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Oshkosh Truck Reports Second Quarter EPS up 55.0%; Increases EPS Expectations to $2.90 for Fiscal 2004

04/27/2004

OSHKOSH, Wis.--(BUSINESS WIRE)--April 27, 2004--Oshkosh Truck Corporation (NYSE:OSK), a leading manufacturer of specialty trucks and truck bodies, today reported that second quarter net income increased 59.2 percent to $22.5 million, or $0.62 per share, on sales of $518.2 million for the quarter ended March 31, 2004. This compares with net income of $14.1 million, or $0.40 per share, on sales of $453.4 million for last year's second quarter. Oshkosh also increased its sales and earnings per share estimates for the full year ending September 30, 2004 to $2.085 billion and $2.90 per share, respectively.

Sales increased 14.3 percent in the second quarter. Operating income increased 43.9 percent to $35.1 million, or 6.8 percent of sales, compared to $24.4 million, or 5.4 percent of sales, in the prior year's second quarter.

Commenting on the results, Robert G. Bohn, Oshkosh's chairman, president and chief executive officer, said: "Our financial performance, particularly the favorable year-over-year earnings growth, during the second quarter was very positive. It's our strongest second quarter ever, and our defense business, including its robust parts sales, was the driving force behind it.

"Unfortunately, business unit performance was somewhat unbalanced, and I am disappointed by the profitability performance of our fire and emergency and commercial businesses. We expected the reduction in profitability in our fire and emergency business which reflects the depressed market conditions and aggressive price competition of 2003. However, we are optimistic about our performance in the second half of this fiscal year, since the recent order rate indicates improving fundamentals in the municipal fire apparatus market. In our commercial business, the situation needs improvement. Throughout the remainder of fiscal 2004, we will focus on improving operating efficiency and reducing costs at McNeilus. As a result, I believe that we will be able to improve profitability in both our fire and emergency and commercial businesses as the year progresses."

Factors affecting second quarter results for the company's business segments included:

Fire and emergency -- Fire and emergency segment sales decreased 4.2 percent, to $135.6 million for the quarter. Operating income was down 21.7 percent to $11.2 million, or 8.3 percent of sales, compared to prior year operating income of $14.3 million, or 10.1 percent of sales. Second quarter results were impacted by a weak mix of custom pumpers and aerials and a very competitive pricing environment when the second quarter's shipments were ordered in fiscal 2003. During fiscal 2003, fire and emergency orders were down over 10% for the industry, driving down pricing on many bids.

Defense -- Defense sales increased 28.8 percent to $168.1 million for the quarter, largely due to higher heavy-payload truck sales to the U.S. Department of Defense and international customers and higher parts sales as a result of the conflicts in Iraq and Afghanistan which more than offset a $32.2 million decrease in MTVR contract sales as the production rate on this contract declined in advance of contract expiration in fiscal 2005. Operating income in the second quarter was up 241.9 percent, to $23.0 million, or 13.7 percent of sales, compared to prior year operating income of $6.7 million, or 5.2 percent of sales. Higher earnings for the quarter reflect the increased sales of these higher margin heavy-payload trucks and parts as well as strong manufacturing cost performance.

Commercial -- Commercial sales increased 19.4 percent, to $217.8 million, for the quarter on strong order intake in the U.S. markets. Operating income decreased 17.1% to $9.4 million, or 4.3 percent of sales, compared to 6.2 percent of sales in the prior year quarter. Operating income margins were lower principally due to manufacturing inefficiencies, a weak sales mix, competitive pricing and start-up costs associated with initial production of the Revolution(TM) composite mixer drum in the U.S. and of new smooth-sided rear, front and side loader refuse products in Europe.

Corporate and other -- Operating expenses and inter-segment profit elimination increased $0.6 million to $8.6 million, due largely to increased acquisition investigation costs. Net interest expense for the quarter decreased $2.1 million to $1.1 million, compared to the prior year quarter. Lower interest costs were largely due to lower average borrowings.

Six-Month Results

The company reported that net income increased 105.3 percent to $52.2 million, or $1.46 per share, for the first six months of fiscal 2004 on sales of $1,011.4 million compared to $25.4 million, or $0.73 per share, for the first six months of fiscal 2003 on sales of $879.7 million.

Operating income increased 82.8 percent to $81.8 million, or 8.1 percent of sales, in the first six months of fiscal 2004 compared to $44.7 million, or 5.1 percent of sales, in the first six months of fiscal 2003.

Dividend Announcement

Oshkosh Truck Corporation's Board of Directors declared a quarterly dividend of $0.05000 per share for Class A Common Stock and $0.05750 per share for Common Stock. These dividends, unchanged from the prior quarter, will be payable May 13, 2004 to shareholders of record as of May 6, 2004.

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 under the Oshkosh(R), McNeilus(R), Pierce(R), Medtec(R), Geesink and Norba brand names. 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.

Oshkosh Truck Corporation officials will comment on the second quarter earnings and their current outlook for fiscal 2004 and 2005 during a live conference call at 11:00 a.m. Eastern Daylight Time today. 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 www.oshkoshtruckcorporation.com 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 at least twelve months at this website.

Forward-Looking Statements

This press release contains statements that the company believes are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding the Company's future financial position, business strategy, targets, projected sales, costs, earnings, capital spending and debt levels, and plans and objectives of management for future operations, are forward-looking statements. When used in this press release, words such as the Company "expects," "intends," "estimates," "anticipates," or "believes" and similar expressions 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, without limitation, the success of the launch of the Revolution(TM) composite concrete mixer drum, the outcome of defense truck procurement competitions, 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 challenges of identifying acquisition candidates and integrating acquired businesses, rapidly rising steel prices and the Company's ability to recover such rising prices with increases in selling prices of its products, and risks associated with international operations and sales, including foreign currency fluctuations. In addition, the Company's expectations for fiscal 2004 are based in part on certain assumptions made by the Company, including, without limitation, the sale of 650 Revolution composite concrete mixer drums in the U.S. in fiscal 2004 at favorable pricing and costs; those relating to concrete placement activity; the performance of the U.S. and European economies generally; when the Company will receive sales orders and payments; achieving cost reductions; production and margin levels under the MTVR contract, the FHTV contract and for international defense trucks; capital expenditures of municipalities and large waste haulers; targets for Geesink Norba sales and operating income; the impact of steel price increases on the Company's earnings; spending on pre-contract costs; interest costs; and that the Company does not complete any acquisitions. 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
             CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                             (Unaudited)

                             Three Months Ended    Six Months Ended
                                  March 31,            March 31,
                             ------------------- ---------------------
                                2004      2003        2004      2003
                             --------- --------- ----------- ---------
                             (In thousands, except per share amounts)

Net sales                    $518,213  $453,377  $1,011,407  $879,713
Cost of sales                 440,450   387,585     845,222   756,282
                             --------- --------- ----------- ---------
Gross income                   77,763    65,792     166,185   123,431

Operating expenses:
   Selling, general and
    administrative             41,009    39,798      81,040    75,473
   Amortization of purchased
    intangibles                 1,669     1,607       3,332     3,209
                             --------- --------- ----------- ---------
Total operating expenses       42,678    41,405      84,372    78,682
                             --------- --------- ----------- ---------

Operating income               35,085    24,387      81,813    44,749

Other income (expense):
   Interest expense            (1,401)   (3,497)     (2,549)   (6,906)
   Interest income                331       307         581       494
   Miscellaneous, net             600       601         560       325
                             --------- --------- ----------- ---------
                                 (470)   (2,589)     (1,408)   (6,087)
                             --------- --------- ----------- ---------

Income before provision for
 income taxes and equity
 in earnings of
 unconsolidated affiliates     34,615    21,798      80,405    38,662

Provision for income taxes     12,636     8,178      29,348    14,382
                             --------- --------- ----------- ---------

Income before equity in
 earnings of unconsolidated
 affiliates                    21,979    13,620      51,057    24,280

Equity in earnings of
 unconsolidated affiliates,
 net of income taxes              494       494       1,114     1,126
                             --------- --------- ----------- ---------

Net income                    $22,473   $14,114     $52,171   $25,406
                             ========= ========= =========== =========

Earnings per share            $  0.64   $  0.42     $  1.49   $  0.75

Earnings per share assuming
 dilution                     $  0.62   $  0.40     $  1.46   $  0.73

Weighted average shares
 outstanding:
   Basic                       34,996    33,976      34,897    33,929
   Assuming dilution           36,031    34,884      35,851    34,834

Cash dividends:
   Class A Common Stock      $0.05000  $0.03750    $0.10000  $0.07500
   Common Stock              $0.05750  $0.04313    $0.11500  $0.08625


                       OSHKOSH TRUCK CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS

                                             March 31,   September 30,
                                               2004          2003
                                           ------------- -------------
                                            (Unaudited)
                                                  (In thousands)
                  ASSETS
Current assets:
   Cash and cash equivalents                 $   24,458    $   19,245
   Receivables, net                             221,533       159,752
   Inventories                                  328,900       242,076
   Prepaid expenses                               8,793        10,393
   Deferred income taxes                         33,516        35,092
                                           ------------- -------------
      Total current assets                      617,200       466,558
Investment in unconsolidated affiliates          22,601        21,977
Other long-term assets                           16,145         7,852
Property, plant and equipment                   295,371       285,270
Less accumulated depreciation                  (144,849)     (138,801)
                                           ------------- -------------
   Net property, plant and equipment            150,522       146,469
Purchased intangible assets, net                 99,596       102,460
Goodwill                                        344,114       337,816
                                           ------------- -------------
Total assets                                 $1,250,178    $1,083,132
                                           ============= =============

   LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                          $  153,403    $  115,739
   Floor plan notes payable                      36,057        18,730
   Customer advances                            174,866       164,460
   Payroll-related obligations                   35,602        33,712
   Income taxes                                   1,369           263
   Accrued warranty                              29,232        29,172
   Other current liabilities                     61,740        54,293
   Revolving credit facility and current
    maturities of long-term debt                 69,093        51,625
                                           ------------- -------------
          Total current liabilities             561,362       467,994
Long-term debt                                      691         1,510
Deferred income taxes                            41,764        47,619
Other long-term liabilities                      69,323        47,146
Commitments and contingencies
Shareholders' equity                            577,038       518,863
                                           ------------- -------------
Total liabilities and shareholders' equity   $1,250,178    $1,083,132
                                           ============= =============


                       OSHKOSH TRUCK CORPORATION
            CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Unaudited)

                                                    Six Months Ended
                                                        March 31,
                                                  --------------------
                                                      2004      2003
                                                  ---------- ---------
                                                     (In thousands)
Operating activities:
   Net income                                      $ 52,171  $ 25,406
   Non-cash and other adjustments                    13,630     9,979
   Changes in operating assets and liabilities      (61,440)  (25,469)
                                                  ---------- ---------
      Net cash provided from operating activities     4,361     9,916

Investing activities:
   Additions to property, plant and equipment       (13,446)  (11,767)
   Proceeds from sale of assets                         104     3,760
   Increase in other long-term assets                (4,195)   (8,409)
                                                  ---------- ---------
      Net cash used for investing activities        (17,537)  (16,416)

Financing activities:
   Net borrowings under revolving credit facility    17,500         -
   Proceeds from issuance of long-term debt             965         -
   Repayment of long-term debt                       (1,824)  (12,219)
   Dividends paid                                    (4,012)   (2,927)
   Other                                              4,471       964
                                                  ---------- ---------
      Net cash provided from (used for)
       financing activities                          17,100   (14,182)

Effect of exchange rate changes on cash               1,289       437
                                                  ---------- ---------

Increase (decrease) in cash and cash equivalents      5,213   (20,245)

Cash and cash equivalents at beginning of period     19,245    40,039
                                                  ---------- ---------

Cash and cash equivalents at end of period         $ 24,458  $ 19,794
                                                  ========== =========

Supplementary disclosure:
   Depreciation and amortization                   $ 13,213  $ 12,328


                       OSHKOSH TRUCK CORPORATION
                          SEGMENT INFORMATION
                              (Unaudited)

                          Three Months Ended      Six Months Ended
                              March 31,               March 31,
                        ---------------------- -----------------------
                              2004       2003        2004        2003
                        ----------- ---------- ----------- -----------
                                        (In thousands)
Net sales to unaffiliated
 customers:
   Commercial            $ 217,802  $ 182,398  $  400,798   $ 349,149
   Fire and emergency      135,639    141,586     258,500     254,542
   Defense                 168,137    130,551     358,524     279,160
   Intersegment
    eliminations            (3,365)    (1,158)     (6,415)     (3,138)
                        ----------- ---------- ----------- -----------
      Consolidated       $ 518,213  $ 453,377  $1,011,407   $ 879,713
                        =========== ========== =========== ===========


Operating income
 (expense):
   Commercial            $   9,439  $  11,384   $  16,626   $  19,036
   Fire and emergency       11,211     14,315      22,817      24,340
   Defense                  23,035      6,738      60,199      16,326
   Corporate and other      (8,600)    (8,050)    (17,829)    (14,953)
                        ----------- ---------- ----------- -----------
      Consolidated       $  35,085  $  24,387   $  81,813   $  44,749
                        =========== ========== =========== ===========


Period-end backlog:
   Commercial                                  $  238,870  $  145,617
   Fire and emergency                             358,245     306,707
   Defense                                      1,012,552     907,782
                                               ----------- -----------
      Consolidated                             $1,609,667  $1,360,106
                                               =========== ===========

CONTACT:
Oshkosh Truck Corporation
Financial:
Charles L. Szews, 920-233-9332
or
Media:
Kirsten Skyba, 920-233-9621