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Oshkosh Truck Reports Third Quarter EPS up 38.5 Percent to $0.72


OSHKOSH, Wis.--(BUSINESS WIRE)--Aug. 1, 2006--

Raises Full-Year Fiscal 2006 EPS Estimate Range to $2.70 - $2.75 and

Announces Fiscal 2007 EPS Estimate Range of $3.05 - $3.15

Oshkosh Truck Corporation (NYSE:OSK), a leading manufacturer of specialty trucks and truck bodies, today reported that, for the quarter ended June 30, 2006, earnings per share increased 38.5 percent to $0.72 on sales of $887.9 million and net income of $53.4 million. This compares with earnings per share of $0.52 on sales of $818.9 million and net income of $38.7 million for the prior year's third quarter. These results exceeded Oshkosh's most recent earnings per share estimate range for the third quarter of fiscal 2006 of $0.53 - $0.57 per share. Based upon the results of the third quarter, Oshkosh increased its earnings per share estimate range for the full year ending September 30, 2006 to $2.70 - $2.75 per share.

Sales increased 8.4 percent in the third quarter of fiscal 2006 as compared to the prior year's third quarter. Operating income increased 31.2 percent to $82.6 million, or 9.3 percent of sales, compared to $63.0 million, or 7.7 percent of sales, in the prior year's third quarter. All segments contributed to the sales and earnings growth during the third quarter with the commercial segment driving approximately two-thirds of the increase in consolidated operating income. Third quarter operating income rose 252.0 percent in the commercial segment compared to the prior year's third quarter.

Commenting on the results, Robert G. Bohn, chairman, president and chief executive officer, said, "Oshkosh's commercial segment was the driving force in delivering exceptional earnings per share growth this quarter. The team's efforts over the last year to raise prices, increase production capacity and drive lean production processes across the segment led the way to a 500 basis point increase in segment margins in the third quarter compared to prior year levels."

Bohn continued, "Oshkosh's defense segment contributed another solid quarter, and the fire and emergency segment experienced strong results led by a superior performance in our Pierce Manufacturing fire apparatus business and improved airport product sales. Exceptional results year-to-date, along with solid visibility into the next quarter, provided the basis for us to raise our earnings per share estimate range to $2.70 - $2.75 for fiscal 2006.

"We're very pleased to have announced during the last 90 days that we have entered into agreements to purchase two additional companies, AK Specialty Vehicles and Iowa Mold Tooling. Both companies will continue our diversification within specialty body markets and move Oshkosh Truck into several new product lines, including broadcasting, mobile medical, specialized cranes and service vehicles. We believe each company also provides near-term growth prospects and an opportunity for sharing technologies throughout the corporation. We expect these acquisitions to contribute annual sales of approximately $245 million and $0.10 per share to fiscal 2007 earnings," stated Bohn.

Bohn concluded, "We have initiated our earnings per share estimate range for fiscal 2007 at $3.05 - $3.15. This estimate range reflects our confidence in our ability to deliver earnings improvement despite softening market demand for vocational trucks in 2007 as a result of the diesel engine emissions standards changes effective January 1, 2007. It also fully considers the contributions of our latest acquisitions, along with prospects for organic growth. As we move into fiscal 2007, we are actively pursuing more acquisitions, new business development opportunities and operational initiatives to improve on these estimates."

Factors affecting third quarter results for the Company's business segments included:

Fire and emergency--Fire and emergency segment sales increased 14.7 percent to $255.3 million for the quarter compared to the third quarter of last year. Operating income was up 28.7 percent to $29.8 million, or 11.7 percent of sales, compared to prior year quarter operating income of $23.1 million, or 10.4 percent of sales. The increase in sales for the fire and emergency segment included $13.6 million in sales that were delayed from the previous quarter due to two separate supplier component issues. Operating income margins for the fire and emergency segment improved due to an improved product mix, including increased airport product sales, and benefits from cost reduction initiatives, especially at Pierce.

Defense--Defense segment sales increased 3.7 percent to $291.4 million for the quarter compared to the prior year's third quarter. An increase in sales of remanufactured trucks for the U.S. Department of Defense and of new trucks for international customers offset lower parts and service and Medium Tactical Vehicle Replacement ("MTVR") truck sales. The MTVR base contract was concluded during the third quarter of fiscal 2005.

Operating income in the third quarter was up 6.7 percent to $49.0 million, or 16.8 percent of sales, compared to prior year operating income of $46.0 million, or 16.4 percent of sales. The increase in operating income for the third quarter was primarily due to the increase in sales and was partially offset by higher bid and proposal spending. Operating income margins in the third quarter of fiscal 2005 benefited from a $2.1 million ($0.02 per share) adjustment to MTVR base contract margins, which was recorded under the percentage of completion method of accounting.

Commercial--Commercial segment sales increased 8.8 percent to $350.6 million in the third quarter compared to the prior year quarter. Operating income increased 252.0 percent to $25.4 million, or 7.2 percent of sales, compared to $7.2 million, or 2.2 percent of sales, in the prior year quarter. The increase in sales for the segment was largely due to strong demand at the Company's North American businesses in advance of diesel engine emissions standards changes effective January 1, 2007 and higher unit sales at the Company's European refuse business, offset in part by a lower mix of package sales involving both a truck chassis and truck body. The significant increase in operating income margins in the third quarter of fiscal 2006 resulted from both higher price realization and cost reduction in North America and continued profitable operations at the Company's European refuse business compared to an operating loss of $5.1 million in Europe in the third quarter of fiscal 2005. The prior year's third quarter results included a $4.3 million ($0.04 per share) charge for workforce reductions at the Company's European refuse business. The improvement in Europe resulted from increased sales volume, cost reduction activities and restructuring activities that began in fiscal 2005.

Corporate and other--Operating expenses and inter-segment profit elimination increased $8.2 million to $21.5 million. The increase in the third quarter was largely due to a $5.9 million increase in acquisition investigation and related costs, an additional $1.1 million related to the expensing of stock options due to the adoption of Statement of Financial Accounting Standards No. 123(R), "Share Based Payment," and $0.8 million related to the Company's new office in China. Interest income net of interest expense for the quarter was $0.3 million as compared to $1.4 million of net expense for the prior year quarter. Lower interest costs were largely due to the repayment of acquisition-related debt and higher interest income resulting from the investment of higher average cash balances during the quarter.

Cash and cash equivalents, net of debt, increased during the quarter to $193.1 million at June 30, 2006 from $74.6 million at March 31, 2006.

Nine-Month Results

The Company reported that earnings per share increased 31.3 percent to $2.10 per share for the first nine months of fiscal 2006 on sales of $2.52 billion and net income of $156.3 million compared to $1.60 per share for the first nine months of fiscal 2005 on sales of $2.14 billion and net income of $117.5 million. Results for the first nine months of fiscal 2005 included MTVR base contract life-to-date margin adjustments totaling $24.7 million.

Operating income increased 29.0 percent to $249.3 million, or 9.9 percent of sales, in the first nine months of fiscal 2006 compared to $193.2 million, or 9.0 percent of sales, in the first nine months of fiscal 2005.

Dividend Announcement

Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.10 per share of Common Stock. The dividend, unchanged from the immediately preceding quarter, will be payable August 23, 2006 to shareholders of record as of August 15, 2006.

The Company will comment on third quarter earnings and expectations for the remainder of fiscal 2006 and for fiscal 2007 during a live conference call at 9:00 a.m. Eastern Daylight Time this morning. Viewer-controlled slides for the call will be available on the Company's website beginning at 8:30 a.m. Eastern Daylight Time this morning. The call will be available simultaneously via a webcast over the Internet as a service to investors. It will be listen-only format for on-line listeners. To access the webcast, investors should go to at least 15 minutes prior to the event and follow instructions for listening to the broadcast. An audio replay of such conference call and related question and answer session will be available for twelve months at this website.

Oshkosh Truck Corporation is a leading designer, manufacturer and marketer of a broad range of specialty commercial, fire and emergency and military trucks and truck bodies. Oshkosh's products are valued worldwide by fire and emergency units, defense forces, municipal and airport support services, and concrete placement and refuse businesses where high quality, superior performance, rugged reliability and long-term value are paramount.

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, that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the Company's ability to continue the turnaround of its Geesink Norba Group business, the cyclical nature of the Company's commercial and fire and emergency markets, risks related to reductions in government expenditures, the uncertainty of government contracts, the availability of defense truck carcasses for remanufacturing, the challenges of identifying acquisition candidates and integrating acquired businesses, risks associated with the implementation of an enterprise resource planning system at McNeilus(R); the success of the Revolution(R) composite concrete mixer drum, the availability of commercial chassis and certain chassis components including engines, and risks associated with international operations and sales, including foreign currency fluctuations. In addition, the Company's expectations for fiscal 2006 and fiscal 2007 are based in part on certain assumptions made by the Company, including without limitation those relating to the Company's ability to continue the turnaround of the business of the Geesink Norba Group sufficiently to support its current valuation resulting in no non-cash impairment charge for Geesink Norba Group goodwill; the Company's ability to sustain flat operating income in the commercial segment and to raise operating income in its fire and emergency segment in fiscal 2007 despite anticipated lower industry demand resulting from changes to diesel engine emissions standards effective January 1, 2007; the Company's estimates for the level of concrete placement activity, housing starts and mortgage rates; the performance of the U.S. and European economies generally; the Company's expectations as to timing of receipt of sales orders and payments and execution and funding of defense contracts; the Company's ability to achieve cost reductions and operating efficiencies, in particular at McNeilus and the Geesink Norba Group; the anticipated level of production and margins associated with the Family of Heavy Tactical Vehicles contract, the Indefinite Demand/Indefinite Quantity truck remanufacturing contract, the MTVR follow-on contract and international defense truck contracts; the expected level of U.S. Department of Defense procurement of replacement parts and services and funding thereof; the Company's estimates for capital expenditures of municipalities for fire and emergency and refuse products, of airports for aircraft rescue and snow removal products and of large commercial waste haulers generally and with the Company; federal funding levels for U.S. Department of Homeland Security and spending by governmental entities on homeland security apparatus; the availability of chassis components including engines and commercial chassis generally; the Company's planned spending on product development and bid and proposal activities with respect to defense truck procurement competitions and the outcome of such competitions; the expected level of commercial "package" body and purchased chassis sales compared to "body only" sales; the Company's ability to integrate acquired businesses and achieve expected synergies; the Company's ability to close the Iowa Mold Tooling acquisition; the Company's estimates of the impact of changing fuel prices and credit availability on capital spending of towing operators; anticipated levels of capital expenditures; the Company's estimates for costs relating to litigation, acquisition investigation, product warranty, insurance, stock options and restricted stock awards, personnel and raw materials; the Company's ability to negotiate expiring union contracts on a satisfactory basis; the Company's estimates for debt levels, interest rates, working capital needs and effective tax rates; and that the Company does not complete any further acquisitions other than AK Specialty Vehicles and Iowa Mold Tooling. 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.

                       OSHKOSH TRUCK CORPORATION

                         Three Months Ended       Nine Months Ended
                              June 30,                June 30,
                       ----------------------- -----------------------
                          2006        2005        2006        2005
                       ----------- ----------- ----------- -----------
                          (In thousands, except per share amounts)

Net sales              $  887,919  $  818,912  $2,523,035  $2,136,184
Cost of sales             732,629     695,068   2,069,457   1,776,856
                       ----------- ----------- ----------- -----------
Gross income              155,290     123,844     453,578     359,328

Operating expenses:
  Selling, general and
   administrative          70,841      58,827     198,617     160,332
  Amortization of
   intangibles              1,832       2,046       5,617       5,768
                       ----------- ----------- ----------- -----------
Total operating
 expenses                  72,673      60,873     204,234     166,100
                       ----------- ----------- ----------- -----------

Operating income           82,617      62,971     249,344     193,228

Other income
  Interest expense         (1,293)     (1,880)     (4,212)     (6,370)
  Interest income           1,625         481       4,457       1,499
  Miscellaneous, net         (301)       (224)       (709)       (837)
                       ----------- ----------- ----------- -----------
                               31      (1,623)       (464)     (5,708)
                       ----------- ----------- ----------- -----------

Income before
 provision for income
 taxes, equity in
 earnings of
 affiliates and
 minority interest         82,648      61,348     248,880     187,520

Provision for income
 taxes                     30,058      23,493      94,061      72,195
                       ----------- ----------- ----------- -----------

Income before equity
 in earnings of
 affiliates and
 minority interest         52,590      37,855     154,819     115,325

Equity in earnings of
 affiliates, net of
 income taxes                 880         977       1,878       2,317

Minority interest, net
 of income taxes              (56)       (143)       (378)       (189)
                       ----------- ----------- ----------- -----------

Net income             $   53,414  $   38,689  $  156,319  $  117,453
                       =========== =========== =========== ===========

Earnings per share:
  Basic                $     0.73  $     0.53  $     2.14  $     1.63
  Diluted              $     0.72  $     0.52  $     2.10  $     1.60

Basic weighted average
 shares outstanding        73,181      72,019      73,134      70,747
Effect of dilutive
  Class A Common Stock          -         566           -       1,263
  Stock options and
   compensation awards      1,310       1,298       1,229       1,460
                       ----------- ----------- ----------- -----------
Diluted weighted
 average shares
 outstanding               74,491      73,883      74,363      73,470
                       =========== =========== =========== ===========

                       OSHKOSH TRUCK CORPORATION

                                             June 30,    September 30,
                                               2006          2005
                                           ------------- -------------
                                                  (In thousands)
Current assets:
 Cash and cash equivalents                 $    221,703  $    127,507
 Receivables, net                               287,718       280,247
 Inventories, net                               543,569       489,997
 Deferred income taxes                           41,291        36,618
 Other current assets                            20,433        20,015
                                           ------------- -------------
    Total current assets                      1,114,714       954,384
Investments in unconsolidated affiliates         18,569        20,280
Property, plant and equipment                   390,588       355,341
Less accumulated depreciation                  (177,217)     (162,315)
                                           ------------- -------------
 Property, plant and equipment, net             213,371       193,026
Goodwill, net                                   405,523       399,875
Purchased intangible assets, net                123,439       128,525
Other long-term assets                           26,499        22,213
                                           ------------- -------------
Total assets                               $  1,902,115  $  1,718,303
                                           ============= =============

Current liabilities:
 Accounts payable                          $    223,703  $    226,768
 Revolving credit facility and current
  maturities of long-term debt                   26,501        21,521
 Customer advances                              300,671       303,090
 Floor plan notes payable                        30,773        21,332
 Payroll-related obligations                     52,475        47,460
 Income taxes payable                            18,438        11,571
 Accrued warranty                                48,380        39,546
 Deferred revenue                                23,102        25,457
 Other current liabilities                       76,419        78,794
                                           ------------- -------------
    Total current liabilities                   800,462       775,539
Long-term debt                                    2,083         2,589
Deferred income taxes                            51,030        55,443
Other long-term liabilities                      63,592        62,917
Commitments and contingencies
Minority interest                                 3,671         3,145
Shareholders' equity                            981,277       818,670
                                           ------------- -------------
Total liabilities and shareholders' equity $  1,902,115  $  1,718,303
                                           ============= =============

                       OSHKOSH TRUCK CORPORATION

                                                Nine Months Ended
                                                     June 30,
                                               2006          2005
                                           ------------- -------------
                                                 (In thousands)
Operating activities:
 Net income                                $    156,319  $    117,453
 Non-cash and other adjustments                  24,005        26,446
 Changes in operating assets and
  liabilities                                   (34,674)      (42,206)
                                           ------------- -------------
    Net cash provided by operating
     activities                                 145,650       101,693

Investing activities:
 Acquisition of businesses, net of cash
  acquired                                            -       (31,302)
 Additions to property, plant and
  equipment                                     (40,482)      (21,716)
 Proceeds from sale of assets                       365           194
 (Increase) decrease in other long-term
  assets                                           (996)        4,986
                                           ------------- -------------
    Net cash used by investing activities       (41,113)      (47,838)

Financing activities:
 Net borrowings (repayments) under
  revolving credit facilities                     3,750       (52,263)
 Repayment of long-term debt                       (471)         (603)
 Proceeds from exercise of stock options          2,565        24,149
 Excess tax benefits from stock-based
  compensation                                    2,700             -
 Dividends paid                                 (19,682)      (11,073)
                                           ------------- -------------
    Net cash used by financing activities       (11,138)      (39,790)

Effect of exchange rate changes on cash             797        (1,084)
                                           ------------- -------------

Increase in cash and cash equivalents            94,196        12,981

Cash and cash equivalents at beginning of
 period                                         127,507        30,081
                                           ------------- -------------

Cash and cash equivalents at end of period $    221,703  $     43,062
                                           ============= =============

Supplementary disclosure:
 Depreciation and amortization             $     26,664  $     23,490

                       OSHKOSH TRUCK CORPORATION
                          SEGMENT INFORMATION

                         Three Months Ended       Nine Months Ended
                              June 30,                June 30,
                       ----------------------- -----------------------
                          2006        2005        2006        2005
                       ----------- ----------- ----------- -----------
                                       (In thousands)
Net sales to
  Fire and emergency   $  255,314  $  222,670  $  693,050  $  630,051
  Defense                 291,366     280,985     988,664     706,095
  Commercial              350,561     322,346     871,231     819,186
   eliminations            (9,322)     (7,089)    (29,910)    (19,148)
                       ----------- ----------- ----------- -----------
     Consolidated      $  887,919  $  818,912  $2,523,035  $2,136,184
                       =========== =========== =========== ===========

Operating income
  Fire and emergency   $   29,760  $   23,132  $   68,562  $   60,580
  Defense(1)               49,013      45,955     187,430     147,037
  Commercial               25,388       7,212      49,024      19,295
  Corporate and other     (21,544)    (13,328)    (55,672)    (33,684)
                       ----------- ----------- ----------- -----------
     Consolidated      $   82,617  $   62,971  $  249,344  $  193,228
                       =========== =========== =========== ===========

Period-end backlog:
  Fire and emergency                           $  554,750  $  520,982
  Defense                                       1,054,696   1,163,137
  Commercial                                      418,032     246,010
                                               ----------- -----------
     Consolidated                              $2,027,478  $1,930,129
                                               =========== ===========

(1) Includes the following cumulative life-to-date adjustments to
    operating income due to an increase in margins on the Company's
    MTVR base contract.

                         Three Months Ended       Nine Months Ended
                              June 30,                June 30,
                       ----------------------- -----------------------
                           2006        2005        2006        2005
                       ----------- ----------- ----------- -----------
                             (In thousands, except percentages)
Increase in operating
 income                 $       -   $   2,100   $       -   $  24,700
Increase in margin
 percentage                     -         0.2%          -         2.5%
Margin percentage at
 period-end                                             -        10.1%
    CONTACT: Oshkosh Truck Corporation
             Charles L. Szews (Financial), 920-233-9332
             Kirsten A. Skyba (Media), 920-233-9621

    SOURCE: Oshkosh Truck Corporation