Item 1 BUSINESS
The Company
The Company is a leading designer, manufacturer and marketer of a broad range of fire and emergency apparatus and specialty commercial and military trucks under the "Oshkosh," "Pierce," "McNeilus" and "MTM" trademarks. The Company's custom and commercial fire apparatus and emergency vehicles include pumpers, aerial and ladder trucks, tankers, heavy-duty rescue vehicles, wildland rough terrain response vehicles, aircraft rescue and firefighting ("ARFF") and snow removal vehicles. The Company's commercial truck lines include refuse truck bodies and rear- and forward-discharge concrete mixers. As the leading manufacturer of severe-duty heavy tactical trucks for the United States Department of Defense ("DoD"), the Company manufactures vehicles that perform a variety of demanding tasks such as hauling tanks, missile systems, ammunition, fuel and cargo for combat units. McNeilus has an equity interest in Oshkosh/McNeilus Financial Services Partnership ("OMFSP") which provides lease financing to the Company's customers.
The Company's objective is to continue to enhance market positions by providing innovative design, sophisticated engineering, efficient, low-cost manufacturing, extensive distribution and superior customer service to its commercial, municipal and military customers within its core markets.
Competitive Strengths
The following competitive strengths support the Company's business strategy:
Strong Market Positions. The Company has developed strong market positions in each of its core businesses, which management attributes to the Company's reputation for innovation, vehicle performance, reliability and customer service. The Company has the leading share of the severe-duty heavy tactical truck segment of the domestic defense truck market, and also believes it has a leading share in: (i) custom and commercial fire apparatus, including pumpers, aerial and ladder trucks, tankers, heavy duty rescue, wildland rough terrain response vehicles and ARFF vehicles for the domestic fire apparatus market; (ii) the domestic refuse truck body market; (iii) the domestic rear- and forward-discharge concrete mixer markets; and (iv) the domestic airport snow removal vehicle market. The Company intends to continue to strengthen its market share by capitalizing on its strong reputation, introducing innovative products and services and leveraging its extensive distribution capabilities.
Extensive Distribution Capabilities. With the addition of the commercial and municipal distribution capabilities of Pierce and McNeilus, the Company has established an extensive domestic and international distribution system for specialty trucks and truck bodies covering over 70 countries. In addition to its network of dealers and distributors, the Company employs over 100 in-house sales and service representatives. Management believes the Company's broad distribution system has enabled the Company to: (i) maximize sales of new products and technologies: (ii) become a benchmark for government customers in establishing their bid
specifications; (iii) provide customer service on a national and international scale; and (iv) reduce distribution expenses through significant economies of scale.
Flexible and Efficient Manufacturing. The Company believes it has competitive advantages over larger truck manufacturers in its specialty truck markets due to its manufacturing flexibility and custom fabrication capabilities. For example, the Company has successfully configured its defense truck and fire apparatus manufacturing plants for the simultaneous manufacture of many different types and models of vehicles on the same assembly line. In addition, the Company believes it has a competitive advantage over smaller competitors due to its: (i) manufacturing in relatively higher volumes; (ii) purchasing power across its product lines; and (iii) investing in fixturing and robotics to improve efficiency and reduce costs.
Quality Products and Customer Service. Oshkosh, Pierce and McNeilus have each developed strong brand recognition based on their commitments to meet the stringent product quality and reliability requirements of their customers and the specialty truck markets they serve. The Company's commitment to product quality is exemplified by the ISO 9001 certification of Oshkosh and Pierce, which achieved ISO 9001 certification in April 1998. The Company also achieves high quality customer service through its extensive service and parts support program, which is available to domestic customers 365 days a year in all product lines throughout the Company's distribution systems.
Proprietary Components. The Company's advanced design and engineering capabilities have contributed to the development of proprietary, severe-duty components that enhance truck performance, reduce manufacturing costs and strengthen customer relationships. These proprietary components include front drive and steer axles, transfer cases, cabs, the ALL-STEER electronic all-wheel steering system, independent suspension, the Sky-Arm articulating aerial ladder and the McNeilus Auto Reach Arm. Management believes these proprietary components provide the Company a competitive advantage by increasing its vehicles' durability, operating efficiency and vehicle effectiveness. The integration of many of these components across various product lines also reduces the Company's costs to manufacture its products compared to manufacturers who simply assemble purchased components.
Business Strategy
The Company is focused on increasing its net sales, profitability and cash flow by capitalizing on its competitive strengths. Key elements of the Company's business strategy include:
Focusing on Specialized Truck Markets. The Company plans to continue its focus on those specialized truck and truck body markets where it has strong market positions and where the Company can leverage synergies in purchasing, manufacturing, technology and distribution. The Company's objective is to achieve and maintain market leadership through internal growth and strategic acquisitions. Management believes the higher sales volumes associated with market leadership would allow the Company to continue to enhance productivity in manufacturing operations, fund innovative product development and invest in further expansion.
Expanding Distribution and International Sales. The Company plans to add new distribution capabilities for the municipal segment of the refuse truck body market and in targeted geographic areas in the domestic fire apparatus market. The Company intends to increase international sales beyond the $35.0 million volume achieved in fiscal 1998 by introducing McNeilus refuse truck bodies, rear-discharge concrete mixers and ready-mix batch plants to international markets and by continuing the expansion of Pierce's international customer base through the Company's expanding international distribution capabilities.
Reducing Costs While Maintaining Quality. The Company actively benchmarks its competitors' costs and best industry practices, and continuously seeks to implement process improvements to increase cash flow and improve profitability. With each of its acquisitions, the Company has established cost reduction targets. At Pierce, the Company exceeded its two-year cost reduction target of $6.5 million as a result of consolidating facilities, reengineering the manufacturing process and leveraging increased purchasing power. The Company is planning for additional cost savings at Pierce in fiscal 1999. The Company intends to further improve efficiencies by taking advantage of the Company's greater purchasing power and by developing additional manufacturing synergies across product lines following its acquisition of McNeilus and has established a $5-$7 million two-year cost reduction target with respect to this acquisition. In the first seven months following the acquisition of McNeilus, $1.45 million of the cost reduction target was realized.
Introducing New Products. The Company has increased its emphasis on new product development in recent years, and seeks to expand sales by introducing new or improved products in its core markets, either through internal development or strategic acquisition. For example, in December 1997, the Company purchased the aerial fire apparatus product line of Nova Quintech, a division of Nova Bus Corporation. This acquisition broadened Pierce's aerial product line and provided Pierce with three new products in fiscal 1998.
Diversifying DoD Contracts. The Company is seeking to diversify its business with the DoD beyond its traditional contracts relating to the manufacture of severe-duty heavy tactical trucks. Management believes the Company has a reputation within the DoD for advanced engineering, quality manufacturing and vehicle performance that will assist the Company in obtaining contracts to provide other types of vehicles to the DoD. For example, the Company was one of two manufacturers selected to participate in a DoD program to produce upgraded medium-duty prototype vehicles for the Medium Tactical Truck Remanufacture ("MTTR") program. The Company expects the initial production contract to be awarded to the Company or the competing bidder in December 1998. The Company is also one of two manufacturers currently preparing prototype Family of Medium Tactical Vehicles ("FMTV") trucks for testing by the DoD. Upon conclusion of this testing, the Company will compete to be a second source supplier for the $15.6 billion FMTV program which extends through 2020.
Increasing Aftermarket Sales and Service. The Company is focused on increasing its aftermarket sales and service revenues. In the fire apparatus and commercial truck markets, the Company has expanded and plans to continue to expand its refurbishment facilities and parts distribution capabilities. In the defense truck market, the Company plans to continue to pursue parts and maintenance contracts for upgrading and reconditioning trucks at both domestic and international U.S. military bases.
Pursuing Strategic Acquisitions. The Company intends to selectively pursue additional strategic acquisitions, both domestically and internationally, in order to enhance its product line and expand its international presence in specialized truck markets. The Company intends to focus its acquisition strategy in specialty truck and truck body markets where it can enhance its strong market positions and achieve significant acquisition synergies.
Products and Markets
The Company is focused on the following core specialty truck and truck body markets:
Fire Apparatus. The Company, through Pierce, is among the leading domestic manufacturers of custom and commercial fire apparatus. The Company primarily serves domestic governmental markets, but also sells fire apparatus to airports, universities and large industrial companies. In addition, the Company sells fire apparatus in international markets. Pierce's history of research and development in consultation with firefighters has resulted in a broad product line that features a wide range of innovative, high-quality custom and commercial firefighting equipment with advanced fire suppression capabilities. The Company's engineering expertise also allows it to design its vehicles to meet stringent government regulations for safety and effectiveness.
Refuse Truck Bodies. Management believes the Company, through McNeilus, is a leading domestic manufacturer of refuse truck bodies for the waste services industry. The Company manufactures a wide range of automated rear, front, side and top loading refuse truck bodies, which the Company mounts on commercial chassis. The Company sells its refuse vehicles primarily to commercial waste management companies. Management believes the Company's refuse vehicles have a reputation for efficient, cost-effective, dependable operation that supports the Company's continued expansion into municipal and international markets.
Concrete Mixers and Snow Removal Vehicles. Management believes the Company is a leading domestic manufacturer of rear- and forward-discharge concrete mixers. The Company sells rear- and forward-discharge concrete mixers and portable concrete mixer plants to construction companies throughout the United States and internationally. Management believes the Company is one of the only domestic concrete mixer manufacturers that markets both rear- and forward-discharge concrete mixers.
The Company is also among the leading domestic manufacturers of snow removal vehicles for airports. The Company's specially designed airport snow removal vehicles can cast up to 4,000 tons of snow per hour and are used by some of the largest airports in the United States, such as Denver International Airport, LaGuardia International Airport, Minneapolis-St. Paul International Airport and O'Hare International Airport. Management believes the reliability of the Company's high performance snow removal vehicles contributes to its strong market position.
Defense Trucks. The Company has sold products to the DoD for over 70 years and is the leading manufacturer of a broad line of severe-duty heavy tactical trucks for the DoD. The Company's proprietary military all-wheel drive product line includes: (i) the Palletized Load System ("PLS"), a highly mobile self-contained truck and trailer system that loads and unloads a wide range of cargo in a short period of time; (ii) the Heavy Expanded Mobility Tactical Truck ("HEMTT"), a cross-country cargo and supply carrier that, among other tasks, is used for direct rearming of the Multiple Launch Rocket System, transport of Patriot erector/launchers, resupply of field artillery ammunition and refueling of tanks, trucks and helicopters in forward areas; (iii) the Heavy Equipment Transporter ("HET"), the primary hauler of the M1A1 main battle tank and also a hauler of other tanks, fighting and recovery vehicles, self-propelled howitzers and construction equipment; and (iv) the Logistic Vehicle System ("LVS"), a highly mobile cargo carrier with a maximum payload capacity of 20 tons. The Company also exports its severe-duty heavy tactical trucks to approved foreign customers.
The Company has developed a strong relationship with the DoD that has resulted in the Company operating under "family contracts" with the DoD for the PLS, HEMTT, HET and LVS and for DoD vehicle parts. Under the vehicle family contracts, the DoD orders a specified range of volume of trucks at fixed prices, which allows the Company to predict and plan its products and delivery schedules for vehicles. These family contracts were established in 1996 and 1997 and expire in fiscal years 1999 and 2000.
Markets and Products Description
Fire and Emergency Market Firefighting apparatus that are Custom Pumpers......... equipped with a water tank, water pump, and foam system (optional). The Pierce line of * Quantum - Flagship of the Pierce custom pumpers is available on each of these line. Features advanced ergonomics, custom chassis: unique styling, enhanced maneuverability, and a cab that seats up to 10 personnel. * Lance 2000 - Features a split-tilt cab. High gross vehicle weight rating enables this truck to support aerial devices. * Dash 2000 - Custom tilt cab, designed for comfort, space and maneuverability. * Saber - Value-priced chassis featuring a tilt-cab, select options, and seating for up to 8 personnel. * Arrow - Cab-forward design. Commercial Pumpers..... Firefighting apparatus that arewith a water tank, equipped water pump and foam system (optional). Commercial pumpers have the firefighting bodies mounted on customer-specified commercial truck chassis. Aerial Apparatus....... Firefighting apparatus with an aerial device mounted on the body for access and rescues in elevated locations. These devices are available on the Pierce line of custom chassis. Products include: * 105' and 85' aerial platforms. * 75' and 105' heavy-duty ladders. * 105' super heavy-duty ladder. * 105' aerial tiller - Tractor-drawn trailer has an Aerial ladder mounted on the trailer and steering capability for the rear axle. * Sky Arm - Four-section, 100-foot aerial ladder with an articulating platform. * Sky Five - Five-section aerial ladder that is available in rear- and mid-mount configurations. The Company believes that, at rest, this is the shortest 100-foot aerial ladder available. * Sky Boom - Elevated water tower boom with an attached ladder. Available in 55' and 60' lengths. Rescue Vehicles........ These units are designed to carr and large personnel quantities of equipment. Pierce rescue vehicles are used for extrication, water rescue, hazardous materials response, fire fighting, command center, and lighting operations. Mini-Pumper............ This initial response vehicle is a fast, lightweight, scaled-down version of full-sized pumper. Elliptical Tanker...... Elliptical tankers are used to large amounts of transport water to fire scenes and can be equipped with a variety of pumping packages so the vehicles can also be used as a front line of attack. Water capacity ranges from 1,500 to 5,000 gallons. Hawk Wildland Rapid Response Vehicle.............. Four-wheel-drive vehicle takes firefighters into off-road terrain that can be difficult or even impassable for larger, two-wheel-drive pumpers. Designed specifically as a first-strike vehicle, the Hawk features a water tank, water pump, and a compressed air foam system. H-Series............... An airport snow removal vehicle that can clear 4,000 tons of snow per hour. Optional sweepers, blowers and plows are Available. P-Series............... A super heavy-duty frame vehicle that can break through heavily drifted snow. The vehicle also has the added flexibility of being durable enough to meet the demands of off-road applications.
Refuse Truck Body Market Front Loader........... Refuse is loaded into a container at the front of the vehicle; The container is lifted by large arms and dumped into the body. The front loader can carry 40 to 43 cubic yards of refuse and is available on a selection of commercial chassis. A self-leveling system for keeping the container level during dumping cycle is optional. Rear Loader............ McNeilus offers three different models of rear-loading refuse bodies. Refuse is loaded into the rear of the vehicle and compacted toward the front of the refuse body. McNeilus rear loaders can carry from 17 to 32 cubic yards of refuse Autoreach Automated Side Loader............... This refuse body features a boomless arm for loading large containers of refuse from the side of the vehicle. The side-loading arm is designed to articulate left to right and dump from any angle. The driver can keep the vehicle in one position after stopping for a pick-up rather than having to move the vehicle to put the arm in the proper position for lifting the next refuse container. The McNeilus Autoreach is available in 28-, 33- and 36-cubic yard capacities and features a continuous packing cycle. Manual Side Loader..... Designed for one-person refuse collection operations and can carry up to 33 cubic yards. The body can be loaded from either side and is typically mounted on a low-entry chassis.
Concrete Mixer Market F-Series............... Designed for a variety of severe-duty all-wheel drive applications, including rear-discharge concrete mixers, concrete block trucks, dry wall haulers, wall form trucks, digger derricks, aerial buckets and oil field service. S-Series............... A forward-discharge concrete mixer that allows the driver to approach a job with greater visibility, improved placement and greater safety. The two-speed transfer case and front driving gear gives extra power to maneuver into tighter spots in challenging terrain. Bridgemaster III....... Rear-discharge mixer featuring a trailing axle. This mixer lineup can carry from 9 to 11.5 cubic yards of concrete. The Bridgemaster IIIs are available on a variety of commercial truck chassis. Standard Rear Discharge Mixer................ Rear-discharge concrete mixer that can handle from 4 to 11 cubic yards and are available with a variety of axle Configurations including tag axles. Options include remote pendant controls for controlling discharge near the rear of the vehicle. Sliding Mixer System... Mounted on a trailer that can be extended up to 13 feet depending on the size of the mixer selected. It is designed for transport and large pours. It typically can carry 11 to 13 yards of concrete. Defense Truck Market Heavy Expanded Mobility Tactical Truck ("HEMTT").............. Cross-country cargo and supply carrier with maximum payload capacity of 11 tons. The HEMTT is used for direct rearming of the Multiple Launch Rocket System, transport of Patriot erector/launchers and resupply of field artillery ammunition and refueling of tanks, trucks and helicopters in forward areas. Heavy Equipment Transporter ("HET").............. Primary hauler of the M1A1 main battle tank and also transports other tanks, fighting and recovery vehicles, self-propelled howitzers and construction equipment. Palletized Load System ('PLS").............. Cargo hauler with maximum payload capacity of 33 tons. The truck and trailer system hauls a variety of cargo and can load or unload in a short period of time. Logistic Vehicle System ("LVS").............. Highly mobile cargo carriers with a maximum payload capacity of 20 tons. The LVS can carry military vehicles and supply containers over rough terrain and steep g grades due to its separating chassis module design.
Sales and Distribution
The Company believes it differentiates itself from many of its larger competitors by tailoring its distribution to the needs of its specialized truck markets and from its smaller competitors with its national and global sales and service capabilities. Distribution personnel use demonstration trucks to show customers how to properly use the Company's trucks and truck bodies, compared to the showroom sales approach of the typical dealers of large truck manufacturers. The Company backs all products by same-day parts shipment, and its service technicians are available in person or by telephone to domestic customers 365 days a year. The Company believes that its dedication to keeping its trucks in-service in demanding conditions worldwide has contributed to customer loyalty.
The Company provides its salespeople, representatives and distributors with product and sales training on the operation and specifications of its products. The Company's engineers, along with its product managers, develop operating manuals and provide field support at truck delivery for certain markets.
Distributors, where used, enter into agreements with the Company that allow for termination by either party generally upon 90 days' notice. Distributors are not permitted to market and sell competitive products.
Fire and Emergency. The Company believes that the geographical breadth, size and quality of its fire apparatus sales and service organization are competitive advantages in a market characterized by a few large manufacturers and numerous small, regional competitors. Pierce's fire apparatus are sold through 38 sales and service organizations with more than 260 sales representatives nationwide, which combine broad geographical reach with frequency of contact with fire departments and municipal government officials. Management believes that frequency of contact and local presence are important to cultivate major, and typically infrequent, purchases involving the city or town council and fire department, purchasing, finance, and mayoral offices, among others, that may participate in a fire truck bid and selection. After the sale, Pierce's nationwide local parts and service capability is available to help municipalities maintain peak readiness for this vital municipal service.
Pierce primarily focused its sales efforts in rural and small suburban domestic markets prior to its acquisition by Oshkosh. Due to the Company's expertise and long-standing relationships in numerous large urban markets, the Company has extended Pierce's sales focus into several key metropolitan areas.
Pierce substantially strengthened its competitive position overseas in fiscal 1998. Pierce's worldwide distribution network was expanded to include 43 international representatives. This network has delivered several new orders including the award in December 1997 of a $35 million contract for 130 custom fire trucks for Saudi Arabia to be delivered from November 1998 through October 1999.
The Company has invested in the development of sales tools for its representatives that it believes creates a competitive advantage in the sale of fire apparatus. For example, Pierce's Pride II PC-based sales tool can be used by its sales representatives to develop the detail specifications, price the base truck and options and draw the configured truck on the customer's premises. The quote, if accepted, is directly interfaced into Pierce's sales order systems.
Oshkosh maintains 22 full-time sales and service dealers focused on the sale of snow removal vehicles, principally to airports, but also to municipalities, counties and other governmental entities.
Defense. Substantially all domestic defense products are sold direct to principal branches of the DoD. The Company maintains a liaison office in Washington, D.C. to represent its interests with the Pentagon, Congress and the Office of the President. The Company also sells and services defense products to foreign governments directly through four Company-owned international sales offices, through agents, consultants and representatives, and through the United States Foreign Military Sales ("FMS") program. The DoD has begun to rely on industry for support and sustainability of its vehicles which has opened up new opportunities for maintenance, service and contract support to the U.S. Army and U.S. Marine Corps.
In addition to marketing its current truck offerings and competing for new contracts in the medium- and light-duty segments, the Company actively works with the Armed Services to develop new applications for its vehicles. For example, the Company is:
o Developing new applications for its PLS vehicle beyond its traditional ammunition transportation role. A contract for construction models has already been awarded, and several other models of the PLS are currently under evaluation.
o Modifying its HEMTT vehicle for alternate uses. The Company has integrated a foam proportioning fire fighting package on a HEMTT for use by the U.S. military and other governmental agencies in the extinguishment of wildland fires. The HEMTT has also been modified to include a load handling system to meet lower payload requirements.
o Upgrading existing products such as the HEMTT, PLS and HET in order to achieve better performance and new technology. As an example, the Company has separate development contracts for each product with the U.S. Army to develop a new HEMTT, HET and PLS with new engines, transmissions, transfer cases and numerous other components that increase reliability and performance at reduced costs. In addition, the HEMTT Extended Service Program ("ESP") and HET Technology Insertion Program ("TIP") vehicles incorporate facets of the new "sealed hood" concept in which vehicle systems are monitored electronically and maintenance recommendations are delivered directly to the operator without ever having to open the hood.
Commercial. Oshkosh maintains four distribution centers with 26 in-house sales and service representatives in the U.S. to sell and service its forward- and rear-discharge concrete mixers. All of the Oshkosh facilities provide full service, mounting and parts distribution to customers in their geographic regions, while two also have paint facilities. In addition, Oshkosh utilizes one independent distributor in this market.
McNeilus operates eight distribution centers with 83 in-house sales and service representatives in the U.S. to sell and service its refuse truck bodies, rear-discharge concrete mixers and ready-mix batch plants. Six of such distribution centers provide full service, mounting and parts distribution to customers in their geographic regions while the remainder are primarily sales offices with limited parts and service capabilities. Five of the McNeilus distribution centers also have paint facilities and provide significant additional paint and mounting services during peak demand periods.
With respect to McNeilus, the Company has begun to:
o Combine the McNeilus and Oshkosh distribution capabilities. Because there is little geographic overlap between the rear-discharge markets of McNeilus and the forward-discharge markets of Oshkosh, management retained all existing distribution centers of both companies. The Company believes that the combined network represents one of the largest refuse truck body and concrete mixer distribution networks in the U.S.
o Apply Oshkosh's and Pierce's sales and marketing expertise in municipal markets to increase sales of McNeilus refuse truck bodies to municipal customers. Prior to the Company's acquisition of McNeilus, virtually all McNeilus refuse truck body sales were to commercial customers. The Company believes that commercial customers represent a majority of the refuse truck body market. However, many municipalities purchase their own refuse trucks. The Company believes that it is positioned to create an effective municipal distribution in the refuse truck body market by building upon its present base of municipal distributors. Following its acquisition and new focus in municipal markets, McNeilus has been awarded new business for the city of Los Angeles and has targeted other major metropolitan areas.
o Offer McNeilus refuse truck bodies, rear-discharge concrete mixers and ready-mix batch plants to Oshkosh's international dealers for sales and service worldwide. McNeilus' international sales have historically been limited because McNeilus has focused on the domestic market. However, management believes that refuse body exports are a significant percentage of certain competitors' sales, and represents a meaningful opportunity for the Company. The Company has trained its international Oshkosh and Pierce dealers to sell and service the McNeilus product line and has commenced sales of McNeilus products through these dealers in the first seven months following the acquisition.
Competition
The Company operates in highly competitive industries. The Company competes in the fire apparatus and defense truck markets principally on the basis of lowest qualified bid. To submit a qualified bid, the bidder must demonstrate that the fire apparatus or defense truck meets stringent specifications and, for most defense truck contracts, passes extensive testing. In addition, decreases in the DoD budget have resulted in a reduction in the number and size of contracts, which has intensified the competition for remaining available contracts. The Company and its competitors continually undertake substantial efforts in order to maintain existing levels of defense business and to succeed in bid competitions for available contracts. In the refuse truck body and concrete mixer markets, the Company also faces intense competition on the basis of price, innovation, quality, service and product performance capabilities. As the Company seeks to expand its sales of refuse truck bodies to municipal customers, management believes the principal basis of competition for such business will be lowest qualified bid.
In all of the Company's markets, competitors include smaller, specialized manufacturers as well as large, mass producers. The Company believes that, in its specialized truck markets, it has been able to effectively compete against large, mass producers due to its manufacturing flexibility and specialized distribution systems. The Company believes that its competitive cost structure, engineering expertise and global distribution systems have enabled it to effectively compete with other specialized manufacturers.
Pierce's principal competitors in the fire apparatus market include Emergency One, Inc. (a subsidiary of Federal Signal Corporation), Kovatch Mobile Equipment Corp., and numerous small, regional manufacturers. Principal competitors of McNeilus, in the refuse truck body market, include The Heil Company (a subsidiary of Dover Corporation), Leach Company, and McClain E-Z Pack, Inc. Principal competitors of McNeilus and Oshkosh in concrete mixer markets include Advance Mixer, Inc., London Machinery, Inc., Rexworks, Inc., and T.L. Smith Machine Co., Inc. Oshkosh's principal competitors in snow removal markets include Monroe Truck Equipment, Inc. and Stewart & Stevenson Services, Inc. Oshkosh's principal competitors for DoD contracts include AM General Corporation and Stewart & Stevenson Services, Inc. The Company also faces competition from its competitors for acquisition opportunities.
Several of the Company's competitors have greater financial, marketing, manufacturing and distribution resources than the Company. There can be no assurance that the Company's products will continue to compete successfully with the products of competitors or that the Company will be able to retain its customer base or to improve or maintain its profit margins on sales to its customers, all of which could materially adversely affect the Company's financial condition, results of operations and debt service capability.
Customers and Backlog
Sales to the DoD comprised approximately 28% of the Company's net sales for fiscal 1998. No other single customer accounted for more than 2% of the Company's sales for this period. A substantial majority of the Company's net sales are derived from customer orders prior to commencing production.
The Company's backlog at September 30, 1998 was $377.5 million compared to $361.1 million at September 30, 1997. Backlog related to DoD contracts decreased by $94.1 million in 1998 compared to 1997 due to the completion of the IPF contract and because the Company's family contracts are coming up for renewal. The Company's fire and emergency and commercial backlogs increased by $51.2 million and $59.3 million, respectively, generally due to higher sales volumes for Pierce and due to the inclusion of McNeilus in 1998. Substantially all of the Company's backlog pertains to fiscal 1999 business.
Reported backlog excludes purchase options and announced orders for which definitive contracts have not been executed. Additionally, backlog excludes unfunded portions of DoD long-term family contracts. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales or the ratio of the Company's future sales to the DoD versus its sales to other customers.
Government Contracts
Approximately 28% of the Company's net sales for fiscal 1998 were made to the U.S. government under long-term contracts and programs, substantially all of which were in the defense truck market. Accordingly, a significant portion of the Company's sales are subject to inherent risks, including uncertainty of economic conditions, changes in government policies and requirements that may reflect rapidly changing military and political developments and the availability of funds.
The Company's sales into defense truck markets are substantially dependent upon periodic awards of new contracts and the purchase of base vehicle quantities and the exercise of options under existing contracts. The Company's existing contracts with the DoD may be terminated at any time for the convenience of the government. Upon such termination, the Company would generally be entitled to reimbursement of its incurred costs and, in general, to payment of a reasonable profit for work actually performed.
In November 1996, the U.S. Army Tank Automotive and Armaments Command awarded the Company and one other defense contractor $6.9 million prototype contracts for Phase I competition of the MTTR program. The MTTR program was initiated to update and modernize the 5-ton tactical vehicle fleet of the U.S. Marine Corps and the U.S. Army. The goal of the U.S. Marine Corps portion of the program is to remanufacture the current configuration to carry a much greater payload with substantially increased cross-country mobility. The U.S. Army portion of the program was designed to increase the useful life and decrease operation and support costs of a portion of the U.S. Army's existing fleet but this portion of the program was subsequently cancelled. Phase I covers the design, development, and production of five prototype test vehicles for the U.S. Marine Corps and five additional prototype test vehicles for the U.S. Army. Testing of the ten-prototype test vehicles commenced August 1997 and was concluded in fiscal 1998. Phase II of the program is currently expected to include the production of up to 8,168 vehicles for the U.S. Marine Corps at a value that could exceed $1.0 billion over a period of years. Competition for the Phase II production contract is intense between the two Phase I contractors. Phase I testing along with the Phase II proposal will determine the single supplier of any production contract awarded. No assurance can be given that the DoD will award a Phase II Contract or that federal budgets will provide future funding for a Phase II contract. The DoD has targeted to announce an award of the MTTR contract to either Oshkosh or its competition in December 1998.
The U.S. Army has announced a competition to add a second supplier to build FMTV trucks. Oshkosh and one competitor have been awarded contracts to build three trucks for testing by the DoD. Based on current plans announced by the DoD, the winner of the competition would be awarded an initial production contract for approximately 763 vehicles. Upon completion of this production contract and the current supplier's present contract, the U.S. Army is expected to conduct a competition between these two manufacturers for the production of approximately 50,000 FMTV trucks. No assurance can be given that the DoD will award the FMTV second source contract or that federal budgets will provide future funding for the FMTV program.
Under firm fixed-price contracts with the government, the price paid to the Company is generally not subject to adjustment to reflect the Company's actual costs, except costs incurred as a result of contract changes ordered by the government. The Company generally attempts to negotiate with the government the amount of increased compensation to which the Company is entitled for government-ordered changes that result in higher costs. In the event that the Company is unable to negotiate a satisfactory agreement to provide such increased compensation, the Company may file an appeal with the Armed Services Board of Contract Appeals or the U.S. Claims Court. The Company has no such appeals pending.
The Company, as a U.S. government contractor, is subject to financial audits and other reviews by the U.S. government of performance of, and the accounting and general practices relating to, U.S. government contracts, and like most large government contractors, the Company is audited and reviewed on a continual basis. Costs and prices under such contracts may be subject to adjustment based upon the results of such audits and reviews. Additionally, such audits and reviews can and have led to civil, criminal or administrative proceedings. Such proceedings could involve claims by the government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company or one or more of its subsidiaries can also be suspended or debarred from government contracts, or lose its export privileges based on the results of such proceedings. The Company believes, based on all available information, that the outcome of all such audits, reviews and proceedings will not have a material adverse effect on its consolidated financial condition or results of operations.
Suppliers
The Company is highly dependent on its suppliers and subcontractors in order to meet commitments to its customers, and many major components are procured or subcontracted on a sole-source basis with a number of domestic and foreign companies. Through its reliance on this supply network for the purchase of certain components, the Company is able to avoid many of the preproduction and fixed costs associated with the manufacture of those components. The Company maintains an extensive qualification and performance measurement system to control risks associated with such reliance on suppliers. The Company occasionally experiences problems with supplier and subcontractor performance and must identify alternate sources of supply and/or address related warranty claims from customers.
While the Company purchases many costly components such as engines, transmissions and axles, it manufactures certain proprietary components that are deemed material to the Company's business. These components include front drive and steer axles, transfer cases, cabs, the ALL-STEER electronic all-wheel steering system, independent suspension, the Sky-Arm articulating aerial ladder, the McNeilus Auto Reach Arm, body structures and many smaller parts which add uniqueness and value to the Company's products. Some of these proprietary components are marketed to other manufacturers.
Engineering, Research and Development
The Company maintains three facilities for new product development and testing with a staff of 46 engineers and technicians who are responsible for improving existing products and development and testing of new trucks, truck bodies and components. The Company prepares annual new product development and improvement plans for each of its markets and measures progress against those plans.
Virtually all of the Company's sales of fire apparatus require some custom engineering to meet the customer's specifications. Engineering is also a critical factor in defense truck markets due to the severe operating conditions under which the Company's trucks are utilized, new customer requirements and stringent government documentation requirements. In the refuse truck body, concrete mixer and snow equipment markets, product innovation is highly important to meet customers' changing requirements. Accordingly, the Company maintains a permanent staff of over 240 engineers and engineering technicians, and it regularly outsources significant engineering activities in connection with major DoD bids and proposals.
For fiscal years 1998, 1997, and 1996, Oshkosh incurred engineering, research and development expenditures of $9.7 million, $7.8 million and $6.3 million, respectively, portions of which were recoverable from customers, principally the U.S. government.
Intellectual Property
Patents and licenses are important in the operation of the Company's business, as one of management's key objectives is developing proprietary components in order to provide the Company's customers with advanced technological solutions at attractive prices. The Company holds in excess of 50 active domestic patents. Management believes patents for all-wheel steer and independent suspension systems, which have remaining lives of 9 to 19 years, provide the Company with a competitive advantage in the fire apparatus business and the sale of ARFF and snow removal vehicles. The independent suspension system was also added to the U.S. Marine Corps portion of the MTTR program, which the Company believes should be a competitive advantage in the competition for the Phase II production contract. While other proprietary components provide the Company a competitive advantage, management believes that none of the Company's other patents individually are significant to the business.
The Company holds trademarks for "Oshkosh," "Pierce," "McNeilus" and "MTM." These trademarks are considered to be important to the future success of the Company's business.
Quality Management
In 1994, Oshkosh commenced a program to educate and train all employees at its Oshkosh facilities in quality principles and to seek ISO 9001 certification to improve the Company's competitiveness in its global markets. Employees at all levels of the Company are encouraged to understand customer and supplier requirements, measure performance, develop systems and procedures to prevent nonconformance with requirements and produce continuous improvement in all work processes. Oshkosh achieved ISO 9001 certification in 1995 and Pierce achieved ISO 9001 certification in April 1998. The Company is evaluating whether to pursue ISO 9001 certification for McNeilus. Although management does not consider such certification essential for McNeilus' domestic markets, the Company may conclude it is valuable in marketing to certain international customers.
Employees
As of September 30, 1998, the Company had approximately 3,500 employees, of which approximately 1,300, 1300 and 900 employees are located at its principal facilities in Oshkosh, Wisconsin, Appleton, Wisconsin and Dodge Center, Minnesota, respectively. Production workers totaling approximately 800 employees at the Company's Oshkosh facilities are represented by the United Auto Workers union. The Company's five-year contract with the United Auto Workers union extends through September 30, 2001. The Company believes its relationship with employees is satisfactory.
Manufacturing
The Company manufactures trucks and truck bodies at ten manufacturing facilities. Employee involvement is encouraged to improve production processes and product quality. In order to reduce production costs, the Company maintains a continuing emphasis on the development of proprietary components, self-sufficiency in fabrication, just-in-time inventory management, improvement in production flows, interchangeability and simplification of components among product lines, creation of jigs and fixtures to ensure repeatability of quality processes, utilization of robotics, and performance measurement to assure progress toward cost reduction targets.
The Company intends to continue to upgrade its manufacturing capabilities by adopting best practices across its manufacturing facilities, relocating manufacturing activities to the most efficient facility, investing in further fixturing and robotics, re-engineering manufacturing processes and adopting lean manufacturing management practices across all facilities.
The Company is drawing upon its recent experience with the Pierce acquisition in integrating the McNeilus manufacturing facilities. Within the first year following the Pierce acquisition, the Company consolidated three Pierce manufacturing facilities down to two while increasing Pierce's capacity by improving product flow. In addition, among other things, the Company reduced the number of operating shifts at the Pierce paint plant from three to one to substantially reduce utility costs, implemented indexing of production lines and relocated chassis frame build-up to Oshkosh to improve production efficiencies, and eliminated storage rooms to relocate inventory to point of use thereby eliminating duplicate material handling. Likewise, at McNeilus, the Company has installed additional robots, commenced re-arrangement of weld and mount activities and developed plans to expand paint capacity in order to improve production facilities, all in the first seven months following the acquisition.
Item 2.
Item 2. PROPERTIES
Management believes the Company's equipment and buildings are modern, well maintained and adequate for its present and anticipated needs. As of September 30, 1998, the Company operated in ten manufacturing plants. In addition, the Company maintains
twelve distribution centers throughout the United States and four sales offices internationally. The Company's manufacturing plants include:
The Company's facilities are pledged as collateral under the terms of the Senior Credit Facility.
The Company's manufacturing facilities generally operate five days per week on one shift, except for one-week shutdowns in July and December. Management believes the Company's manufacturing capacity could be approximately doubled with limited capital spending by working an additional shift at each facility.
Item 3.
Item 3. LEGAL PROCEEDINGS
The Company is engaged in litigation against Super Steel Products Corporation ("SSPC"), the Company's former supplier of mixer systems for forward-discharge concrete mixer trucks under a long-term supply contract. SSPC sued the Company in state court claiming the Company breached the contract. The Company counterclaimed for repudiation of contract. On July 26, 1996, a jury returned a verdict for SSPC awarding damages totaling $4.5 million. On October 10, 1996, the state court judge overturned the verdict against the Company, granted judgment for the Company on its counterclaim, and ordered a new trial for damages on the Company's counterclaim. Both SSPC and the Company appealed the state court judge's decision. On December 8, 1998, the Wisconsin Court of Appeals ordered a state court judge to reinstate the jury verdict against the Company awarding damages totaling approximately $4.5 million plus interest to SSPC. The Company intends to petition for review of this decision by the Wisconsin Supreme Court. The outcome of this matter cannot be predicted at the present time. At September 30, 1998, the Company does not have a reserve relating to this matter.
The Company was engaged in the arbitration of certain disputes between the Oshkosh Florida Division and O.V. Containers, Inc. ("OV"), which arose out of the performance of a contract to deliver 690 skeletal container chassis. The Company contested warranty and other claims made against it, and reached a settlement in June 1998, which included payment by the Company of $1 million to OV.
As part of its routine business operations, the Company disposes of and recycles or reclaims certain industrial waste materials, chemicals and solvents at third party disposal and recycling facilities that are licensed by appropriate governmental agencies. In some instances, these facilities have been and may be designated by the United States Environmental Protection Agency ("EPA") or a state environmental agency for remediation. Under Comprehensive Environmental Response, Compensation, and Liability Act (the "Superfund" law or "CERCLA") and similar state laws, each potentially responsible party ("PRP") that contributed hazardous substances may be jointly and severally liable for the costs associated with cleaning up the site. Typically, PRPs negotiate a resolution with the EPA and/or the state environmental agencies. PRPs also negotiate with each other regarding allocation of the cleanup cost.
As to one such Superfund site, Pierce is one of 414 PRPs participating in the costs of addressing the site and has been assigned an allocation share of approximately 0.04%. Currently a remedial investigation/feasibility study is being completed, and as such, an estimate for the total cost of the remediation of this site has not been made to date. However, based on estimates and the assigned allocations, the Company believes its liability at the site will not be material and its share is adequately covered through reserves established by the Company at September 30, 1998. Actual liability could vary based on results of the study, the resources of other PRPs and the Company's final share of liability.
The Company is addressing a regional trichloroethylene ("TCE") groundwater plume on the south side of Oshkosh, Wisconsin. The Company believes there may be multiple sources in the area. TCE was detected at the Company's North Plant facility with recent testing showing the highest concentrations in a monitoring well located on the upgradient property line. Because the investigation process is still ongoing, it is not possible for the Company to estimate its long-term total liability associated with this issue at this time. Also, as part of the regional TCE groundwater investigation, the Company conducted a groundwater investigation of a former landfill
located on Company property. The landfill, acquired by the Company in 1972, is approximately 2.0 acres in size and is believed to have been used for the disposal of household waste. Based on the investigation, the Company does not believe the landfill is one of the sources of the TCE contamination. Based upon current knowledge, the Company believes its liability associated with the TCE issue will not be material and is adequately covered through reserves established by the Company at September 30, 1998. However, this may change as investigations proceed by the Company, other unrelated property owners, and government entities.
The Company is subject to other environmental matters and legal proceedings and claims, including patent, antitrust and state dealership regulation compliance proceedings. Although the final results of all such claims cannot be predicted with certainty, management believes that the ultimate resolution of all claims, after taking into account the liabilities accrued with respect to such claims, will not have a material adverse effect on the Company's financial condition or results of operations. Actual results could vary, among other things, due to the uncertainties involved in litigation.
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended September 30, 1998.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information as of November 15, 1998 concerning the Company's executive officers and other officers. All of the Company's officers serve terms of one year and until their successors are elected and qualified.
Robert G. Bohn. Mr. Bohn joined the Company in 1992 as Vice President-Operations. He was appointed President and Chief Operating Officer in 1994. He was appointed President and Chief Executive Officer in October 1997. Prior to joining the Company, Mr. Bohn was Director-European Operations for Johnson Controls, Inc., Milwaukee, Wisconsin, which manufactures, among other things, automotive products. He worked for Johnson Controls from 1984 until 1992. He was elected a Director of the Company in June 1995.
Timothy M. Dempsey. Mr. Dempsey joined the Company in October 1995 as Vice President, General Counsel and Secretary. Mr. Dempsey has been and continues to be a partner in the law firm of Dempsey, Magnusen, Williamson and Lampe in Oshkosh, Wisconsin.
Paul C. Hollowell. Mr. Hollowell joined the Company in April 1989 as Vice President-Defense Products and assumed his present position in February 1994.
Dan J. Lanzdorf. Mr. Lanzdorf joined the Company in 1973 as a design engineer and has served in various assignments including Chief Engineer -- Defense, Director of Defense Engineering, Director of the Defense Business unit, and Vice President of Manufacturing prior to assuming his current position in September 1998.
John W. Randjelovic. Mr. Randjelovic joined the Company in October 1992 as Vice President and General Manager in charge of the Bradenton, Florida Division. In September 1996, he was appointed Vice President of Manufacturing, Purchasing, and Materials for Pierce and assumed his present position in October 1997.
Charles L. Szews. Mr. Szews joined the Company in March 1996 as Vice President and Chief Financial Officer and assumed his present position in October 1997. Mr. Szews was previously employed by Fort Howard Corporation, a manufacturer of tissue products, from June 1988 until March 1996 in various positions, including Vice President and Controller from September 1994 until March 1996.
Matthew J. Zolnowski. Mr. Zolnowski joined the Company as Vice President-Human Resources in January 1992 and assumed his present position in September 1998.
J. David Brantingham. Mr. Brantingham joined the Company in April 1995 as Manager of Technical Services and assumed his present position in November 1997. Mr. Brantingham was previously employed by Western Publishing, Inc., a printer and publisher of children's books and a manufacturer of adult games, in various positions including Director of Technical Services from May 1989 through April 1995.
Fred C. Fielding. Mr. Fielding joined the Company in October 1989 and assumed his present position in January 1991.
Ted Henson. Mr Henson joined the Company in January 1990 as Contract Specialist and assumed his current position in September 1998. Prior to joining the Company, Mr. Henson served in the U.S. Army, most recently as Brigade Commander Sargent Major.
Mark A. Meaders. Mr. Meaders joined the Company as Director of Purchasing for Pierce in September 1996 and assumed his present position as Vice President-Corporate Purchasing and Logistics in November 1997. Prior to joining the Company, Mr. Meaders was Vice President-Purchasing for the CA Short Co., Inc., a provider of premium incentives, from 1995 until joining Pierce. Mr. Meaders began his career at the Company's former Chassis Division as the plant manager from 1993-1995. He previously served 13 years in the U.S. Army and departed after attaining the rank of Major.
Scott L. Ney. Mr. Ney joined the Company in May 1973 as Credit Manager. He served as Treasurer prior to assuming his present position in September 1998.
Thomas J. Polnaszek. Mr. Polnaszek joined the Company in January 1998 as Corporate Controller and assumed his present position in September 1998. Mr. Polnaszek was previously employed by Wisconsin Pharmacal Company, Inc., a consumer products manufacturer and marketer, from July 1991 to January 1998 as Vice President - Finance and Chief Financial Officer.
Donald H. Verhoff. Mr. Verhoff joined the Company in May 1973 as a development engineer. He has held positions as Manager of the Test Lab, and Director of New Product Development prior to assuming his present position in November 1997.
James D. Voss. Mr. Voss joined the Company in March 1992 as Director of Human Resources. Prior to joining the Company, Mr. Voss was employed by the University of Wisconsin as Human Resource Coordinator. Mr. Voss assumed his present position in September 1998.
PART II
Item 5.
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
The information under the captions "Financial Highlights" and Notes 7 and 12 to the Consolidated Financial Statements contained in the company's Annual Report to Shareholders for the fiscal year ended September 30, 1998, is hereby incorporated by reference in answer to this item.
In July 1995, the company's board of directors authorized the repurchase of up to 1,000,000 shares of Common Stock. As of December 17, 1998, the Company has repurchased 461,535 shares under this program at a cost of $6.6 million.
Item 6.
Item 6. SELECTED FINANCIAL DATA.
The information under the caption "Financial Highlights" contained in the company's Annual Report to Shareholders for the fiscal year ended September 30, 1998, is hereby incorporated by reference in answer to this item.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The information under the caption "Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations" contained in the company's Annual Report to Shareholders for the fiscal year ended September 30, 1998, is hereby incorporated by reference in answer to this item.
Item 7A.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information under the caption "Management's Discussion and Analysis of Consolidated Financial Condition and results of Operation - Market Risk" contained in the company's Annual Report to Shareholders for the fiscal year ended September 30, 1998, is hereby incorporated by reference in answer to this item.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements set forth in the company's Annual Report to Shareholders for the fiscal year ended September 30, 1998, are hereby incorporated by reference in answer to this item. Data regarding quarterly results of operations included in Note 12 to the Consolidated Financial Statements contained in the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1998, is hereby incorporated by reference.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES.
None.
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information under the captions "Election of Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance" of the company's definitive proxy statement for the annual meeting of shareholders on February 1, 1999, as filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item. Reference is also made to the information under the heading "Executive Officers of the Registrant" included under Part I of this report.
Item 11.
Item 11. EXECUTIVE COMPENSATION.
The information under the captions "Executive Compensation" contained in the company's definitive proxy statement for the annual meeting of shareholders on February 1, 1999, as filed with the Securities and Exchange Commission is hereby incorporated by reference in answer to this item.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information under the caption "Shareholdings of Nominees and Principal Shareholders" contained in the company's definitive proxy statement for the annual meeting of shareholders on February 1, 1999, as filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the captions "Election of Directors" and "Certain Transactions" contained in the company's definitive proxy statement for the annual meeting of shareholders on February 1, 1999, as filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements: The following consolidated financial statements of the company and the report of independent auditors included in the Annual Report to Shareholders for the fiscal year ended September 30, 1998, are incorporated by reference in Item 8:
Report of Ernst & Young LLP, Independent Auditors Consolidated Statements of Income (Loss) for the years ended September 30, 1998, 1997, and 1996 Consolidated Balance Sheets at September 30, 1998, and 1997 Consolidated Statements of Shareholders' Equity for the years ended September 30, 1998, 1997, and 1996. Consolidated Statements of Cash Flows for the years ended September 30, 1998, 1997, and 1996 Notes to Consolidated Financial Statements
2.Financial Statement Schedules:
Schedule II - Valuation & Qualifying Accounts
All other schedules are omitted because they are not applicable, or the required information is included in the consolidated financial statements or notes thereto.
3. Exhibits:
2.1 Stock Purchase Agreement by and among McNeilus Companies, Inc., the shareholders of McNeilus Companies, Inc., and Oshkosh Truck Corporation dated December 8, 1997 (incorporated by reference to Exhibit 2.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 (File No. 0-13886)). 2.2 First Amendment to Stock Purchase Agreement dated February 26, 1998, by and among McNeilus Companies, Inc., the shareholders of McNeilus Companies, Inc. and Oshkosh Truck Corporation (incorporated by reference to Exhibit 2.2 to the Company' Current Report on Form 8-K dated February 26, 1998 (File No. 0-13886)). 3.1 Restated Articles of Incorporation of Oshkosh Truck Corporation (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 (File No. 0-13886)). 3.2 By-Laws of Oshkosh Truck Corporation, as amended (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4 (Reg. No. 333-47931)). 4.1 Credit Agreement dated February 26, 1998, among Oshkosh Truck Corporation, Bank of America National Trust and Savings Association, as Agent and as Swing Line Lender, and certain other financial institutions (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 26, 1998 (File No. 0-13886)). 4.2 Indenture dated February 26, 1998, among Oshkosh Truck Corporation, the Subsidiary Guarantors and Firstar Trust Company (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated February 26, 1998 (File No. 0-13886)). 4.3 Form of 8 3/4% Senior Subordinated Note due 2008 (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-4 (Reg. No. 333-47931)). 4.4 Form of Note Guarantee (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-4 (Reg. No. 333-47931)). 10.1 1990 Incentive Stock Plan for Key Employees, as amended, subject to shareholder approval at the Company's 1999 Annual Meeting of Shareholders.*
10.2 1994 Long-Term Incentive Compensation Plan dated March 29, 1994 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended September 30, 1994) (File No. 0-13886)).* 10.3 Form of Key Employees Employment and Severance Agreement with Messrs. R.G. Bohn, T.M. Dempsey, P.C. Hollowell, C.L. Szews, and M.J. Zolnowski (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended September 30, 1994 (File No. 0-13886)).* 10.4 Employment Agreement with P.C. Hollowell, Executive Vice President (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 (File No. 0-13886)).* 10.5 Form of Oshkosh Truck Corporation 1990 Incentive Stock Plan, as amended, Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (Reg. No. 33-6287)).* 10.6 Form of Oshkosh Truck Corporation 1990 Incentive Stock Plan, as amended, Nonqualified Director Stock Option Agreement (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (Reg. No. 33-6287)).* 10.7 Form of 1994 Long-Term Incentive Compensation Plan Award Agreement (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 (File No. 0-13886)).* 10.8 Stock Purchase Agreement, dated April 26, 1996, among Oshkosh Truck Corporation, J. Peter Mosling, Jr. and Stephen P. Mosling, and consented to by R. Eugene Goodson (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended September 30, 1996 (File No. 0-13886)). 10.9 Employment Agreement dated as of October 15, 1998, between Oshkosh Truck Corporation and Robert G. Bohn.* 10.10 Letter Agreement dated as of June 5, 1998, between Oshkosh Truck Corporation and R. Eugene Goodson.* 10.11 Employment Agreement with R. E. Goodson as of April 16, 1992 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 1992 (File No. 0-13886)).* 11. Computation of per share earnings (contained in Note 1 of "Notes to Consolidated Financial Statements" of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1998). 13. 1998 Annual Report to Shareholders, to the extent incorporated herein by reference. 21. Subsidiaries of Registrant. 23. Consent of Ernst & Young LLP 27. Financial Data Schedule
*Denotes a management contract or compensatory plan or arrangement.
(b) The company was not required to file a report on Form 8-K during the quarter ended September 30, 1998.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OSHKOSH TRUCK CORPORATION
December 17, 1998 By /S/ Robert G. Bohn ------------------------------------------ Robert G. Bohn, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.
December 17, 1998 /S/ R. G. Bohn ---------------------------------------------- R. G. Bohn, President and Chief Executive Officer
(Principal Executive Officer)
December 17, 1998 /S/ C. L. Szews ------------------------------------------------------ C. L. Szews, Executive Vice President and Chief Financial Officer (Principal Financial Officer)
December 17, 1998 /S/ T. J. Polnaszek ------------------------------------------------------ T. J. Polnaszek, Vice President and Controller (Principal Accounting Officer)
December 17, 1998 /S/ J. W. Andersen ------------------------------------------------------ J. W. Andersen, Director
December 17, 1998 /S/ D. T. Carroll ------------------------------------------------------ D. T. Carroll, Chairman
December 17, 1998 /S/ General F. M. Franks, Jr. ------------------------------------------------------ General F. M. Franks, Jr., Director
December 17, 1998 /S/ M. W. Grebe ------------------------------------------------------ M. W. Grebe, Director
December 17, 1998 /S/ K. J. Hempel ------------------------------------------------------ K. J. Hempel, Director
December 17, 1998 /S/ S. P. Mosling ------------------------------------------------------ S. P. Mosling, Director
December 17, 1998 /S/ J. P. Mosling, Jr. ------------------------------------------------------ J. P. Mosling, Jr., Director
December 17, 1998 /S/ R. G. Sim ------------------------------------------------------ R. G. Sim, Director
SCHEDULE II
OSHKOSH TRUCK CORPORATION VALUATION AND QUALIFYING ACCOUNTS
* Represents amounts written off to the reserve, net of recoveries.
INDEX TO EXHIBITS
3. Exhibits:
2.1 Stock Purchase Agreement by and among McNeilus Companies, Inc., the shareholders of McNeilus Companies, Inc., and Oshkosh Truck Corporation dated December 8, 1997 (incorporated by reference to Exhibit 2.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 (File No. 0-13886)). 2.2 First Amendment to Stock Purchase Agreement dated February 26, 1998, by and among McNeilus Companies, Inc., the shareholders of McNeilus Companies, Inc. and Oshkosh Truck Corporation (incorporated by reference to Exhibit 2.2 to the Company' Current Report on Form 8-K dated February 26, 1998 (File No. 0-13886)). 3.1 Restated Articles of Incorporation of Oshkosh Truck Corporation (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 (File No. 0-13886)). 3.2 By-Laws of Oshkosh Truck Corporation, as amended (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-4 (Reg. No. 333-47931)). 4.1 Credit Agreement dated February 26, 1998, among Oshkosh Truck Corporation, Bank of America National Trust and Savings Association, as Agent and as Swing Line Lender, and certain other financial institutions (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated February 26, 1998 (File No. 0-13886)). 4.2 Indenture dated February 26, 1998, among Oshkosh Truck Corporation, the Subsidiary Guarantors and Firstar Trust Company (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated February 26, 1998 (File No. 0-13886)). 4.3 Form of 8 3/4% Senior Subordinated Note due 2008 (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-4 (Reg. No. 333-47931)). 4.4 Form of Note Guarantee (incorporated by reference to Exhibit 4.4 to the Company's Registration Statement on Form S-4 (Reg. No. 333-47931)). 10.1 1990 Incentive Stock Plan for Key Employees, as amended, subject to shareholder approval at the Company's 1999 Annual Meeting of Shareholders.* 10.2 1994 Long-Term Incentive Compensation Plan dated March 29, 1994 (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended September 30, 1994) (File No. 0-13886)).* 10.3 Form of Key Employees Employment and Severance Agreement with Messrs. R.G. Bohn, T.M. Dempsey, P.C. Hollowell, C.L. Szews, and M.J. Zolnowski (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended September 30, 1994 (File No. 0-13886)).* 10.4 Employment Agreement with P.C. Hollowell, Executive Vice President (incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended September 30, 1997 (File No. 0-13886)).* 10.5 Form of Oshkosh Truck Corporation 1990 Incentive Stock Plan, as amended, Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (Reg. No. 33-6287)).* 10.6 Form of Oshkosh Truck Corporation 1990 Incentive Stock Plan, as amended, Nonqualified Director Stock Option Agreement (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (Reg. No.33-6287)).* 10.7 Form of 1994 Long-Term Incentive Compensation Plan Award Agreement (incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 (File No. 0-13886)).*
10.8 Stock Purchase Agreement, dated April 26, 1996, among Oshkosh Truck Corporation, J. Peter Mosling, Jr. and Stephen P. Mosling, and consented to by R. Eugene Goodson (incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended September 30, 1996 (File No. 0-13886)). 10.9 Employment Agreement dated as of October 15, 1998, between Oshkosh Truck Corporation and Robert G. Bohn.* 10.10 Letter Agreement dated as of June 5, 1998, between Oshkosh Truck Corporation and R. Eugene Goodson.* 10.11 Employment Agreement with R. E. Goodson as of April; 16, 1992 (incorporated by reference to the Company's Annual Report on Form 10-K for the year ended September 30, 1992 (File No. 0-13886)).* 11. Computation of per share earnings (contained in Note 1 of "Notes to Consolidated Financial Statements" of the Company's Annual Report to Shareholders for the fiscal year ended September 30, 1998). 13. 1998 Annual Report to Shareholders, to the extent incorporated herein by reference. 21. Subsidiaries of Registrant. 23. Consent of Ernst & Young LLP 27. Financial Data Schedule
*Denotes a management contract or compensatory plan or arrangement.