SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

 
Date of Report (Date of earliest event reported):    April 28, 2011
 
Oshkosh Corporation
(Exact name of registrant as specified in its charter)

Wisconsin	 	1-31371	 	39-0520270	
(State or other
jurisdiction of
incorporation)	 	(Commission File
Number)	 	(IRS Employer
Identification No.)	
 
P.O. Box 2566, Oshkosh, Wisconsin 54903
(Address of principal executive offices, including zip code)
 
(920) 235-9151
(Registrant’s telephone number)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
Item 2.02 .                        Results of Operations and Financial Condition .
 
On April 28, 2011, Oshkosh Corporation (the “Company”) issued a press release (the “Press Release”) announcing its earnings for its second fiscal quarter ended March 31, 2011. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.
 
On April 28, 2011, the Company held a conference call in connection with the Company’s announcement of its earnings for its second fiscal quarter ended March 31, 2011. A copy of the script (the “Script”) for such conference call is furnished as Exhibit 99.2 and is incorporated by reference herein. An audio replay of such conference call and the related question and answer session will be available for at least twelve months on the Company’s website at www.oshkoshcorporation.com.
 
The information, including, without limitation, all forward-looking statements, contained in the Press Release, the Script and related slide presentation on the Company’s website (the “Slide Presentation”) or provided in the conference call and related question and answer session speaks only as of April 28, 2011. The Company assumes no obligation, and disclaims any obligation, to update information contained in the Press Release, the Script and the Slide Presentation or provided in the conference call and related question and answer session. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.
 
The Press Release, the Script and the Slide Presentation contain, and representatives of the Company made, during the conference call and the related question and answer session, statements that the 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 the Press Release, the Script and the Slide Presentation or made during the conference call and related question and answer session, 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, plans and objectives of management for future operations, and compliance with credit agreement covenants are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan,” or the negative thereof or variations thereon or similar terminology. The Company cannot provide any assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, without limitation, those set forth under the caption “Risk Factors” below. Additional information concerning 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’s filings with the Securities and Exchange Commission.
 
In this Current Report on Form 8-K, “we,” “us” or “our” refers to Oshkosh Corporation.
 
RISK FACTORS
 
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.
 
The high levels of sales in our defense business 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, and we cannot predict how long these conflicts will last or the demand for our products that will arise out of such events. Accordingly, we cannot provide any assurance that the increased defense business as a result of these conflicts will continue. Furthermore, our defense business may fluctuate significantly from time to time as a result of the start and completion of new contract awards that we may receive, such as the MRAP-All Terrain Vehicle (“M-ATV”) and Family of Medium Tactical Vehicles (“FMTV”) contracts. In addition, current economic conditions have put significant pressure on the U.S. federal budget, including the defense budget. Specifically, the President’s recently-approved defense budget for fiscal 2011 and the budget request for fiscal 2012 each include significantly lower funding for purchases of new military vehicles that we manufacture under our Family of Heavy Tactical Vehicles (“FHTV”) contract than in prior years. Moreover, the level of U.S. military involvement in Iraq has been significantly reduced and uncertainty exists regarding the future level of U.S. military involvement in Afghanistan and the level of defense funding that will be
 
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allocated to support U.S. military involvement in Iraq and Afghanistan. The magnitude of the adverse impact that federal budget pressures, future defense funding for U.S. military involvement in Iraq and Afghanistan and an uncertain United States Department of Defense (“DoD”) tactical wheeled vehicle strategy will have on funding for Oshkosh defense programs is uncertain, but directionally, we expect such funding to decline.
 
The decline compared to historical levels in overall customer demand in our access equipment, commercial and fire & emergency markets that we have experienced to date and any further decline could have a material adverse effect on our operating performance. The access equipment market that JLG operates in is highly cyclical and impacted by the strength of economies in general, by prevailing mortgage and other interest rates, 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 prevailing mortgage and other interest rates, by the number of housing starts and by other factors that may have an effect on the level of concrete placement activity, either regionally or nationally. Refuse collection vehicle markets are less 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 also cyclical later in an economic downturn and are impacted by the economy generally and 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 our sales volumes for our access equipment, commercial and fire & emergency products as compared to historical levels. 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 non-residential construction spending or continued low levels of construction activity generally may cause future weakness in demand for our products. Furthermore, municipal tax revenues have weakened, which has impacted demand for fire apparatus. The towing and recovery equipment market is also being negatively impacted by the global economy and tight credit 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 our or market expectations. If the global economic weakness and tight credit markets continue or become more severe, or if any economic recovery progresses more slowly than our or market expectations, then there could be a material adverse effect on our net sales, financial condition, profitability and/or cash flows.
 
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.
 
We are dependent on U.S. and foreign government contracts for a substantial portion of our business. That business is subject to the following risks, among others, that could have a material adverse effect on our operating performance:
 
·            Our business is susceptible to changes in the U.S. defense budget, which may reduce revenues that we expect from our defense business, especially in light of federal budget pressures in part caused by U.S. economic weakness and the uncertainty that exists regarding the future level of U.S. military involvement in Iraq and Afghanistan and the related level of defense funding that will be allocated to support this involvement and the DoD’s tactical wheeled vehicle strategy.
 
·            The U.S. government may not appropriate funding that we expect for our U.S. government contracts, which may prevent us from realizing revenues under current contracts or receiving additional orders that we anticipate we will receive, including anticipated orders that we took into account when we determined our outlook for the remainder of fiscal 2011.
 
·            Certain of our government contracts for the U.S. Army and U.S. Marines could be suspended, 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. Specifically, during the second quarter of fiscal 2011, we received a stop work order from the U.S.
 
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government related to our previous award for 250 M-ATV ambulances. The U.S. government issued the stop work order in connection with its investigation of other options for delivery of ambulances to the theater. During the duration of the stop work order, we have worked, and we intend to continue to work, at our own expense to further refine this product to better meet the needs of our customer. If the U.S. government does not lift the stop work order or rescinds this award, we will not be able to recover amounts that we expend on this program during the duration of the stop work order.
 
·            The current U.S. Administration has indicated that it supports increased competition for existing defense programs. The Weapon Systems Acquisition Reform Act also requires competition for defense programs in certain circumstances. Accordingly, it is possible that there will be competition for any M-ATV orders for units above the 10,000 unit ceiling in the initial contract award. Also, 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. Our FHTV contract is scheduled to expire in September 2011, and we expect our vehicle deliveries under this contract to continue through October 2012. The U.S. Army has announced its intention to award a bridge contract for the FHTV program to us under which we would continue producing FHTVs while the U.S. Army develops a path to conduct an open competition for the next contract relating to this program in 2013. The bridge contract would likely include the purchase of the design rights to our vehicles under this contract so that the U.S. Army could compete the program. The U.S. Army may decide to forgo the issuance of this bridge contract, which may prevent us from realizing these revenues. Likewise, the U.S. Army and Marine Corps have inquired about purchasing the design rights to the M-ATV and Medium Tactical Vehicle Replacement (“MTVR”) that we produce, respectively. Competition for these and other DoD programs 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.
 
·            Defense truck contract awards that we receive may be subject to protests by competing bidders, which protests, if successful, could result in the DoD revoking part or all of any defense truck contract it awards to us and our inability to recover amounts we have expended in anticipation of initiating production under any such contract.
 
·            Most of our government contracts, including the FMTV contract, are fixed-price contracts with price escalation factors included for those contracts that extend beyond one year. Our actual costs on any of these contracts may exceed our projected costs, which could result in profits lower than historically realized or than we anticipate or net losses under these contracts. In addition, if the timing and size of orders received from the U.S. government differ significantly from the assumptions that we used to price the contract, we may incur unanticipated start-up costs or expend more capital to start up production under the contract, and we may not benefit as we expected from contractual price increases, which could also result in lower than anticipated margins or net losses under these contracts. In particular, we bid the FMTV program at very aggressive margins. We have received orders to date under this program significantly in excess of the quantities that bidders were asked to use to prepare their pricing for this program in the original request for proposal. While the timing and extent of FMTV orders have created opportunities to leverage higher orders to reduce our material costs, they have adversely impacted start-up manufacturing costs under the contract and product pricing relative to what we had originally anticipated as we do not benefit from price escalation factors. In addition, the higher order rate for FMTVs has caused us to devote more attention to increasing our FMTV production capacity, which has delayed our focus on reducing manufacturing costs as compared to our original plans. Collectively, these items have caused us to incur losses under the FMTV program to date and we expect to also incur losses in the third and fourth quarters of fiscal 2011. Although we expect sales for the FMTV contract beyond fiscal 2011 to be profitable, this expectation is based on certain assumptions, including estimates for future increases in the costs of raw materials, targeted cost savings and 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 $21 million. Although this amount is less than the expected future profitability, it would significantly reduce the expected future gross margins on orders received to date. It is possible that 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.
 
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·            We are required to 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.
 
·            Competitions for the award of defense truck contracts are intense, and we cannot provide any assurance that we will be successful in the defense truck procurement competitions in which we participate.
 
·            Our defense products undergo rigorous testing by the customer and are subject to highly technical requirements. Any failure to pass these tests or to comply with these requirements could result in unanticipated retrofit costs, delayed acceptance of vehicles, late or no payments under such contracts or cancellation of the contract to provide vehicles to the government. The U.S. government is currently testing our initial FMTV units. Any failure to pass FMTV contract testing could subject us to these risks.
 
·            Our government contracts are subject to audit, which could result in adjustments of our costs and prices under these contracts.
 
·            Our defense truck contracts are large in size and require significant personnel and production resources, and when such contracts end, we must make adjustments to personnel and production resources. In particular, orders for FMTVs are requiring substantial personnel and production resources to enable us to maintain the production levels required to meet the delivery requirements for such orders, while we expect our FHTV production quantities and required personnel and production resources to decline.
 
·     We have historically received payments in advance of product deliveries, or performance-based payments (“PBP”), on a number of our government contracts. In the event that we are not able to meet contractual delivery requirements on these contracts, the government may discontinue providing PBPs. Specifically, our government customer is not currently providing PBPs on the FMTV program as we have not met its contractual delivery requirements. If we are unable to improve our deliveries or reach agreement with our customer on a revised delivery schedule, we may not receive future PBPs under the FMTV program, which could have an adverse effect on our debt levels and cause us to incur higher interest rates on our outstanding debt.
 
·            We periodically experience difficulties with sourcing sufficient vehicle carcasses to maintain our defense truck remanufacturing schedule, which can create uncertainty and inefficiencies for this area of our business.
 
An impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect our operating results.
 
We have a substantial amount of goodwill and purchased intangible assets on our balance sheet as a result of acquisitions we have completed. Approximately 88% of these intangibles are concentrated in the access equipment segment. The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of indefinite-lived intangible assets represents the fair value of trademarks and trade names as of the acquisition date. Goodwill and indefinite-lived intangible assets that we expect to contribute indefinitely to our cash flows are not amortized, but instead we evaluate these assets for impairment at least annually, or more frequently if potential interim indicators exist that could result in impairment. In testing for impairment, if the carrying value of a reporting unit exceeds its current fair value as determined based on the discounted future cash flows of the reporting unit and market comparable sales and earnings multiples, the goodwill or intangible asset is considered impaired and is reduced to fair value via a non-cash charge to earnings. Events and conditions that could result in impairment include a prolonged period of global economic weakness and tight credit markets, further decline in economic conditions or a slow, weak economic recovery, as well as sustained declines in the price of our common stock, adverse changes in the regulatory environment, adverse changes in interest rates, or other factors leading to reductions in the long-term sales or profitability that we expect. Determination of the fair value of a reporting unit includes developing estimates which are highly subjective and incorporate calculations that are sensitive to minor changes in underlying assumptions. Management’s assumptions change as more information becomes available. Changes in these assumptions could result in an impairment charge in the future, which could have a significant adverse impact on our reported earnings.
 
Our current debt levels, including the associated financing costs and restrictive covenants, could limit our flexibility in managing our business and increase our vulnerability to general adverse economic and industry conditions.
 
Our credit agreement contains financial and restrictive covenants which, among other things, require us to satisfy quarter-end financial ratios, including a leverage ratio, a senior secured leverage ratio and an interest
 
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coverage ratio. Our ability to meet the financial ratios in such covenants may be affected by a number of risks or events, including the risks described in this Current Report on Form 8-K and events beyond our control. The indenture governing our senior notes also contains restrictive covenants. Any failure by us to comply with these restrictive covenants or the financial and restrictive covenants in our credit agreement could have a material adverse effect on our financial condition, results of operations and debt service capability.
 
Our access to debt financing at competitive risk-based interest rates is partly a function of our credit ratings. Our current long-term debt ratings are BB with “stable” outlook from Standard & Poor’s Rating Services and Ba3 with “stable” outlook from Moody’s Investors Service. A downgrade to our credit ratings could increase our interest rates, could limit our access to public debt markets, could limit the institutions willing to provide us credit facilities, and could make any future credit facilities or credit facility amendments more costly and/or difficult to obtain.
 
We had approximately $1.1 billion of debt outstanding as of March 31, 2011, which consisted primarily of $50 million drawn under our revolving credit facility maturing in October 2015, a $585 million term loan under our credit agreement maturing in October 2015 and $500 million of senior notes, $250 million of which mature in March 2017 and $250 million of which mature in March 2020. Our ability to make required payments of principal and interest on our debt will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, political and other factors, some of which are beyond our control. While we experienced strong earnings and significant debt reduction during fiscal 2010 due largely to M-ATV contract sales in the defense segment, fiscal 2011 is a transition year for us in which we expect to replace fiscal 2010 high volume production of M-ATVs with the gradual increase in production of FMTVs at what we expect to be low single digit negative margins through our fiscal 2011. As we discuss above, our dependency on contracts with U.S. and foreign government agencies, such as the FMTV contract, subjects us to a variety of risks that, if realized, could materially reduce our revenues, profits and cash flows. In addition, among other risks that we face that could affect our revenues, profits and cash flows, current continued weak economic conditions and tight credit markets could become more severe or prolonged. Accordingly, conditions could arise that could limit our ability to generate sufficient cash flows or access borrowings to enable us to fund our liquidity needs, further limit our financial flexibility or impair our ability to obtain alternative financing sufficient to repay our debt at maturity.
 
The covenants in our credit agreement and the indenture governing our senior notes, our credit rating, our current debt levels and the current credit market conditions could have important consequences for our operations, including:
 
·            Render us more vulnerable to general adverse economic and industry conditions in our highly cyclical markets or economies generally;
 
·            Require us to dedicate a substantial portion of our cash flow from operations to higher interest costs or higher required payments on debt, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, research and development, dividends and other general corporate activities;
 
·            Limit our ability to obtain additional financing in the future to fund growth working capital, capital expenditures, new product development expenses and other general corporate requirements;
 
·            Limit our ability to enter into additional foreign currency and interest rate derivative contracts;
 
·            Make us vulnerable to increases in interest rates as a portion of our debt under our credit agreement is at variable rates;
 
·            Limit our flexibility in planning for, or reacting to, changes in our business and the markets we serve;
 
·            Place us at a competitive disadvantage compared to less leveraged competitors; and
 
·            Limit our ability to pursue strategic acquisitions that may become available in our markets or otherwise capitalize on business opportunities if we had additional borrowing capacity.
 
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Raw material price fluctuations may adversely affect our results.
 
We purchase, directly and indirectly through component purchases, significant amounts of steel, petroleum based products and other raw materials annually. Steel, fuel and other commodity prices have historically been highly volatile. Commodity costs have risen significantly over the past several months, and there are indications that these costs may increase further due to one or more of the following: a sustained economic recovery, political unrest in certain countries or a weakening U.S. dollar. Increases in commodity costs negatively impact the profitability of orders in backlog as prices on those orders are usually fixed. Furthermore, we largely do business in the defense segment under annual firm, fixed-price contracts with the DoD. We attempt to limit this risk in the defense segment by obtaining firm pricing from suppliers at the time a contract is awarded. However, if these suppliers do not honor their contracts, then we could face margin pressure in our defense business. If we are not able to recover commodity cost increases through price increases to our customers on new orders, then such increases will have an adverse effect on our results of operations. Additionally, if we are unable to negotiate timely component cost decreases commensurate with any commodity decreases, then such decreases will have an adverse effect on our results of operations.
 
We expect to incur costs and charges as a result of measures such as facilities and operations consolidations and workforce reductions that we intend will reduce costs, and those measures also may be disruptive to our business and may not result in anticipated cost savings.
 
We have been consolidating facilities and operations in an effort to make our business more efficient. For example, we closed two JerrDan facilities and integrated JerrDan operations into existing JLG production facilities during the fourth quarter of fiscal 2010, we closed a facility and integrated our mobile medical business into our Clearwater, Florida operations during the first quarter of fiscal 2011, and we recently moved manufacturing production of our Medtec ambulances to our Bradenton, Florida operations. We recently concluded a consultation and information procedure regarding possible facility consolidations for JLG manufacturing in Europe in a manner that permits such consolidations. Also during the first quarter of fiscal 2011, we announced workforce reductions and other cost reduction measures in our fire & emergency and commercial segments. 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, which 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.
 
We may experience losses in excess of our recorded reserves for doubtful accounts, finance receivables, notes receivable and guarantees of indebtedness of others.
 
As of March 31, 2011, we had consolidated gross receivables of $853.9 million. In addition, we were a party to agreements in the access equipment segment whereby we have maximum exposure of $64.2 million under guarantees of customer indebtedness to third parties aggregating approximately $194.3 million. We evaluate the collectability of open accounts, finance receivables, notes receivable and our guarantees of indebtedness of others based on a combination of factors and establish reserves based on our estimates of potential losses. In circumstances where we believe it is probable that a specific customer will have difficulty meeting its financial obligations, a specific reserve is recorded to reduce the net recognized receivable to the amount we expect to collect, and/or we recognize a liability for a guarantee we expect to pay, taking into account any amounts that we would anticipate realizing if we are forced to repossess the equipment that supports the customer’s financial obligations to us. We also establish additional reserves based upon our perception of the quality of the current receivables, the current financial position of our customers and past collections experience. Continued economic weakness and tight credit markets may result in additional requirements for specific reserves. During periods of economic weakness, the collateral underlying our guarantees of indebtedness of customers or receivables can decline sharply, thereby increasing our exposure to losses. We also face a concentration of credit risk as JLG’s ten largest debtors at March 31, 2011 represented approximately 23% of our consolidated gross receivables. Some of these customers are highly leveraged. In the future, we may incur losses in excess of our recorded reserves if the financial condition of our
 
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customers were to deteriorate further or the full amount of any anticipated proceeds from the sale of the collateral supporting our customers’ financial obligations is not realized. Our cash flows and overall liquidity may be materially adversely affected if any of the financial institutions that finance our customer receivables become unable or unwilling, due to current economic conditions, a weakening of our or their financial position or otherwise, to continue providing such credit.
 
Systemic failures that the customer may identify could exceed recorded reserves or negatively affect our ability to win future business with the DoD or other foreign military customers.
 
As a result of the accelerated timetable from product design to full-scale production, the accelerated production schedule and limited field testing under the M-ATV contract and our ramp up to full-scale production of FMTVs, these vehicles could encounter systemic failures during fielding and use of the vehicles for which we may have responsibility if they occur. Additionally, we did not design the FMTV portfolio of trucks and trailers, and the design for this portfolio includes requirements that have caused us to implement manufacturing processes that we have not used extensively under previous contracts. If we do not implement these manufacturing processes correctly, then there could be systemic failures for which we would have responsibility. We have established reserves for the estimated cost of such systemic-type repairs based upon historical warranty rates of other defense programs in which we participate. If systemic issues arise, rectification costs could be in excess of the established reserves. If the DoD identifies systemic issues, this situation could impact our ability to win future business with the DoD or other foreign military customers, which would adversely affect our future earnings and cash flows.
 
A disruption or termination of the supply of parts, materials, components and final assemblies from third-party suppliers could delay sales of our vehicles and vehicle bodies.
 
We have experienced, and may in the future experience, significant disruption or termination of the supply of some of our parts, materials, components and final assemblies that we obtain from sole source suppliers or subcontractors. We may also incur a significant increase in the cost of these parts, materials, components or final assemblies. These risks are increased in a weak economic environment with tight credit conditions and when demand increases coming out of an economic downturn. Such disruptions, terminations or cost increases could delay sales of our vehicles and vehicle bodies and could result in a material adverse effect on our net sales, financial condition, profitability and/or cash flows. These risks are particularly serious with respect to our suppliers who participate in the automotive industry, from whom we obtain a significant portion of our parts, materials, components and final assemblies.
 
During the second quarter of fiscal 2011, Japan suffered a catastrophic earthquake and ensuing tsunami which severely damaged the infrastructure in that country, including roads, ports and other transportation networks, power generation and distribution facilities and other industrial facilities in a large swath of Northeastern Japan. Many industrial plants in the area, including facilities of a limited number of our suppliers, have been forced to operate at reduced levels. Our suppliers in Japan are currently making damage assessments, and it is too early to accurately gauge the likely extent and duration of any possible disruption to their operations. It is possible that spreading radiation from damaged nuclear power generation facilities could cause further portions of Japan to close operations and impact other of our suppliers. There can be no assurance that we will not face disruptions to our supply chain as a result of the conditions in Japan. Any significant or extended disruptions to our supply chain could have a material adverse affect on our business and results of operations.
 
Our objective is to expand international operations, the conduct of which subjects us to risks that may have a material adverse effect on our business.
 
Expanding international sales is a part of our growth strategy. Our outlook depends in part upon increases in international orders and sales that may not materialize. International operations and sales are subject to various risks, including political, religious and economic instability, local labor market conditions, the imposition of foreign tariffs and other trade barriers, the impact of foreign government regulations and the effects of income and withholding taxes, governmental expropriation and differences in business practices. We may incur increased costs and experience delays or disruptions in product deliveries and payments in connection with international manufacturing and sales that could cause loss of revenues and earnings. In addition, expansion into foreign markets requires the establishment of distribution networks and may require modification of products to meet local
 
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requirements or preferences. Establishment of distribution networks or modification to the design of our products to meet local requirements and preferences may take longer or be more costly than we anticipate and could have a material adverse effect on our ability to achieve international sales growth.
 
As a result of our international operations and sales, we are subject to the Foreign Corrupt Practice Act (“FCPA”) and other laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business. Our international activities create the risk of unauthorized payments or offers of payments in violation of the FCPA by one of our employees, consultants, sales agents or distributors, because these parties are not always subject to our control. Any violations of the FCPA could result in significant fines, criminal sanctions against us or our employees, and prohibitions on the conduct of our business, including our business with the U.S. government. We are also increasingly subject to export control regulations, including, without limitation, the United States Export Administration Regulations and the International Traffic in Arms Regulations. Unfavorable changes in the political, regulatory and business climate could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows.
 
We are subject to fluctuations in exchange rates associated with our non-U.S. operations that could adversely affect our results of operations and may significantly affect the comparability of our results between financial periods.
 
For the fiscal year ended September 30, 2010, approximately 10% of our net sales were attributable to products sold outside of the United States, including approximately 8% that involved export sales from the United States. The majority of export sales are denominated in U.S. dollars. Sales outside the United States are typically made in the local currencies of those countries. Fluctuations in foreign currency can have an adverse impact on our sales and profits as amounts that are measured in foreign currency are translated back to U.S. dollars. We have sales of inventory denominated in U.S. dollars to certain of our subsidiaries that have functional currencies other than the U.S. dollar. The exchange rates between many of these currencies and the U.S. dollar have fluctuated significantly in recent years and may fluctuate significantly in the future. Such fluctuations, in particular those with respect to the Euro, the Chinese Renminbi, the Canadian dollar and the Australian dollar, may have a material effect on our net sales, financial condition, profitability and/or cash flows and may significantly affect the comparability of our results between financial periods. Any appreciation in the value of the U.S. dollar in relation to the value of the local currency will adversely affect our revenues from our foreign operations when translated into U.S. dollars. Similarly, any appreciation in the value of the U.S. dollar in relation to the value of the local currency of those countries where our products are sold will increase our costs in our foreign operations, to the extent such costs are payable in foreign currency, when translated into U.S. dollars.
 
Work stoppages and other labor matters could adversely affect our business.
 
As of September 30, 2010, we employed approximately 12,400 people worldwide, including approximately 11,000 employees in the U.S. Approximately 27% of our employees in the U.S. are represented by labor unions, the largest of which is the United Auto Workers union (“UAW”) in our defense segment, and we expect to hire additional employees in our defense segment in connection with the ramp up of FMTV production in fiscal 2011. Our five-year agreement with the UAW expires in September 2011. In September 2010, we approached the UAW with an offer to extend the current contract for one year, until September 2012, under terms similar to the current agreement. The UAW rejected our offer, and we have not engaged in any further discussions regarding the extension. If we do not reach an agreement with the UAW prior to the expiration of the current contract, we could experience a work stoppage at certain of our defense manufacturing facilities. Outside of the U.S., we enter into employment contracts and collective agreements in those countries in which such relationships are mandatory or customary. The provisions of these agreements correspond in each case with the required or customary terms in the subject jurisdiction. While we do not believe that work stoppages or other labor matters will impact us, we cannot provide any assurance that future issues with our labor unions will be resolved favorably or that we will not encounter future strikes or other types of conflicts with labor unions or our employees, particularly as we take steps to optimize our manufacturing footprint. Any of these factors may have an adverse effect on us or may limit our flexibility in dealing with our workforce.
 
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Disruptions or cost overruns in our global enterprise system implementation could affect our operations.
 
During the fourth quarter of fiscal 2010, we launched a multi-year project to implement a global enterprise resource planning system to replace many of our existing operating and financial systems. Such an implementation is a major undertaking, both financially and from a management and personnel perspective. Should the system not be implemented successfully and within budget, or if the system does not perform in a satisfactory manner, it could disrupt and might adversely affect our operations and results of operations, including our ability, among other things, to timely manufacture products for sale to our customers and to report accurate and timely financial results.
 
Changes in regulations could adversely affect our business.
 
Both our products and the operation of our manufacturing facilities are subject to statutory and regulatory requirements. These include environmental requirements applicable to manufacturing and vehicle emissions, government contracting regulations and domestic and international trade regulations. A significant change to these regulatory requirements could substantially increase manufacturing costs or impact the size or timing of demand for our products, all of which could make our business results more variable.
 
In particular, climate change is receiving increasing attention worldwide. Many scientists, legislators and others attribute climate change to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. Congress has previously considered and may in the future implement 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 reduction programs. Our manufacturing plants use energy, including electricity and natural gas, and certain of our plants emit amounts of greenhouse gas that may be affected 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 offset our own emissions or result in an overall increase in our costs of raw materials, any one of which could increase our costs, reduce our competitiveness in a global economy or otherwise negatively affect our business, operations or financial results. While additional regulation of emissions in the future appears likely, it is too early to predict how this regulation will ultimately affect our business, operations or financial results.
 
Disruptions within our dealer network could adversely affect our business.
 
Although we sell the majority of our products directly to the end user, we market, sell and service products through a network of independent dealers in the fire & emergency segment and in a limited number of markets for the access equipment and commercial segments. As a result, our business with respect to these products is influenced by our ability to establish and manage new and existing relationships with dealers. While we have relatively low turnover of dealers, from time to time, we or a dealer may choose to terminate the relationship as a result of difficulties that our independent dealers experience in operating their businesses due to economic conditions or other factors, or as a result of an alleged failure by us or an independent dealer to comply with the terms of our dealer agreement. We do not believe our business is dependent on any single dealer, the loss of which would have a sustained material adverse effect upon our business. However, disruption of dealer coverage within a specific state or other geographic market could cause difficulties in marketing, selling or servicing our products and have an adverse effect on our business, operating results or financial condition.
 
In addition, our ability to terminate our relationship with a dealer is limited due to state dealer laws, which generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with required notices. Under many state laws, dealers may protest termination notices or petition for relief from termination actions. Responding to these protests and petitions may cause us to incur costs and, in some instances, could lead to litigation resulting in lost opportunities with other dealers or lost sales opportunities, which may have an adverse effect on our business, operating results or financial condition.
 
10 

 
Item 9.01 .                     F inancial Statements and Exhibits .
 
(a)                       Not applicable.
 
(b)                      Not applicable.
 
(c)                       Not applicable.
 
(d)                      Exhibits . The following exhibits are being furnished herewith:
 
(99.1)                     Oshkosh Corporation Press Release dated April 28, 2011.
 
(99.2)                     Script for conference call held April 28, 2011.
 
11 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	OSHKOSH CORPORATION	

Date: April 28, 2011	By:	/S/ David M. Sagehorn	
 	 	David M. Sagehorn	
 	 	Executive Vice President and	
 	 	Chief Financial Officer	
 
12 

 
OSHKOSH CORPORATION
 
Exhibit Index to Current Report on Form 8-K
Dated April 28, 2011

Exhibit	 	 	
Number	 	 	
 	 	 	
(99.1)	 	Oshkosh Corporation Press Release dated April 28, 2011.	
 	 	 	
(99.2)	 	Script for conference call held April 28, 2011.	
 
13 

Exhibit 99.1

 
OSHKOSH CORPORATION
 
FOR IMMEDIATE RELEASE

For more information, contact:	 	
Financial:	Patrick Davidson	
 	Vice President, Investor Relations	
 	920.966.5939	
 	 	
Media:	John Daggett	
 	Vice President, Communications	
 	920.233.9247	
 
OSHKOSH CORPORATION REPORTS RESULTS FOR
FISCAL 2011 SECOND QUARTER
 
Second Quarter EPS of $0.74 Compared to
Prior Year EPS of $3.22
 
Repaid $50 Million of Debt
 
OSHKOSH, WI — (April 28, 2011) — Oshkosh Corporation (NYSE: OSK), a leading manufacturer of specialty vehicles and vehicle bodies, today reported fiscal 2011 second quarter net sales of $1.75 billion and net income attributable to Oshkosh Corporation of $67.9 million, or $0.74 per share. This compares with net sales of $2.86 billion and net income of $292.6 million, or $3.22 per share, in the prior year second quarter.
 
“During the second quarter, we continued our transition from high volume production of MRAP-All Terrain Vehicles (M-ATVs) to the gradual launch of production of the U.S. Army’s Family of Medium Tactical Vehicles (FMTVs), which will negatively impact our quarterly earnings comparisons throughout fiscal 2011,” said Charles L. Szews, Oshkosh Corporation president and chief executive officer. “The launch of FMTV production has been challenging, but we made good progress late in the second quarter and expect our FMTV sales to rise sharply in the second half of fiscal 2011. Oshkosh is the sole supplier of the FMTV through fiscal 2015.
 
“Our access equipment business returned to profitability this quarter and continued its recovery with non-M-ATV related sales increasing 73 percent, orders nearly doubling and backlog nearly tripling compared to the prior year’s second quarter,” said Szews. “Multiple new product launches during the quarter were greeted with enthusiasm by our customers and led to robust order intake for these new products.
 
-more-

 
“During the first half of fiscal 2011, we experienced further deterioration in our markets impacted by municipal spending. In particular, industry orders for fire apparatus and refuse collection vehicles in North America have been constrained by tight municipal budgets. Recent facility consolidations and other cost reduction activities should help mitigate the effects on our results of lower demand for these products beginning in the second half of fiscal 2011.
 
Szews concluded, “We are pleased with our recent progress in launching FMTV production. During the second half of fiscal 2011, we will focus on accelerating production of FMTVs, raising FMTV margins, capitalizing on the recovery of our access equipment business and generally sustaining tight fiscal control in more challenged municipal and construction markets.”
 
The Company reported that consolidated net sales in the second quarter of fiscal 2011 decreased 39.1 percent, or $1.12 billion, to $1.75 billion compared to the prior year second quarter. The lower sales levels were largely due to an expected decrease in sales under the M-ATV contract, which declined by $1.38 billion, offset in part by increased demand in the access equipment segment for aerial work platforms and telehandlers.
 
Operating income decreased to $132.4 million, or 7.6 percent of sales, for the second quarter of fiscal 2011 compared with operating income of $494.3 million, or 17.3 percent of sales, in the prior year second quarter. The decrease in operating income was primarily attributable to the lower sales volumes.
 
Factors affecting second quarter results for the Company’s business segments included:
 
Defense — Defense segment sales decreased 57.2 percent to $972.3 million for the second quarter of fiscal 2011 compared with the prior year second quarter. The decrease was primarily due to the completion of production under the M-ATV contract, offset in part by higher shipments of reducible height armor kits. Combined M-ATV related vehicle and parts & service sales totaled $248.8 million in the second quarter of fiscal 2011, a decrease of $1.38 billion compared to the second quarter of the prior year when the Company shipped almost 3,000 M-ATVs.
 
Defense segment operating income in the second quarter decreased 68.7 percent to $141.6 million, or 14.6 percent of sales, compared to prior year second quarter operating income of $452.8 million, or 19.9 percent of sales. The decrease in operating income as a percent of sales was due to lower volumes on a relatively fixed cost base, adverse product mix, investments in new product development and start-up costs on the FMTV contract, offset in part by cost estimate changes on an undefinitized contract that resulted in higher revenue and income.
 
Access Equipment — Access equipment segment (1)  sales to external customers increased 72.7 percent to $471.2 million for the second quarter of fiscal 2011 compared to the prior year second quarter as a result of increased global demand, led by replacement demand in North America. In addition to sales to external customers, access equipment segment sales in the second quarter of fiscal 2010 included $737.2 million of M-ATV related sales to the defense segment. Including sales to the defense segment, access equipment segment sales decreased 53.3 percent for the second quarter of fiscal 2011 compared with the prior year quarter.

(1)  During fiscal 2010, in conjunction with the appointment of a new segment president, the Company transferred operational responsibility of JerrDan, the Company’s towing and recovery business unit, from the fire & emergency segment to the access equipment segment. As a result, JerrDan has been included within the access equipment reporting segment for financial reporting purposes. Historical information has been reclassified to include JerrDan in the access equipment segment for all periods presented.
 
2 

 
Access equipment segment operating income in the second quarter decreased 61.2 percent to $17.7 million, or 3.8 percent of sales, compared to prior year second quarter operating income of $45.8 million, or 4.5 percent of sales. The decline in operating income reflected the decrease in intersegment sales at high single-digit operating income margins, offset in part by higher volume with external customers and improved product mix.
 
Fire & Emergency — Fire & emergency segment sales for the second quarter of fiscal 2011 decreased 17.2 percent to $177.2 million compared with the prior year quarter. The decrease in sales primarily reflected lower shipments of fire fighting apparatus and a shift in the timing of airport product shipments to later in the fiscal year. Weak municipal spending in the U.S. was the primary driver of a decrease in fire fighting apparatus sales with the North American market down by approximately 30 percent from its long-term average.
 
The fire & emergency segment reported an operating loss of $6.6 million, or 3.7 percent of sales, for the second quarter of fiscal 2011 compared to operating income of $19.3 million, or 9.0 percent of sales, in the prior year quarter. Operating results during the second quarter were largely impacted by lower sales volume and the related absorption impact as well as adverse product mix and costs related to the move of Oshkosh Specialty Vehicles and Medtec ambulance production to the Company’s facilities in Florida.
 
Commercial — Commercial segment sales increased 3.9 percent to $151.7 million in the second quarter of fiscal 2011 compared with the prior year quarter due primarily to higher aftermarket parts sales.
 
Commercial segment operating income in the second quarter increased 273.4 percent to $5.3 million, or 3.5 percent of sales, compared to prior year second quarter operating income of $1.4 million, or 1.0 percent of sales. The increase in operating income primarily resulted from improved absorption.
 
Corporate — Corporate operating expenses increased $1.7 million to $25.5 million for the second quarter of fiscal 2011 compared to the prior year quarter. The increase was primarily a result of the Company’s investment to support its growth initiatives for fiscal 2012 and beyond.
 
Interest Expense Net of Interest Income — Interest expense net of interest income decreased $24.5 million to $20.7 million in the second quarter of fiscal 2011 compared to the prior year quarter. The decrease was largely due to the effects of lower borrowings as well as lower interest rates following the refinancing of the Company’s credit agreement in September 2010. Average debt outstanding decreased from $1.7 billion during the second quarter of fiscal 2010 to $1.1 billion during the second quarter of fiscal 2011 as a result of strong cash flow generation during the past 12 months. The Company repaid $50.2 million of debt during the second quarter of fiscal 2011.
 
Provision for Income Taxes — The Company recorded income tax expense of $44.2 million in the second quarter of fiscal 2011, or 39.5 percent of pre-tax income, compared to 35.0 percent of pre-tax income in the prior year quarter. The second quarter fiscal 2011 effective tax rate was negatively impacted by the effect of unbenefitted losses in foreign tax jurisdictions.
 
Six-month Results
 
The Company reported net sales for the first six months of fiscal 2011 of $3.45 billion and net income attributable to Oshkosh Corporation of $167.5 million, or $1.83 per share. This compares with net sales of $5.30 billion and income from continuing operations of $465.1 million, or $5.12 per share, in the first six months of the prior year. Results for the first six months of fiscal 2010 included per share charges of $0.21, net of income tax benefits, for the non-cash impairment of goodwill and other long-lived assets. Excluding asset impairment
 
3 

 
charges of $23.3 million (2) , the Company reported income from continuing operations of $483.8 million, or $5.33 per share, for the first six months of fiscal 2010. The decreases in sales and income attributable to Oshkosh Corporation were primarily due to the completion of the initial 8,079 M-ATVs in the first quarter of fiscal 2011. Combined M-ATV related vehicle and parts & service sales totaled $2.74 billion in the first six months of fiscal 2010 compared to $763.8 million in the first six months of fiscal 2011.
 
Conference Call
 
The Company will comment on second quarter earnings during a conference call at 9:00 a.m. EDT this morning. Viewer-controlled slides for the call will be available on the Company’s website beginning at 8:00 a.m. EDT this morning. The call will be webcast simultaneously over the Internet. To access the webcast, listeners can go to www.oshkoshcorporation.com at least 15 minutes prior to the event and follow instructions for listening to the broadcast. An audio replay of the call and related question and answer session will be available for 12 months at this website.
 
About Oshkosh Corporation
 
Oshkosh Corporation is a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies. Oshkosh Corporation manufactures, distributes and services products under the brands of Oshkosh ® , JLG ® , Pierce ® , McNeilus ® , Medtec ® , Jerr-Dan ® , Oshkosh Specialty Vehicles, Frontline ™ , SMIT ™ , CON-E-CO ® , London ®  and IMT ® . Oshkosh products are valued worldwide in businesses where high quality, superior performance, rugged reliability and long-term value are paramount. For more information, log on to www.oshkoshcorporation.com.
 
®, TM  All brand names referred to in this news release are trademarks of Oshkosh Corporation or its subsidiary companies.
 
Non-GAAP Financial Measures
 
The Company reports its financial results in accordance with generally accepted accounting principles (GAAP) in the United States of America. The Company is presenting various operating results, such as income from continuing operations and earnings per share from continuing operations both on a reported basis and on a basis excluding impairment charges that affect comparability of operating results. When the Company uses operating results, such as income from continuing operations and earnings per share from continuing operations, excluding impairment charges, they are considered non-GAAP financial measures. The Company believes excluding the impact of non-cash intangible assets impairment charges is useful to investors to allow a more accurate comparison of the Company’s operating performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s results prepared in accordance with GAAP.

(2)  Further information regarding operating results including impairment charges and related reconciliations of these non-GAAP financial measures to the most comparable GAAP measures can be found under the caption “Non-GAAP Financial Measures” in this press release, which should be thoroughly reviewed.
 
4 

 
The table below presents a reconciliation of the Company’s presented non-GAAP measures to the most directly comparable GAAP measures for the six months ended March 31, 2010 (in millions, except per share amounts):

Non-GAAP income from continuing operations, net of tax	 	$	       483.8	 	
Intangible assets impairment charges	 	(23.3	)	
Income tax benefit associated with intangible assets impairment charges	 	4.6	 	
GAAP income from continuing operations, net of tax	 	$	       465.1	 	
 	 	 	 	
Non-GAAP income per share from continuing operations	 	$	        5.33	 	
Intangible assets impairment charges per share	 	(0.21	)	
GAAP income per share from continuing operations	 	$	        5.12	 	
 
Forward-Looking Statements
 
This press release contains statements that the 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, 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, are forward-looking statements. When used in this press release, 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 impact on revenues and margins of the decrease in M-ATV production rates; the cyclical nature of the Company’s access equipment, commercial and fire & emergency markets, especially during periods of global economic weakness, tight credit markets and lower municipal spending; the Company’s ability to produce vehicles under the FMTV contract at targeted margins and at required volumes to receive and sustain performance-based payments; the duration of the ongoing global economic weakness, which could lead to additional impairment charges related to many of the Company’s intangible assets and/or a slower recovery in the Company’s cyclical businesses than equity market expectations; the expected level and timing of U.S. Department of Defense (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; the potential for the U.S. government to competitively bid the Company’s Army and Marine Corps contracts; the consequences of financial leverage, which could limit the Company’s ability to pursue various opportunities; increasing commodity and other raw material costs, particularly in a sustained economic recovery; the ability to pass on to customers price increases to offset higher input costs; risks related to costs and charges as a result of facilities consolidation and alignment, including that anticipated cost savings may not be achieved; 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’s products; risks related to production delays arising from supplier quality or production issues, especially in light of the significant recent earthquake and subsequent tsunami in Japan; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; risks related to
 
5 

 
work stoppages and other labor matters, especially in light of the pending contract expiration for union employees at the Company’s Oshkosh defense facilities; the potential for disruptions or cost overruns in the Company’s global enterprise system implementation; the potential for increased costs relating to compliance with changes in laws and regulations; and risks related to disruptions in the Company’s distribution networks. Additional information concerning these and other factors is contained in the Company’s filings with the Securities and Exchange Commission, including the Form 8-K filed today. All forward-looking statements speak only as of the date of this press release. The Company assumes no obligation, and disclaims any obligation, to update information contained in this press release. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.
 
6 

 
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; in millions)

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	March 31,	 	March 31,	 	
 	 	2011	 	2010	 	2011	 	2010	 	
 	 	 	 	 	 	 	 	 	 	
Net sales	 	$	1,745.6	 	$	2,864.2	 	$	3,446.4	 	$	5,298.3	 	
Cost of sales	 	1,464.5	 	2,236.4	 	2,856.3	 	4,191.3	 	
Gross income	 	281.1	 	627.8	 	590.1	 	1,107.0	 	
 	 	 	 	 	 	 	 	 	 	
Operating expenses:	 	 	 	 	 	 	 	 	 	
Selling, general and administrative	 	133.7	 	118.3	 	258.7	 	233.1	 	
Amortization of purchased intangibles	 	15.0	 	15.2	 	30.3	 	30.6	 	
Intangible assets impairment charges	 	—	 	—	 	—	 	23.3	 	
Total operating expenses	 	148.7	 	133.5	 	289.0	 	287.0	 	
Operating income	 	132.4	 	494.3	 	301.1	 	820.0	 	
 	 	 	 	 	 	 	 	 	 	
Other income (expense):	 	 	 	 	 	 	 	 	 	
Interest expense	 	(21.7	)	(45.7	)	(48.2	)	(96.5	)	
Interest income	 	1.0	 	0.5	 	1.8	 	1.4	 	
Miscellaneous, net	 	0.4	 	1.0	 	0.1	 	1.2	 	
 	 	(20.3	)	(44.2	)	(46.3	)	(93.9	)	
Income from continuing operations before income taxes and equity in earnings (losses) of unconsolidated affiliates	 	112.1	 	450.1	 	254.8	 	726.1	 	
Provision for income taxes	 	44.2	 	157.4	 	88.2	 	260.6	 	
Income from continuing operations before equity in earnings (losses) of unconsolidated affiliates	 	67.9	 	292.7	 	166.6	 	465.5	 	
Equity in earnings (losses) of unconsolidated affiliates	 	(0.2	)	(0.1	)	0.2	 	(0.4	)	
Income from continuing operations, net of tax	 	67.7	 	292.6	 	166.8	 	465.1	 	
Loss on discontinued operations, net of tax	 	—	 	—	 	—	 	(2.9	)	
Net income	 	67.7	 	292.6	 	166.8	 	462.2	 	
Net loss attributable to the noncontrolling interest	 	0.2	 	—	 	0.7	 	—	 	
Net income attributable to Oshkosh Corporation	 	$	67.9	 	$	292.6	 	$	167.5	 	$	462.2	 	
 
7 

 
OSHKOSH CORPORATION
EARNINGS PER SHARE
(Unaudited)

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	March 31,	 	March 31,	 	
 	 	2011	 	2010	 	2011	 	2010	 	
Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-basic	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	0.75	 	$	3.27	 	$	1.85	 	$	5.19	 	
Discontinued operations	 	—	 	—	 	—	 	(0.03	)	
 	 	$	0.75	 	$	3.27	 	$	1.85	 	$	5.16	 	
Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-diluted	 	 	 	 	 	 	 	 	 	
Continuing operations	 	$	0.74	 	$	3.22	 	$	1.83	 	$	5.12	 	
Discontinued operations	 	—	 	—	 	—	 	(0.03	)	
 	 	$	0.74	 	$	3.22	 	$	1.83	 	$	5.09	 	
 	 	 	 	 	 	 	 	 	 	
Basic weighted average shares outstanding	 	90,839,750	 	89,596,583	 	90,716,175	 	89,536,608	 	
Effect of dilutive stock options and equity-based compensation awards	 	964,606	 	1,322,631	 	921,762	 	1,301,505	 	
Diluted weighted average shares outstanding	 	91,804,356	 	90,919,214	 	91,637,937	 	90,838,113	 	
 	 	 	 	 	 	 	 	 	 	
Amounts attributable to Oshkosh Corporation common shareholders (in millions):	 	 	 	 	 	 	 	 	 	
Income from continuing operations, net of tax	 	$	67.9	 	$	292.6	 	$	167.5	 	$	465.1	 	
Loss on discontinued operations, net of tax	 	—	 	—	 	—	 	(2.9	)	
Net income	 	$	67.9	 	$	292.6	 	$	167.5	 	$	462.2	 	
 
8 

 
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; in millions)

 	 	March 31,	 	September 30,	 	
 	 	2011	 	2010	 	
ASSETS	 	 	 	 	 	
Current assets:	 	 	 	 	 	
Cash and cash equivalents	 	$	416.7	 	$	339.0	 	
Receivables, net	 	773.9	 	889.5	 	
Inventories, net	 	773.6	 	848.6	 	
Deferred income taxes	 	72.4	 	86.7	 	
Other current assets	 	65.4	 	52.1	 	
Total current assets	 	2,102.0	 	2,215.9	 	
Investment in unconsolidated affiliates	 	32.1	 	30.4	 	
Property, plant and equipment:	 	 	 	 	 	
Property, plant and equipment	 	826.8	 	821.0	 	
Accumulated depreciation	 	(438.4	)	(417.4	)	
Property, plant and equipment, net	 	388.4	 	403.6	 	
Goodwill	 	1,059.9	 	1,049.6	 	
Purchased intangible assets, net	 	870.4	 	896.3	 	
Other long-term assets	 	94.4	 	112.8	 	
Total assets	 	$	4,547.2	 	$	4,708.6	 	
 	 	 	 	 	 	
LIABILITIES AND EQUITY	 	 	 	 	 	
Current liabilities:	 	 	 	 	 	
Revolving credit facility and current maturities of long-term debt	 	$	83.1	 	$	215.9	 	
Accounts payable	 	669.4	 	717.7	 	
Customer advances	 	250.0	 	373.2	 	
Payroll-related obligations	 	95.2	 	127.5	 	
Income taxes payable	 	1.7	 	1.3	 	
Accrued warranty	 	73.5	 	90.5	 	
Deferred revenue	 	37.2	 	76.9	 	
Other current liabilities	 	253.7	 	209.0	 	
Total current liabilities	 	1,463.8	 	1,812.0	 	
Long-term debt, less current maturities	 	1,053.8	 	1,086.4	 	
Deferred income taxes	 	182.9	 	189.6	 	
Other long-term liabilities	 	304.5	 	293.8	 	
Commitments and contingencies	 	 	 	 	 	
Equity:	 	 	 	 	 	
Oshkosh Corporation shareholders’ equity	 	1,542.7	 	1,326.6	 	
Noncontrolling interest	 	(0.5	)	0.2	 	
Total equity	 	1,542.2	 	1,326.8	 	
Total liabilities and equity	 	$	4,547.2	 	$	4,708.6	 	
 
9 

 
OSHKOSH CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited; in millions)

 	 	Six Months Ended	 	
 	 	March 31,	 	
 	 	2011	 	2010	 	
Operating activities:	 	 	 	 	 	
Net income	 	$	166.8	 	$	462.2	 	
Non-cash asset impairment charges	 	—	 	23.3	 	
Loss on sale of discontinued operations, net of tax	 	—	 	2.9	 	
Depreciation and amortization	 	69.9	 	80.8	 	
Deferred income taxes	 	2.7	 	(28.8	)	
Other non-cash adjustments	 	4.7	 	13.4	 	
Changes in operating assets and liabilities	 	12.5	 	211.5	 	
Net cash provided by operating activities	 	256.6	 	765.3	 	
 	 	 	 	 	 	
Investing activities:	 	 	 	 	 	
Additions to property, plant and equipment	 	(31.0	)	(34.4	)	
Additions to equipment held for rental	 	(3.1	)	(3.5	)	
Proceeds from sale of property, plant and equipment	 	0.7	 	0.5	 	
Proceeds from sale of equipment held for rental	 	7.8	 	6.0	 	
Other investing activities	 	(1.1	)	0.8	 	
Net cash used by investing activities	 	(26.7	)	(30.6	)	
 	 	 	 	 	 	
Financing activities:	 	 	 	 	 	
Repayment of long-term debt	 	(65.3	)	(907.0	)	
Proceeds from issuance of long-term debt	 	—	 	500.0	 	
Repayments under revolving credit facility, net	 	(100.0	)	—	 	
Debt issuance costs	 	—	 	(10.8	)	
Proceeds from exercise of stock options	 	7.0	 	3.1	 	
Other financing activities	 	1.8	 	1.1	 	
Net cash used by financing activities	 	(156.5	)	(413.6	)	
 	 	 	 	 	 	
Effect of exchange rate changes on cash	 	4.3	 	(6.6	)	
Increase in cash and cash equivalents	 	77.7	 	314.5	 	
Cash and cash equivalents at beginning of period	 	339.0	 	530.4	 	
Cash and cash equivalents at end of period	 	$	416.7	 	$	844.9	 	
 
10 

 
OSHKOSH CORPORATION
SEGMENT INFORMATION
(Unaudited; in millions)

 	 	Three Months Ended	 	Six Months Ended	 	
 	 	March 31,	 	March 31,	 	
 	 	2011	 	2010	 	2011	 	2010	 	
Net sales:	 	 	 	 	 	 	 	 	 	
Defense	 	$	972.3	 	$	2,270.2	 	$	2,086.0	 	$	4,129.9	 	
Access equipment	 	471.2	 	1,010.2	 	798.5	 	1,763.9	 	
Fire & emergency	 	177.2	 	214.1	 	378.7	 	439.3	 	
Commercial	 	151.7	 	145.9	 	271.2	 	301.0	 	
Intersegment eliminations	 	(26.8	)	(776.2	)	(88.0	)	(1,335.8	)	
Consolidated	 	$	1,745.6	 	$	2,864.2	 	$	3,446.4	 	$	5,298.3	 	
 	 	 	 	 	 	 	 	 	 	
Operating income (loss):	 	 	 	 	 	 	 	 	 	
Defense	 	$	141.6	 	$	452.8	 	$	359.5	 	$	792.5	 	
Access equipment	 	17.7	 	45.8	 	1.0	 	59.1	 	
Fire & emergency	 	(6.6	)	19.3	 	(4.0	)	17.3	 	
Commercial	 	5.3	 	1.4	 	(2.4	)	4.5	 	
Corporate	 	(25.5	)	(23.8	)	(56.7	)	(48.2	)	
Intersegment eliminations	 	(0.1	)	(1.2	)	3.7	 	(5.2	)	
Consolidated	 	$	132.4	 	$	494.3	 	$	301.1	 	$	820.0	 	

 	 	March 31,	 	
 	 	2011	 	2010	 	
Period-end backlog:	 	 	 	 	 	
Defense	 	$	4,989.0	 	$	4,281.3	 	
Access equipment	 	596.3	 	203.3	 	
Fire & emergency	 	459.8	 	500.6	 	
Commercial	 	119.1	 	99.5	 	
Consolidated	 	$	6,164.2	 	$	5,084.7	 	
 
# # #
 
11 

Exhibit 99.2
 
Second Quarter Fiscal 2011 Earnings
Conference Call Script
April 28 , 2011
 
Pat Davidson
 
Good morning and thanks for joining us. Earlier today, we published our second quarter results for fiscal 2011. A copy of the release is available on our website at www.oshkoshcorporation.com. Today’s call is being webcast and is accompanied by a slide presentation, which is also available on our website. The audio replay and slide presentation will be available on our website for approximately 12 months. Please refer now to slide 2 of that slide presentation.
 
Our remarks that follow, including answers to your questions, include statements that we believe to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different. These risks include, among others, matters that we have described in our Form 8-K filed with the SEC this morning and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements, which may not be updated until our next quarterly earnings conference call, if at all.
 
Presenting today for Oshkosh Corporation will be Charlie Szews, President and Chief Executive Officer, and Dave Sagehorn, Executive Vice President and Chief Financial Officer.
 
Let’s begin by turning to slide 3 and I’ll turn it over to Charlie.
 
Charlie Szews
 
Oshkosh Q2 FY11 Results
 
Thank you, Pat. Good morning everybody. Let’s get started.
 
For the quarter, our sales decreased 39% to $1.75 billion, leading to operating income of $132.4 million and earnings per share (“EPS”) of $0.74. Lower sales and earnings compared to the prior year quarter were expected as we
 
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delivered nearly 3,000 M-ATVs in the second quarter of fiscal 2010 compared to none in the current quarter. I want to highlight a few points and will then discuss them in more detail a little later in the call. First and foremost, we are proud of the strong performance turned in by JLG in the access equipment segment. While not at pre-recession levels, this segment delivered significantly higher sales to external customers and was solidly profitable in the quarter. I should note that there were no M-ATV related sales in the quarter from this segment to our defense segment. Second, we continued to work hard through a challenging launch of the FMTV program at our Oshkosh Defense factories in the second quarter. Trucks and trailers were still being sold at a low volume during the quarter, but our deliveries have picked up since then. We plan to triple our daily production rate by the end of calendar 2011. And third, we continued to generate positive free cash flow and reduced our debt by another $50 million during the quarter. Let’s take a look at some of the operating highlights.
 
Please turn to slide 4.
 
Q2 FY11 Operating Highlights
 
We talked about JLG beginning to turn the corner on our last call and we believe that has indeed taken place. Orders for the quarter were up significantly, both sequentially from the first quarter and year over year, leading to a 193% increase in backlog to $596 million at March 31. Both orders and backlog are at their highest levels since the recession began. We participated in a very active and lively ConExpo last month in Las Vegas. In fact, many of you listening today attended the show and had the opportunity to experience the excitement first hand as we took you through our access equipment and commercial segment booths. Attendance was the second highest ever for the show with strong order intake during the show. I think all attending would agree that there was an air of confidence, anticipation and excitement from attendees.
 
The launch of the Family of Medium Tactical Vehicles program is a major activity for our Company. It’s been a challenging ramp up, as our contract included higher technical and quality requirements than the previous FMTV contract. We have implemented production processes that were new to Oshkosh in part to address the new contract requirements and have required our supply base to implement these changes as well. We have resolved most
 
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of the initial start-up issues and increased deliveries in April. Next in line is to triple production levels over the remainder of this calendar year due to higher orders than anticipated at the time of our bid, which will cause us to re-arrange our factories and incur additional start-up costs. During the second quarter, our focus on start-up issues and production ramp up caused us to divert resources from our cost reduction teams to our launch team. The net effect is that we incurred start-up losses on the FMTV program in the second quarter and we don’t expect this program to be profitable until fiscal 2012.
 
We continue to execute on our other defense programs, even as we ramp up the FMTV program. We had a strong quarter of vehicle deliveries under our FHTV program. And, we continued to deliver high volumes of M-ATV parts, as expected. Key orders that we announced during the quarter include 2,080 M-ATV Underbody Improvement Kits that should be delivered by the fourth quarter, as well as an order for 60 of our massive HETs for the United Arab Emirates.
 
We received a stop work order in the quarter related to our previous award for 250 M-ATV ambulances. This is a development program and the U.S. government is investigating another option for delivery of ambulances into the theater. We continued work at our own expense during the quarter to further refine this product, including successfully completing blast tests on the vehicle at the Aberdeen Proving Grounds earlier this month. We believe our vehicle is the best suited ambulance to serve our troops in Afghanistan. The M-ATV ambulance has unmatched off-road mobility with the ability to carry more patients than other MRAP ambulances and permits much faster and safer ingress and egress of patients on the battlefield, among other benefits. We are pleased with the rapid development of this M-ATV variant, but at this time we have removed this business from our fiscal 2011 sales estimate.
 
During the quarter, we experienced further deterioration in our businesses serving municipal markets. In particular, our fire & emergency segment experienced very low demand leading to a disappointing operating loss in the segment for the quarter. Adverse product mix and costs to relocate our Oshkosh Specialty Vehicles and Medtec ambulance businesses to our facilities in Florida further contributed to the loss. Our quarterly market share in the fire apparatus market increased slightly compared to the prior year, so that is not a factor in the results. Over the next few months, we will be working to lower our cost structure in the fire & emergency segment to adjust
 
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to new lower demand levels which we expect to be sustained for the near term. Industry demand for refuse collection vehicles has also declined due to municipal fiscal challenges. However, we were able to sufficiently reduce our cost structure to allow us to turn a small profit in the commercial segment in the quarter.
 
In response to escalating commodity costs, we have raised prices in most non-defense businesses in recent months. We generally have been realizing the higher pricing on new orders, especially in our access equipment segment where we believe supplier capacity constraints are beginning to impact overall industry shipments. As a result, we presently believe that across our Company, we will be able to recover most of the commodity cost increases that we expect to incur.
 
Please turn to slide 5 to review market conditions across our Company.
 
Market Conditions
 
Access equipment demand continued to improve in most of our markets in the quarter. Even Europe, which had been lagging the turnaround in other markets around the world, began to show signs of improvement during the quarter. Both Europe and North America are experiencing mainly replacement demand while product penetration and construction-related demand is driving many of our other international markets. We expect the trend for improving access equipment sales to continue through the remainder of fiscal 2011. Our view is based on what we are hearing from our customers, continued improvement in key data points as tracked by Rouse Asset Services and the positive customer interest we experienced at ConExpo. We are also starting to see some smaller rental companies have some success in securing financing for access equipment purchases. I wouldn’t say lenders have opened the flood gates for financing smaller rental companies, but it’s definitely a step in the right direction.
 
In our defense segment, the long-awaited U.S. fiscal 2011 federal budget was passed earlier this month. Next up for the U.S. government is to pass the fiscal 2012 budget. As a result of the late signing date of the fiscal 2011 federal budget and alternate budget proposals for fiscal 2012 announced by the President and members of Congress, we believe there will continue to be pressure on U.S. defense spending levels that could impact our programs.
 
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We do believe, however, that the passage of the fiscal 2011 federal budget will enable the Department of Defense to move forward on a number of initiatives that we are particularly interested in. Specifically, we now believe that both the U.S. Army and U.S. Marine Corps will launch RFPs for HMMWV recap programs yet this fiscal year. These will likely be multi-year programs to recapitalize a portion of the existing HMMWV fleets. And, we continue our efforts to re-enter the JLTV competition when the RFP for the next phase of that program is issued. We expect the RFP for the Engineering & Manufacturing Development phase of the JLTV program to be issued late this summer or early autumn.
 
As many of you know, our government customer can order our FHTVs through September of this year under the current contract with deliveries to continue through October 2012. At the Tactical Wheeled Vehicle Conference in February, the FHTV program office announced that it intends to issue a bridge contract to Oshkosh to continue producing FHTVs while it develops a path to compete this program in 2013. At this time, we don’t have more details on what the size of a bridge contract might be, but we do look forward to continuing to produce vehicles under the FHTV program past October 2012. Similarly, we expect to produce both MTVRs and LVSRs for the Marines beyond 2012.
 
Internationally, we are competing for the Canadian TAPV program, with our proposal due this summer. Additionally, we plan to compete for the Canadian Army’s medium payload truck program, the MSVS. This program has been delayed, but we expect to see an RFP sometime in the next six months. And, we continue to pursue global opportunities for the M-ATV. We remain optimistic about our prospects for selling this great vehicle internationally. However, as we have previously mentioned, the process of selling military vehicles internationally, especially armored military vehicles, can be a long, drawn out affair.
 
The latest fire apparatus market data showed that the industry continued to hold at an annualized rate of about 3,800 units. However, the latest quarter included several large international orders, including the Ghana order that we received for more than 100 units. Excluding these orders, the market trend would be for an annualized rate closer to 3,600 units. Continued pressure on municipal spending is negatively impacting this market. At this time, we don’t expect to see meaningful improvement in the domestic fire apparatus market in either the remainder of 2011 or 2012. We will continue to combat the weak market conditions by focusing our efforts to grow our domestic market share through new product introductions and strong customer service.
 
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We will also continue to pursue international opportunities. We have had good success internationally with both fire trucks and airport products, and believe we have the right strategies to grow these sales even more.
 
The RCV market in North America remains down, although not nearly to the extent that we’ve experienced with concrete mixers. Municipalities continue to struggle finding capital for new vehicles. We remain the market leader and have responded by continuing to launch new products, which we expect will drive sales in the future. Recent launches of our lower height Lo-Pro unit and our zero radius ZR Side Loader are doing very well. We are building on this success with additional new products that we will be launching at Waste Expo next month in Dallas. These products are designed specifically to achieve success in our domestic and certain international markets.
 
As I just mentioned, the domestic concrete mixer market is still not in recovery mode. We really need to see some pick up in residential construction before we would expect to see a pronounced increase in concrete mixer sales.
 
Interest in CNG-powered vehicles continues to grow. CNG-powered units are attractive as they offer cleaner emissions and reduced dependence on foreign oil. The economics continue to improve as the price of oil has again risen to more than $100 per barrel. We’ve been building and delivering high quality CNG refuse collection vehicles for several years now, but the addition of CNG mixers to our product lineup rounds out our offerings very nicely. Last month at ConExpo was the first time that we have displayed them at a trade show and offered them for sale. We have already received some orders for our CNG concrete mixers.
 
Last November, I said that we would report on our progress with respect to principal business initiatives each quarter. Let’s turn to slide 6 and we’ll provide an update on our operations initiatives.
 
Operations Update
 
We’re making good progress on the facility optimization activities that we discussed on the last call. Manufacturing at Pierce’s Bradenton, Florida facility has been completely reconfigured. We now have fire truck manufacturing at this facility running down one automated manufacturing line. We’ve moved Medtec ambulance production into this facility and are
 
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currently ramping up production of that product line. We also moved fabrication of Oshkosh Specialty Vehicles to this facility.
 
In the access equipment segment, we recently reached agreements with the works councils at our Belgian facility and are getting ready to transfer some of the production to our facility in Romania.
 
We also made significant progress during the quarter manufacturing our JerrDan car carriers and wreckers at our JLG facilities. Production is back on schedule and we’re starting to build stock units. We’re producing high quality vehicles to help our customers perform their critically important jobs. We’re also on track to realize the savings identified when we put the plan together.
 
As we stated last quarter, we continue to review our manufacturing footprint across all segments. The FMTV production launch has consumed many of our resources, but we plan to devote more attention to this initiative in the third quarter.
 
We are continuing to launch the Oshkosh Operating System across the Company. It is our approach to sustain continuous improvement in our facilities, which will be important to our future success.
 
Of course, we are all still saddened by the tragedy in Japan last month. On the operations front, we have been communicating very actively with our suppliers and business partners who have direct and indirect exposure to Japan. We have experienced some parts shortages particularly related to engines and transmissions. We are working through countermeasures to seek to sustain planned shipments. It is a situation that we continue to monitor.
 
Please turn to slide 7 and we can talk about some of our industry leading innovations that we expect to drive our future success.
 
Market Leading Innovations
 
Another fiscal 2011 initiative for Oshkosh is to continue our market leadership with important new product innovations.
 
For example, at ConExpo, JLG launched a collection of new products including the new 150 foot Ultra Boom, which is designed to be more transportable than competing products and, at 150 feet, is the largest self-
 
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propelled telescopic boom in the market. This product has been very well received by our customers, as evidenced by the number of orders we received at ConExpo. Likewise, we introduced our 340AJ, which is a 34 foot articulating boom lift with a heavy lifting capacity, and our new compact crawler boom family, which is built in Italy by one of our business partners. Order rates have also been strong for these new products.
 
As I mentioned, ConExpo saw the introduction of our CNG-powered concrete mixer trucks, an industry first. We have performed several very successful demonstrations of this vehicle already and are beginning to take orders after attendees to our booth were able to see the simple and effective improvements we’ve made using a CNG-powered mixer. With oil prices escalating, some ready mix companies are considering whether to advance their replacement purchase decisions to take advantage of lower operating costs with CNG.
 
Running almost concurrently with ConExpo was the annual FDIC show, the largest U.S. fire industry show. Pierce again led the way. The star of the show was our new Dash Ò  CF, which adds significant space for the driver and captain, enhances safety and improves serviceability, to name just a few of the improvements we added by dropping the engine and transmission back and between the frame rails. It is the first custom fire chassis designed around the driver and captain to enhance their situational awareness and ability to perform their missions. Additionally, we recently announced our new licensing agreement for North America with Bronto. Bronto is a premier provider of extended reach equipment and will enhance Pierce’s product offerings.
 
Finally, we continue to innovate in defense. I mentioned our plans for the HMMWV recap, JLTV and the TAPV in Canada, where we have built prototype vehicles and commenced testing of the vehicles. And, we have developed a truly next generation, M-ATV ambulance designed for the most demanding battlefields that is quick to the scene, quick to load patients ergonomically and provides ample space and compartments for medics to care for wounded warriors. This vehicle can also be quickly transformed into a safe troop carrier. We have also begun work to ship several hundred of our Tactical Protector Vehicles, the SandCat, to the Mexican government for use along the U.S.-Mexican border.
 
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Okay, please turn to slide 8 and Dave will take us through a brief discussion of our financial performance for the quarter and our expectations for the remainder of fiscal 2011.
 
Dave Sagehorn
 
Thanks, Charlie.
 
Consolidated Results
 
Consolidated net sales for the second fiscal quarter were $1.75 billion, a 39.1% decrease compared with the same quarter of last year. Lower M-ATV related sales were the largest driver of our lower revenues in the quarter. We had $249 million of M-ATV related sales in the second fiscal quarter, compared with $1.6 billion in last year’s second fiscal quarter, when we delivered nearly 3,000 M-ATVs units to the DoD.
 
Sales to external customers in our access equipment segment continued to improve, up 72.7% compared to the prior year quarter. Similar to our first fiscal quarter, orders from external customers nearly doubled, and backlog almost tripled compared to the prior year quarter.
 
Sales in our fire & emergency segment were down again this quarter, reflecting the challenging municipal spending environment. And, our commercial segment was able to post a small increase in sales compared to the prior year quarter.
 
Operating income for the quarter was $132.4 million, or 7.6% of sales, compared with $494.3 million, or 17.3% of sales, in the prior year quarter. Lower sales volumes were the largest driver of the decrease in operating income and operating income margin. In our defense segment, we incurred a loss on the FMTV program in the quarter due to start-up expenses of $13.5 million described earlier by Charlie. Separately, we also recorded approximately $15 million of higher revenue and income on an undefinitized contract as a result of cost estimate changes. With no M-ATV related intersegment sales in the quarter, operating income for the access equipment segment reflects only access equipment-related business.
 
As a reminder, we do have slides highlighting drivers of the financial results for each segment in the appendix of this morning’s slide presentation.
 
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Our tax rate in the quarter was 39.5%. The effective tax rate for the quarter was negatively impacted by unbenefitted losses in certain foreign jurisdictions on lower consolidated income.
 
EPS for the quarter was $0.74 compared to $3.22 per share in the second quarter of fiscal 2010. The decrease in EPS was largely the result of lower M-ATV volume compared to the prior year quarter.
 
We also paid down $50 million of debt in the quarter as a result of positive cash flow generation.
 
Please turn to slide 9 for a discussion of our fiscal 2011 outlook.
 
Updated Expectations for FY11
 
We currently believe full year sales for our defense segment will be between $4.1 - $4.2 billion. This is down from our previous estimate range of $4.4 - $4.5 billion. We noted in our last earnings call that some of our estimated fiscal 2011 sales were dependent on the fiscal 2011 U.S. federal budget being signed on a timely basis. The April signing of the federal budget will cause between 700-750 FHTV units included in our prior estimates to slip into fiscal 2012. In addition, we have removed the M-ATV ambulance revenues that were previously included in our fiscal 2011 sales estimates. Partially offsetting these reductions in our sales outlook is an increase in our estimated aftermarket sales, due to receipt of an order for 2,080 M-ATV Underbody Improvement Kits and other aftermarket parts orders.
 
We continue to believe that full year operating income margins in the defense segment will be in the low double digits. We expect that higher than previously estimated FMTV volume in our third and fourth fiscal quarters at low single digit negative margins will result in significantly lower operating income margins in these quarters compared with the segment’s operating income margin in the second fiscal quarter. We also believe that defense segment operating income margin in our fourth fiscal quarter will be lower than in our third fiscal quarter as FMTV volumes are expected to represent a much larger portion of the segment’s volume.
 
Another quarter of improved access equipment orders from external customers leads us to be incrementally more positive about the fiscal 2011
 
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prospects for this segment. Sales to external customers in the first half of fiscal 2011 were up more than 50% compared to the prior year. We don’t expect to maintain that pace for the whole year, but we do believe that this segment will achieve strong full year sales gains to external customers.
 
We continue to believe that operating income margins in this segment, including costs associated with the restructuring actions that we announced in our first fiscal quarter, will be in the low single digits for the full year. We currently believe that restructuring charges and other costs related to these actions will total approximately $13 - $18 million in fiscal 2011, including $11.2 million of costs incurred in the first half of the fiscal year. We expect that these actions will result in approximately $16 million of benefits on an annualized basis.
 
Due to weak fire truck markets and under-performance in our fire & emergency segment in the second fiscal quarter, we are significantly lowering our expectations for fiscal 2011 results in this segment. While we believe the segment will be profitable in the second half of the year based on scheduled deliveries currently in our backlog, including a few multi-unit international orders, we expect that full year operating income margins will be significantly lower than in fiscal 2010. Also, we expect to incur an additional $5 million of costs in this fiscal year associated with previously announced restructuring actions. We expect these actions and other cost reduction activities to result in annualized benefits of approximately $12 million when fully implemented.
 
Our outlook for the commercial segment for fiscal 2011 remains similar to our last quarterly earnings call. We expect concrete mixer sales in the U.S. to remain at historically low levels, with expected international sales providing some upside to the U.S. sales outlook. We now believe that RCV sales will be slightly lower compared to fiscal 2010. We continue to believe that operating income margins in this segment will be slightly lower than fiscal 2010, which benefitted from LIFO inventory accounting. Cost reductions implemented earlier this fiscal year are expected to result in $5 million of savings in fiscal 2011, and $7 million on an annualized basis.
 
I’ll close by noting a few additional items. We believe our corporate expenses will be higher than last year due to investments to support our growth initiatives. We also expect our full year tax rate will approximate 36%. And, we now estimate that our capital expenditures will be approximately $100 -
 
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$110 million and that we will deliver further debt reduction, although the pace of that reduction may be lumpy over the next two quarters.
 
I’ll turn it back over to Charlie. Please turn to slide 10.
 
Charlie Szews
 
Thanks, Dave.
 
FY11: A Transition Year for OSK
 
We’ve been talking about fiscal 2011 as a transition year over the past couple of quarters and during investor conferences. We won’t match last year’s record results, but we can transform our business and build a strong foundation for future growth. We are excited about the possibilities that we see, especially in our access equipment segment. Part of our excitement is a result of the opportunities we see for global growth of these products. We’re also pursuing global growth opportunities in our other segments. And, we have a number of opportunities that we are pursuing in our defense segment that would provide solid revenue streams for a number of years.
 
We have very engaged and active leadership teams and employees across the Company, who have the drive to build on the success the Company has achieved in the face of some very challenging circumstances over the last several years. While it’s true that we still face challenging market conditions in several of our businesses, it’s also true that we offer the most extensive product line-up in nearly all of our markets. And, we’ve set in motion a number of operational improvements across the Company that we believe will enhance our performance going forward. For those of you who own OSK stock, thank you for being loyal holders and thanks to the rest of you for participating with us this morning on the call.
 
At this time, I’ll turn it back over to Pat and the operator to begin the Q&A.
 
Pat Davidson
 
Thanks Charlie. I’d like to remind everyone to limit their questions to one plus a follow-up. After the follow-up, we ask that you get back in queue to ask additional questions.
 
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Operator, please begin the question and answer period of this call.
 
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