4 ) (1.4 ) (8.0 ) (8.0 ) TroubledAt December 31, 2012, restructured finance receivables and notes receivables were $4.0 million and $23.3 million, respectively. Losses on troubled debt restructurings were not significant during the three and nine months ended June 30,December 31, 2012. Three Months Ended December 31, 2012 Total Allowance for doubtful accounts at beginning of period $ 1.4 $ 8.0 $ 8.6 $ 18.0 Provision for doubtful accounts, net of recoveries 0.1 — 0.4 0.5 Charge-off of accounts — — — — Foreign currency translation — — — — Allowance for doubtful accounts at end of period $ 1.5 $ 8.0 $ 9.0 $ 18.5 Three Months Ended December 31, 2011 Total Allowance for doubtful accounts at beginning of period $ 11.5 $ 8.9 $ 9.1 $ 29.5 Provision for doubtful accounts, net of recoveries (2.5 ) — 0.6 (1.9 ) Charge-off of accounts (5.3 ) (0.2 ) (1.0 ) (6.5 ) Foreign currency translation — — — — Allowance for doubtful accounts at end of period $ 3.7 $ 8.7 $ 8.7 $ 21.1 December 31, September 30, 2012 2012 Raw materials $ 497.7 $ 558.0 Partially finished products 332.0 318.3 Finished products 511.7 371.0 Inventories at FIFO cost 1,341.4 1,247.3 Less: Progress/performance-based payments on U.S. government contracts (211.3 ) (238.0 ) Excess of FIFO cost over LIFO cost (73.2 ) (71.8 ) $ 1,056.9 $ 937.5 December 31, September 30, 2012 2012 RiRent (The Netherlands) $ 10.9 $ 10.5 Other 8.8 8.3 $ 19.7 $ 18.8 third-party were partners in Oshkosh/McNeilus Financial Services Partnership (“OMFSP”), a general partnership formed for the purpose of offering lease financing to certain customers of the Company. OMFSP historically engaged in providing vendor lease financing to certain customers of the Company. During the third quarter of fiscal 2012, the Company sold its interest in OMFSP for an immaterial pre-tax gain. Cash distributions and proceeds from the sale aggregated $16.5 million.OSHKOSH CORPORATIONNotes to Condensed Consolidated Financial Statements(Unaudited)The Company and an unaffiliated third-partyparty are joint venture partners in RiRent Europe B.V. (“RiRent”BV ("RiRent"). RiRent maintains a fleet of access equipment for short-term lease to rental companies throughout most of Europe. The re-rental fleet provides rental companies with equipment to support requirements on short notice. RiRent does not provide services directly to end users.$5.0$0.2 million and $3.1 million for the ninethree months ended June 30, 2012 and 2011, respectively.December 31, 2012. The Company had no sales to RiRent in the three months ended December 31, 2011. The Company recognizes income on sales to RiRent at the time of shipment in proportion to the outside third-party interest in RiRent and recognizes the remaining income ratably over the estimated useful life of the equipment, which is generally five years. Indebtedness of RiRent is secured by the underlying leases and assets of RiRent. All such RiRent indebtedness is non-recourse to the Company and its partner. Under RiRent’s €15.0€15.0 million bank credit facility, the partners of RiRent have committed to maintain an overall equity to asset ratio for RiRent of at least 30.0% (62.6% (67.5% as of June 30, 2012)December 31, 2012). December 31, September 30, 2012 2012 Land and land improvements $ 46.0 $ 45.8 Buildings 237.2 236.3 Machinery and equipment 555.3 550.6 Equipment on operating lease to others 12.8 23.8 851.3 856.5 Less accumulated depreciation (493.3 ) (486.6 ) $ 358.0 $ 369.9 $48.1$15.8 million and $55.7$17.5 million for the ninethree months ended June 30,December 31, 2012 and 2011, respectively. Capitalized interest was insignificant for all reported periods. Equipment on operating lease to others represents the cost of equipment shipped to customers for whom the Company has guaranteed the residual value and equipment on short-term lease.leases. These transactions are accounted for as operating leases with the related assets capitalized and depreciated over their estimated economic lives of five to ten years. Cost less accumulated depreciation for equipment on operating lease to others at JuneDecember 31, 2012 and September 30, 2012 was $7.5 million and September 30, 2011 was $8.0$9.4 million and $6.5 million,, respectively.ninethree months ended June 30,December 31, 2012 (in millions): Commercial Total Net goodwill at September 30, 2012 $ 906.1 $ 106.1 $ 21.6 $ 1,033.8 Foreign currency translation 5.2 — (0.1 ) 5.1 Net goodwill at December 31, 2012 $ 911.3 $ 106.1 $ 21.5 $ 1,038.9 December 31, 2012 September 30, 2012 Gross Net Gross Net Access equipment $ 1,843.4 $ (932.1 ) $ 911.3 $ 1,838.2 $ (932.1 ) $ 906.1 Fire & emergency 114.3 (8.2 ) 106.1 114.3 (8.2 ) 106.1 Commercial 197.4 (175.9 ) 21.5 197.5 (175.9 ) 21.6 $ 2,155.1 $ (1,116.2 ) $ 1,038.9 $ 2,150.0 $ (1,116.2 ) $ 1,033.8 December 31, 2012 Gross Net Amortizable intangible assets: Distribution network 39.1 $ 55.4 $ (22.6 ) $ 32.8 Non-compete 10.5 56.9 (56.1 ) 0.8 Technology-related 12.0 100.9 (60.5 ) 40.4 Customer relationships 12.7 566.2 (278.1 ) 288.1 Other 16.6 16.6 (12.9 ) 3.7 14.4 796.0 (430.2 ) 365.8 Non-amortizable trade names 396.2 — 396.2 $ 1,192.2 $ (430.2 ) $ 762.0 September 30, 2012 Gross Net Amortizable intangible assets: Distribution network 39.1 $ 55.4 $ (22.2 ) $ 33.2 Non-compete 10.5 56.9 (55.5 ) 1.4 Technology-related 12.0 100.9 (58.4 ) 42.5 Customer relationships 12.7 563.8 (265.5 ) 298.3 Other 16.5 16.6 (12.8 ) 3.8 14.4 793.6 (414.4 ) 379.2 Non-amortizable trade names 396.2 — 396.2 $ 1,189.8 $ (414.4 ) $ 775.4 $43.9$14.4 million and $45.5$14.7 million for the ninethree months ended June 30,December 31, 2012 and 2011, respectively. The estimated future amortization expense of purchased intangible assets for the remainder of fiscal 20122013 and the five years succeeding September 30, 20122013 are as follows: 20122013 (remaining threenine months) - $14.1 million; 2013$41.8 million; 2014 - $55.9 million; 2014$54.9 million; 2015 - $54.5 million; 2015$54.1 million; 2016 - $53.7 million; 2016$53.5 million; 2017 - $53.1$45.4 million and 20172018 - $45.7 million.12$37.7 million. December 31, September 30, 2012 2012 Senior Secured Term Loan $ 455.0 $ 455.0 8¼% Senior notes due March 2017 250.0 250.0 8½% Senior notes due March 2020 250.0 250.0 955.0 955.0 Less current maturities (16.3 ) — $ 938.7 $ 955.0 Revolving Credit Facility $ — $ — Current maturities of long-term debt 16.3 — $ 16.3 $ — hasmaintains a senior secured credit agreement with various lenders (the “Credit Agreement”). At June 30, 2012, theThe Credit Agreement providedprovides for (i) a revolving credit facility (“Revolving Credit Facility”) that matures in October 2015 with an initial maximum aggregate amount of availability of $550$525 million and (ii) a $650$455 million term loan (“Term Loan”) facility due in quarterly principal installments of $16.25$16.25 million commencing December 31, 2013 with a balloon payment of $341.25$341.25 million due at maturity in October 2015. During the first nine months of fiscalAt December 31, 2012 the Company prepaid the principal installments under the Term Loan that were originally due September 30, 2012 through September 30, 2013. At June 30, 2012,, outstanding letters of credit of $39.1$176.0 million reduced available capacity under the Revolving Credit Facility to $510.9 million. Refer to Note 21 of the Notes to Condensed Consolidated Financial Statements for information regarding the amendment of the Company’s Credit Agreement in July 2012.$349.0 million.At June 30, 2012,was obligated tomust pay (i) an unused commitment fee ranging from 0.40%0.25% to 0.50% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 1.125%0.75% to 3.50%1.25% per annum of the maximum amount available to be drawn for each performance letter of credit issued and outstanding under the Credit Agreement.LIBOR)LIBOR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied. At June 30,December 31, 2012, the interest spread on the Revolving Credit Facility and Term Loan was 275175 basis points. The weighted-average interest rate on borrowings outstanding under the Term Loan at June 30,December 31, 2012 was 3.00%1.96%.OSHKOSH CORPORATIONNotes to Condensed Consolidated Financial Statements(Unaudited)·1.0.·1.0.1.0.·1.0.the following:Fiscal Quarter EndingJune 30, 2012 and September 30, 20123.00 to 1.0Thereafter2.75 to 1.0June 30,December 31, 2012 and expects to be able to meet the financial covenants contained in the Credit Agreement over the next twelve months.limitedlimits the ability of the Company to pay dividends and other distributions, including repurchases of stock.shares of the Company's Common Stock. However, so long as no event of default exists under the Credit Agreement or would result from such payment, the Company was allowed tomay pay dividends and other distributions at June 30,after April 1, 2012 in an aggregate amount not exceeding the sum of:i. ii. iii. (i)$50 million during any fiscal year; plus(ii)the excess of (a) 25% of the cumulative net income of the Company and its consolidated subsidiaries for all fiscal quarters ending after September 27, 2010, over (b) the cumulative amount of all such dividends and other distributions made in any fiscal year ending after such date that exceed $50 million; plus(iii)for each of the first four fiscal quarters ending after September 27, 2010, $25 million per fiscal quarter, in each case provided that the leverage ratio (as defined) as of the last day of the most recently ended fiscal quarter was less than 2.0 to 1.0; plus(iv)for the period of four fiscal quarters ending September 30, 2011 and for each period of four fiscal quarters ending thereafter, $100 million during such period, in each case provided that the leverage ratio (as defined) as of the last day of the most recently ended fiscal quarter was less than 2.0 to 1.0.$250.0$250.0 million of 8¼% unsecured senior notes due March 1, 2017 and $250.0$250.0 million of 8½% unsecured senior notes due March 1, 2020 (collectively, the “Senior Notes”). The Senior Notes were issued pursuant to an indenture (the “Indenture”) among the Company, the subsidiary guarantors named therein and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the Senior Notes due 2017 and Senior Notes due 2020 for a premium after March 1, 2014 and March 1, 2015, respectively. Certain of the Company’s subsidiaries fully, unconditionally, jointly and severally guarantee the Company’s obligations under the Senior Notes. See Note 2021 of the Notes to Condensed Consolidated Financial Statements for separate financial information of the subsidiary guarantors.June 30,December 31, 2012, the fair value of the Senior Notes was estimated to be $530$553 million and the fair value of the Term Loan approximated book value.14OSHKOSH CORPORATIONNotes to Condensed Consolidated Financial Statements(Unaudited) 2012 2011 Balance at beginning of period $ 95.0 $ 75.0 Warranty provisions 9.7 12.8 Settlements made (12.9 ) (10.7 ) Changes in liability for pre-existing warranties, net (1.0 ) 2.1 Foreign currency translation (0.3 ) — Balance at end of period $ 90.5 $ 79.2 Changes in the liability for pre-existing warranties during the nine months ended June 30, 2012 primarily related to increased warranty costs in the fire & emergency segment. Actual MRAP All-Terrain Vehicle (“MATV”) warranty claims have been lower than the Company expected on the M-ATV product launch, which resulted in reductions in liabilities for pre-existing warranties for the nine months ended June 30, 2011. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. At times, warranty issues arise that are beyond the scope of the Company’sCompany's historical experience. For example, accelerated programs to design, test, manufacture and deploy products such as the M-ATV, in war-time conditions, carry with them an increased level of inherent risk of product or component failure. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters in excess of amounts accrued; however, the Company does not expect that any such amounts, while not determinable, would have a material adverse effect on the Company’sCompany's consolidated financial condition, resultresults of operations or cash flows.$160.6$358.6 million in indebtedness of others,customers, including $125.1$124.6 million under loss pool agreements. The Company estimated that its maximum loss exposure under these contracts at June 30,December 31, 2012 was $39.9 million.$88.2 million. Under the terms of these and various related agreements and upon the occurrence of certain events, the Company generally has the ability to, among other things, take possession of the underlying collateral. If the financial condition of the customers were to deteriorate and result in their inability to make payments, then additional accruals may be required. While the Company does not expect to experience losses under these agreements that are materially in excess of the amounts reserved, it cannot provide any assurance that the financial condition of the third partiescustomers will not deteriorate resulting in the third parties’customers' inability to meet their obligations. In the event that this occurs, the Company cannot guarantee that the collateral underlying the agreements will be sufficient to avoid losses materially in excess of the amounts reserved. Any losses under these guarantees would generally be mitigated by the value of any underlying collateral, including financed equipment, and are generally subject to the finance company’scompany's ability to provide the Company clear title to foreclosed equipment and other conditions. During periods of economic weakness, collateral values generally decline and can contribute to higher exposure to losses.OSHKOSH CORPORATIONNotes to Condensed Consolidated Financial Statements(Unaudited)consolidatedCompany’s credit guarantee liability were as follows (in millions):In 2012 2011 Balance at beginning of period $ 5.0 $ 6.5 Provision for new credit guarantees — 0.2 Settlements made (0.1 ) (0.5 ) Changes for pre-existing guarantees, net (0.1 ) (1.1 ) Amortization of previous guarantees (0.1 ) (0.4 ) Balance at end of period $ 4.7 $ 4.7 first quarterCompany's Board of fiscal 2011,Directors adopted a shareholder rights plan (the "Rights Plan") and declared a dividend of one preferred stock purchase right (a “right”) for each outstanding share of the Company's Common Stock to shareholders of record at the close of business on November 5, 2012. On January 4, 2013, the Board of Directors approved, and the Company reachedentered into, an amendment to the Rights Plan accelerating the expiration date of the Rights Plan to January 7, 2013. As a settlement with a customer that resulted inresult, the customer’s repaymentrights expired and the Rights Plan terminated on January 7, 2013.$28.3 millionup to 6,000,000 shares of loans supportedthe Company's Common Stock. In July 2012, the Company's Board of Directors increased the repurchase authorization by Company guarantees for which4,000,000 shares of Common Stock. On November 15, 2012, the Company's Board of Directors further increased the repurchase authorization from the then remaining 6,683,825 shares of Common Stock to 11,000,000 shares of Common Stock. As of December 31, 2012, the Company had established specific credit loss reserves. Upon releaserepurchased 4,250,072 shares of its Common Stock at an aggregate cost of $125.1 million leaving 6,749,928 shares of Common Stock remaining under this repurchase authorization. The Company is restricted by its Credit Agreement from repurchasing shares in certain situations. See Note 8 of the guarantees, the Company reduced previously accrued reserves and increased pre-tax income by $8.1 million.11.Notes to Condensed Consolidated Financial Statements for information regarding these restrictions.June 30,times, the Company has designated these hedges as either cash flow hedges or fair value hedges under FASB ASC Topic 815, Derivatives and Hedging, as follows:Derivatives and Hedging,and accordingly, the mark-to-market impact of these derivatives is recorded each period in current earnings. The fair value of foreign currency related derivatives is included in the Condensed Consolidated Balance Sheets in “Other current assets” and “Other current liabilities.” At June 30,December 31, 2012, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts totaled $128.6$131.0 million in notional amounts, including $65.0$67.5 million in contracts to sell Euro, $51.5$50.2 million in contracts to sell Australian dollars and $7.7$8.1 million in contracts to sell U.K. pounds sterling and buy Euro, with the remaining contracts covering a variety of foreign currencies. December 31, 2012 September 30, 2012 Not designated as hedging instruments: Foreign exchange contracts $ 0.7 $ 1.0 $ 0.4 $ — 12. 2012 2011 Cash flow hedges: Reclassified from other comprehensive income (effective portion): Interest rate contracts Interest expense $ — $ (2.2 ) Not designated as hedges: Foreign exchange contracts Miscellaneous, net (2.0 ) (2.9 ) $ (2.0 ) $ (5.1 ) MeasurementsLevel 1: Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2: Observable inputs other than quoted prices in active markets for identical assets or liabilities, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets. Level 3: Unobservable inputs reflecting management's own assumptions about the inputs used in pricing the asset or liability. Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities.Level 2:Observable inputs other than quoted prices other than those included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.Level 3:Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.June 30,December 31, 2012. As of June 30,December 31, 2012, the fair values of the Company’s financial assets and liabilities were as follows (in millions):
(a)
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Foreign currency exchange derivatives (a) | $ | — | $ | 0.7 | $ | — | $ | 0.7 | |||||||
Liabilities: | |||||||||||||||
Foreign currency exchange derivatives (a) | $ | — | $ | 1.0 | $ | — | $ | 1.0 |
(a) | Based on observable market transactions of forward currency prices. |
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Under the 2009 Stock Plan, officers, directors, including non-employee directors, and employees of the Company may be granted stock options, stock appreciation rights (“SAR”), performance shares, performance units, shares of Common Stock, restricted stock, restricted stock units (“RSU”) or other stock-based awards. The 2009 Stock Plan provides for the granting of options to purchase shares of the Company’s Common Stock at not less than the fair market value of such shares on the date of grant. Stock options granted under the 2009 Stock Plan generally become exercisable in equal installments over a three-yearthree-year period, beginning with the first anniversary of the date of grant of the option, unless a shorter or longer duration is established by the Human Resources Committee of the Board of Directors at the time of the option grant. Stock options terminate not more than seven years from the date of grant. Except for performance shares and performance units, vesting is based solely on continued service as an employee of the Company. At June 30,December 31, 2012, the Company had reserved 11,570,69310,595,781 shares of Common Stock available for issuance under the 2009 Stock Plan to provide for the exercise of outstanding stock options and the issuance of Common Stock under incentive compensation awards, including awards issued prior to the effective date of the 2009 Stock Plan.
The Company granted 20,000 and 30,575 options to purchase shares of the Company’s Common Stock and issued 80,000 and 13,812 shares of nonvested stock during the nine months ended June 30, 2012 and 2011, respectively.
14.
As part of the Company’s actions to rationalize and optimize its global manufacturing footprint and in an effort to streamline operations,
In January 2011, the Company announced that its fire & emergency segment would be closingexit its Medtec ambulance manufacturingbusiness. The Company had expected that the move of ambulance production from
In January 2011,completion of units in backlog, which the Company initiated a planexpects to address continued weak market conditions in its access equipment segment in Europe. The plan included the consolidation of certain facilities and other cost reduction initiatives resulting in reductions in its workforce in Europe. In connection with this plan, the Company recorded statutorily or contractually required termination benefit costsoccur in the firstsecond quarter of fiscal 2011. The Company largely completed these actions in the first quarter of fiscal 2012.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Pre-tax restructuring charges (credits) included in continuing operations for the three and nine months ended June 30,December 31, 2012 and 2011 were as follows (in millions):
|
| Three Months Ended June 30, 2012 |
| Three Months Ended June 30, 2011 |
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| Selling, |
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| Selling, |
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| Cost of |
| General and |
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| Cost of |
| General and |
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| Administrative |
| Total |
| Sales |
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| Total |
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Access equipment |
| $ | (0.1 | ) | $ | — |
| $ | (0.1 | ) | $ | (2.5 | ) | $ | (0.5 | ) | $ | (3.0 | ) |
Fire & emergency |
| — |
| 0.1 |
| 0.1 |
| — |
| 0.2 |
| 0.2 |
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Commercial |
| — |
| — |
| — |
| — |
| 0.1 |
| 0.1 |
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| $ | (0.1 | ) | $ | 0.1 |
| $ | — |
| $ | (2.5 | ) | $ | (0.2 | ) | $ | (2.7 | ) |
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| Nine Months Ended June 30, 2012 |
| Nine Months Ended June 30, 2011 |
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| General and |
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| Cost of |
| General and |
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| Administrative |
| Total |
| Sales |
| Administrative |
| Total |
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Access equipment |
| $ | (0.7 | ) | $ | — |
| $ | (0.7 | ) | $ | 1.8 |
| $ | 0.9 |
| $ | 2.7 |
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Fire & emergency |
| 0.2 |
| 1.1 |
| 1.3 |
| — |
| 1.6 |
| 1.6 |
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Commercial |
| 0.1 |
| — |
| 0.1 |
| 0.1 |
| 0.4 |
| 0.5 |
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| $ | (0.4 | ) | $ | 1.1 |
| $ | 0.7 |
| $ | 1.9 |
| $ | 2.9 |
| $ | 4.8 |
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Cost of Sales | Selling, General and Administrative | Total | |||||||||
Fiscal 2013: | |||||||||||
Fire & emergency | $ | — | $ | (0.4 | ) | $ | (0.4 | ) | |||
Fiscal 2012: | |||||||||||
Access equipment | $ | (0.5 | ) | $ | — | $ | (0.5 | ) | |||
Fire & emergency | — | 0.3 | 0.3 | ||||||||
$ | (0.5 | ) | $ | 0.3 | $ | (0.2 | ) |
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Beginning balance |
| $ | 3.6 |
| $ | — |
| $ | 3.6 |
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Restructuring provisions |
| (0.2 | ) | 0.9 |
| 0.7 |
| |||
Utilized - cash |
| (1.6 | ) | (0.8 | ) | (2.4 | ) | |||
Utilized - noncash |
| — |
| (0.1 | ) | (0.1 | ) | |||
Foreign currency translation |
| (0.3 | ) | — |
| (0.3 | ) | |||
Ending balance |
| $ | 1.5 |
| $ | — |
| $ | 1.5 |
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19
Employee Severance and Termination Benefits | Other | Total | |||||||||
Balance at September 30, 2012 | $ | 2.8 | $ | 2.1 | $ | 4.9 | |||||
Restructuring provisions | 0.1 | (0.5 | ) | (0.4 | ) | ||||||
Utilized - cash | (0.6 | ) | (0.6 | ) | (1.2 | ) | |||||
Balance at December 31, 2012 | $ | 2.3 | $ | 1.0 | $ | 3.3 |
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
15.16. Employee Benefit Plans
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| Three Months Ended |
| Nine Months Ended |
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| June 30, |
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Service cost |
| $ | 5.6 |
| $ | 4.2 |
| $ | 16.7 |
| $ | 13.1 |
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Interest cost |
| 4.0 |
| 3.4 |
| 12.2 |
| 10.3 |
| ||||
Expected return on plan assets |
| (3.9 | ) | (4.0 | ) | (11.7 | ) | (11.7 | ) | ||||
Amortization of prior service cost |
| 0.5 |
| 1.1 |
| 1.7 |
| 2.1 |
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Amortization of net actuarial loss |
| 1.9 |
| 1.5 |
| 5.5 |
| 5.0 |
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Net periodic benefit cost |
| $ | 8.1 |
| $ | 6.2 |
| $ | 24.4 |
| $ | 18.8 |
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The Company made a $15.0 million discretionary contribution to its pension plans in June 2012.
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Components of net periodic benefit cost | |||||||
Service cost | $ | 4.0 | $ | 5.6 | |||
Interest cost | 4.0 | 4.1 | |||||
Expected return on plan assets | (4.1 | ) | (3.9 | ) | |||
Amortization of prior service cost | 0.4 | 0.6 | |||||
Curtailment | 0.9 | — | |||||
Amortization of net actuarial loss | 1.1 | 1.8 | |||||
Net periodic benefit cost | $ | 6.3 | $ | 8.2 |
2013 compared to
$35.8 million in fiscal 2012.
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| Three Months Ended |
| Nine Months Ended |
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| June 30, |
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| 2012 |
| 2011 |
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Service cost |
| $ | 1.8 |
| $ | 1.1 |
| $ | 5.4 |
| $ | 3.4 |
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Interest cost |
| 0.9 |
| 0.8 |
| 2.6 |
| 2.3 |
| ||||
Amortization of net actuarial loss |
| 0.3 |
| 0.3 |
| 0.9 |
| 0.8 |
| ||||
Net periodic benefit cost |
| $ | 3.0 |
| $ | 2.2 |
| $ | 8.9 |
| $ | 6.5 |
|
Three Months Ended | |||||||
December 31, | |||||||
2012 | 2011 | ||||||
Components of net periodic benefit cost | |||||||
Service cost | $ | 2.0 | $ | 1.8 | |||
Interest cost | 0.8 | 0.9 | |||||
Amortization of prior service cost | (0.1 | ) | — | ||||
Amortization of net actuarial loss | 0.3 | 0.3 | |||||
Net periodic benefit cost | $ | 3.0 | $ | 3.0 |
16.2013.
returns (
660 basis points).OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the “Provision for income taxes” in the Company’s Condensed Consolidated Statements of Income. During the ninethree months ended June 30,December 31, 2012 and 2011, the Company recognized $0.7a charge of $0.7 million and $1.8a benefit of $(0.6) million in related to interest and penalties, respectively. At June 30,December 31, 2012, the Company had accruals for the payment of interest and penalties of $16.1 million.$14.4 million. During the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce unrecognized tax benefits by approximately $29.8$2.5 million, because the Company’s tax positions are sustained on audit, because the Company agrees to thetheir disallowance of the Company’s tax positions or because the applicable statutestatutes of limitations closes.
expire.
17.2011.
The following table sets forth the computation of basic
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Net income from continuing operations | $ | 46.5 | $ | 39.0 | |||
Less: net earnings allocated to participating securities | (0.3 | ) | (0.1 | ) | |||
Net income available to Oshkosh Corporation common shareholders | $ | 46.2 | $ | 38.9 | |||
Net income (loss) from discontinued operations | $ | — | $ | (0.1 | ) |
|
| Three Months Ended |
| Nine Months Ended |
| ||||
|
| June 30, |
| June 30, |
| ||||
|
| 2012 |
| 2011 |
| 2012 |
| 2011 |
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding |
| 91,417,937 |
| 91,030,847 |
| 91,320,794 |
| 90,821,066 |
|
Effect of dilutive stock options and other equity-based compensation awards |
| 507,158 |
| 658,761 |
| 494,823 |
| 829,968 |
|
Diluted weighted-average shares outstanding |
| 91,925,095 |
| 91,689,608 |
| 91,815,617 |
| 91,651,034 |
|
calculations was as follows:
Three Months Ended December 31, | |||||
2012 | 2011 | ||||
Basic weighted-average shares outstanding | 90,303,191 | 91,186,347 | |||
Effect of dilutive stock options and equity-based compensation awards | 878,606 | 585,278 | |||
Diluted weighted-average shares outstanding | 91,181,797 | 91,771,625 |
18.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company had reserves of $2.0$2.0 million and $2.1$2.0 million for losses related to environmental matters that were probable and estimable at JuneDecember 31, 2012 and September 30, 2012 and September 30, 2011,, respectively. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. Actual costs incurred in future periods may vary from the estimates, given the inherent uncertainties in evaluating certain exposures. Subject to the imprecision in estimating future contingent liability costs, the Company does not expect that any sum it may have to pay in connection with these matters in excess of the amounts recorded will have a material adverse effect on the Company’s financial position, results of operations or cash flows.
December 31, 2012.
On January 8, 2010, Control Solutions LLC (“Control Solutions”) brought suit against the Company in the United States District Court for the Northern District of Illinois for breach of express contract, breach of implied-in-fact contract, unjust enrichment and promissory estoppel related to the Company’s contract to supply the United States Department of Defense with M-ATVs. Control Solutions has asserted damages in the amount of $190.3 million. On October 3, 2011, following written and oral discovery, the Company moved for summary judgment. On that same date, Control Solutions filed a cross-motion for summary judgment. The Company’s and Control Solutions’ response briefs have been filed with the Court. While this case is in the early stages of litigation and its outcome cannot be predicted with certainty, the Company believes that the ultimate resolution of this case will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
While the Family of Medium Tactical Vehicles (“FMTV”) contract was profitable for the first nine months of fiscal 2012 and the Company expects the contract to remain profitable throughout the remaining life of the contract, the Company’s expectation of future profitability is based on certain assumptions, including estimates of future material and production costs. Management cost assumptions include estimates for future increases in the costs of materials, targeted cost savings and production efficiencies. There are inherent uncertainties related to these estimates. Small changes in estimates can have a significant impact on profitability under the contract. For example, a 1% escalation in material costs over the Company’s projection for FMTV orders currently in backlog would increase the cost of materials by approximately $18 million. While this amount is less than the expected future profitability of the FMTV contract, it would reduce the expected future gross margins on orders currently in backlog. It is possible that other assumptions underlying the analysis could change in such a manner that the Company would determine in the future that this is a loss contract, which could result in a material charge to earnings.
19.
Table of ContentsSegment Reporting
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
For, for purposes of business segment performance measurement, the Company does not allocate to individual business segments costs or items that are of a non-operating nature or organizational or functional expenses of a corporate nature. The caption “Corporate” includes corporate office expenses, including share-based compensation, costs of certain business initiatives and shared services benefiting multiple segments and results of insignificant operations. Identifiable assets of the business segments exclude general corporate assets, which principally consist of cash and cash equivalents, certain property, plant and equipment and certain other assets pertaining to corporate activities. Intersegment sales generally include amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed and agreed-upon pricing which is intended to be reflective of the contribution made by the supplying business segment.
|
| Three Months Ended June 30, 2012 |
| Three Months Ended June 30, 2011 |
| ||||||||||||||
|
| External |
| Inter- |
| Net |
| External |
| Inter- |
| Net |
| ||||||
|
| Customers |
| segment |
| Sales |
| Customers |
| segment |
| Sales |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access equipment |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Aerial work platforms |
| $ | 426.1 |
| $ | — |
| $ | 426.1 |
| $ | 294.4 |
| $ | — |
| $ | 294.4 |
|
Telehandlers |
| 260.8 |
| — |
| 260.8 |
| 144.3 |
| — |
| 144.3 |
| ||||||
Other |
| 127.0 |
| 0.7 |
| 127.7 |
| 124.0 |
| 17.4 |
| 141.4 |
| ||||||
Total access equipment |
| 813.9 |
| 0.7 |
| 814.6 |
| 562.7 |
| 17.4 |
| 580.1 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Defense |
| 957.9 |
| 0.6 |
| 958.5 |
| 1,105.8 |
| 1.2 |
| 1,107.0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fire & emergency |
| 234.0 |
| 12.1 |
| 246.1 |
| 211.3 |
| 4.7 |
| 216.0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Concrete placement |
| 67.4 |
| — |
| 67.4 |
| 48.7 |
| — |
| 48.7 |
| ||||||
Refuse collection |
| 77.5 |
| — |
| 77.5 |
| 71.5 |
| — |
| 71.5 |
| ||||||
Other |
| 25.6 |
| 5.7 |
| 31.3 |
| 22.9 |
| 15.4 |
| 38.3 |
| ||||||
Total commercial |
| 170.5 |
| 5.7 |
| 176.2 |
| 143.1 |
| 15.4 |
| 158.5 |
| ||||||
Intersegment eliminations |
| — |
| (19.1 | ) | (19.1 | ) | — |
| (38.7 | ) | (38.7 | ) | ||||||
Consolidated |
| $ | 2,176.3 |
| $ | — |
| $ | 2,176.3 |
| $ | 2,022.9 |
| $ | — |
| $ | 2,022.9 |
|
|
| Nine Months Ended June 30, 2012 |
| Nine Months Ended June 30, 2011 |
| ||||||||||||||
|
| External |
| Inter- |
| Net |
| External |
| Inter- |
| Net |
| ||||||
|
| Customers |
| segment |
| Sales |
| Customers |
| segment |
| Sales |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access equipment |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Aerial work platforms |
| $ | 1,059.8 |
| $ | — |
| $ | 1,059.8 |
| $ | 636.0 |
| $ | — |
| $ | 636.0 |
|
Telehandlers |
| 643.4 |
| — |
| 643.4 |
| 358.8 |
| — |
| 358.8 |
| ||||||
Other |
| 375.2 |
| 124.3 |
| 499.5 |
| 329.7 |
| 54.1 |
| 383.8 |
| ||||||
Total access equipment |
| 2,078.4 |
| 124.3 |
| 2,202.7 |
| 1,324.5 |
| 54.1 |
| 1,378.6 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Defense |
| 2,994.6 |
| 2.2 |
| 2,996.8 |
| 3,188.9 |
| 4.1 |
| 3,193.0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fire & emergency |
| 563.0 |
| 27.6 |
| 590.6 |
| 580.8 |
| 13.9 |
| 594.7 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Concrete placement |
| 166.8 |
| — |
| 166.8 |
| 123.3 |
| — |
| 123.3 |
| ||||||
Refuse collection |
| 252.5 |
| — |
| 252.5 |
| 194.2 |
| — |
| 194.2 |
| ||||||
Other |
| 74.9 |
| 21.3 |
| 96.2 |
| 57.6 |
| 54.6 |
| 112.2 |
| ||||||
Total commercial |
| 494.2 |
| 21.3 |
| 515.5 |
| 375.1 |
| 54.6 |
| 429.7 |
| ||||||
Intersegment eliminations |
| — |
| (175.4 | ) | (175.4 | ) | — |
| (126.7 | ) | (126.7 | ) | ||||||
Consolidated |
| $ | 6,130.2 |
| $ | — |
| $ | 6,130.2 |
| $ | 5,469.3 |
| $ | — |
| $ | 5,469.3 |
|
Three Months Ended December 31, | |||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||
External Customers | Inter- segment | Net Sales | External Customers | Inter- segment | Net Sales | ||||||||||||||||||
Access equipment | |||||||||||||||||||||||
Aerial work platforms | $ | 252.2 | $ | — | $ | 252.2 | $ | 252.9 | $ | — | $ | 252.9 | |||||||||||
Telehandlers | 206.9 | — | 206.9 | 148.4 | — | 148.4 | |||||||||||||||||
Other (a) | 122.1 | 0.1 | 122.2 | 103.8 | 122.6 | 226.4 | |||||||||||||||||
Total access equipment | 581.2 | 0.1 | 581.3 | 505.1 | 122.6 | 627.7 | |||||||||||||||||
Defense | 827.8 | 0.9 | 828.7 | 1,050.2 | 0.8 | 1,051.0 | |||||||||||||||||
Fire & emergency | 182.6 | 10.7 | 193.3 | 155.4 | 4.7 | 160.1 | |||||||||||||||||
Commercial | |||||||||||||||||||||||
Concrete placement | 63.3 | — | 63.3 | 46.7 | — | 46.7 | |||||||||||||||||
Refuse collection | 80.8 | — | 80.8 | 95.3 | — | 95.3 | |||||||||||||||||
Other | 25.3 | 7.9 | 33.2 | 23.0 | 6.6 | 29.6 | |||||||||||||||||
Total commercial | 169.4 | 7.9 | 177.3 | 165.0 | 6.6 | 171.6 | |||||||||||||||||
Intersegment eliminations | — | (19.6 | ) | (19.6 | ) | — | (134.7 | ) | (134.7 | ) | |||||||||||||
Consolidated | $ | 1,761.0 | $ | — | $ | 1,761.0 | $ | 1,875.7 | $ | — | $ | 1,875.7 |
(a) | Access equipment intersegment sales are comprised of assembly of Mine Resistant Ambush Protected All-Terrain Vehicle crew capsules and complete vehicles for the defense segment. The access equipment segment invoices the defense segment for this work. These sales are eliminated in consolidation. |
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Operating income (loss) from continuing operations: | |||||||
Access equipment | $ | 48.9 | $ | 13.1 | |||
Defense | 60.9 | 92.4 | |||||
Fire & emergency | 5.8 | (9.9 | ) | ||||
Commercial | 8.0 | 6.9 | |||||
Corporate | (42.7 | ) | (27.1 | ) | |||
Intersegment eliminations | (0.1 | ) | — | ||||
Consolidated | 80.8 | 75.4 | |||||
Interest expense net of interest income | (14.2 | ) | (20.0 | ) | |||
Miscellaneous other income (expense) | 0.3 | (5.6 | ) | ||||
Income from continuing operations before income taxes and equity in earnings of unconsolidated affiliates | $ | 66.9 | $ | 49.8 |
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| June 30, |
| June 30, |
| ||||||||
|
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| ||||
Operating income (loss): |
|
|
|
|
|
|
|
|
| ||||
Access equipment |
| $ | 88.2 |
| $ | 29.5 |
| $ | 169.7 |
| $ | 30.5 |
|
Defense |
| 40.2 |
| 112.5 |
| 174.5 |
| 472.0 |
| ||||
Fire & emergency |
| 6.4 |
| 4.4 |
| (14.9 | ) | 0.4 |
| ||||
Commercial |
| 12.1 |
| 3.7 |
| 22.9 |
| 1.3 |
| ||||
Corporate |
| (22.5 | ) | (24.5 | ) | (76.6 | ) | (81.2 | ) | ||||
Intersegment eliminations |
| 0.1 |
| 0.4 |
| 0.1 |
| 4.1 |
| ||||
|
| 124.5 |
| 126.0 |
| 275.7 |
| 427.1 |
| ||||
Interest expense, net of interest income |
| (18.1 | ) | (20.4 | ) | (55.7 | ) | (66.8 | ) | ||||
Miscellaneous, net |
| (0.8 | ) | (0.5 | ) | (5.1 | ) | (0.4 | ) | ||||
Income from operations before income taxes and equity in earnings of unconcolidated affiliates |
| $ | 105.6 |
| $ | 105.1 |
| $ | 214.9 |
| $ | 359.9 |
|
|
| June 30, |
| September 30, |
| ||
|
| 2012 |
| 2011 |
| ||
Identifiable assets: |
|
|
|
|
| ||
Access equipment: |
|
|
|
|
| ||
U.S. |
| $ | 1,868.6 |
| $ | 1,779.8 |
|
Europe (a) |
| 673.3 |
| 694.0 |
| ||
Rest of the world |
| 317.6 |
| 248.9 |
| ||
Total access equipment |
| 2,859.5 |
| 2,722.7 |
| ||
Defense - U.S. (a) |
| 729.6 |
| 762.3 |
| ||
Fire & emergency: |
|
|
|
|
| ||
U.S. |
| 554.0 |
| 518.9 |
| ||
Europe |
| 11.5 |
| 12.9 |
| ||
Total fire & emergency |
| 565.5 |
| 531.8 |
| ||
Commercial: |
|
|
|
|
| ||
U.S. |
| 327.5 |
| 321.4 |
| ||
Other North America (a) |
| 48.7 |
| 41.5 |
| ||
Total commercial |
| 376.2 |
| 362.9 |
| ||
Corporate: |
|
|
|
|
| ||
U.S. (b) |
| 403.0 |
| 441.2 |
| ||
Rest of the world |
| 3.7 |
| 6.0 |
| ||
Total corporate |
| 406.7 |
| 447.2 |
| ||
Consolidated |
| $ | 4,937.5 |
| $ | 4,826.9 |
|
(a)Includes investment in unconsolidated affiliates.
(b)Primarily includes cash and short-term investments.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Net
December 31, | September 30, | ||||||
2012 | 2012 | ||||||
Identifiable assets: | |||||||
Access equipment: | |||||||
U.S. | $ | 1,634.5 | $ | 1,754.6 | |||
Europe (a) | 676.0 | 684.2 | |||||
Rest of the world | 258.8 | 283.1 | |||||
Total access equipment | 2,569.3 | 2,721.9 | |||||
Defense - U.S. | 591.2 | 684.5 | |||||
Fire & emergency - U.S. | 509.1 | 534.0 | |||||
Commercial: | |||||||
U.S. | 313.6 | 304.5 | |||||
Rest of the world (a) | 33.8 | 37.0 | |||||
Total commercial | 347.4 | 341.5 | |||||
Corporate: | |||||||
U.S. (b) | 581.0 | 658.1 | |||||
Rest of the world | 5.9 | 7.8 | |||||
Total corporate | 586.9 | 665.9 | |||||
Consolidated | $ | 4,603.9 | $ | 4,947.8 |
(a) | Includes investments in unconsolidated affiliates. |
(b) | Primarily includes cash and short-term investments. |
|
| Nine Months Ended |
| ||||
|
| June 30, |
| ||||
|
| 2012 |
| 2011 |
| ||
Net sales: |
|
|
|
|
| ||
United States |
| $ | 4,908.4 |
| $ | 4,534.8 |
|
Other North America |
| 179.6 |
| 164.4 |
| ||
Europe, Africa and Middle East |
| 622.9 |
| 469.8 |
| ||
Rest of the world |
| 419.3 |
| 300.3 |
| ||
Consolidated |
| $ | 6,130.2 |
| $ | 5,469.3 |
|
20.
Three Months Ended December 31, | |||||||
2012 | 2011 | ||||||
Net sales: | |||||||
United States | $ | 1,455.5 | $ | 1,511.4 | |||
Other North America | 57.5 | 52.9 | |||||
Europe, Africa and Middle East | 131.8 | 196.2 | |||||
Rest of the world | 116.2 | 115.2 | |||||
Consolidated | $ | 1,761.0 | $ | 1,875.7 |
Condensed Consolidating Statement of Income
For the Three Months Ended June 30, 2012
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
|
|
|
| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
| $ | 1,006.0 |
| $ | 961.8 |
| $ | 238.0 |
| $ | (29.5 | ) | $ | 2,176.3 |
|
Cost of sales |
| 934.4 |
| 812.1 |
| 186.9 |
| (30.2 | ) | 1,903.2 |
| |||||
Gross income |
| 71.6 |
| 149.7 |
| 51.1 |
| 0.7 |
| 273.1 |
| |||||
Selling, general and administrative expenses |
| 52.8 |
| 68.1 |
| 13.5 |
| — |
| 134.4 |
| |||||
Amortization of purchased intangibles |
| 0.1 |
| 9.9 |
| 4.2 |
| — |
| 14.2 |
| |||||
Operating income |
| 18.7 |
| 71.7 |
| 33.4 |
| 0.7 |
| 124.5 |
| |||||
Interest expense |
| (46.6 | ) | (20.5 | ) | (0.8 | ) | 49.4 |
| (18.5 | ) | |||||
Interest income |
| 0.6 |
| 7.7 |
| 41.5 |
| (49.4 | ) | 0.4 |
| |||||
Miscellaneous, net |
| 4.0 |
| (51.6 | ) | 46.8 |
| — |
| (0.8 | ) | |||||
Income (loss) from operations before income taxes |
| (23.3 | ) | 7.3 |
| 120.9 |
| 0.7 |
| 105.6 |
| |||||
Provision for (benefit from) income taxes |
| (10.0 | ) | 2.6 |
| 38.2 |
| 0.3 |
| 31.1 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
| (13.3 | ) | 4.7 |
| 82.7 |
| 0.4 |
| 74.5 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
| 89.2 |
| 37.4 |
| 3.3 |
| (129.9 | ) | — |
| |||||
Equity in earnings (losses) of unconsolidated affiliates |
| (0.2 | ) | — |
| 1.4 |
| — |
| 1.2 |
| |||||
Net income (loss) |
| 75.7 |
| 42.1 |
| 87.4 |
| (129.5 | ) | 75.7 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
| — |
| — |
| — |
| — |
| — |
| |||||
Net income (loss) attributable to Oshkosh Corporation |
| $ | 75.7 |
| $ | 42.1 |
| $ | 87.4 |
| $ | (129.5 | ) | $ | 75.7 |
|
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
|
|
|
| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
| $ | 1,157.7 |
| $ | 693.4 |
| $ | 223.6 |
| $ | (51.8 | ) | $ | 2,022.9 |
|
Cost of sales |
| 1,011.2 |
| 595.1 |
| 197.0 |
| (52.4 | ) | 1,750.9 |
| |||||
Gross income |
| 146.5 |
| 98.3 |
| 26.6 |
| 0.6 |
| 272.0 |
| |||||
Selling, general and administrative expenses |
| 52.1 |
| 65.7 |
| 13.0 |
| — |
| 130.8 |
| |||||
Amortization of purchased intangibles |
| — |
| 10.0 |
| 5.2 |
| — |
| 15.2 |
| |||||
Operating income |
| 94.4 |
| 22.6 |
| 8.4 |
| 0.6 |
| 126.0 |
| |||||
Interest expense |
| (49.3 | ) | (18.6 | ) | (1.0 | ) | 47.7 |
| (21.2 | ) | |||||
Interest income |
| 0.6 |
| 7.2 |
| 40.7 |
| (47.7 | ) | 0.8 |
| |||||
Miscellaneous, net |
| 4.2 |
| (19.7 | ) | 15.0 |
| — |
| (0.5 | ) | |||||
Income (loss) from operations before income taxes |
| 49.9 |
| (8.5 | ) | 63.1 |
| 0.6 |
| 105.1 |
| |||||
Provision for (benefit from) income taxes |
| 26.9 |
| (5.1 | ) | 14.6 |
| 0.2 |
| 36.6 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
| 23.0 |
| (3.4 | ) | 48.5 |
| 0.4 |
| 68.5 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
| 45.4 |
| 28.4 |
| (3.3 | ) | (70.5 | ) | — |
| |||||
Equity in earnings (losses) unconsolidated affiliates |
| — |
| — |
| 0.1 |
| — |
| 0.1 |
| |||||
Net income (loss) |
| 68.4 |
| 25.0 |
| 45.3 |
| (70.1 | ) | 68.6 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
| — |
| — |
| (0.2 | ) | — |
| (0.2 | ) | |||||
Net income (loss) attributable to Oshkosh Corporation |
| $ | 68.4 |
| $ | 25.0 |
| $ | 45.1 |
| $ | (70.1 | ) | $ | 68.4 |
|
December 31, 2012
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net sales | $ | 858.4 | $ | 742.7 | $ | 190.2 | $ | (30.3 | ) | $ | 1,761.0 | ||||||||
Cost of sales | 769.2 | 608.0 | 167.7 | (30.2 | ) | 1,514.7 | |||||||||||||
Gross income | 89.2 | 134.7 | 22.5 | (0.1 | ) | 246.3 | |||||||||||||
Selling, general and administrative expenses | 71.8 | 73.8 | 5.5 | — | 151.1 | ||||||||||||||
Amortization of purchased intangibles | 0.1 | 9.9 | 4.4 | — | 14.4 | ||||||||||||||
Operating income | 17.3 | 51.0 | 12.6 | (0.1 | ) | 80.8 | |||||||||||||
Interest expense | (50.8 | ) | (14.3 | ) | (1.1 | ) | 49.5 | (16.7 | ) | ||||||||||
Interest income | 0.6 | 10.0 | 41.4 | (49.5 | ) | 2.5 | |||||||||||||
Miscellaneous, net | 9.1 | (27.7 | ) | 18.9 | — | 0.3 | |||||||||||||
Income (loss) from continuing operations before income taxes | (23.8 | ) | 19.0 | 71.8 | (0.1 | ) | 66.9 | ||||||||||||
Provision for (benefit from) income taxes | (7.4 | ) | 5.9 | 22.5 | — | 21.0 | |||||||||||||
Income (loss) from continuing operations before equity in earnings (losses) of affiliates | (16.4 | ) | 13.1 | 49.3 | (0.1 | ) | 45.9 | ||||||||||||
Equity in earnings (losses) of consolidated subsidiaries | 62.9 | 17.0 | 11.8 | (91.7 | ) | — | |||||||||||||
Equity in earnings (losses) of unconsolidated affiliates | — | — | 0.6 | — | 0.6 | ||||||||||||||
Income from continuing operations | 46.5 | 30.1 | 61.7 | (91.8 | ) | 46.5 | |||||||||||||
Discontinued operations, net of tax | — | — | — | — | — | ||||||||||||||
Net income | 46.5 | 30.1 | 61.7 | (91.8 | ) | 46.5 | |||||||||||||
Net income attributable to the noncontrolling interest | — | — | — | — | — | ||||||||||||||
Net income attributable to Oshkosh Corporation | $ | 46.5 | $ | 30.1 | $ | 61.7 | $ | (91.8 | ) | $ | 46.5 |
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
|
|
|
| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
| $ | 3,092.8 |
| $ | 2,562.0 |
| $ | 705.1 |
| $ | (229.7 | ) | $ | 6,130.2 |
|
Cost of sales |
| 2,829.8 |
| 2,205.1 |
| 589.9 |
| (229.6 | ) | 5,395.2 |
| |||||
Gross income |
| 263.0 |
| 356.9 |
| 115.2 |
| (0.1 | ) | 735.0 |
| |||||
Selling, general and administrative expenses |
| 168.5 |
| 203.2 |
| 43.7 |
| — |
| 415.4 |
| |||||
Amortization of purchased intangibles |
| 0.2 |
| 30.1 |
| 13.6 |
| — |
| 43.9 |
| |||||
Operating income |
| 94.3 |
| 123.6 |
| 57.9 |
| (0.1 | ) | 275.7 |
| |||||
Interest expense |
| (140.5 | ) | (59.9 | ) | (3.0 | ) | 146.1 |
| (57.3 | ) | |||||
Interest income |
| 1.7 |
| 22.8 |
| 123.2 |
| (146.1 | ) | 1.6 |
| |||||
Miscellaneous, net |
| 13.7 |
| (83.6 | ) | 64.8 |
| — |
| (5.1 | ) | |||||
Income (loss) from operations before income taxes |
| (30.8 | ) | 2.9 |
| 242.9 |
| (0.1 | ) | 214.9 |
| |||||
Provision for (benefit from) income taxes |
| (12.0 | ) | — |
| 75.8 |
| — |
| 63.8 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
| (18.8 | ) | 2.9 |
| 167.1 |
| (0.1 | ) | 151.1 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
| 171.1 |
| 86.3 |
| 17.0 |
| (274.4 | ) | — |
| |||||
Equity in earnings (losses) of unconsolidated affiliates |
| (0.4 | ) | — |
| 2.3 |
| — |
| 1.9 |
| |||||
Net income (loss) |
| 151.9 |
| 89.2 |
| 186.4 |
| (274.5 | ) | 153.0 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
| — |
| — |
| (1.1 | ) | — |
| (1.1 | ) | |||||
Net income (loss) attributable to Oshkosh Corporation |
| $ | 151.9 |
| $ | 89.2 |
| $ | 185.3 |
| $ | (274.5 | ) | $ | 151.9 |
|
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net income | $ | 46.5 | $ | 30.1 | $ | 61.7 | $ | (91.8 | ) | $ | 46.5 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||
Change in fair value of derivative instruments | — | — | — | — | — | ||||||||||||||
Employee pension and postretirement benefits | 1.0 | — | — | — | 1.0 | ||||||||||||||
Currency translation adjustments | 8.6 | — | 8.6 | (8.6 | ) | 8.6 | |||||||||||||
Total other comprehensive income (loss), net of tax | 9.6 | — | 8.6 | (8.6 | ) | 9.6 | |||||||||||||
Comprehensive income | 56.1 | 30.1 | 70.3 | (100.4 | ) | 56.1 | |||||||||||||
Comprehensive (income) loss attributable to the noncontrolling interest | — | — | — | — | — | ||||||||||||||
Comprehensive income attributable to Oshkosh Corporation | $ | 56.1 | $ | 30.1 | $ | 70.3 | $ | (100.4 | ) | $ | 56.1 |
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
|
|
|
| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
| $ | 3,322.3 |
| $ | 1,666.6 |
| $ | 646.7 |
| $ | (166.3 | ) | $ | 5,469.3 |
|
Cost of sales |
| 2,760.2 |
| 1,443.1 |
| 574.7 |
| (170.8 | ) | 4,607.2 |
| |||||
Gross income |
| 562.1 |
| 223.5 |
| 72.0 |
| 4.5 |
| 862.1 |
| |||||
Selling, general and administrative expenses |
| 162.9 |
| 180.9 |
| 45.7 |
| — |
| 389.5 |
| |||||
Amortization of purchased intangibles |
| — |
| 29.9 |
| 15.6 |
| — |
| 45.5 |
| |||||
Operating income |
| 399.2 |
| 12.7 |
| 10.7 |
| 4.5 |
| 427.1 |
| |||||
Interest expense |
| (154.1 | ) | (63.3 | ) | (3.1 | ) | 151.1 |
| (69.4 | ) | |||||
Interest income |
| 2.3 |
| 20.0 |
| 131.4 |
| (151.1 | ) | 2.6 |
| |||||
Miscellaneous, net |
| 13.6 |
| (47.1 | ) | 33.1 |
| — |
| (0.4 | ) | |||||
Income (loss) from operations before income taxes |
| 261.0 |
| (77.7 | ) | 172.1 |
| 4.5 |
| 359.9 |
| |||||
Provision for (benefit from) income taxes |
| 95.0 |
| (26.8 | ) | 55.0 |
| 1.6 |
| 124.8 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
| 166.0 |
| (50.9 | ) | 117.1 |
| 2.9 |
| 235.1 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
| 69.9 |
| 41.3 |
| (45.8 | ) | (65.4 | ) | — |
| |||||
Equity in earnings (losses) of unconsolidated affiliates |
| — |
| — |
| 0.3 |
| — |
| 0.3 |
| |||||
Net income (loss) |
| 235.9 |
| (9.6 | ) | 71.6 |
| (62.5 | ) | 235.4 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
| — |
| — |
| 0.5 |
| — |
| 0.5 |
| |||||
Net income (loss) attributable to Oshkosh Corporation |
| $ | 235.9 |
| $ | (9.6 | ) | $ | 72.1 |
| $ | (62.5 | ) | $ | 235.9 |
|
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net sales | $ | 1,070.8 | $ | 741.9 | $ | 212.5 | $ | (149.5 | ) | $ | 1,875.7 | ||||||||
Cost of sales | 950.7 | 667.5 | 185.4 | (149.4 | ) | 1,654.2 | |||||||||||||
Gross income | 120.1 | 74.4 | 27.1 | (0.1 | ) | 221.5 | |||||||||||||
Selling, general and administrative expenses | 54.6 | 39.4 | 37.4 | — | 131.4 | ||||||||||||||
Amortization of purchased intangibles | 0.1 | 10.0 | 4.6 | — | 14.7 | ||||||||||||||
Operating income (loss) | 65.4 | 25.0 | (14.9 | ) | (0.1 | ) | 75.4 | ||||||||||||
Interest expense | (48.1 | ) | (19.5 | ) | (1.0 | ) | 48.0 | (20.6 | ) | ||||||||||
Interest income | 0.5 | 7.5 | 40.6 | (48.0 | ) | 0.6 | |||||||||||||
Miscellaneous, net | 2.1 | (35.0 | ) | 27.3 | — | (5.6 | ) | ||||||||||||
Income (loss) from continuing operations before income taxes | 19.9 | (22.0 | ) | 52.0 | (0.1 | ) | 49.8 | ||||||||||||
Provision for (benefit from) income taxes | 4.2 | (7.2 | ) | 14.1 | — | 11.1 | |||||||||||||
Income (loss) from continuing operations before equity in earnings (losses) of affiliates | 15.7 | (14.8 | ) | 37.9 | (0.1 | ) | 38.7 | ||||||||||||
Equity in earnings (losses) of consolidated subsidiaries | 23.2 | 20.4 | (6.5 | ) | (37.1 | ) | — | ||||||||||||
Equity in earnings (losses) of unconsolidated affiliates | — | — | 0.7 | — | 0.7 | ||||||||||||||
Income from continuing operations | 38.9 | 5.6 | 32.1 | (37.2 | ) | 39.4 | |||||||||||||
Discontinued operations, net of tax | — | — | (0.1 | ) | — | (0.1 | ) | ||||||||||||
Net income | 38.9 | 5.6 | 32.0 | (37.2 | ) | 39.3 | |||||||||||||
Net income attributable to the noncontrolling interest | — | — | (0.4 | ) | — | (0.4 | ) | ||||||||||||
Net income attributable to Oshkosh Corporation | $ | 38.9 | $ | 5.6 | $ | 31.6 | $ | (37.2 | ) | $ | 38.9 |
AsStatements of June 30, 2012
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
|
|
|
| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 333.1 |
| $ | 10.2 |
| $ | 47.4 |
| $ | — |
| $ | 390.7 |
|
Receivables, net |
| 488.0 |
| 628.0 |
| 190.6 |
| (38.0 | ) | 1,268.6 |
| |||||
Inventories, net |
| 241.9 |
| 414.9 |
| 246.8 |
| (2.0 | ) | 901.6 |
| |||||
Other current assets |
| 51.9 |
| 46.9 |
| 20.0 |
| — |
| 118.8 |
| |||||
Total current assets |
| 1,114.9 |
| 1,100.0 |
| 504.8 |
| (40.0 | ) | 2,679.7 |
| |||||
Investment in and advances to consolidated subsidiaries |
| 2,549.2 |
| (1,392.8 | ) | 3,105.8 |
| (4,262.2 | ) | — |
| |||||
Intangible assets, net |
| 2.5 |
| 1,120.0 |
| 698.4 |
| — |
| 1,820.9 |
| |||||
Other long-term assets |
| 152.9 |
| 150.1 |
| 133.9 |
| — |
| 436.9 |
| |||||
Total assets |
| $ | 3,819.5 |
| $ | 977.3 |
| $ | 4,442.9 |
| $ | (4,302.2 | ) | $ | 4,937.5 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| |||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
| $ | 355.2 |
| $ | 294.6 |
| $ | 108.8 |
| $ | (33.0 | ) | $ | 725.6 |
|
Customer advances |
| 288.0 |
| 171.9 |
| 4.6 |
| — |
| 464.5 |
| |||||
Other current liabilities |
| 264.9 |
| 196.5 |
| 80.2 |
| (7.0 | ) | 534.6 |
| |||||
Total current liabilities |
| 908.1 |
| 663.0 |
| 193.6 |
| (40.0 | ) | 1,724.7 |
| |||||
Long-term debt, less current maturities |
| 955.0 |
| — |
| — |
| — |
| 955.0 |
| |||||
Other long-term liabilities |
| 208.7 |
| 148.1 |
| 153.3 |
| — |
| 510.1 |
| |||||
Equity: |
|
|
|
|
|
|
|
|
|
|
| |||||
Oshkosh Corporation shareholders’ equity |
| 1,747.7 |
| 166.2 |
| 4,096.0 |
| (4,262.2 | ) | 1,747.7 |
| |||||
Noncontrolling interest |
| — |
| — |
| — |
| — |
| — |
| |||||
Total equity |
| 1,747.7 |
| 166.2 |
| 4,096.0 |
| (4,262.2 | ) | 1,747.7 |
| |||||
Total liabilities and equity |
| $ | 3,819.5 |
| $ | 977.3 |
| $ | 4,442.9 |
| $ | (4,302.2 | ) | $ | 4,937.5 |
|
Comprehensive Income
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net income | $ | 38.9 | $ | 5.6 | $ | 32.0 | $ | (37.2 | ) | $ | 39.3 | ||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||||||
Change in fair value of derivative instruments | 1.4 | — | — | — | 1.4 | ||||||||||||||
Employee pension and postretirement benefits | 1.5 | — | — | — | 1.5 | ||||||||||||||
Currency translation adjustments | (8.1 | ) | 2.2 | (10.3 | ) | 8.1 | (8.1 | ) | |||||||||||
Total other comprehensive income (loss), net of tax | (5.2 | ) | 2.2 | (10.3 | ) | 8.1 | (5.2 | ) | |||||||||||
Comprehensive income | 33.7 | 7.8 | 21.7 | (29.1 | ) | 34.1 | |||||||||||||
Comprehensive (income) loss attributable to the noncontrolling interest | — | — | (0.4 | ) | — | (0.4 | ) | ||||||||||||
Comprehensive income attributable to Oshkosh Corporation | $ | 33.7 | $ | 7.8 | $ | 21.3 | $ | (29.1 | ) | $ | 33.7 |
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 423.7 | $ | 3.2 | $ | 28.8 | $ | — | $ | 455.7 | |||||||||
Receivables, net | 202.9 | 349.3 | 133.6 | (39.6 | ) | 646.2 | |||||||||||||
Inventories, net | 395.0 | 420.7 | 242.7 | (1.5 | ) | 1,056.9 | |||||||||||||
Other current assets | 148.4 | 42.7 | 19.9 | 0.4 | 211.4 | ||||||||||||||
Total current assets | 1,170.0 | 815.9 | 425.0 | (40.7 | ) | 2,370.2 | |||||||||||||
Investment in and advances to consolidated subsidiaries | 2,301.1 | (1,132.9 | ) | 3,343.3 | (4,511.5 | ) | — | ||||||||||||
Intangible assets, net | 2.4 | 1,100.5 | 698.0 | — | 1,800.9 | ||||||||||||||
Other long-term assets | 149.8 | 151.2 | 131.8 | — | 432.8 | ||||||||||||||
Total assets | $ | 3,623.3 | $ | 934.7 | $ | 4,598.1 | $ | (4,552.2 | ) | $ | 4,603.9 | ||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 292.2 | $ | 176.8 | $ | 96.5 | $ | (32.9 | ) | $ | 532.6 | ||||||||
Customer advances | 291.8 | 186.0 | 3.9 | — | 481.7 | ||||||||||||||
Other current liabilities | 148.3 | 205.0 | 77.1 | (7.8 | ) | 422.6 | |||||||||||||
Total current liabilities | 732.3 | 567.8 | 177.5 | (40.7 | ) | 1,436.9 | |||||||||||||
Long-term debt, less current maturities | 938.7 | — | — | — | 938.7 | ||||||||||||||
Other long-term liabilities | 164.4 | 132.7 | 143.3 | — | 440.4 | ||||||||||||||
Shareholders' equity | 1,787.9 | 234.2 | 4,277.3 | (4,511.5 | ) | 1,787.9 | |||||||||||||
Total liabilities and shareholders' equity | $ | 3,623.3 | $ | 934.7 | $ | 4,598.1 | $ | (4,552.2 | ) | $ | 4,603.9 |
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
|
|
|
| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 376.3 |
| $ | 13.5 |
| $ | 38.7 |
| $ | — |
| $ | 428.5 |
|
Receivables, net |
| 525.8 |
| 521.4 |
| 135.8 |
| (93.9 | ) | 1,089.1 |
| |||||
Inventories, net |
| 194.0 |
| 336.8 |
| 257.9 |
| (1.9 | ) | 786.8 |
| |||||
Other current assets |
| 86.0 |
| 34.8 |
| 29.4 |
| — |
| 150.2 |
| |||||
Total current assets |
| 1,182.1 |
| 906.5 |
| 461.8 |
| (95.8 | ) | 2,454.6 |
| |||||
Investment in and advances to consolidated subsidiaries |
| 2,506.5 |
| (1,402.6 | ) | 2,902.4 |
| (4,006.3 | ) | — |
| |||||
Intangible assets, net |
| 2.7 |
| 1,131.4 |
| 746.1 |
| — |
| 1,880.2 |
| |||||
Other long-term assets |
| 167.4 |
| 156.6 |
| 168.1 |
| — |
| 492.1 |
| |||||
Total assets |
| $ | 3,858.7 |
| $ | 791.9 |
| $ | 4,278.4 |
| $ | (4,102.1 | ) | $ | 4,826.9 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| |||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
| $ | 498.6 |
| $ | 298.7 |
| $ | 61.3 |
| $ | (89.7 | ) | $ | 768.9 |
|
Customer advances |
| 334.8 |
| 120.2 |
| 13.6 |
| — |
| 468.6 |
| |||||
Other current liabilities |
| 208.3 |
| 167.1 |
| 85.0 |
| (6.1 | ) | 454.3 |
| |||||
Total current liabilities |
| 1,041.7 |
| 586.0 |
| 159.9 |
| (95.8 | ) | 1,691.8 |
| |||||
Long-term debt, less current maturities |
| 1,020.0 |
| — |
| — |
| — |
| 1,020.0 |
| |||||
Other long-term liabilities |
| 200.4 |
| 172.4 |
| 145.7 |
| — |
| 518.5 |
| |||||
Equity: |
|
|
|
|
|
|
|
|
|
|
| |||||
Oshkosh Corporation shareholders’ equity |
| 1,596.5 |
| 33.5 |
| 3,972.7 |
| (4,006.2 | ) | 1,596.5 |
| |||||
Noncontrolling interest |
| 0.1 |
| — |
| 0.1 |
| (0.1 | ) | 0.1 |
| |||||
Total equity |
| 1,596.6 |
| 33.5 |
| 3,972.8 |
| (4,006.3 | ) | 1,596.6 |
| |||||
Total liabilities and equity |
| $ | 3,858.7 |
| $ | 791.9 |
| $ | 4,278.4 |
| $ | (4,102.1 | ) | $ | 4,826.9 |
|
2012
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Assets | |||||||||||||||||||
Current assets: | |||||||||||||||||||
Cash and cash equivalents | $ | 500.0 | $ | 5.5 | $ | 35.2 | $ | — | $ | 540.7 | |||||||||
Receivables, net | 388.0 | 487.5 | 177.3 | (34.2 | ) | 1,018.6 | |||||||||||||
Inventories, net | 284.3 | 415.7 | 239.3 | (1.8 | ) | 937.5 | |||||||||||||
Other current assets | 129.2 | 47.9 | 20.6 | — | 197.7 | ||||||||||||||
Total current assets | 1,301.5 | 956.6 | 472.4 | (36.0 | ) | 2,694.5 | |||||||||||||
Investment in and advances to consolidated subsidiaries | 2,358.1 | (1,182.9 | ) | 3,235.8 | (4,411.0 | ) | — | ||||||||||||
Intangible assets, net | 2.5 | 1,110.4 | 696.3 | — | 1,809.2 | ||||||||||||||
Other long-term assets | 154.7 | 156.8 | 132.6 | — | 444.1 | ||||||||||||||
Total assets | $ | 3,816.8 | $ | 1,040.9 | $ | 4,537.1 | $ | (4,447.0 | ) | $ | 4,947.8 | ||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||||
Current liabilities: | |||||||||||||||||||
Accounts payable | $ | 326.2 | $ | 288.9 | $ | 96.7 | $ | (28.5 | ) | $ | 683.3 | ||||||||
Customer advances | 315.4 | 190.5 | 4.5 | — | 510.4 | ||||||||||||||
Other current liabilities | 213.6 | 220.2 | 84.5 | (7.5 | ) | 510.8 | |||||||||||||
Total current liabilities | 855.2 | 699.6 | 185.7 | (36.0 | ) | 1,704.5 | |||||||||||||
Long-term debt, less current maturities | 955.0 | — | — | — | 955.0 | ||||||||||||||
Other long-term liabilities | 153.1 | 137.3 | 144.4 | — | 434.8 | ||||||||||||||
Shareholders' equity | 1,853.5 | 204.0 | 4,207.0 | (4,411.0 | ) | 1,853.5 | |||||||||||||
Total liabilities and shareholders' equity | $ | 3,816.8 | $ | 1,040.9 | $ | 4,537.1 | $ | (4,447.0 | ) | $ | 4,947.8 |
|
| Oshkosh |
| Guarantor |
| Non-Guarantor |
|
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|
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| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
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|
|
|
|
|
|
|
|
|
| |||||
Net cash provided (used) by operating activities |
| $ | (28.3 | ) | $ | (69.3 | ) | $ | 171.9 |
| $ | — |
| $ | 74.3 |
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|
|
|
|
|
|
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|
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|
| |||||
Investing activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Additions to property, plant and equipment |
| (16.0 | ) | (11.8 | ) | (6.1 | ) | — |
| (33.9 | ) | |||||
Additions to equipment held for rental |
| — |
| — |
| (5.9 | ) | — |
| (5.9 | ) | |||||
Proceeds from sale of equity method investments |
| — |
| — |
| 8.7 |
| — |
| 8.7 |
| |||||
Intercompany investing |
| 99.4 |
| 88.2 |
| (168.0 | ) | (19.6 | ) | — |
| |||||
Other investing activities |
| 5.0 |
| 8.6 |
| 4.3 |
| — |
| 17.9 |
| |||||
Net cash provided (used) by investing activities |
| 88.4 |
| 85.0 |
| (167.0 | ) | (19.6 | ) | (13.2 | ) | |||||
|
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| |||||
Financing activities: |
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|
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|
|
|
|
|
|
| |||||
Repayment of long-term debt |
| (105.0 | ) | — |
| — |
| — |
| (105.0 | ) | |||||
Net repayments under revolving credit facility |
| — |
| — |
| — |
| — |
| — |
| |||||
Intercompany financing |
| (1.0 | ) | (19.5 | ) | 0.9 |
| 19.6 |
| — |
| |||||
Other financing activities |
| 2.7 |
| — |
| 0.2 |
| — |
| 2.9 |
| |||||
Net cash provided (used) by financing activities |
| (103.3 | ) | (19.5 | ) | 1.1 |
| 19.6 |
| (102.1 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of exchange rate changes on cash |
| — |
| 0.5 |
| 2.7 |
| — |
| 3.2 |
| |||||
Increase (decrease) in cash and cash equivalents |
| (43.2 | ) | (3.3 | ) | 8.7 |
| — |
| (37.8 | ) | |||||
Cash and cash equivalents at beginning of period |
| 376.3 |
| 13.5 |
| 38.7 |
| — |
| 428.5 |
| |||||
Cash and cash equivalents at end of period |
| $ | 333.1 |
| $ | 10.2 |
| $ | 47.4 |
| $ | — |
| $ | 390.7 |
|
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net cash provided (used) by operating activities | $ | (79.3 | ) | $ | 34.3 | $ | 90.1 | $ | — | $ | 45.1 | ||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and equipment | (3.0 | ) | (2.9 | ) | (2.4 | ) | — | (8.3 | ) | ||||||||||
Additions to equipment held for rental | — | — | (1.1 | ) | — | (1.1 | ) | ||||||||||||
Intercompany investing | 130.7 | (27.2 | ) | (96.2 | ) | (7.3 | ) | — | |||||||||||
Other investing activities | — | — | 3.5 | — | 3.5 | ||||||||||||||
Net cash provided (used) by investing activities | 127.7 | (30.1 | ) | (96.2 | ) | (7.3 | ) | (5.9 | ) | ||||||||||
Financing activities: | |||||||||||||||||||
Repayment of long-term debt | — | — | — | — | — | ||||||||||||||
Repurchase of common stock | (125.1 | ) | — | — | — | (125.1 | ) | ||||||||||||
Intercompany financing | (0.3 | ) | (6.5 | ) | (0.5 | ) | 7.3 | — | |||||||||||
Other financing activities | 0.7 | — | — | — | 0.7 | ||||||||||||||
Net cash provided (used) by financing activities | (124.7 | ) | (6.5 | ) | (0.5 | ) | 7.3 | (124.4 | ) | ||||||||||
Effect of exchange rate changes on cash | — | — | 0.2 | — | 0.2 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (76.3 | ) | (2.3 | ) | (6.4 | ) | — | (85.0 | ) | ||||||||||
Cash and cash equivalents at beginning of period | 500.0 | 5.5 | 35.2 | — | 540.7 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 423.7 | $ | 3.2 | $ | 28.8 | $ | — | $ | 455.7 |
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| Oshkosh |
| Guarantor |
| Non-Guarantor |
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| |||||
|
| Corporation |
| Subsidiaries |
| Subsidiaries |
| Eliminations |
| Total |
| |||||
|
|
|
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|
|
|
|
|
|
|
| |||||
Net cash provided (used) by operating activities |
| $ | 176.2 |
| $ | (39.8 | ) | $ | 142.3 |
| $ | — |
| $ | 278.7 |
|
|
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| |||||
Investing activities: |
|
|
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|
|
|
|
|
|
|
| |||||
Additions to property, plant and equipment |
| (31.2 | ) | (16.3 | ) | (6.4 | ) | — |
| (53.9 | ) | |||||
Additions to equipment held for rental |
| — |
| — |
| (3.1 | ) | — |
| (3.1 | ) | |||||
Proceeds from sale of equity method investments |
| — |
| — |
| — |
| — |
| — |
| |||||
Intercompany investing |
| 112.7 |
| 77.0 |
| (168.6 | ) | (21.1 | ) | — |
| |||||
Other investing activities |
| (2.8 | ) | (0.3 | ) | 13.0 |
| — |
| 9.9 |
| |||||
Net cash provided (used) by investing activities |
| 78.7 |
| 60.4 |
| (165.1 | ) | (21.1 | ) | (47.1 | ) | |||||
|
|
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|
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|
|
| |||||
Financing activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Repayment of long-term debt |
| (65.2 | ) | (0.2 | ) | — |
| — |
| (65.4 | ) | |||||
Net repayments under revolving credit facility |
| (125.0 | ) | — |
| — |
| — |
| (125.0 | ) | |||||
Intercompany financing |
| (1.0 | ) | (19.5 | ) | (0.6 | ) | 21.1 |
| — |
| |||||
Other financing activities |
| 9.8 |
| — |
| — |
| — |
| 9.8 |
| |||||
Net cash provided (used) by financing activities |
| (181.4 | ) | (19.7 | ) | (0.6 | ) | 21.1 |
| (180.6 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of exchange rate changes on cash |
| — |
| 0.3 |
| 3.5 |
| — |
| 3.8 |
| |||||
Increase (decrease) in cash and cash equivalents |
| 73.5 |
| 1.2 |
| (19.9 | ) | — |
| 54.8 |
| |||||
Cash and cash equivalents at beginning of period |
| 202.2 |
| 2.5 |
| 134.3 |
| — |
| 339.0 |
| |||||
Cash and cash equivalents at end of period |
| $ | 275.7 |
| $ | 3.7 |
| $ | 114.4 |
| $ | — |
| $ | 393.8 |
|
21. Subsequent Events
In July 2012, the Company amended its Credit Agreement to lower the applicable variable interest rate spread by 100 basis points, modify the restricted payment language to be consistent with the Senior Notes, lower the maximum amount of the Revolving Credit Facility from $550 million to $525 million and reduce the Term Loan to $455 million (the amount outstanding as of June 30, 2012). Under the amended Credit Agreement, the Company will pay (i) an unused commitment fee ranging from 0.25% to 0.50% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.75% to 1.25% per annum of the maximum amount available to be drawn for each performance letter of credit issued and outstanding under the Credit Agreement.
Additionally, with certain exceptions, the amended Credit Agreement limits the ability of the Company to pay dividends and other distributions, including repurchases of shares of the Company’s Common Stock. However, so long as no event of default exists under the Credit Agreement or would result from such payment, the Company may pay dividends and other distributions in an aggregate amount not exceeding the sum of:
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On July 26, 2012 the Company initiated a plan to exit its ambulance business. The Company had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida in April 2011 would result in significantly improved performance. Despite efforts by numerous dedicated individuals and teams, the Medtec business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. The Company expects to discontinue production of ambulances in the first quarter of fiscal 2013 following completion of units currently in backlog. As a result of the plan to exit this business, the Company expects to incur pre-tax charges between $8 million to $13 million. The majority of these charges are expected to be recorded in the fourth quarter of fiscal 2012.
Oshkosh Corporation | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Total | |||||||||||||||
Net cash provided (used) by operating activities | $ | 38.3 | $ | (13.7 | ) | $ | 37.3 | $ | — | $ | 61.9 | ||||||||
Investing activities: | |||||||||||||||||||
Additions to property, plant and equipment | (5.9 | ) | (5.4 | ) | (2.9 | ) | — | (14.2 | ) | ||||||||||
Additions to equipment held for rental | — | — | (3.5 | ) | — | (3.5 | ) | ||||||||||||
Intercompany investing | (6.5 | ) | 37.2 | (23.7 | ) | (7.0 | ) | — | |||||||||||
Other investing activities | 1.9 | 0.7 | 0.9 | — | 3.5 | ||||||||||||||
Net cash provided (used) by investing activities | (10.5 | ) | 32.5 | (29.2 | ) | (7.0 | ) | (14.2 | ) | ||||||||||
Financing activities: | |||||||||||||||||||
Repayment of long-term debt | (40.0 | ) | — | — | — | (40.0 | ) | ||||||||||||
Repurchase of Common Stock | — | — | — | — | — | ||||||||||||||
Intercompany financing | (0.3 | ) | (6.5 | ) | (0.2 | ) | 7.0 | — | |||||||||||
Other financing activities | 0.1 | — | — | — | 0.1 | ||||||||||||||
Net cash provided (used) by financing activities | (40.2 | ) | (6.5 | ) | (0.2 | ) | 7.0 | (39.9 | ) | ||||||||||
Effect of exchange rate changes on cash | — | 0.8 | 3.2 | — | 4.0 | ||||||||||||||
Increase (decrease) in cash and cash equivalents | (12.4 | ) | 13.1 | 11.1 | — | 11.8 | |||||||||||||
Cash and cash equivalents at beginning of period | 376.3 | 13.5 | 38.7 | — | 428.5 | ||||||||||||||
Cash and cash equivalents at end of period | $ | 363.9 | $ | 26.6 | $ | 49.8 | $ | — | $ | 440.3 |
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company is in negotiations to sell its investment in its European mobile medical business as the business was determined to be a non-core business. The Company expects to incur a pre-tax loss of approximately $7 million on the disposition of this business. The Company’s objective is to complete the sale of this business in the fourth quarter of fiscal 2012.
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In the defense segment, the Company first fiscal quarter. Third Quarter Fiscal First Nine Months Fiscal 2012 2011 2012 2011 Net sales: Access equipment $ 814.6 $ 580.1 $ 2,202.7 $ 1,378.6 Defense 958.5 1,107.0 2,996.8 3,193.0 Fire & emergency 246.1 216.0 590.6 594.7 Commercial 176.2 158.5 515.5 429.7 Intersegment eliminations (19.1 ) (38.7 ) (175.4 ) (126.7 ) Consolidated $ 2,176.3 $ 2,022.9 $ 6,130.2 $ 5,469.3 2012 segments. recognition of revenue. improved product mix (up $10.6 million).Management’sManagement's Discussion and Analysis of Consolidated Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that Oshkosh Corporation (the “Company”"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 this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, including those under the caption “Executive Overview,”Overview” are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology 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, which 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’sCompany's access equipment, commercial and fire & emergency markets, especially in the current environment where there are conflicting signs regarding the future global economic outlook;outlook and the ability of the U.S. government to resolve budgetary and debt issues; the expected level and timing of the U.S. Department of Defense (“DoD”("DoD") procurement of products and services and funding thereof; risks related to reductions in government expenditures in light of U.S. defense budget pressures and an uncertain DoD tactical wheeled vehicle strategy; risks that profit on the definitization of contractsability to comply with laws and regulations applicable to U.S. government contractors; the DoD could differ from the Company’s estimates;ability to increase prices to raise margins or offset higher input costs; increasing commodity and other raw material costs, particularly in a sustained economic recovery; the ability to increase prices to raise margins or offset higher input costs; risks related to the Company’sCompany's exit from its ambulance and European mobile medical businesses,business, including the amounts of related costs and charges; risks related to facilities consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; the Company’s ability to produce vehicles under the Family of Medium Tactical Vehicles (“FMTV”) contract at targeted margins; the duration of the ongoing global economic weakness, which could lead to additional impairment charges related to many of the Company’sCompany's intangible assets and/or a slower recovery in the Company’sCompany's cyclical businesses than Company or equity market expectations; the potential for the U.S. government to competitively bid the Company’sCompany's Army and Marine Corps contracts; the consequences of financial leverage, which could limit the Company’s ability to pursue various opportunities; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company’sCompany's products; risks related to production or shipment delays arising from quality or production issues; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; risks related to actions of activist shareholders; and risks related to the Company’sCompany's ability to successfully execute on its strategic road map and meet its long-term financial goals. Additional information concerning these and other 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’sCompany's U.S. Securities and Exchange Commission (“SEC”("SEC") filings, including, but not limited to, the Company’sCompany's Current Report on Form 8-K filed with the SEC on July 26, 2012January 25, 2013 and Item 1A. of Part II of this Quarterly Report on Form 10-Q.mobile medical trailers sold to hospitals and third-party medical service providers in Europe and broadcast vehicles sold to broadcasters and TVtelevision stations in North Americathe U.S. and abroad.It was evident in the third2012 that improvement in certain2013 was another strong quarter of the Company’s non-defense markets and the Company’s MOVE strategy initiatives are beginning to enhance the Company’s results. Over the next few years, the Company believes the effective execution of its MOVE strategy will permit the Company to overcome a declining defense business as a result of lower U.S. defense spending for tactical wheeled vehicles and report earnings growth and improved returns for shareholders.Earnings per share increased to $0.82performance for the third quarter of fiscal 2012 including discrete tax benefits of $0.07, compared to $0.75 in the third quarter of fiscal 2011. Consolidated sales increased 7.6% to $2.18 billion for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. While theCompany. The Company reported higher sales to external customers for the first quarter of fiscal 2013 in alleach of its non-defense segments replacement-driven demandwhich offset a large portion of the expected decline in North Americadefense segment sales. The Company experienced positive conditions in the access equipment segment ledand commercial segments in the sales increase to offset a declinequarter as the recovery in defense segmentthe U.S. housing market benefited concrete mixer truck and telehandler sales. Consolidated operating income in the thirdfirst quarter of fiscal 2013 increased $was $124.5to $80.8 million, or 5.7%4.6% of sales, compared to $126.0 million, or 6.2% of sales, insales. Results for the thirdfirst quarter of fiscal 2011. Improved operating performance2013 were particularly strong considering that the Company incurred pre-tax costs of $16.3 million in connection with a tender offer for the Company's Common Stock and a threatened proxy contest compared to $2.8 million that the Company incurred in connection with a proxy contest in the Company’s non-defense segments offset almostfirst quarter of fiscal 2012. The improved operating income on lower sales reflects the impact of the Company's MOVE strategy along with the realization of price increases implemented in calendar 2012. The strong performance along with available cash allowed the Company to repurchase 4.25 million shares of its Common Stock in the quarter at an aggregate cost of $125.1 million.the decline in defense operating income which was expected as U.S. defense spending for tactical wheeled vehicles declined and is expected to continue to decline for the next few years.its segments. In addition to the benefit of higher sales volumes, price increases in the access equipment segment, key customer metrics in North America remained strong, and improved operational performanceas the Company had expected, different customer ordering patterns than those experienced in prior years led to significantly higher orders in the commercial segment helped boost operating income. As expected, the fire & emergency segment returned to profitability in the thirdfirst quarter of fiscal 2012 on higher revenues. A shift in defense segment sales mix from higher margin Family of Heavy Tactical Vehicles (“FHTV”) and aftermarket parts to lower margin FMTVs was the primary driver of the decline in operating income in the defense segment. Margins on sales under the FMTV program continued to show improvement in the third quarter of fiscal 20122013 compared to the secondprior year quarter of fiscaland a rebound in backlog as compared to September 30, 2012. Margins on this program remained at low single digits and the Company expects margins on this program to remain well below historical margin levels of the defense segment through the life of the five-year contract.recently announced that it received anlarge delivery orders for both the Family of Heavy Tactical Vehicles ("FHTV") and Family of Medium Tactical Vehicles ("FMTV") programs. The Company's receipt of these orders significantly reduced the potential impact from sequestration on the defense segment's core vehicle programs. During the first quarter of fiscal 2013, the defense segment also delivered the first Mine Resistant Ambush Protected All-Terrain Vehicles ("M-ATVs") under a 750 unit order for 750 MRAP All-Terrain Vehicle (“M-ATV”) units from the United Arab Emirates which is the Company’s first large international order for M-ATVs.("UAE"). The Company expects these M-ATVs to be shipped in fiscal 2013. This order is important for the Company’s defense business and further reinforces the Company’s belief that there are significant opportunities for international sales of the M-ATV and other Oshkosh defense vehicles over the next few years. The Company has been forward deploying business development teams around the world to pursue these opportunities.In the fire & emergency segment, the Company made progress in the quarter improving the operational efficiency of its fire apparatus manufacturing. Those improvements are key to driving marginsturnaround in the fire & emergency segment to acceptable levelscontinued in the current low volume environment. To allowfirst quarter of fiscal 2013 as the Company to focus limited resources on improvingsegment recorded a profit for the performancethird consecutive quarter. Further, the Company's exit of its principal product linesambulance business remained on track. The Company expects to cease ambulance production in the fire & emergencysecond quarter of fiscal 2013. In the commercial segment, concrete mixer orders more than doubled in the Company made a decision in July 2012first quarter of fiscal 2013 compared to exit the ambulance and European mobile medical businesses. The Company had expected thatprior year quarter as the move of ambulance production from four separate facilities to a dedicated production facility in Florida would result in significantly improvedperformance. Despite efforts by numerous dedicated individuals and teams, the businessU.S. housing market continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. show improvement.decisionsCompany's strong performance in the first quarter of fiscal 2013 and the Company's outlook for the remainder of the year, along with a lower share count and expected lower tax rate than previous estimates, the Company increased its estimated range of adjusted earnings from continuing operations from $2.35 to exit these businesses,$2.60 per share to $2.80 to $3.05 per share. These estimates exclude $0.09 per share incurred in the first quarter of fiscal 2013 as well as any future potential costs related to the tender offer for the Company's Common Stock and threatened proxy contest, restructuring costs and discrete tax items.to incur pre-tax charges of approximately $15 million to $20 million, with approximately $14 million to $18 million expectedfiscal 2013 sales in the fourth quarter of fiscal 2012.The Company recently announced that Mr. Wilson Jones was promoted to President and Chief Operating Officer of the Company, effective August 1, 2012. Mr. Jones has led two of the Company’s operating segments, building strong teams and providing customer-focused results. Mr. Jones’ role as President of the access equipment segment to be between $2.8 billion and $3.0 billion. The Company believes that operating income margins in the access equipment segment for fiscal 2013 will now approximate 10.5%, up from the Company's previously estimated range of 9.5% to 10.0%.filled by Mr. Frank Nerenhausen. Mr. Nerenhausenslightly higher than its previous expectations, increasing to approximately 6.5%. The Company expects the defense segment to benefit from the shipment of M-ATVs to the UAE in the second and his teamthird quarters of fiscal 2013. As a result, the Company expects defense segment sales to increase marginally in the second and third fiscal quarters from the first fiscal quarter. After the wind down of the UAE M-ATV deliveries, the Company expects fourth quarter sales in the defense segment to decline approximately 25% from first fiscal quarter levels.led an operation that has been especially hard-hit by the recession and returned it to profitability, with an operating income margin of nearly 7%for fiscal 2013 will also be in the third quarterrange of fiscal 2012. Mr. Todd Fierro, who has been one of the driving forces for change and improvement in the commercial segment as the Vice President of Operations, will become President of the commercial segment effective August 1, 2012.The FMTV contract was profitable for the first nine months of fiscal 2012 and the Company expects the contract$720 million to remain profitable throughout the remaining life of the contract. The Company’s expectation of future profitability is based on certain assumptions including scheduled price increases and estimates of future material and production costs. Management cost assumptions include estimates for future increases in the costs of materials, targeted cost savings and production efficiencies. There are inherent uncertainties related to these estimates. Small changes in estimates can have a significant impact on profitability under the contract. For example, a 1% escalation in material costs over the Company’s projection of material costs for FMTV orders currently in backlog would increase the cost of materials by approximately $18$750 million. While this amount is less than the expected future profitability of the FMTV contract, it would reduce the expected future gross margins on orders currently in backlog. It is possible that other assumptions underlying the analysis could change in such a manner that the Company would determine in the future that this is a loss contract, which could result in a material charge to earnings.The Company remains focused on its MOVE initiatives. As previously noted, fiscal 2012 is an investment year for the Company as it continues to invest in planning and rolling out MOVE initiatives that the Company expects will positively impact the Company’s cost structure, ability to innovate and generate international revenue expansion. With the Company’s sequentially improved performance in the third quarter, the Company updated its guidance for fiscal 2012.The Company believes that access equipment segment sales in fiscal 2012 will be approximately 40% higher than fiscal 2011, compared to the Company’s previous estimate of 35% to 40% higher. The Company continues to believe that operating income margins in the access equipmentcommercial segment in fiscal 2013 will be in the 7.5%4.5% to 8.0%5.0% range.sales and operating income margins in the fourth quarter of fiscal 2012 in the access equipment segmentthat adjusted corporate expenses will be lower than in the third quarter of fiscal 2012, reflecting the seasonal pattern that the access equipment segment traditionally experiences.The Company believes sales in the defense segmentbetween $130 million and $135 million for fiscal 2012 will be approximately 10% lower than the prior year. With the continued improvement in FMTV margins, the Company believes that operating income margins in the defense segment in fiscal 2012 will be in the 5.0% to 5.5% range.Consistent with previous expectations, the Company believes that fire & emergency segment sales in fiscal 2012 will be up slightly compared to fiscal 2011. The Company believes that the fire & emergency segment will report a small operating loss in fiscal 2012 compared to the Company’s previous estimate2013, which excludes $16.3 million of breakeven. The Company’s expectations for operating results do not include expected costs associated with exiting its ambulance and European mobile medical businesses of $14 million to $18 million.The Company believes that fiscal 2012 sales in the commercial segment will be up approximately 20% compared to fiscal 2011. This is an increase from previous expectations of up 15%. The Company believes that operating income margins in the commercial segment will be in the 3.5% to 4.0% range, reflecting the continued progress being madeincurred by the commercial segment management team.The Company believes that corporate expenses in fiscal 2012 will be approximately flat with fiscal 2011 even considering that fiscal 2012 results include $6.4 million in costs related to the proxy contest in connection with a tender offer for the Company’s 2012 annual meeting of shareholders. The Company expects interest expense in fiscal 2012 will be lowerCompany's Common Stock and threatened proxy contest. This is higher than in fiscal 2011the Company's previous estimate due to the expiration of the Company’s interest rate swap and the full year impact of fiscal 2011 debt reduction.a higher stock price on stock-based compensation and higher expected information technology spending in the year. The Company now believes that the Company’sits fiscal 20122013 effective income tax rate will be 29% to 30%approximate 32%, down from the Company’sCompany's previous expectations generally asdue largely to the recent reinstatement of the research & development tax credit in the U.S. The Company's expectations assume a resultfull year fiscal 2013 share count of discrete items. The Company estimates89.0 million shares, down from its fiscal 2012 capital expenditures will be between $50previous estimate of 91.5 million and $60 million.Asshares, reflecting only the Company’s current debt approximates the Company’s target level, the Company believes there could be opportunities to increase shareholder valueCompany's share repurchase activity through the useend of selective repurchases of Company Common Stock. Accordingly, in July 2012, the Company’s Board of Directors authorized the repurchase of an additional 4.0 million shares of its Common Stock. When combined with 3.2 million shares remaining from a previous authorization, the Company now has the authority to repurchase up to approximately 7.2 million shares of its Common Stock.Third First Quarter Fiscal 2013 2012 Net sales: Access equipment $ 581.3 $ 627.7 Defense 828.7 1,051.0 Fire & emergency 193.3 160.1 Commercial 177.3 171.6 Intersegment eliminations (19.6 ) (134.7 ) Consolidated $ 1,761.0 $ 1,875.7 20122013 Compared to 2011increased 7.6%decreased $114.7 million, or 6.1%, to $2.18$1.76 billion for in the thirdfirst quarter of fiscal 2013 compared to the first quarter of fiscal 2012 compareddue to the third quarter of fiscal 2011. Although salesan expected decline in defense segment sales. Sales to external customers increased in all non-defense segments, increased replacement-driven demand for aerial work platforms and telehandlers in North America in the access equipment segment led the sales increase to offset a decline in defense segment sales.increased 40.4%decreased $46.4 million, or 7.4%, to $814.6$581.3 million for in the thirdfirst quarter of fiscal 2013 compared to the first quarter of fiscal 2012 on lower sales to the defense segment. Access equipment segment sales to external customers in the first quarter of fiscal 2013 increased 15.1% to $581.2 millioncompared to the thirdfirst quarter of fiscal 20112012. Access equipment sales to external customers increased principally as a result of higherdue to an increase in telehandler unit volumes ($186.4 million) andin North America, the realization of previously announced price increases ($37.625.6 million) and improved aftermarket sales ($11.3 million). Sales grew by double-digit percentages compared to the prior year quarter in all major regions of the globe, with the largest increase in North America, driven largely by demand for replacement of aged equipment.13.4%$222.3 million, or 21.1%, to $958.5$828.7 million for in the thirdfirst quarter of fiscal 20122013 compared to the thirdfirst quarter of fiscal 2011.2012. The decrease in defense segment sales was primarily due to expected lower FHTV volume ($256.5 million), lowerM-ATV and related aftermarket parts sales ($107.0 million) and a decrease in M-ATV volume ($52.9shipments (down $340.6 million), offset in part by higher FHTV (up $105.1 million) and FMTV volume ($273.9(up $54.7 million) asunit sales. Due to a shortage in tires at one of the Company reachedCompany's suppliers, the defense segment was unable to complete production of certain FHTVs to recognize revenue in fiscal 2012. During the first quarter of fiscal 2013, tires were obtained and sustained full rate production under the FMTV contract duringvehicles were completed and sold, resulting in the quarter.13.9%$33.2 million, or 20.7%, to $246.1$193.3 million for in the thirdfirst quarter of fiscal 20122013 compared to the thirdfirst quarter of fiscal 2011.2012. The increase in fire & emergency segment sales primarily reflected increased international shipmentshigher unit volumes as the segment benefited from the acceleration of deliveries (up $18.1 million) and the delivery of Rapid Intervention Vehicles under a contract with the United States Air Force.11.2%$5.7 million, or 3.3%, to $176.2$177.3 million for in the thirdfirst quarter of fiscal 20122013 compared to the thirdfirst quarter of fiscal 2011.2012. The increase in commercial segment sales was primarily attributable to a 36% increase inincreased concrete placement vehicleproducts volume compareddue to very low prior year volume and increased demand forin the concrete mixer market (up $21.0 million) and improved aftermarket parts &and service ($9.5sales (up $6.3 million), offset in part by lower intersegment sales to the defense segment ($9.7chassis volume (down $22.7 million).
First Nine Months of Fiscal 2012 Compared to 2011
Consolidated net sales increased 12.1% to $6.13 billion for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. Higher FMTV sales and an increase in replacement-driven demand for aerial work platforms and telehandlers in North America were offset in part by expected declines in sales of FHTV vehicles and defense aftermarket parts and service.
Access equipment segment net sales increased 59.8% to $2.20 billion for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. Sales to external customers totaled $2.08 billion for the first nine months of fiscal 2012, a 56.9% increase compared to the first nine months of fiscal 2011. The Company realized double-digit sales increases in all regions of the world and across all product lines, generally as a result of replacement of aged equipment in North America and parts of Europe, as well as economic growth and increased product adoption in emerging markets. In addition, sales included $124.3 million in intersegment M-ATV related sales in the first nine months of fiscal 2012 compared to $54.1 million in the first nine months of fiscal 2011.
Defense segment net sales decreased 6.1% to $3.0 billion for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The decrease was primarily due to reductions in FHTV volume ($637.0 million) and aftermarket parts and service sales ($475.3 million), offset in part by higher FMTV volume ($964.3 million).
Fire & emergency segment net sales decreased 0.7% to $590.6 million for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The decrease in sales primarily reflected lower shipments of airport products ($36.0 million), offset in part by the delivery of Rapid Intervention Vehicles under a contract with the United States Air Force. Revenues for the first nine months of fiscal 2011 included the sale of 24 aircraft rescue and firefighting vehicles to airports in Pakistan.
Commercial segment net sales increased 20.0% to $515.5 million for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The increase in sales was primarily attributable to a 36% increase in refuse collection vehicle units sales compared to the prior year period, a 31% increase in concrete placement vehicle volume compared to very low prior year volume and increased demand for aftermarket parts & service ($19.7 million), offset in part by lower intersegment production for the defense segment ($33.3 million). Refuse collection vehicle volume was favorably impacted by the expiration of a U.S. bonus tax depreciation deduction at the end of calendar 2011.
Analysis of Consolidated Cost of Sales
Third
2012
First Nine Months 2012 Compared to 2011
Consolidated cost of sales increased to $5.40 billion, or 88.0%86.0% of sales, in the first nine monthsquarter of fiscal 20122013 compared to $4.61
|
| Third Quarter Fiscal |
| First Nine Months Fiscal |
| ||||||||
|
| 2012 |
| 2011 |
| 2012 |
| 2011 |
| ||||
Operating income (loss): |
|
|
|
|
|
|
|
|
| ||||
Access equipment |
| $ | 88.2 |
| $ | 29.5 |
| $ | 169.7 |
| $ | 30.5 |
|
Defense |
| 40.2 |
| 112.5 |
| 174.5 |
| 472.0 |
| ||||
Fire & emergency |
| 6.4 |
| 4.4 |
| (14.9 | ) | 0.4 |
| ||||
Commercial |
| 12.1 |
| 3.7 |
| 22.9 |
| 1.3 |
| ||||
Corporate |
| (22.5 | ) | (24.5 | ) | (76.6 | ) | (81.2 | ) | ||||
Intersegment eliminations |
| 0.1 |
| 0.4 |
| 0.1 |
| 4.1 |
| ||||
Consolidated |
| $ | 124.5 |
| $ | 126.0 |
| $ | 275.7 |
| $ | 427.1 |
|
Third
First Quarter Fiscal | |||||||
2013 | 2012 | ||||||
Operating income (loss): | |||||||
Access equipment | $ | 48.9 | $ | 13.1 | |||
Defense | 60.9 | 92.4 | |||||
Fire & emergency | 5.8 | (9.9 | ) | ||||
Commercial | 8.0 | 6.9 | |||||
Corporate | (42.7 | ) | (27.1 | ) | |||
Intersegment eliminations | (0.1 | ) | — | ||||
Consolidated | $ | 80.8 | $ | 75.4 |
2012
Access equipment segment operating income increased 199.7% to $88.2 million, or 10.8% of sales, in the third quarter of fiscal 2012 compared to $29.5 million, or 5.1% of sales, in the prior year quarter. The improvement in operating results primarily reflected higher volume, the realization of previously announced price increases ($37.6 million) and manufacturing efficiencies ($4.2 million), offset in part by higher material costs ($19.6 million).
Defense segment operating income decreased 64.3% to $40.2 million, or 4.2% of sales, in the third quarter of fiscal 2012 compared to $112.5 million, or 10.2% of sales, in the prior year quarter. The decrease in operating income as a percentage of sales compared to the prior year quarter reflected adverse changes in product mix, lower sales volumes and charges resulting from revenue and cost estimate changes of $8.0 million on undefinitized contracts, offset in part by the absence of costs incurred in the third quarter of fiscal 2011 in connection with the ramp-up of production under the FMTV contract of $21.8 million. Profit margins under the FMTV program continued to improve in the third quarter compared to the second quarter of fiscal 2012.
Fire & emergency segment operating income increased 44.2% to $6.4 million, or 2.6% of sales, for the third quarter of fiscal 2012 compared to operating income of $4.4 million, or 2.0% of sales, in the prior year quarter. Operating income benefitted from higher sales in the thirdfirst quarter of fiscal 2012. Operating results duringfor the thirdfirst quarter of fiscal 2012 and fiscal 20112013 were negativelypositively impacted by $4.3 million and $3.6 million, respectively, as a resulthigher sales volume, the elimination of inefficiencies incurred in the prior year quarter related to the transition of ambulance production to the Company’sCompany's facilities in Florida.Florida and improved price realization.
volume.
incentive share-based compensation costs.
First Nine Months Fiscal 2012 Compared to 2011
Consolidated operating income decreased 35.4% to $275.7 million, or 4.5% of sales,proxy contest in the first nine monthsquarter of fiscal 2012, compared to $427.1 million, or 7.8% of sales, in the first nine months of fiscal 2011. The decrease in consolidated operating income was primarily attributable to the defense segment, where an adverse sales mix negatively impacted operating income comparisons, offset in part by increased earnings on higher access equipment segment sales.
Access equipment segment operating income increased to $169.7 million, or 7.7% of sales, in the first nine months of fiscal 2012 compared to $30.5 million, or 2.2% of sales, in the prior year period. The increase in operating income was primarily due to higher sales to external customers and realization of price increases ($60.5 million), offset in part by higher material costs ($80.7 million) and increased product development spending ($19.3 million).
Defense segment operating income decreased 63.0% to $174.5 million, or 5.8% of sales, in the first nine months of fiscal 2012 compared to $472.0 million, or 14.8% of sales, in the first nine months of fiscal 2011. The decrease in operating income as a percentage of sales reflected an adverse change in product mix and lower sales volumes, offset in part by the absence of FMTV ramp-up costs of $37.1 million.
The fire & emergency segment reported an operating loss of $14.9 million, or 2.5% of sales, for the first nine months of fiscal 2012 compared to operating income of $0.4 million, or 0.1% of sales, in the prior year period. Operating results during the first nine months of fiscal 2012 were negatively impacted by a more competitive pricing environment and higher material costs, as well as costs of $12.3 million related to the transition of ambulance production to the Company’s facilitiesa shift in Florida and $1.3 million related to exiting the U.S. mobile medical trailer product line and workforce reductions at Pierce. Costs to transition ambulance production to the Company’s facilities in Florida were $7.8 million in the first nine months of fiscal 2011.
The commercial segment generated operating income of $22.9 million, or 4.4% of sales in the first nine months of fiscal 2012 compared to operating income of $1.3 million, or 0.3% of sales, in the first nine months of fiscal 2011. The improvement in operating results primarily related to higher sales volumes and improved product mix (combined increase of $14.8 million) and the realization of price increases in excess of higher material costs ($9.3 million) as the segment continued to recover material cost increases incurred in prior quarters.
Corporate operating expenses decreased $4.6 million to $76.6 million in the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The decrease in corporate operating expenses was primarily the result of lower spending, net of increased cost allocations to segments offset in part by $6.4 millionthat have a higher percentage of costs related to the proxy contest in connection with the Company’s 2012 annual meeting of shareholders in the first nine months of fiscal 2012.
Consolidated selling, general and administrative expenses increased 6.7% to $415.4 million, or 6.8% of sales, in the first nine months of fiscal 2012 compared to $389.5 million, or 7.1% of sales, in the first nine months of fiscal 2011. The increase in selling, general and administrative expenses was due primarily to higher salary and fringe benefits ($12.3 million) principally in the Company’s access equipment segment as a result of the sales growth that it experienced, higher costs associated with international expansion and costs related to the proxy contest ($6.4 million). The decrease in consolidated selling, general and administrative expenses as a percentage of sales was largely due to an increase in sales on a relatively fixed cost base.
Intersegment profit of $0.1 million and $4.1 million in the first nine months of fiscal 2012 and 2011, respectively, resulted from profit on intercompany sales between segments (largely M-ATV related sales between access equipment and defense). To the extent that the purchasing segment sells the inventory to an outside party, previously deferred intersegment profits are recognized in consolidated earnings through intersegment profit eliminations.
expenses.
Third
2012
2013 and
Table of Contentsexpense in the first quarter of fiscal 2012 primarily related to net foreign currency transaction gains and losses.
First Nine Months Fiscal 2012 Compared to 2011
Interest expense net of interest income decreased $11.1 million to $55.7 million in the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011, largely as a result of the expiration of the Company’s interest rate swap in December 2011. In the first nine months of fiscal 2012 and fiscal 2011, interest expense included $2.2 million and $13.5 million, respectively, of expense related to the Company’s interest rate swap. Average debt outstanding decreased from $1.11 billion during the first nine months of fiscal 2011 to $1.00 billion during the first nine months of fiscal 2012.
The Company’s effective income tax rate was 29.7% of pre-tax income in the first nine months of fiscal 2012 compared to 34.7% for the first nine months of fiscal 2011. The effective tax rate for the first nine months of fiscal 2012 was favorably impacted by net discrete tax benefits of 650 basis points. Net discrete tax benefits included provision to return adjustments, settlement of foreign tax audits and other items. The effective tax rate for the first nine months of fiscal 2011 was favorably impacted by net discrete tax benefits of 150 basis points. Net discrete tax benefits included foreign tax credits related to the decision to repatriate earnings previously fully reinvested, reinstatement of the U.S. research and development tax credit, unbenefitted losses in foreign jurisdictions due to cumulative net operating losses and other items.
Equity in earnings of unconsolidated affiliates of $1.9 million in the first nine months of fiscal 2012 and $0.3 million in the first nine months of fiscal 2011 primarily represented the Company’s equity interest in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.
|
| June 30, |
| September 30, |
| ||
|
| 2012 |
| 2011 |
| ||
Cash and cash equivalents |
| $ | 390.7 |
| $ | 428.5 |
|
Total debt |
| 955.0 |
| 1,060.1 |
| ||
Oshkosh Corporation’s shareholders’ equity |
| 1,747.7 |
| 1,596.5 |
| ||
Total capitalization (debt plus equity) |
| 2,702.7 |
| 2,656.6 |
| ||
Debt to total capitalization |
| 35.3 | % | 39.9 | % | ||
December 31, | September 30, | ||||||
2012 | 2012 | ||||||
Cash and cash equivalents | $ | 455.7 | $ | 540.7 | |||
Total debt | 955.0 | 955.0 | |||||
Shareholders’ equity | 1,787.9 | 1,853.5 | |||||
Total capitalization (debt plus equity) | 2,742.9 | 2,808.5 | |||||
Debt to total capitalization | 34.8 | % | 34.0 | % |
15 months.
domestic sales in the access equipment segment, which generally have shorter payment terms. Consolidated inventory turns (defined as “Cost of Sales” divided by the average “Inventory” at the past five quarter end periods) decreased from 6.0 times at September 30, 2012 to 5.0 times at December 31, 2012. The decrease in inventory turns was primarily due to seasonal sales fluctuations in the access equipment segment and larger in-transit times for international sales in the defense segment.
|
| Nine Months Ended |
| ||||
|
| June 30, |
| ||||
|
| 2012 |
| 2011 |
| ||
|
|
|
|
|
| ||
Receivables, net |
| $ | (190.5 | ) | $ | (83.7 | ) |
Inventories, net |
| (126.4 | ) | 48.4 |
| ||
Accounts payable |
| (26.1 | ) | 21.7 |
| ||
Customer advances |
| (1.8 | ) | (83.0 | ) | ||
Deferred revenue |
| 105.5 |
| (30.7 | ) | ||
|
| $ | (239.3 | ) | $ | (127.3 | ) |
Cash utilized in the first nine months of fiscal 2012 for inventory and receivables was generally a result of higher production and sales in the access equipment segment. The decrease in cash resulting from reductions in customer advances primarily related to the timing of performance-based payments in the defense segment. Cash generated as a result of changes in deferred revenue in the first nine months of fiscal 2012 was primarily driven by the receipt of payment from the U.S. government on units as to which the Company was not able to recognize revenue due to a previously communicated tire shortage. In June 2012, the tire shortage which prevented revenue recognition lessened. The Company expects to recognize the revenue related to these trucks during the fourth quarter of fiscal 2012 and the first quarter of fiscal 2013 as tires are received and installed on previously produced trucks. Cash utilized as a result of changes in receivables net of accounts payable in the first nine months of fiscal 2011 was primarily driven by increases in production and sales to external customers in the access equipment segment, offset in part by reductions in M-ATV production in the defense segment. Changes in inventories and customer advances in the first nine months of fiscal 2011 were primarily driven by reductions in M-ATV production in the defense segment.
2013.
Consolidated days sales outstanding (defined as “Trade Receivables” at quarter end divided by “Net Sales” for the most recent quarter multiplied by 90 days) increased from 45 days at September 30, 2011 to 51 days at June 30, 2012. The increase in days sales outstanding was primarily due to a delay in the definitization
Financing Cash Flows
repurchased 4,250,072 shares of its Common Stock under its share repurchase program at an aggregate cost of
$125.1 million.Covenant Compliance
·
·
·
2.75 to 1.0. | |||
|
| ||
|
|
The Company was in compliance with the financial covenants contained in the Credit Agreement as of June 30,December 31, 2012 and expects to be able to meet the financial covenants contained in the Credit Agreement over the next twelve months.
| |
(i) | $485.0 million; plus |
(ii) | 50% of the consolidated net income of the Company and its subsidiaries (or if such consolidated net income is a deficit, minus 100% of such deficit), accrued on a cumulative basis during the period beginning on April 1, 2012 and ending on the last day of the fiscal quarter immediately preceding the date of the applicable proposed dividend or distribution; plus |
(iii) | 100% of the aggregate net proceeds received by the Company subsequent to March 31, 2012 either as a contribution to its common equity capital or from the issuance and sale of its Common Stock. |
December 31, 2012.2021 of the Notes to Condensed Consolidated Financial Statements for separate financial information of the subsidiary guarantors.June 30, 2012.Company’sCompany's contractual obligations, commercial commitments and off-balance sheet arrangement disclosures in its Annual Report on Form 10-K for the year ended September 30, 20112012 have not materially changed since that report was filed.41
Application of Critical Accounting Policies
condensed consolidated financial statements.
During the first quarter of fiscal 2012, the U.S. government awarded the Company a two-year extension on its FHTV contract. Under the extended contract, the U.S. government can place orders through October 2013 and deliveries can continue through September 2014. As part of the extended contract, the Company retained the design rights to the Company’s vehicles.
orders from large waste haulers and lower municipal spending.
2013.
Fiscal 2013 Expectations | |||||||
Low | High | ||||||
Corporate | |||||||
Non-GAAP operating expenses | $ | 130.0 | $ | 135.0 | |||
Tender offer and proxy contest costs | 16.3 | 16.3 | |||||
GAAP operating expenses | $ | 146.3 | $ | 151.3 | |||
Consolidated | |||||||
Non-GAAP earnings per share available to Oshkosh | |||||||
Corporation from continuing operations-diluted | $ | 2.80 | $ | 3.05 | |||
Tender offer and proxy contest costs, net of tax | (0.11 | ) | (0.11 | ) | |||
Discrete tax benefits | 0.02 | 0.02 | |||||
GAAP earnings per share available to Oshkosh | |||||||
Corporation from continuing operations-diluted | $ | 2.71 | $ | 2.96 |
42
On January 8, 2010, Control Solutions LLC (“Control Solutions”) brought suit against the Company in the United States District Court for the Northern District of Illinois for breach of express contract, breach of implied-in-fact contract, unjust enrichment and promissory estoppel related to the Company’s contract to supply the United States Department of Defense with M-ATVs. Control Solutions has asserted damages in the amount of $190.3 million. On October 3, 2011, following written and oral discovery, the Company moved for summary judgment. On that same date, Control Solutions filed a cross-motion for summary judgment. The Company’s and Control Solutions’ response briefs have been filed with the Court. While this case is in the early stages of litigation and its outcome cannot be predicted with certainty, the Company believes that the ultimate resolution of this case will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
Our dependency on contracts with U.S. and foreign government agencies subjects us to a variety of risks that could materially reduce our revenues or profits. Democratic Republic of Congo or an adjoining country, the final rules require the issuer to prepare and file a report addressing its efforts to exercise due diligence on the source of such “conflict minerals” and their chain of custody. Our supply chain is complex. While we have no intention to use minerals sourced from the Democratic Republic of Congo or adjoining countries, we expect to incur significant costs to determine the source and custody of any “conflict minerals” necessary to the functionality of the products we manufacture. We may also face reputational challenges if we are unable to verify the origins for all conflict minerals used in our products, or if we are unable to certify that our products are “conflict free.” Implementation of these rules may also affect the sourcing and availability of some minerals necessary to the manufacture of our products and may affect the availability and price of conflict minerals capable of certification as “conflict-free.” Accordingly, we may incur significant costs as a consequence of these rules, which may adversely affect our business, financial condition or results of operations.thatwhich may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended September 30, 2011,2012, which have not materially changed other than as reflected below.Certain of our markets are highly cyclical and the current or any further decline in these markets could have a material adverse effect on our operating performance.Approximately 94% of our defense segment sales in fiscal 2011 were to the DoD. The high levels of sales in our defense segment in recent years have been due in significant part to demand for defense trucks, replacement parts and services (including armoring) and truck remanufacturing arising from the conflicts in Iraq and Afghanistan. Events such as these are unplanned, as is the demand for our products that arises out of such events. Virtually all U.S. troops were withdrawn from Iraq during 2011, and plans exist regarding the withdrawal of U.S. troops from Afghanistan by December 2014, both of which will likely result in a reduction in the level of defense funding allocated to support U.S. military involvement in those conflicts. In addition, current economic conditions have put significant pressure on the U.S. federal budget, including the defense budget. The DoD budget for fiscal 2012 includes significantly lower funding for purchases of new military vehicles that we manufacture under our FHTV and FMTV contracts than in prior years. In addition, the President’s fiscal 2013 defense budget request, which includes expected funding requests for defense programs through fiscal 2017, includes significantly lower funding levels for the FHTV and FMTV programs than those that were included in the fiscal 2012 budget and includes no planned funding for the FMTV program starting in fiscal 2015. The President’s fiscal 2013 budget request reflects previously announced plans to cut U.S. defense spending by $487 billion over the next ten years. The Budget Control Act of 2011 contains an automatic sequestration feature that could require additional cuts to defense spending totaling over $1 trillion during this period if Congress fails to enact the specified $1.2 trillion in U.S. federal deficit reductions. Unless Congress acts, sequestration will result in significant reductions to the defense budget starting in calendar 2013. The magnitude of the adverse impact that federal budget pressures and expected reductions in future defense funding as a result of the withdrawal of U.S. troops from Iraq and planned withdrawal of U.S. troops from Afghanistan and an uncertain DoD tactical wheeled vehicle strategy will have on funding for Oshkosh defense programs is uncertain, but directionally, we expect such funding to decline significantly. Furthermore, our defense business may fluctuate significantly from time to time as a result of the start and completion of existing and new contract awards that we may receive.The decline, compared to historical levels, in overall customer demand in our commercial and fire & emergency markets that we have experienced since the start of the global economic downturn and any further decline could have a material adverse effect on our operating performance. While demand in our access equipment markets has rebounded from historical lows that we experienced during the Great Recession, such demand is dependent on the global economies and may not be sustainable. Recently, there have been increasing concerns about several European economies. Further, certain countries in Asia and Latin America have experienced slower growth rates than the prior yearand there have been mixed economic signs in the U.S. All of these factors, whether taken together or individually, could result in lower demand for our products. The access equipment market is highly cyclical and impacted by the strength of economies in general, by residential and non-residential construction spending, by the ability of rental companies to obtain third party financing to purchase revenue generating assets, by capital expenditures of rental companies in general and by other factors. The ready-mix concrete market that we serve is highly cyclical and impacted by the strength of the economy generally, by the number of housing starts andby other factors that may have an effect on the level of concrete placement activity, either regionally or nationally. Refuse collection vehicle markets are also cyclical and impacted by the strength of economies in general, by municipal tax receipts and by capital expenditures of large waste haulers. Fire & emergency markets are cyclical later in an economic downturn and are impacted by the economy generally and by municipal tax receipts and capital expenditures. Concrete mixer and access equipment sales also are seasonal with the majority of such sales occurring in the spring and summer months, which constitute the traditional construction season in the Northern hemisphere.The global economy continues to experience weakness, which has negatively impacted sales volumes for our access equipment, commercial and fire & emergency products as compared to historical levels. In addition, the global economic weakness has caused lending institutions to tighten their credit lending standards, which has restricted our customers’ access to capital. Continued weakness in U.S. and European housing starts and non-residential construction spending in most geographical areas of the world are further contributing to the lower sales volumes. A lack of significant improvement in residential and non-residential construction spending or continued low levels of construction activity generally may cause future weakness in demand for our products. Municipal tax revenues in the U.S. have weakened, which has negatively impacted demand for fire apparatus and refuse collection vehicles and delayed the recovery in these markets. Furthermore, it is possible that emerging market growth has slowed and could slow even further, which could negatively impact our growth in those markets. We cannot provide any assurance that the global economic weakness and tight credit markets will not continue or become more severe. In addition, we cannot provide any assurance that any economic recovery will not progress more slowly than what we or the market expect. If the global economic weakness and tight credit markets continue or become more severe, or if any economic recovery progresses more slowly than what we or the market expect, then there could be a material adverse effect on our net sales, financial condition, profitability and/or cash flows.·DoD’sDoD's tactical wheeled vehicle strategy generally.·· opened for competition or terminated, and all such contracts expire in the future and may not be replaced, which could reduce revenues that we expect under the contracts and negatively affect margins in our defense segment.·The current U.S. Administration has indicated that it supports increased competition for existing defense programs. also requires competition for U.S. defense programs in certain circumstances. It is possible that the U.S. Army and U.S. Marines will conduct an open competition for programs for which we currently have contracts upon the expiration of the existing contracts. Likewise, the U.S. Army and Marine Corps have, in the past, inquired about purchasing the design rights to the FHTV, M-ATV and Medium Tactical Vehicle Replacement that we produce, respectively. Competition for DoD programs that we currently have could result in the U.S. government awarding future contracts to another manufacturer or the U.S. government awarding the contracts to us at lower prices and operating margins than we experience under the current contracts.·· In particular, we bid the FMTV contract at very aggressive margins. Although the FMTV contract was profitable in the first three quarters of fiscal 2012, our expected future profitability under this contract is based on certain assumptions, including scheduled price increases and estimates for future increases in the costs of raw materials, targeted cost savings and our ability to achieve certain production efficiencies. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of profitability. For example, a 1% escalation in material costs over the Company’s projection for FMTV orders currently in backlog would increase the cost of materials by approximately $18 million. Although we do not believe that such an increase wouldresult in a loss on future sales under this contract, it would reduce our expected future profitability on orders currently in backlog. It is possible that other assumptions underlying the analysis could change in such a manner that the Company would determine in the future that this is a loss contract, which could result in a material charge to earnings.·We recognize revenue on certain undefinitized contracts with the DoD to the extent that we can reasonably and reliably estimate the expected final contract price and when collectability is reasonably assured. Undefinitized contracts are used when we and the DoD have not agreed upon all contract terms before we begin performance under the contracts. At June 30,December 31, 2012, we had recorded $581.8$93.7 million in revenue on contracts that remain undefinitized. To the extent that contract definitization results in changes or adjustments to previously recognized revenues or estimated or incurred costs, including charges from subcontractors, we record those adjustments as a change in estimate in the period of change. While we believe the definitization of contracts will not have a material adverse effect on our financial condition, actual results could vary from current estimates.·are required tomust 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.···Ourwhich could result in adjustmentsand review by the Defense Contract Audit Agency and the Defense Contract Management Agency. These agencies review our performance under our U.S. government contracts, our cost structure and our compliance with laws and regulations applicable to U.S. government contractors. Systems that are subject to review include, but are not limited to, our accounting systems, estimating systems, material management systems, earned value management systems, purchasing systems and government property systems. If an audit uncovers improper or illegal activities, then we may be subject to civil and criminal penalties and administrative sanctions that may include the termination of our U.S. government contracts, forfeiture of profits, suspension of payments, fines and, under certain circumstances, suspension or debarment from future U.S. government contracts for a period of time. Whether or not illegal activities are alleged, the U.S. government also has the ability to decrease or withhold certain payments when it deems systems subject to its review to be inadequate. These laws and regulations affect how we do business with our customers and, in some instances, impose added costs and prices under these contracts.·on our business.·whichor reduce the amount of PBPs on new contract awards, as was the case on our recently negotiated FHTV contract extension. If we stop receiving PBPs or receive PBPs at lower levels on future contract awards, it could have an adverse effect on our ability to repay debt and cause us to incur higher interest rates on our outstanding debt.·cash flows.· This could result in the U.S. government diverting the supply of component parts necessary for the production of vehicles under our U.S. defense contracts to other contractors.We expect to incur costs and charges as a result of measures such as facilities and operations consolidations and workforce reductions that we expect will reduce costs, and those measures also may be disruptive to our business and may not resultanticipated cost savings.We have been consolidating facilities and operations in an effort to make our business more efficient and expect to continue to review our overall manufacturing footprint. We have incurred, and expect in the future to incur, additional costs and restructuring charges in connection with such consolidations, workforce reductions and other cost reduction measures that have adversely affected and, to the extent incurred in the future would adversely affect, our future earnings and cash flows. Furthermore, such actions may be disruptive to our business. This may result in production inefficiencies, product quality issues, late product deliveries or lost orders as we begin production at consolidated facilities, which would adversely impact our sales levels, operating results and operating margins. In addition, we may not realize the cost savings that we expect to realize as a result of such actions.In January 2011, we began the consolidation of Medtec Ambulance production into fire & emergency segment facilities in Bradenton, Florida. We had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida would result in significantly improved performance. Despite efforts by numerous dedicated individuals and teams, the business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. Costs to exit this business mayexceed our estimates andregulations could adversely affect our business.earningsimplement restrictions on greenhouse gas emissions through a cap-and-trade system under which emitters would be required to buy allowances to offset emissions of greenhouse gas. In addition, several states, including states where we have manufacturing plants, are considering various greenhouse gas registration and cash flows. Furthermore, such actionsreduction programs. Our manufacturing plants use energy, including electricity and natural gas, and certain of our plants emit amounts of greenhouse gas that may be disruptiveaffected by these legislative and regulatory efforts. Greenhouse gas regulation could increase the price of the electricity we purchase, increase costs for our use of natural gas, potentially restrict access to or the use of natural gas, require us to purchase allowances to offsetbusinessesproducts. If any “conflict minerals” that are necessary to the functionality of a product manufactured by an SEC reporting company originated in the fire & emergency segment.Certain20122013 Annual Meeting of Shareholders. Responding to proxy contestsactions such as thisthese and other actions by activist shareholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. Perceived uncertainties among current and potential customers, employees and other parties as to our future direction may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners. Furthermore, if there is disagreement among our directors about the direction of our business, it could impair our ability to effectively and timely implement our MOVE strategy. These actions could also cause our stock price to experience periods of volatility.In July 1995, the Company’s Board of Directors authorized the repurchase of up6,000,000 shares of Common Stock. The Company did not repurchase any shares under this authorization during the quarter ended June 30, 2012. As of June 30, 2012, the Company had repurchased 2,769,210 shares under this program at a cost of $6.6 million, leaving the Company with authority to repurchase 3,230,790 sharespurchases of Common Stock under this program. In July 2012,made by the Company’s BoardCompany or on the Company's behalf during the first quarter of fiscal 2013:Period October 1 - October 31 — $ — — 6,683,825 November 1 - November 30 490,562 30.66 490,562 10,509,438 December 1 - December 31 3,759,510 29.27 3,759,510 6,749,928 Total 4,250,072 29.43 4,250,072 6,749,928 (1) Company can use this authorization at any time, and there is no expiration date associated with the Board authorization. The Company’sCompany's credit agreement restricts the Company’s ability to repurchase shares of its Common Stock through financial covenants. The Company’s credit agreement, as amended in July 2012, also limits the amount of dividends and other distributions, including repurchases of stock, itthe Company may pay after April 1, 2012 up to $485.0 million; plus (i) 50% of the consolidated net income of the Company and its subsidiaries, accrued on a cumulative basis during the period beginning on April 1, 2012 and ending on the last day of the fiscal quarter immediately preceding the date of the applicable proposed dividend or distribution; plus (ii) 100% of the aggregate net proceeds received by the Company subsequent to March 31, 2012 either as a contribution to its common equity capital or from the issuance and sale of its Common Stock. The Company’sCompany's indenture also contains restrictive covenants that may limit the Company’sCompany's ability to repurchase shares of its Common Stock or make dividends and other types of distributions to shareholders.5.4.OTHER INFORMATIONMINE SAFETY DISCLOSURES
On July 26, 2012 the Company initiated a plan to exit its ambulance business. The Company had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida would result in significantly improved performance. Despite efforts by numerous dedicated individuals and teams, the business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. The Company expects to discontinue production of ambulances in the first quarter of fiscal 2013 following completion of units currently in backlog. As a result of the plan to exit the ambulance business, the Company expects to incur pre-tax charges between $8 million and $13 million. These charges consist of severance and other termination benefits of approximately $2 million, non-cash excess and obsolete inventory charges of $2 million to $3 million, non-cash asset impairments of $1 million to $2 million and other exit costs of $3 million to $6 million. The majority of these charges are expected to be recorded in the fourth quarter of fiscal 2012.
On July 25, 2012, the Company entered into a non-binding letter of intent to sell its investment in its European mobile medical business as the business was determined to be a non-core business. The Company expects to incur a pre-tax loss of approximately $7 million on the disposition of this business, approximately half of which is related to cash charges. The Company expects to complete the sale of this business in the fourth quarter of fiscal 2012.
ITEM 6. EXHIBITS
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3.1 | ||
| Composite of Restated Articles of Incorporation of Oshkosh Corporation, |
4.1 | ||
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31.1 | ||
| Certification by the |
31.2 | ||
| Certification by the Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated |
32.1 | ||
| Written Statement of the |
32.2 | ||
| Written Statement of the Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. §1350, dated |
101 | ||
| The following materials from Oshkosh |
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OSHKOSH CORPORATION | ||||
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January 25, 2013 | By | /S/ Charles L. Szews | ||
Charles L. Szews, | ||||
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January 25, 2013 | ||||
By | ||||
| /S/ David M. Sagehorn | |||
David M. Sagehorn, | ||||
Executive Vice President and Chief Financial Officer | ||||
(Principal Financial Officer) | ||||
January 25, 2013 | ||||
| /S/ Thomas J. Polnaszek | |||
Thomas J. Polnaszek, | ||||
Senior Vice President Finance and Controller | ||||
(Principal Accounting Officer) | ||||
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3.1 | ||
| Composite of Restated Articles of Incorporation of Oshkosh Corporation, |
4.1 | ||
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31.1 | ||
| Certification by the |
31.2 | ||
| Certification by the Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated |
32.1 | ||
| Written Statement of the |
32.2 | ||
| Written Statement of the Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. §1350, dated |
101 | ||
| The following materials from Oshkosh |