UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-31371
Oshkosh Corporation
(Exact name of registrant as specified in its charter)
Wisconsin |
|
39-0520270 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
P.O. Box 2566 Oshkosh, Wisconsin |
|
54903-2566 |
(Address of principal executive offices) |
|
(Zip Code) |
Registrants telephone number, including area code: (920) 235-9151
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer x |
|
Accelerated filer o |
|
|
|
Non-accelerated filer o |
|
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No
As of July 20, 2012, 91,648,564 shares of the registrants Common Stock were outstanding.
OSHKOSH CORPORATION
FOR THE QUARTER ENDED JUNE 30, 2012
PART I FINANCIAL INFORMATION
OSHKOSH CORPORATION
Condensed Consolidated Statements of Income
(In millions, except per share amounts; unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net sales |
|
$ |
2,176.3 |
|
$ |
2,022.9 |
|
$ |
6,130.2 |
|
$ |
5,469.3 |
|
Cost of sales |
|
1,903.2 |
|
1,750.9 |
|
5,395.2 |
|
4,607.2 |
| ||||
Gross income |
|
273.1 |
|
272.0 |
|
735.0 |
|
862.1 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Selling, general and administrative |
|
134.4 |
|
130.8 |
|
415.4 |
|
389.5 |
| ||||
Amortization of purchased intangibles |
|
14.2 |
|
15.2 |
|
43.9 |
|
45.5 |
| ||||
Total operating expenses |
|
148.6 |
|
146.0 |
|
459.3 |
|
435.0 |
| ||||
Operating income |
|
124.5 |
|
126.0 |
|
275.7 |
|
427.1 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
(18.5 |
) |
(21.2 |
) |
(57.3 |
) |
(69.4 |
) | ||||
Interest income |
|
0.4 |
|
0.8 |
|
1.6 |
|
2.6 |
| ||||
Miscellaneous, net |
|
(0.8 |
) |
(0.5 |
) |
(5.1 |
) |
(0.4 |
) | ||||
Income from operations before income taxes and equity in earnings of unconsolidated affiliates |
|
105.6 |
|
105.1 |
|
214.9 |
|
359.9 |
| ||||
Provision for income taxes |
|
31.1 |
|
36.6 |
|
63.8 |
|
124.8 |
| ||||
Income from operations before equity in earnings of unconsolidated affiliates |
|
74.5 |
|
68.5 |
|
151.1 |
|
235.1 |
| ||||
Equity in earnings of unconsolidated affiliates |
|
1.2 |
|
0.1 |
|
1.9 |
|
0.3 |
| ||||
Net income |
|
75.7 |
|
68.6 |
|
153.0 |
|
235.4 |
| ||||
Net (income) loss attributable to the noncontrolling interest |
|
|
|
(0.2 |
) |
(1.1 |
) |
0.5 |
| ||||
Net income attributable to Oshkosh Corporation |
|
$ |
75.7 |
|
$ |
68.4 |
|
$ |
151.9 |
|
$ |
235.9 |
|
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share attributable to Oshkosh Corporation common shareholders: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
0.83 |
|
$ |
0.75 |
|
$ |
1.66 |
|
$ |
2.60 |
|
Diluted |
|
0.82 |
|
0.75 |
|
1.65 |
|
2.57 |
|
The accompanying notes are an integral part of these financial statements.
OSHKOSH CORPORATION
Condensed Consolidated Balance Sheets
(In millions, except share and per share amounts; unaudited)
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
390.7 |
|
$ |
428.5 |
|
Receivables, net |
|
1,268.6 |
|
1,089.1 |
| ||
Inventories, net |
|
901.6 |
|
786.8 |
| ||
Deferred income taxes |
|
73.8 |
|
72.9 |
| ||
Other current assets |
|
45.0 |
|
77.3 |
| ||
Total current assets |
|
2,679.7 |
|
2,454.6 |
| ||
Investment in unconsolidated affiliates |
|
18.4 |
|
31.8 |
| ||
Property, plant and equipment, net |
|
359.1 |
|
388.7 |
| ||
Goodwill |
|
1,030.3 |
|
1,041.5 |
| ||
Purchased intangible assets, net |
|
790.6 |
|
838.7 |
| ||
Other long-term assets |
|
59.4 |
|
71.6 |
| ||
Total assets |
|
$ |
4,937.5 |
|
$ |
4,826.9 |
|
|
|
|
|
|
| ||
Liabilities and Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Revolving credit facility and current maturities of long-term debt |
|
$ |
|
|
$ |
40.1 |
|
Accounts payable |
|
725.6 |
|
768.9 |
| ||
Customer advances |
|
464.5 |
|
468.6 |
| ||
Payroll-related obligations |
|
113.9 |
|
110.7 |
| ||
Income taxes payable |
|
8.1 |
|
5.3 |
| ||
Accrued warranty |
|
87.6 |
|
75.0 |
| ||
Deferred revenue |
|
143.8 |
|
38.4 |
| ||
Other current liabilities |
|
181.2 |
|
184.8 |
| ||
Total current liabilities |
|
1,724.7 |
|
1,691.8 |
| ||
Long-term debt, less current maturities |
|
955.0 |
|
1,020.0 |
| ||
Deferred income taxes |
|
140.5 |
|
171.3 |
| ||
Other long-term liabilities |
|
369.6 |
|
347.2 |
| ||
Commitments and contingencies |
|
|
|
|
| ||
Equity: |
|
|
|
|
| ||
Preferred Stock ($.01 par value; 2,000,000 shares authorized; none issued and outstanding) |
|
|
|
|
| ||
Common Stock ($.01 par value; 300,000,000 shares authorized; 91,650,355 and 91,330,019 shares issued, respectively) |
|
0.9 |
|
0.9 |
| ||
Additional paid-in capital |
|
697.4 |
|
685.6 |
| ||
Retained earnings |
|
1,184.7 |
|
1,032.7 |
| ||
Accumulated other comprehensive loss |
|
(135.2 |
) |
(122.6 |
) | ||
Common Stock in treasury, at cost (2,791 and 6,956 shares, respectively) |
|
(0.1 |
) |
(0.1 |
) | ||
Total Oshkosh Corporation shareholders equity |
|
1,747.7 |
|
1,596.5 |
| ||
Noncontrolling interest |
|
|
|
0.1 |
| ||
Total equity |
|
1,747.7 |
|
1,596.6 |
| ||
Total liabilities and equity |
|
$ |
4,937.5 |
|
$ |
4,826.9 |
|
The accompanying notes are an integral part of these financial statements.
OSHKOSH CORPORATION
Condensed Consolidated Statements of Equity
(In millions; unaudited)
|
|
Oshkosh Corporations Shareholders |
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
Accumulated |
|
Common |
|
|
|
|
| |||||||
|
|
|
|
Additional |
|
|
|
Other |
|
Stock in |
|
Non- |
|
|
| |||||||
|
|
Common |
|
Paid-In |
|
Retained |
|
Comprehensive |
|
Treasury |
|
Controlling |
|
Comprehensive |
| |||||||
|
|
Stock |
|
Capital |
|
Earnings |
|
Income (Loss) |
|
at Cost |
|
Interest |
|
Income |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at September 30, 2010 |
|
$ |
0.9 |
|
$ |
659.7 |
|
$ |
759.2 |
|
$ |
(93.2 |
) |
$ |
|
|
$ |
0.2 |
|
|
| |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
|
|
|
|
|
235.9 |
|
|
|
|
|
(0.5 |
) |
$ |
235.4 |
| ||||||
Change in fair value of derivative instruments, net of tax of $4.2 |
|
|
|
|
|
|
|
7.3 |
|
|
|
|
|
7.3 |
| |||||||
Employee pension and postretirement benefits, net of tax of $2.4 |
|
|
|
|
|
|
|
4.1 |
|
|
|
|
|
4.1 |
| |||||||
Currency translation adjustments |
|
|
|
|
|
|
|
35.8 |
|
|
|
|
|
35.8 |
| |||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
282.6 |
| ||||||
Exercise of stock options |
|
|
|
7.7 |
|
|
|
|
|
0.2 |
|
|
|
|
| |||||||
Stock-based compensation and award of nonvested shares |
|
|
|
11.5 |
|
|
|
|
|
|
|
|
|
|
| |||||||
Tax benefit related to stock-based compensation |
|
|
|
2.4 |
|
|
|
|
|
|
|
|
|
|
| |||||||
Other |
|
|
|
0.1 |
|
0.1 |
|
|
|
(0.2 |
) |
|
|
|
| |||||||
Balance at June 30, 2011 |
|
$ |
0.9 |
|
$ |
681.4 |
|
$ |
995.2 |
|
$ |
(46.0 |
) |
$ |
|
|
$ |
(0.3 |
) |
|
|
|
|
Oshkosh Corporations Shareholders |
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
Accumulated |
|
Common |
|
|
|
|
| |||||||
|
|
|
|
Additional |
|
|
|
Other |
|
Stock in |
|
Non- |
|
|
| |||||||
|
|
Common |
|
Paid-In |
|
Retained |
|
Comprehensive |
|
Treasury |
|
Controlling |
|
Comprehensive |
| |||||||
|
|
Stock |
|
Capital |
|
Earnings |
|
Income (Loss) |
|
at Cost |
|
Interest |
|
Income |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance at September 30, 2011 |
|
$ |
0.9 |
|
$ |
685.6 |
|
$ |
1,032.7 |
|
$ |
(122.6 |
) |
$ |
(0.1 |
) |
$ |
0.1 |
|
|
| |
Comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Net income |
|
|
|
|
|
151.9 |
|
|
|
|
|
1.1 |
|
$ |
153.0 |
| ||||||
Change in fair value of derivative instruments, net of tax of $0.8 |
|
|
|
|
|
|
|
1.4 |
|
|
|
|
|
1.4 |
| |||||||
Employee pension and postretirement benefits, net of tax of $2.6 |
|
|
|
|
|
|
|
4.5 |
|
|
|
|
|
4.5 |
| |||||||
Currency translation adjustments |
|
|
|
|
|
|
|
(18.5 |
) |
|
|
|
|
(18.5 |
) | |||||||
Total comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
140.4 |
| ||||||
Exercise of stock options |
|
|
|
2.4 |
|
|
|
|
|
0.7 |
|
|
|
|
| |||||||
Stock-based compensation and award of nonvested shares |
|
|
|
9.0 |
|
|
|
|
|
|
|
|
|
|
| |||||||
Other |
|
|
|
0.4 |
|
0.1 |
|
|
|
(0.7 |
) |
(1.2 |
) |
|
| |||||||
Balance at June 30, 2012 |
|
$ |
0.9 |
|
$ |
697.4 |
|
$ |
1,184.7 |
|
$ |
(135.2 |
) |
$ |
(0.1 |
) |
$ |
|
|
|
|
The accompanying notes are an integral part of these financial statements.
OSHKOSH CORPORATION
Condensed Consolidated Statements of Cash Flows
(In millions; unaudited)
|
|
Nine Months Ended |
| ||||
|
|
June 30, |
| ||||
|
|
2012 |
|
2011 |
| ||
Operating activities: |
|
|
|
|
| ||
Net income |
|
$ |
153.0 |
|
$ |
235.4 |
|
Depreciation and amortization |
|
95.8 |
|
105.1 |
| ||
Stock-based compensation expense |
|
9.0 |
|
11.5 |
| ||
Deferred income taxes |
|
(35.2 |
) |
11.5 |
| ||
Dividends from equity method investees |
|
6.5 |
|
|
| ||
Other non-cash adjustments |
|
0.8 |
|
(3.6 |
) | ||
Changes in operating assets and liabilities |
|
(155.6 |
) |
(81.2 |
) | ||
Net cash provided by operating activities |
|
74.3 |
|
278.7 |
| ||
|
|
|
|
|
| ||
Investing activities: |
|
|
|
|
| ||
Additions to property, plant and equipment |
|
(33.9 |
) |
(53.9 |
) | ||
Additions to equipment held for rental |
|
(5.9 |
) |
(3.1 |
) | ||
Proceeds from sale of property, plant and equipment |
|
7.5 |
|
1.0 |
| ||
Proceeds from sale of equipment held for rental |
|
3.2 |
|
13.1 |
| ||
Proceeds from sale of equity method investments |
|
8.7 |
|
|
| ||
Other investing activities |
|
7.2 |
|
(4.2 |
) | ||
Net cash used by investing activities |
|
(13.2 |
) |
(47.1 |
) | ||
|
|
|
|
|
| ||
Financing activities: |
|
|
|
|
| ||
Repayment of long-term debt |
|
(105.0 |
) |
(65.4 |
) | ||
Net repayments under revolving credit facility |
|
|
|
(125.0 |
) | ||
Proceeds from exercise of stock options |
|
3.1 |
|
7.9 |
| ||
Other financing activities |
|
(0.2 |
) |
1.9 |
| ||
Net cash used by financing activities |
|
(102.1 |
) |
(180.6 |
) | ||
|
|
|
|
|
| ||
Effect of exchange rate changes on cash |
|
3.2 |
|
3.8 |
| ||
Increase (decrease) in cash and cash equivalents |
|
(37.8 |
) |
54.8 |
| ||
Cash and cash equivalents at beginning of period |
|
428.5 |
|
339.0 |
| ||
Cash and cash equivalents at end of period |
|
$ |
390.7 |
|
$ |
393.8 |
|
|
|
|
|
|
| ||
Supplemental disclosures: |
|
|
|
|
| ||
Cash paid for interest |
|
$ |
44.1 |
|
$ |
55.0 |
|
Cash paid for income taxes |
|
59.5 |
|
93.2 |
|
The accompanying notes are an integral part of these financial statements.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments, unless otherwise noted) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in Oshkosh Corporations (the Company) Annual Report on Form 10-K for the year ended September 30, 2011. The interim results are not necessarily indicative of results for the full year.
2. New Accounting Standards
In June 2011, the Financial Accounting Standards Board (FASB) amended Accounting Standards Codification (ASC) Topic 220, Comprehensive Income, to require all non-owner changes in shareholders equity to be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. Under this amendment, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. An entity will no longer be permitted to present the components of other comprehensive income as part of the statement of equity. The Company will be required to adopt the new presentation requirements as of October 1, 2012. The adoption of the new presentation will not have a material impact on the Companys financial condition, results of operations or cash flows.
3. Receivables
Receivables consisted of the following (in millions):
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
U.S. government: |
|
|
|
|
| ||
Amounts billed |
|
$ |
216.0 |
|
$ |
318.8 |
|
Costs and profits not billed |
|
236.9 |
|
172.3 |
| ||
|
|
452.9 |
|
491.1 |
| ||
Other trade receivables |
|
777.2 |
|
568.8 |
| ||
Finance receivables |
|
9.7 |
|
23.6 |
| ||
Notes receivable |
|
25.8 |
|
33.7 |
| ||
Other receivables |
|
40.1 |
|
27.4 |
| ||
|
|
1,305.7 |
|
1,144.6 |
| ||
Less allowance for doubtful accounts |
|
(20.2 |
) |
(29.5 |
) | ||
|
|
$ |
1,285.5 |
|
$ |
1,115.1 |
|
Costs and profits not billed generally result from undefinitized change orders on existing long-term contracts and not-to-exceed undefinitized contracts whereby the Company cannot invoice the customer the full price under the contract or contract change order until such contract or change order is definitized and agreed to with the customer following a review of costs under such a contract award even though the contract deliverables may have been met. Definitization of a change order on an existing long-term contract or a sole source contract begins when the U.S. government customer undertakes a detailed review of the Companys submitted costs and proposed margin related to the contract, with the final change order or contract price subject to review. The Company recognizes revenue on undefinitized contracts to the extent that it can reasonably and reliably estimate the expected final contract price and when collectability is reasonably assured. At June 30, 2012, the Company had recorded $581.8 million of revenue on contracts which remained undefinitized as of that date. To the extent that contract definitization results in changes to previously estimated or incurred costs or revenues, the Company records those adjustments as a change in estimate. In the third quarter of fiscal 2012, the Company updated its estimated costs under undefinitized contracts and recorded adjustments to reduce sales and operating income on revenue recognized in prior quarters of $38.3 million and $8.0 million, respectively.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Classification of receivables in the Condensed Consolidated Balance Sheets consisted of the following (in millions):
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Current receivables |
|
$ |
1,268.6 |
|
$ |
1,089.1 |
|
Long-term receivables |
|
16.9 |
|
26.0 |
| ||
|
|
$ |
1,285.5 |
|
$ |
1,115.1 |
|
Finance Receivables: Finance receivables represent sales-type leases resulting from the sale of the Companys products and the purchase of finance receivables from lenders pursuant to customer defaults under program agreements with finance companies. Finance receivables originated by the Company generally include a residual value component. Residual values are determined based on the expectation that the underlying equipment will have a minimum fair market value at the end of the lease term. This residual value accrues to the Company at the end of the lease. The Company uses its experience and knowledge as an original equipment manufacturer and participant in end markets for the related products along with third-party studies to estimate residual values. The Company monitors these values for impairment on a periodic basis and reflects any resulting reductions in value in current earnings. Finance receivables are written down if management determines that the specific borrower does not have the ability to repay the loan amounts due in full.
Finance receivables consisted of the following (in millions):
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Finance receivables |
|
$ |
10.5 |
|
$ |
27.9 |
|
Less unearned income |
|
(0.8 |
) |
(4.3 |
) | ||
Net finance receivables |
|
9.7 |
|
23.6 |
| ||
Less allowance for doubtful accounts |
|
(1.6 |
) |
(11.5 |
) | ||
|
|
$ |
8.1 |
|
$ |
12.1 |
|
Contractual maturities of the Companys finance receivables at June 30, 2012 were as follows: 2012 (remaining three months) - $6.7 million; 2013 - $0.8 million; 2014 - $1.4 million; 2015 - $0.8 million; 2016 - $0.4 million; 2017 - $0.1 million; and thereafter - $0.3 million. Historically, obligors have paid off finance receivables prior to their contractual due dates, although actual repayment timing is impacted by a number of factors, including the economic environment at the time. As a result, contractual maturities are not to be regarded as a forecast of future cash flows.
Delinquency is the primary indicator of credit quality of finance receivables. The Company maintains a general allowance for finance receivables considered doubtful of future collection based upon historical experience. Additional allowances are established based upon the Companys perception of the quality of the finance receivables, including the length of time the receivables are past due, past experience of collectability and underlying economic conditions. In circumstances where the Company believes collectability is no longer reasonably assured, a specific allowance is recorded to reduce the net recognized receivable to the amount reasonably expected to be collected. The terms of the finance agreements generally give the Company the ability to take possession of the underlying collateral. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers financial obligations is not realized.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Notes Receivable: Notes receivable include amounts related to refinancing of trade accounts and finance receivables. As of June 30, 2012, approximately 95% of the notes receivable balance outstanding was due from three parties. The Company routinely evaluates the creditworthiness of its customers and establishes reserves where the Company believes collectability is no longer reasonably assured. Notes receivable are written down if management determines that the specific borrower does not have the ability to repay the loan in full. Certain notes receivable are collateralized by a security interest in the underlying assets and/or other assets owned by the debtor. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers financial obligations is not realized.
Quality of Finance and Notes Receivable: The Company does not accrue interest income on finance and notes receivables in circumstances where the Company believes collectability is no longer reasonably assured. Any cash payments received on nonaccrual finance and notes receivable are applied first to principal balances. The Company does not resume accrual of interest income until the customer has shown that it is capable of meeting its financial obligations by making timely payments over a sustained period of time. The Company determines past due or delinquency status based upon the due date of the receivable.
Finance and notes receivable aging and accrual status consisted of the following (in millions):
|
|
Finance Receivables |
|
Notes Receivable |
| ||||||||
|
|
June 30, |
|
September 30, |
|
June 30, |
|
September 30, |
| ||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
Aging of receivables that are past due: |
|
|
|
|
|
|
|
|
| ||||
Greater than 30 days and less than 60 days |
|
$ |
0.1 |
|
$ |
0.5 |
|
$ |
|
|
$ |
|
|
Greater than 60 days and less than 90 days |
|
0.1 |
|
0.1 |
|
|
|
|
| ||||
Greater than 90 days |
|
0.3 |
|
6.5 |
|
|
|
0.5 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Receivables on nonaccrual status |
|
3.6 |
|
17.6 |
|
19.3 |
|
20.8 |
| ||||
Receivables past due 90 days or more and still accruing |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Receivables subject to general reserves |
|
5.8 |
|
0.4 |
|
3.1 |
|
8.6 |
| ||||
Allowance for doubtful accounts |
|
(0.1 |
) |
|
|
|
|
(0.1 |
) | ||||
Receivables subject to specific reserves |
|
3.9 |
|
23.2 |
|
22.7 |
|
25.1 |
| ||||
Allowance for doubtful accounts |
|
(1.5 |
) |
(11.5 |
) |
(8.1 |
) |
(8.8 |
) | ||||
Receivables subject to specific reserves also include loans that the Company has modified in troubled debt restructurings as a concession to customers experiencing financial difficulty. To minimize the economic loss, the Company may modify certain finance and notes receivable. Modifications generally consist of restructured payment terms and time frames in which no payments are required. Troubled debt restructurings were not significant during the three and nine months ended June 30, 2012.
Changes in the Companys allowance for doubtful accounts were as follows (in millions):
|
|
Three Months Ended June 30, 2012 |
|
Three Months Ended June 30, 2011 |
| ||||||||||||||||||||
|
|
|
|
|
|
Trade and |
|
|
|
|
|
|
|
Trade and |
|
|
| ||||||||
|
|
Finance |
|
Notes |
|
Other |
|
Total |
|
Finance |
|
Notes |
|
Other |
|
Total |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Beginning balance |
|
$ |
3.1 |
|
$ |
8.5 |
|
$ |
10.2 |
|
$ |
21.8 |
|
$ |
16.3 |
|
$ |
10.2 |
|
$ |
9.4 |
|
$ |
35.9 |
|
Provision, net of recoveries |
|
(0.2 |
) |
(0.1 |
) |
0.7 |
|
0.4 |
|
4.6 |
|
(0.9 |
) |
(0.1 |
) |
3.6 |
| ||||||||
Charge-offs |
|
(1.3 |
) |
(0.3 |
) |
(0.4 |
) |
(2.0 |
) |
(0.2 |
) |
|
|
|
|
(0.2 |
) | ||||||||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
0.1 |
|
0.2 |
|
0.3 |
| ||||||||
Ending balance |
|
$ |
1.6 |
|
$ |
8.1 |
|
$ |
10.5 |
|
$ |
20.2 |
|
$ |
20.7 |
|
$ |
9.4 |
|
$ |
9.5 |
|
$ |
39.6 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
|
|
Nine Months Ended June 30, 2012 |
|
Nine Months Ended June 30, 2011 |
| ||||||||||||||||||||
|
|
|
|
|
|
Trade and |
|
|
|
|
|
|
|
Trade and |
|
|
| ||||||||
|
|
Finance |
|
Notes |
|
Other |
|
Total |
|
Finance |
|
Notes |
|
Other |
|
Total |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Beginning balance |
|
$ |
11.5 |
|
$ |
8.9 |
|
$ |
9.1 |
|
$ |
29.5 |
|
$ |
20.9 |
|
$ |
9.4 |
|
$ |
11.7 |
|
$ |
42.0 |
|
Provision, net of recoveries |
|
(3.3 |
) |
(0.3 |
) |
3.0 |
|
(0.6 |
) |
5.5 |
|
1.9 |
|
0.2 |
|
7.6 |
| ||||||||
Charge-offs |
|
(6.6 |
) |
(0.5 |
) |
(1.6 |
) |
(8.7 |
) |
(5.7 |
) |
(2.1 |
) |
(2.7 |
) |
(10.5 |
) | ||||||||
Foreign currency translation |
|
|
|
|
|
|
|
|
|
|
|
0.2 |
|
0.3 |
|
0.5 |
| ||||||||
Ending balance |
|
$ |
1.6 |
|
$ |
8.1 |
|
$ |
10.5 |
|
$ |
20.2 |
|
$ |
20.7 |
|
$ |
9.4 |
|
$ |
9.5 |
|
$ |
39.6 |
|
4. Inventories
Inventories consisted of the following (in millions):
|
|
June 30, |
|
September 30, |
| |||
|
|
2012 |
|
2011 |
| |||
|
|
|
|
|
| |||
Raw materials |
|
$ |
503.9 |
|
$ |
587.4 |
| |
Partially finished products |
|
305.4 |
|
377.7 |
| |||
Finished products |
|
437.9 |
|
237.8 |
| |||
Inventories at FIFO cost |
|
1,247.2 |
|
1,202.9 |
| |||
Less: |
Progress/performance-based payments on U.S. government contracts |
|
(266.1 |
) |
(341.7 |
) | ||
|
Excess of FIFO cost over LIFO cost |
|
(79.5 |
) |
(74.4 |
) | ||
|
|
$ |
901.6 |
|
$ |
786.8 |
|
Title to all inventories related to government contracts, which provide for progress or performance-based payments, vests with the government to the extent of unliquidated progress or performance-based payments.
5. Investments in Unconsolidated Affiliates
Investments in unconsolidated affiliates are accounted for under the equity method and consisted of the following (in millions):
|
|
Percent- |
|
June 30, |
|
September 30, |
| ||
|
|
owned |
|
2012 |
|
2011 |
| ||
|
|
|
|
|
|
|
| ||
OMFSP (U.S.) |
|
|
|
$ |
|
|
$ |
13.4 |
|
RiRent (The Netherlands) |
|
50% |
|
10.5 |
|
10.9 |
| ||
Other |
|
|
|
7.9 |
|
7.5 |
| ||
|
|
|
|
$ |
18.4 |
|
$ |
31.8 |
|
Recorded investments generally represent the Companys maximum exposure to loss as a result of the Companys ownership interest. Earnings or losses are reflected in Equity in earnings of unconsolidated affiliates in the Condensed Consolidated Statements of Income.
The Company and an unaffiliated third-party were partners in Oshkosh/McNeilus Financial Services Partnership (OMFSP), a general partnership formed for the purpose of offering lease financing to certain customers of the Company. OMFSP historically engaged in providing vendor lease financing to certain customers of the Company. During the third quarter of fiscal 2012, the Company sold its interest in OMFSP for an immaterial pre-tax gain. Cash distributions and proceeds from the sale aggregated $16.5 million.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company and an unaffiliated third-party are joint venture partners in RiRent Europe, B.V. (RiRent). RiRent maintains a fleet of access equipment for short-term lease to rental companies throughout most of Europe. The re-rental fleet provides rental companies with equipment to support requirements on short notice. RiRent does not provide services directly to end users. The Companys sales to RiRent were $5.0 million and $3.1 million for the nine months ended June 30, 2012 and 2011, respectively. The Company recognizes income on sales to RiRent at the time of shipment in proportion to the outside third-party interest in RiRent and recognizes the remaining income ratably over the estimated useful life of the equipment, which is generally five years. Indebtedness of RiRent is secured by the underlying leases and assets of RiRent. All such RiRent indebtedness is non-recourse to the Company and its partner. Under RiRents 15.0 million bank credit facility, the partners of RiRent have committed to maintain an overall equity to asset ratio for RiRent of at least 30.0% (62.6% as of June 30, 2012).
6. Property, Plant and Equipment
Property, plant and equipment consisted of the following (in millions):
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Land and land improvements |
|
$ |
45.2 |
|
$ |
46.2 |
|
Buildings |
|
234.3 |
|
243.8 |
| ||
Machinery and equipment |
|
528.8 |
|
521.5 |
| ||
Equipment on operating lease to others |
|
22.4 |
|
23.0 |
| ||
|
|
830.7 |
|
834.5 |
| ||
Less accumulated depreciation |
|
(471.6 |
) |
(445.8 |
) | ||
|
|
$ |
359.1 |
|
$ |
388.7 |
|
Depreciation expense was $48.1 million and $55.7 million for the nine months ended June 30, 2012 and 2011, respectively. Equipment on operating lease to others represents the cost of equipment shipped to customers for whom the Company has guaranteed the residual value and equipment on short-term lease. These transactions are accounted for as operating leases with the related assets capitalized and depreciated over their estimated economic lives of five to ten years. Cost less accumulated depreciation for equipment on operating lease at June 30, 2012 and September 30, 2011 was $8.0 million and $6.5 million, respectively.
7. Goodwill and Purchased Intangible Assets
Goodwill and other indefinite-lived intangible assets are not amortized, but are reviewed for impairment annually, or more frequently if potential interim indicators exist that could result in impairment. The Company performs its annual impairment test in the fourth quarter of its fiscal year.
The following table presents changes in goodwill during the nine months ended June 30, 2012 (in millions):
|
|
Access |
|
Fire & |
|
|
|
|
| ||||
|
|
Equipment |
|
Emergency |
|
Commercial |
|
Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning balance |
|
$ |
912.2 |
|
$ |
107.9 |
|
$ |
21.4 |
|
$ |
1,041.5 |
|
Foreign currency translation |
|
(9.5 |
) |
|
|
0.1 |
|
(9.4 |
) | ||||
Deconsolidation of variable interest entity |
|
|
|
(1.8 |
) |
|
|
(1.8 |
) | ||||
Ending balance |
|
$ |
902.7 |
|
$ |
106.1 |
|
$ |
21.5 |
|
$ |
1,030.3 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table presents details of the Companys goodwill allocated to the reportable segments (in millions):
|
|
June 30, 2012 |
|
September 30, 2011 |
| ||||||||||||||
|
|
|
|
Accumulated |
|
|
|
|
|
Accumulated |
|
|
| ||||||
|
|
Gross |
|
Impairment |
|
Net |
|
Gross |
|
Impairment |
|
Net |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access Equipment |
|
$ |
1,834.8 |
|
$ |
(932.1 |
) |
$ |
902.7 |
|
$ |
1,844.3 |
|
$ |
(932.1 |
) |
$ |
912.2 |
|
Fire & Emergency |
|
180.3 |
|
(74.2 |
) |
106.1 |
|
182.1 |
|
(74.2 |
) |
107.9 |
| ||||||
Commercial |
|
197.4 |
|
(175.9 |
) |
21.5 |
|
197.3 |
|
(175.9 |
) |
21.4 |
| ||||||
|
|
$ |
2,212.5 |
|
$ |
(1,182.2 |
) |
$ |
1,030.3 |
|
$ |
2,223.7 |
|
$ |
(1,182.2 |
) |
$ |
1,041.5 |
|
Details of the Companys total purchased intangible assets were as follows (in millions):
|
|
June 30, 2012 |
| |||||||||
|
|
Weighted- |
|
|
|
|
|
|
| |||
|
|
Average |
|
|
|
Accumulated |
|
|
| |||
|
|
Life |
|
Gross |
|
Amortization |
|
Net |
| |||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
| |||
Distribution network |
|
39.1 |
|
$ |
55.4 |
|
$ |
(21.9 |
) |
$ |
33.5 |
|
Non-compete |
|
10.5 |
|
56.8 |
|
(54.8 |
) |
2.0 |
| |||
Technology-related |
|
11.7 |
|
104.7 |
|
(59.9 |
) |
44.8 |
| |||
Customer relationships |
|
12.7 |
|
571.3 |
|
(262.5 |
) |
308.8 |
| |||
Other |
|
16.5 |
|
16.6 |
|
(12.7 |
) |
3.9 |
| |||
|
|
14.3 |
|
804.8 |
|
(411.8 |
) |
393.0 |
| |||
Non-amortizable trade names |
|
|
|
397.6 |
|
|
|
397.6 |
| |||
|
|
|
|
$ |
1,202.4 |
|
$ |
(411.8 |
) |
$ |
790.6 |
|
|
|
September 30, 2011 |
| |||||||||
|
|
Weighted- |
|
|
|
|
|
|
| |||
|
|
Average |
|
|
|
Accumulated |
|
|
| |||
|
|
Life |
|
Gross |
|
Amortization |
|
Net |
| |||
Amortizable intangible assets: |
|
|
|
|
|
|
|
|
| |||
Distribution network |
|
39.1 |
|
$ |
55.4 |
|
$ |
(20.8 |
) |
$ |
34.6 |
|
Non-compete |
|
10.5 |
|
56.9 |
|
(53.0 |
) |
3.9 |
| |||
Technology-related |
|
11.7 |
|
104.8 |
|
(53.3 |
) |
51.5 |
| |||
Customer relationships |
|
12.7 |
|
576.7 |
|
(229.9 |
) |
346.8 |
| |||
Other |
|
16.5 |
|
16.5 |
|
(12.2 |
) |
4.3 |
| |||
|
|
14.3 |
|
810.3 |
|
(369.2 |
) |
441.1 |
| |||
Non-amortizable trade names |
|
|
|
397.6 |
|
|
|
397.6 |
| |||
|
|
|
|
$ |
1,207.9 |
|
$ |
(369.2 |
) |
$ |
838.7 |
|
Amortization expense was $43.9 million and $45.5 million for the nine months ended June 30, 2012 and 2011, respectively. The estimated future amortization expense of purchased intangible assets for the remainder of fiscal 2012 and the five years succeeding September 30, 2012 are as follows: 2012 (remaining three months) - $14.1 million; 2013 - $55.9 million; 2014 - $54.5 million; 2015 - $53.7 million; 2016 - $53.1 million and 2017 - $45.7 million.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
8. Credit Agreements
The Company was obligated under the following debt instruments (in millions):
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Senior Secured Term Loan |
|
$ |
455.0 |
|
$ |
560.0 |
|
8¼% Senior notes due March 2017 |
|
250.0 |
|
250.0 |
| ||
8½% Senior notes due March 2020 |
|
250.0 |
|
250.0 |
| ||
Other long-term facilities |
|
|
|
0.1 |
| ||
|
|
955.0 |
|
1,060.1 |
| ||
Less current maturities |
|
|
|
(40.1 |
) | ||
|
|
$ |
955.0 |
|
$ |
1,020.0 |
|
|
|
|
|
|
| ||
Revolving line of credit |
|
$ |
|
|
$ |
|
|
Current maturities of long-term debt |
|
|
|
40.1 |
| ||
|
|
$ |
|
|
$ |
40.1 |
|
The Company has a senior secured credit agreement with various lenders (the Credit Agreement). At June 30, 2012, the Credit Agreement provided for (i) a revolving credit facility (Revolving Credit Facility) that matures in October 2015 with an initial maximum aggregate amount of availability of $550 million and (ii) a $650 million term loan (Term Loan) facility due in quarterly principal installments of $16.25 million with a balloon payment of $341.25 million due at maturity in October 2015. During the first nine months of fiscal 2012, the Company prepaid the principal installments under the Term Loan that were originally due September 30, 2012 through September 30, 2013. At June 30, 2012, outstanding letters of credit of $39.1 million reduced available capacity under the Revolving Credit Facility to $510.9 million. Refer to Note 21 of the Notes to Condensed Consolidated Financial Statements for information regarding the amendment of the Companys Credit Agreement in July 2012.
The Companys obligations under the Credit Agreement are guaranteed by certain of its domestic subsidiaries, and the Company will guarantee the obligations of certain of its subsidiaries under the Credit Agreement to the extent such subsidiaries borrow directly under the Credit Agreement. Subject to certain exceptions, the Credit Agreement is secured by (i) a first-priority perfected lien and security interests in substantially all of the personal property of the Company, each material subsidiary of the Company and each subsidiary guarantor, (ii) mortgages upon certain real property of the Company and certain of its domestic subsidiaries and (iii) a pledge of the equity of each material subsidiary and each subsidiary guarantor.
At June 30, 2012, the Company was obligated to pay (i) an unused commitment fee ranging from 0.40% to 0.50% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 1.125% to 3.50% per annum of the maximum amount available to be drawn for each performance letter of credit issued and outstanding under the Credit Agreement.
Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied, or (ii) for dollar-denominated loans only, the base rate (which is the highest of (a) the administrative agents prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied. At June 30, 2012, the interest spread on the Revolving Credit Facility and Term Loan was 275 basis points. The weighted-average interest rate on borrowings outstanding under the Term Loan at June 30, 2012 was 3.00%.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Credit Agreement contains various restrictions and covenants, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions and make investments in joint ventures and foreign subsidiaries. The Credit Agreement contains the following financial covenants:
· Leverage Ratio: A maximum leverage ratio (defined as, with certain adjustments, the ratio of the Companys consolidated indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (EBITDA)) as of the last day of any fiscal quarter of 4.50 to 1.0.
· Interest Coverage Ratio: A minimum interest coverage ratio (defined as, with certain adjustments, the ratio of the Companys EBITDA to the Companys consolidated cash interest expense) as of the last day of any fiscal quarter of 2.50 to 1.0.
· Senior Secured Leverage Ratio: A maximum senior secured leverage ratio (defined as, with certain adjustments, the ratio of the Companys consolidated secured indebtedness to the Companys EBITDA) of the following:
Fiscal Quarter Ending |
|
|
|
June 30, 2012 and September 30, 2012 |
|
3.00 to 1.0 |
|
Thereafter |
|
2.75 to 1.0 |
|
The Company was in compliance with the financial covenants contained in the Credit Agreement as of June 30, 2012 and expects to be able to meet the financial covenants contained in the Credit Agreement over the next twelve months.
Additionally, with certain exceptions, the Credit Agreement limited the ability of the Company to pay dividends and other distributions, including repurchases of stock. However, so long as no event of default exists under the Credit Agreement or would result from such payment, the Company was allowed to pay dividends and other distributions at June 30, 2012, in an aggregate amount not exceeding the sum of:
(i) $50 million during any fiscal year; plus
(ii) the excess of (a) 25% of the cumulative net income of the Company and its consolidated subsidiaries for all fiscal quarters ending after September 27, 2010, over (b) the cumulative amount of all such dividends and other distributions made in any fiscal year ending after such date that exceed $50 million; plus
(iii) for each of the first four fiscal quarters ending after September 27, 2010, $25 million per fiscal quarter, in each case provided that the leverage ratio (as defined) as of the last day of the most recently ended fiscal quarter was less than 2.0 to 1.0; plus
(iv) for the period of four fiscal quarters ending September 30, 2011 and for each period of four fiscal quarters ending thereafter, $100 million during such period, in each case provided that the leverage ratio (as defined) as of the last day of the most recently ended fiscal quarter was less than 2.0 to 1.0.
In March 2010, the Company issued $250.0 million of 8¼% unsecured senior notes due March 1, 2017 and $250.0 million of 8½% unsecured senior notes due March 1, 2020 (collectively, the Senior Notes). The Senior Notes were issued pursuant to an indenture (the Indenture) among the Company, the subsidiary guarantors named therein and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the Senior Notes due 2017 and Senior Notes due 2020 for a premium after March 1, 2014 and March 1, 2015, respectively. Certain of the Companys subsidiaries fully, unconditionally, jointly and severally guarantee the Companys obligations under the Senior Notes. See Note 20 of the Notes to Condensed Consolidated Financial Statements for separate financial information of the subsidiary guarantors.
The fair value of the long-term debt is estimated based upon the market rate of the Companys debt. At June 30, 2012, the fair value of the Senior Notes was estimated to be $530 million and the fair value of the Term Loan approximated book value.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
9. Warranties
The Companys products generally carry explicit warranties that extend from six months to five years, based on terms that are generally accepted in the marketplace. Selected components (such as engines, transmissions, tires, etc.) included in the Companys end products may include manufacturers warranties. These manufacturers warranties are generally passed on to the end customer of the Companys products, and the customer would generally deal directly with the component manufacturer.
Changes in the Companys warranty liability were as follows (in millions):
|
|
Nine Months Ended |
| ||||
|
|
June 30, |
| ||||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Beginning balance |
|
$ |
75.0 |
|
$ |
90.5 |
|
Warranty provisions |
|
43.8 |
|
31.3 |
| ||
Settlements made |
|
(40.2 |
) |
(35.8 |
) | ||
Changes in liability for pre-existing warranties, net |
|
8.6 |
|
(12.7 |
) | ||
Foreign currency translation |
|
0.4 |
|
0.8 |
| ||
Ending balance |
|
$ |
87.6 |
|
$ |
74.1 |
|
Provisions for estimated warranty and other related costs are recorded at the time of sale and are periodically adjusted to reflect actual experience. Changes in the liability for pre-existing warranties during the nine months ended June 30, 2012 primarily related to increased warranty costs in the fire & emergency segment. Actual MRAP All-Terrain Vehicle (MATV) warranty claims have been lower than the Company expected on the M-ATV product launch, which resulted in reductions in liabilities for pre-existing warranties for the nine months ended June 30, 2011. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. At times, warranty issues arise that are beyond the scope of the Companys historical experience. For example, accelerated programs to design, test, manufacture and deploy products such as the M-ATV, in war-time conditions, carry with them an increased level of inherent risk of product or component failure. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters in excess of amounts accrued; however, the Company does not expect that any such amounts, while not determinable, would have a material adverse effect on the Companys consolidated financial condition, result of operations or cash flows.
10. Guarantee Arrangements
The Company is party to multiple agreements whereby it guarantees an aggregate of $160.6 million in indebtedness of others, including $125.1 million under loss pool agreements. The Company estimated that its maximum loss exposure under these contracts at June 30, 2012 was $39.9 million. Under the terms of these and various related agreements and upon the occurrence of certain events, the Company generally has the ability to, among other things, take possession of the underlying collateral. If the financial condition of the customers were to deteriorate and result in their inability to make payments, then additional accruals may be required. While the Company does not expect to experience losses under these agreements that are materially in excess of the amounts reserved, it cannot provide any assurance that the financial condition of the third parties will not deteriorate resulting in the third parties inability to meet their obligations. In the event that this occurs, the Company cannot guarantee that the collateral underlying the agreements will be sufficient to avoid losses materially in excess of the amounts reserved. Any losses under these guarantees would generally be mitigated by the value of any underlying collateral, including financed equipment, and are generally subject to the finance companys ability to provide the Company clear title to foreclosed equipment and other conditions. During periods of economic weakness, collateral values generally decline and can contribute to higher exposure to losses.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Changes in the consolidated credit guarantee liability were as follows (in millions):
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Beginning balance |
|
$ |
4.5 |
|
$ |
10.4 |
|
$ |
6.4 |
|
$ |
23.1 |
|
Provision for new credit guarantees |
|
0.9 |
|
0.3 |
|
1.7 |
|
0.4 |
| ||||
Settlements made |
|
(0.4 |
) |
|
|
(0.9 |
) |
(3.0 |
) | ||||
Changes for pre-existing guarantees, net |
|
0.3 |
|
(3.5 |
) |
(1.4 |
) |
(12.4 |
) | ||||
Amortization of previous guarantees |
|
(0.3 |
) |
(0.1 |
) |
(0.8 |
) |
(1.0 |
) | ||||
Foreign currency translation |
|
(0.1 |
) |
0.1 |
|
(0.1 |
) |
0.1 |
| ||||
Ending balance |
|
$ |
4.9 |
|
$ |
7.2 |
|
$ |
4.9 |
|
$ |
7.2 |
|
In the first quarter of fiscal 2011, the Company reached a settlement with a customer that resulted in the customers repayment of $28.3 million of loans supported by Company guarantees for which the Company had established specific credit loss reserves. Upon release of the guarantees, the Company reduced previously accrued reserves and increased pre-tax income by $8.1 million.
11. Derivative Financial Instruments and Hedging Activities
The Company has used forward foreign currency exchange contracts (derivatives) to reduce the exchange rate risk of specific foreign currency denominated transactions. These derivatives typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date. At June 30, 2012, the Company had no forward foreign exchange contracts designated as hedges.
The Company has entered into forward foreign currency exchange contracts to create an economic hedge to manage foreign exchange risk exposure associated with non-functional currency denominated payables resulting from global sourcing activities. The Company has not designated these derivative contracts as hedge transactions under FASB ASC Topic 815, Derivatives and Hedging, and accordingly, the mark-to-market impact of these derivatives is recorded each period in current earnings. The fair value of foreign currency related derivatives is included in the Condensed Consolidated Balance Sheets in Other current assets and Other current liabilities. At June 30, 2012, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts totaled $128.6 million in notional amounts, including $65.0 million in contracts to sell Euro, $51.5 million in contracts to sell Australian dollars and $7.7 million in contracts to sell U.K. pounds sterling and buy Euro, with the remaining contracts covering a variety of foreign currencies.
Fair Market Value of Financial Instruments The fair values of all open derivative instruments in the Condensed Consolidated Balance Sheets were as follows (in millions):
|
|
June 30, 2012 |
|
September 30, 2011 |
| ||||||||
|
|
Other |
|
Other |
|
Other |
|
Other |
| ||||
|
|
Current |
|
Current |
|
Current |
|
Current |
| ||||
|
|
Assets |
|
Liabilities |
|
Assets |
|
Liabilities |
| ||||
Designated as hedging instruments: |
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
2.1 |
|
|
|
|
|
|
|
|
|
|
| ||||
Not designated as hedging instruments: |
|
|
|
|
|
|
|
|
| ||||
Foreign exchange contracts |
|
|
|
3.0 |
|
0.8 |
|
0.2 |
| ||||
|
|
$ |
|
|
$ |
3.0 |
|
$ |
0.8 |
|
$ |
2.3 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The pre-tax effects of derivative instruments on the Condensed Consolidated Statements of Income consisted of the following (in millions):
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
Classification of |
|
June 30, |
|
June 30, |
| ||||||||
|
|
Gains (Losses) |
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
| ||||
Reclassified from other comprehensive income (effective portion): |
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate contracts |
|
Interest expense |
|
$ |
|
|
$ |
(3.0 |
) |
$ |
(2.2 |
) |
$ |
(13.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Not designated as hedges: |
|
|
|
|
|
|
|
|
|
|
| ||||
Foreign exchange contracts |
|
Miscellaneous, net |
|
3.8 |
|
(3.3 |
) |
(3.1 |
) |
(8.0 |
) | ||||
|
|
|
|
$ |
3.8 |
|
$ |
(6.3 |
) |
$ |
(5.3 |
) |
$ |
(21.5 |
) |
12. Fair Value Measurements
FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Observable inputs other than quoted prices other than those included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
Level 3: Unobservable inputs reflecting managements own assumptions about the inputs used in pricing the asset or liability.
There were no transfers of assets between levels during the three months ended June 30, 2012. As of June 30, 2012, the fair values of the Companys financial assets and liabilities were as follows (in millions):
|
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Liabilities: |
|
|
|
|
|
|
|
|
| ||||
Foreign exchange contracts (a) |
|
$ |
|
|
$ |
3.0 |
|
$ |
|
|
$ |
3.0 |
|
(a) Based on observable market transactions of forward currency prices.
13. Stock-Based Compensation
In February 2009, the Companys shareholders approved the 2009 Incentive Stock and Awards Plan. In January 2012, the Companys shareholders approved amendments to the 2009 Incentive Stock and Awards Plan (as amended, the 2009 Stock Plan) to add 6,000,000 shares to the number of shares available for issuance under the plan. The 2009 Stock Plan replaced the 2004 Incentive Stock and Awards Plan, as amended (the 2004 Stock Plan), and 1990 Incentive Stock Plan, as amended (the 1990 Stock Plan). While no new awards will be granted under the 2004 Stock Plan and 1990 Stock Plan, awards previously made under these two plans that remained outstanding as of the initial approval date of the 2009 Stock Plan will remain outstanding and continue to be governed by the provisions of those plans.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Under the 2009 Stock Plan, officers, directors, including non-employee directors, and employees of the Company may be granted stock options, stock appreciation rights, performance shares, performance units, shares of Common Stock, restricted stock, restricted stock units or other stock-based awards. The 2009 Stock Plan provides for the granting of options to purchase shares of the Companys Common Stock at not less than the fair market value of such shares on the date of grant. Stock options granted under the 2009 Stock Plan become exercisable in equal installments over a three-year period, beginning with the first anniversary of the date of grant of the option, unless a shorter or longer duration is established by the Human Resources Committee of the Board of Directors at the time of the option grant. Stock options terminate not more than seven years from the date of grant. Except for performance shares and performance units, vesting is based solely on continued service as an employee of the Company. At June 30, 2012, the Company had reserved 11,570,693 shares of Common Stock available for issuance under the 2009 Stock Plan to provide for the exercise of outstanding stock options and the issuance of Common Stock under incentive compensation awards, including awards issued prior to the effective date of the 2009 Stock Plan.
The Company recognizes compensation expense over the requisite service period for vesting of an award, or to an employees eligible retirement date, if earlier and applicable. Total stock-based compensation expense included in the Companys Condensed Consolidated Statements of Income for the three and nine months ended June 30, 2012 was $3.4 million ($2.1 million net of tax) and $13.6 million ($8.6 million net of tax), respectively. Total stock-based compensation expense included in the Companys Condensed Consolidated Statements of Income for the three and nine months ended June 30, 2011 was $1.7 million ($1.1 million net of tax) and $11.4 million ($7.2 million net of tax), respectively.
The Company granted 20,000 and 30,575 options to purchase shares of the Companys Common Stock and issued 80,000 and 13,812 shares of nonvested stock during the nine months ended June 30, 2012 and 2011, respectively.
14. Restructuring and Other Charges
As part of the Companys actions to rationalize and optimize its global manufacturing footprint and in an effort to streamline operations, the Company announced in September 2010 that it was closing two JerrDan manufacturing facilities and relocating towing and recovery equipment production to other underutilized access equipment segment facilities. The Company largely completed these actions in the first quarter of fiscal 2011.
In January 2011, the Company announced that its fire & emergency segment would be closing its Medtec ambulance manufacturing facilities and integrating those operations into existing operations in Florida. Although the Company largely completed this action in the third quarter of fiscal 2011, the Medtec product line has continued to operate at a loss through June 30, 2012. Refer to Note 21 of the Notes to Condensed Consolidated Financial Statements for additional information regarding a decision to exit ambulance manufacturing and to dispose of the Companys European mobile medical business.
In January 2011, the Company initiated a plan to address continued weak market conditions in its access equipment segment in Europe. The plan included the consolidation of certain facilities and other cost reduction initiatives resulting in reductions in its workforce in Europe. In connection with this plan, the Company recorded statutorily or contractually required termination benefit costs in the first quarter of fiscal 2011. The Company largely completed these actions in the first quarter of fiscal 2012.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Pre-tax restructuring charges (credits) for the three and nine months ended June 30, 2012 and 2011 were as follows (in millions):
|
|
Three Months Ended June 30, 2012 |
|
Three Months Ended June 30, 2011 |
| ||||||||||||||
|
|
|
|
Selling, |
|
|
|
|
|
Selling, |
|
|
| ||||||
|
|
Cost of |
|
General and |
|
|
|
Cost of |
|
General and |
|
|
| ||||||
|
|
Sales |
|
Administrative |
|
Total |
|
Sales |
|
Administrative |
|
Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access equipment |
|
$ |
(0.1 |
) |
$ |
|
|
$ |
(0.1 |
) |
$ |
(2.5 |
) |
$ |
(0.5 |
) |
$ |
(3.0 |
) |
Fire & emergency |
|
|
|
0.1 |
|
0.1 |
|
|
|
0.2 |
|
0.2 |
| ||||||
Commercial |
|
|
|
|
|
|
|
|
|
0.1 |
|
0.1 |
| ||||||
|
|
$ |
(0.1 |
) |
$ |
0.1 |
|
$ |
|
|
$ |
(2.5 |
) |
$ |
(0.2 |
) |
$ |
(2.7 |
) |
|
|
Nine Months Ended June 30, 2012 |
|
Nine Months Ended June 30, 2011 |
| ||||||||||||||
|
|
|
|
Selling, |
|
|
|
|
|
Selling, |
|
|
| ||||||
|
|
Cost of |
|
General and |
|
|
|
Cost of |
|
General and |
|
|
| ||||||
|
|
Sales |
|
Administrative |
|
Total |
|
Sales |
|
Administrative |
|
Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access equipment |
|
$ |
(0.7 |
) |
$ |
|
|
$ |
(0.7 |
) |
$ |
1.8 |
|
$ |
0.9 |
|
$ |
2.7 |
|
Fire & emergency |
|
0.2 |
|
1.1 |
|
1.3 |
|
|
|
1.6 |
|
1.6 |
| ||||||
Commercial |
|
0.1 |
|
|
|
0.1 |
|
0.1 |
|
0.4 |
|
0.5 |
| ||||||
|
|
$ |
(0.4 |
) |
$ |
1.1 |
|
$ |
0.7 |
|
$ |
1.9 |
|
$ |
2.9 |
|
$ |
4.8 |
|
Changes in the Companys restructuring reserves for the nine months ended June 30, 2012, which are included within Other current liabilities in the Condensed Consolidated Balance Sheets, were as follows (in millions):
|
|
Employee |
|
|
|
|
| |||
|
|
Severance and |
|
|
|
|
| |||
|
|
Termination |
|
|
|
|
| |||
|
|
Benefits |
|
Other |
|
Total |
| |||
|
|
|
|
|
|
|
| |||
Beginning balance |
|
$ |
3.6 |
|
$ |
|
|
$ |
3.6 |
|
Restructuring provisions |
|
(0.2 |
) |
0.9 |
|
0.7 |
| |||
Utilized - cash |
|
(1.6 |
) |
(0.8 |
) |
(2.4 |
) | |||
Utilized - noncash |
|
|
|
(0.1 |
) |
(0.1 |
) | |||
Foreign currency translation |
|
(0.3 |
) |
|
|
(0.3 |
) | |||
Ending balance |
|
$ |
1.5 |
|
$ |
|
|
$ |
1.5 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
15. Employee Benefit Plans
Components of net periodic pension benefit cost were as follows (in millions):
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Service cost |
|
$ |
5.6 |
|
$ |
4.2 |
|
$ |
16.7 |
|
$ |
13.1 |
|
Interest cost |
|
4.0 |
|
3.4 |
|
12.2 |
|
10.3 |
| ||||
Expected return on plan assets |
|
(3.9 |
) |
(4.0 |
) |
(11.7 |
) |
(11.7 |
) | ||||
Amortization of prior service cost |
|
0.5 |
|
1.1 |
|
1.7 |
|
2.1 |
| ||||
Amortization of net actuarial loss |
|
1.9 |
|
1.5 |
|
5.5 |
|
5.0 |
| ||||
Net periodic benefit cost |
|
$ |
8.1 |
|
$ |
6.2 |
|
$ |
24.4 |
|
$ |
18.8 |
|
The Company made a $15.0 million discretionary contribution to its pension plans in June 2012. The Company expects to make additional discretionary contributions of approximately $15 million to its pension plans in the fourth quarter of fiscal 2012. The Company made $25.9 million in aggregate discretionary contributions to its pension plans in fiscal 2011.
Components of net periodic other post-employment benefit cost were as follows (in millions):
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Service cost |
|
$ |
1.8 |
|
$ |
1.1 |
|
$ |
5.4 |
|
$ |
3.4 |
|
Interest cost |
|
0.9 |
|
0.8 |
|
2.6 |
|
2.3 |
| ||||
Amortization of net actuarial loss |
|
0.3 |
|
0.3 |
|
0.9 |
|
0.8 |
| ||||
Net periodic benefit cost |
|
$ |
3.0 |
|
$ |
2.2 |
|
$ |
8.9 |
|
$ |
6.5 |
|
The Company made contributions to fund benefit payments of $1.0 million and $0.9 million for the nine months ended June 30, 2012 and 2011, respectively, under its other post-employment benefit plans. The Company estimates that it will make additional contributions of approximately $0.3 million under these other post-employment benefit plans prior to the end of fiscal 2012.
16. Income Taxes
The Companys effective income tax rate was 29.7% of pre-tax income in the first nine months of fiscal 2012 compared to 34.7% for the first nine months of fiscal 2011. The effective tax rate for the first nine months of fiscal 2012 was favorably impacted by net discrete tax benefits of 650 basis points. Net discrete tax benefits included provision to return adjustments, settlement of foreign tax audits and other items. The effective tax rate for the first nine months of fiscal 2011 was favorably impacted by net discrete tax benefits of 150 basis points. Net discrete tax benefits included foreign tax credits related to the decision to repatriate earnings previously fully reinvested, reinstatement of the U.S. research and development tax credit, unbenefitted losses in foreign jurisdictions due to cumulative net operating losses and other items.
The Companys liability for gross unrecognized tax benefits, excluding related interest and penalties, was $57.3 million and $54.4 million as of June 30, 2012 and September 30, 2011, respectively. As of June 30, 2012, net unrecognized tax benefits, excluding interest and penalties, of $48.2 million would affect the Companys net income if recognized, $28.1 million of which would impact net income from continuing operations.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the Provision for income taxes in the Companys Condensed Consolidated Statements of Income. During the nine months ended June 30, 2012 and 2011, the Company recognized $0.7 million and $1.8 million in interest and penalties, respectively. At June 30, 2012, the Company had accruals for the payment of interest and penalties of $16.1 million. During the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce unrecognized tax benefits by approximately $29.8 million, because the Companys tax positions are sustained on audit, because the Company agrees to the disallowance of the Companys tax positions or because the applicable statute of limitations closes.
The Company files federal income tax returns, as well as multiple state, local and non-U.S. jurisdiction tax returns. The Company is regularly audited by federal, state and foreign tax authorities. At June 30, 2012, the Company was under audit by the U.S. Internal Revenue Service for the taxable years ended September 30, 2008 and 2009, and the state of Wisconsin for the taxable years 2006 through 2009.
17. Earnings Per Share
The following table sets forth the computation of basic and diluted weighted-average shares used in the denominator of the per share calculations:
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||
|
|
June 30, |
|
June 30, |
| ||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
Basic weighted-average shares outstanding |
|
91,417,937 |
|
91,030,847 |
|
91,320,794 |
|
90,821,066 |
|
Effect of dilutive stock options and other equity-based compensation awards |
|
507,158 |
|
658,761 |
|
494,823 |
|
829,968 |
|
Diluted weighted-average shares outstanding |
|
91,925,095 |
|
91,689,608 |
|
91,815,617 |
|
91,651,034 |
|
Options to purchase 3,012,460 shares of Common Stock were outstanding during the three and nine months ended June 30, 2012, but were not included in the computation of diluted earnings per share attributable to Oshkosh Corporation common shareholders because the exercise price of the options was greater than the average market price of the shares of Common Stock and therefore the options would have been anti-dilutive. Options to purchase 2,339,123 and 1,383,955 shares of Common Stock were outstanding during the three and nine months ended June 30, 2011, respectively, but were not included in the computation of diluted earnings per share attributable to Oshkosh Corporation common shareholders because the exercise price of the options was greater than the average market price of the shares of Common Stock and therefore the options would have been anti-dilutive.
18. Contingencies, Significant Estimates and Concentrations
Environmental - As part of its routine business operations, the Company disposes of and recycles or reclaims certain industrial waste materials, chemicals and solvents at third-party disposal and recycling facilities, which are licensed by appropriate governmental agencies. In some instances, these facilities have been and may be designated by the United States Environmental Protection Agency (EPA) or a state environmental agency for remediation. Under the Comprehensive Environmental Response, Compensation, and Liability Act and similar state laws, each potentially responsible party (PRP) that contributed hazardous substances may be jointly and severally liable for the costs associated with cleaning up these sites. Typically, PRPs negotiate a resolution with the EPA and/or the state environmental agencies. PRPs also negotiate with each other regarding allocation of the cleanup costs.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company had reserves of $2.0 million and $2.1 million for losses related to environmental matters that were probable and estimable at June 30, 2012 and September 30, 2011, respectively. The amount recorded for identified contingent liabilities is based on estimates. Amounts recorded are reviewed periodically and adjusted to reflect additional technical and legal information that becomes available. Actual costs incurred in future periods may vary from the estimates, given the inherent uncertainties in evaluating certain exposures. Subject to the imprecision in estimating future contingent liability costs, the Company does not expect that any sum it may have to pay in connection with these matters in excess of the amounts recorded will have a material adverse effect on the Companys financial position, results of operations or cash flows.
Personal Injury Actions and Other - Product and general liability claims are made against the Company from time to time in the ordinary course of business. The Company is generally self-insured for future claims up to $3.0 million per claim. Accordingly, a reserve is maintained for the estimated costs of such claims. At June 30, 2012 and September 30, 2011, reserves for product and general liability claims were $43.0 million and $41.7 million, respectively, based on available information. There is inherent uncertainty as to the eventual resolution of unsettled claims. Management, however, believes that any losses in excess of established reserves will not have a material adverse effect on the Companys financial condition, results of operations or cash flows.
Market Risks - The Company was contingently liable under bid, performance and specialty bonds totaling $235.2 million, and open standby letters of credit issued by the Companys banks in favor of third parties totaling $39.1 million, at June 30, 2012.
Other Matters - The Company is subject to other environmental matters and legal proceedings and claims, including patent, antitrust, product liability, warranty and state dealership regulation compliance proceedings that arise in the ordinary course of business. Although the final results of all such matters and claims cannot be predicted with certainty, management believes that the ultimate resolution of all such matters and claims will not have a material adverse effect on the Companys financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
On January 8, 2010, Control Solutions LLC (Control Solutions) brought suit against the Company in the United States District Court for the Northern District of Illinois for breach of express contract, breach of implied-in-fact contract, unjust enrichment and promissory estoppel related to the Companys contract to supply the United States Department of Defense with M-ATVs. Control Solutions has asserted damages in the amount of $190.3 million. On October 3, 2011, following written and oral discovery, the Company moved for summary judgment. On that same date, Control Solutions filed a cross-motion for summary judgment. The Companys and Control Solutions response briefs have been filed with the Court. While this case is in the early stages of litigation and its outcome cannot be predicted with certainty, the Company believes that the ultimate resolution of this case will not have a material adverse effect on the Companys financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
While the Family of Medium Tactical Vehicles (FMTV) contract was profitable for the first nine months of fiscal 2012 and the Company expects the contract to remain profitable throughout the remaining life of the contract, the Companys expectation of future profitability is based on certain assumptions, including estimates of future material and production costs. Management cost assumptions include estimates for future increases in the costs of materials, targeted cost savings and production efficiencies. There are inherent uncertainties related to these estimates. Small changes in estimates can have a significant impact on profitability under the contract. For example, a 1% escalation in material costs over the Companys projection for FMTV orders currently in backlog would increase the cost of materials by approximately $18 million. While this amount is less than the expected future profitability of the FMTV contract, it would reduce the expected future gross margins on orders currently in backlog. It is possible that other assumptions underlying the analysis could change in such a manner that the Company would determine in the future that this is a loss contract, which could result in a material charge to earnings.
19. Business Segment Information
The Company is organized into four reportable segments based on the internal organization used by management for making operating decisions and measuring performance and based on the similarity of customers served, common management, common use of facilities and economic results attained.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
For purposes of business segment performance measurement, the Company does not allocate to individual business segments costs or items that are of a non-operating nature or organizational or functional expenses of a corporate nature. The caption Corporate includes corporate office expenses, including share-based compensation, and results of insignificant operations. Identifiable assets of the business segments exclude general corporate assets, which principally consist of cash and cash equivalents, certain property, plant and equipment and certain other assets pertaining to corporate activities. Intersegment sales generally include amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed and agreed-upon pricing, which is intended to be reflective of the contribution made by the supplying business segment.
Selected financial information concerning the Companys product lines and reportable segments was as follows (in millions):
|
|
Three Months Ended June 30, 2012 |
|
Three Months Ended June 30, 2011 |
| ||||||||||||||
|
|
External |
|
Inter- |
|
Net |
|
External |
|
Inter- |
|
Net |
| ||||||
|
|
Customers |
|
segment |
|
Sales |
|
Customers |
|
segment |
|
Sales |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access equipment |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Aerial work platforms |
|
$ |
426.1 |
|
$ |
|
|
$ |
426.1 |
|
$ |
294.4 |
|
$ |
|
|
$ |
294.4 |
|
Telehandlers |
|
260.8 |
|
|
|
260.8 |
|
144.3 |
|
|
|
144.3 |
| ||||||
Other |
|
127.0 |
|
0.7 |
|
127.7 |
|
124.0 |
|
17.4 |
|
141.4 |
| ||||||
Total access equipment |
|
813.9 |
|
0.7 |
|
814.6 |
|
562.7 |
|
17.4 |
|
580.1 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Defense |
|
957.9 |
|
0.6 |
|
958.5 |
|
1,105.8 |
|
1.2 |
|
1,107.0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fire & emergency |
|
234.0 |
|
12.1 |
|
246.1 |
|
211.3 |
|
4.7 |
|
216.0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Concrete placement |
|
67.4 |
|
|
|
67.4 |
|
48.7 |
|
|
|
48.7 |
| ||||||
Refuse collection |
|
77.5 |
|
|
|
77.5 |
|
71.5 |
|
|
|
71.5 |
| ||||||
Other |
|
25.6 |
|
5.7 |
|
31.3 |
|
22.9 |
|
15.4 |
|
38.3 |
| ||||||
Total commercial |
|
170.5 |
|
5.7 |
|
176.2 |
|
143.1 |
|
15.4 |
|
158.5 |
| ||||||
Intersegment eliminations |
|
|
|
(19.1 |
) |
(19.1 |
) |
|
|
(38.7 |
) |
(38.7 |
) | ||||||
Consolidated |
|
$ |
2,176.3 |
|
$ |
|
|
$ |
2,176.3 |
|
$ |
2,022.9 |
|
$ |
|
|
$ |
2,022.9 |
|
|
|
Nine Months Ended June 30, 2012 |
|
Nine Months Ended June 30, 2011 |
| ||||||||||||||
|
|
External |
|
Inter- |
|
Net |
|
External |
|
Inter- |
|
Net |
| ||||||
|
|
Customers |
|
segment |
|
Sales |
|
Customers |
|
segment |
|
Sales |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Access equipment |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Aerial work platforms |
|
$ |
1,059.8 |
|
$ |
|
|
$ |
1,059.8 |
|
$ |
636.0 |
|
$ |
|
|
$ |
636.0 |
|
Telehandlers |
|
643.4 |
|
|
|
643.4 |
|
358.8 |
|
|
|
358.8 |
| ||||||
Other |
|
375.2 |
|
124.3 |
|
499.5 |
|
329.7 |
|
54.1 |
|
383.8 |
| ||||||
Total access equipment |
|
2,078.4 |
|
124.3 |
|
2,202.7 |
|
1,324.5 |
|
54.1 |
|
1,378.6 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Defense |
|
2,994.6 |
|
2.2 |
|
2,996.8 |
|
3,188.9 |
|
4.1 |
|
3,193.0 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Fire & emergency |
|
563.0 |
|
27.6 |
|
590.6 |
|
580.8 |
|
13.9 |
|
594.7 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Concrete placement |
|
166.8 |
|
|
|
166.8 |
|
123.3 |
|
|
|
123.3 |
| ||||||
Refuse collection |
|
252.5 |
|
|
|
252.5 |
|
194.2 |
|
|
|
194.2 |
| ||||||
Other |
|
74.9 |
|
21.3 |
|
96.2 |
|
57.6 |
|
54.6 |
|
112.2 |
| ||||||
Total commercial |
|
494.2 |
|
21.3 |
|
515.5 |
|
375.1 |
|
54.6 |
|
429.7 |
| ||||||
Intersegment eliminations |
|
|
|
(175.4 |
) |
(175.4 |
) |
|
|
(126.7 |
) |
(126.7 |
) | ||||||
Consolidated |
|
$ |
6,130.2 |
|
$ |
|
|
$ |
6,130.2 |
|
$ |
5,469.3 |
|
$ |
|
|
$ |
5,469.3 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
June 30, |
|
June 30, |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
Operating income (loss): |
|
|
|
|
|
|
|
|
| ||||
Access equipment |
|
$ |
88.2 |
|
$ |
29.5 |
|
$ |
169.7 |
|
$ |
30.5 |
|
Defense |
|
40.2 |
|
112.5 |
|
174.5 |
|
472.0 |
| ||||
Fire & emergency |
|
6.4 |
|
4.4 |
|
(14.9 |
) |
0.4 |
| ||||
Commercial |
|
12.1 |
|
3.7 |
|
22.9 |
|
1.3 |
| ||||
Corporate |
|
(22.5 |
) |
(24.5 |
) |
(76.6 |
) |
(81.2 |
) | ||||
Intersegment eliminations |
|
0.1 |
|
0.4 |
|
0.1 |
|
4.1 |
| ||||
|
|
124.5 |
|
126.0 |
|
275.7 |
|
427.1 |
| ||||
Interest expense, net of interest income |
|
(18.1 |
) |
(20.4 |
) |
(55.7 |
) |
(66.8 |
) | ||||
Miscellaneous, net |
|
(0.8 |
) |
(0.5 |
) |
(5.1 |
) |
(0.4 |
) | ||||
Income from operations before income taxes and equity in earnings of unconcolidated affiliates |
|
$ |
105.6 |
|
$ |
105.1 |
|
$ |
214.9 |
|
$ |
359.9 |
|
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
Identifiable assets: |
|
|
|
|
| ||
Access equipment: |
|
|
|
|
| ||
U.S. |
|
$ |
1,868.6 |
|
$ |
1,779.8 |
|
Europe (a) |
|
673.3 |
|
694.0 |
| ||
Rest of the world |
|
317.6 |
|
248.9 |
| ||
Total access equipment |
|
2,859.5 |
|
2,722.7 |
| ||
Defense - U.S. (a) |
|
729.6 |
|
762.3 |
| ||
Fire & emergency: |
|
|
|
|
| ||
U.S. |
|
554.0 |
|
518.9 |
| ||
Europe |
|
11.5 |
|
12.9 |
| ||
Total fire & emergency |
|
565.5 |
|
531.8 |
| ||
Commercial: |
|
|
|
|
| ||
U.S. |
|
327.5 |
|
321.4 |
| ||
Other North America (a) |
|
48.7 |
|
41.5 |
| ||
Total commercial |
|
376.2 |
|
362.9 |
| ||
Corporate: |
|
|
|
|
| ||
U.S. (b) |
|
403.0 |
|
441.2 |
| ||
Rest of the world |
|
3.7 |
|
6.0 |
| ||
Total corporate |
|
406.7 |
|
447.2 |
| ||
Consolidated |
|
$ |
4,937.5 |
|
$ |
4,826.9 |
|
(a) Includes investment in unconsolidated affiliates.
(b) Primarily includes cash and short-term investments.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Net sales by geographic region based on product shipment destination were as follows (in millions):
|
|
Nine Months Ended |
| ||||
|
|
June 30, |
| ||||
|
|
2012 |
|
2011 |
| ||
Net sales: |
|
|
|
|
| ||
United States |
|
$ |
4,908.4 |
|
$ |
4,534.8 |
|
Other North America |
|
179.6 |
|
164.4 |
| ||
Europe, Africa and Middle East |
|
622.9 |
|
469.8 |
| ||
Rest of the world |
|
419.3 |
|
300.3 |
| ||
Consolidated |
|
$ |
6,130.2 |
|
$ |
5,469.3 |
|
20. Separate Financial Information of Subsidiary Guarantors of Indebtedness
The Senior Notes are jointly, severally and unconditionally guaranteed on a senior unsecured basis by all of Oshkosh Corporations existing and future subsidiaries that from time to time guarantee obligations under Oshkosh Corporations senior credit facility, with certain exceptions (the Guarantors). The following condensed supplemental consolidating financial information reflects the summarized financial information of Oshkosh Corporation, the Guarantors on a combined basis and Oshkosh Corporations non-guarantor subsidiaries on a combined basis (in millions):
Condensed Consolidating Statement of Income
For the Three Months Ended June 30, 2012
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
1,006.0 |
|
$ |
961.8 |
|
$ |
238.0 |
|
$ |
(29.5 |
) |
$ |
2,176.3 |
|
Cost of sales |
|
934.4 |
|
812.1 |
|
186.9 |
|
(30.2 |
) |
1,903.2 |
| |||||
Gross income |
|
71.6 |
|
149.7 |
|
51.1 |
|
0.7 |
|
273.1 |
| |||||
Selling, general and administrative expenses |
|
52.8 |
|
68.1 |
|
13.5 |
|
|
|
134.4 |
| |||||
Amortization of purchased intangibles |
|
0.1 |
|
9.9 |
|
4.2 |
|
|
|
14.2 |
| |||||
Operating income |
|
18.7 |
|
71.7 |
|
33.4 |
|
0.7 |
|
124.5 |
| |||||
Interest expense |
|
(46.6 |
) |
(20.5 |
) |
(0.8 |
) |
49.4 |
|
(18.5 |
) | |||||
Interest income |
|
0.6 |
|
7.7 |
|
41.5 |
|
(49.4 |
) |
0.4 |
| |||||
Miscellaneous, net |
|
4.0 |
|
(51.6 |
) |
46.8 |
|
|
|
(0.8 |
) | |||||
Income (loss) from operations before income taxes |
|
(23.3 |
) |
7.3 |
|
120.9 |
|
0.7 |
|
105.6 |
| |||||
Provision for (benefit from) income taxes |
|
(10.0 |
) |
2.6 |
|
38.2 |
|
0.3 |
|
31.1 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
|
(13.3 |
) |
4.7 |
|
82.7 |
|
0.4 |
|
74.5 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
|
89.2 |
|
37.4 |
|
3.3 |
|
(129.9 |
) |
|
| |||||
Equity in earnings (losses) of unconsolidated affiliates |
|
(0.2 |
) |
|
|
1.4 |
|
|
|
1.2 |
| |||||
Net income (loss) |
|
75.7 |
|
42.1 |
|
87.4 |
|
(129.5 |
) |
75.7 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
| |||||
Net income (loss) attributable to Oshkosh Corporation |
|
$ |
75.7 |
|
$ |
42.1 |
|
$ |
87.4 |
|
$ |
(129.5 |
) |
$ |
75.7 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Income
For the Three Months Ended June 30, 2011
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
1,157.7 |
|
$ |
693.4 |
|
$ |
223.6 |
|
$ |
(51.8 |
) |
$ |
2,022.9 |
|
Cost of sales |
|
1,011.2 |
|
595.1 |
|
197.0 |
|
(52.4 |
) |
1,750.9 |
| |||||
Gross income |
|
146.5 |
|
98.3 |
|
26.6 |
|
0.6 |
|
272.0 |
| |||||
Selling, general and administrative expenses |
|
52.1 |
|
65.7 |
|
13.0 |
|
|
|
130.8 |
| |||||
Amortization of purchased intangibles |
|
|
|
10.0 |
|
5.2 |
|
|
|
15.2 |
| |||||
Operating income |
|
94.4 |
|
22.6 |
|
8.4 |
|
0.6 |
|
126.0 |
| |||||
Interest expense |
|
(49.3 |
) |
(18.6 |
) |
(1.0 |
) |
47.7 |
|
(21.2 |
) | |||||
Interest income |
|
0.6 |
|
7.2 |
|
40.7 |
|
(47.7 |
) |
0.8 |
| |||||
Miscellaneous, net |
|
4.2 |
|
(19.7 |
) |
15.0 |
|
|
|
(0.5 |
) | |||||
Income (loss) from operations before income taxes |
|
49.9 |
|
(8.5 |
) |
63.1 |
|
0.6 |
|
105.1 |
| |||||
Provision for (benefit from) income taxes |
|
26.9 |
|
(5.1 |
) |
14.6 |
|
0.2 |
|
36.6 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
|
23.0 |
|
(3.4 |
) |
48.5 |
|
0.4 |
|
68.5 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
|
45.4 |
|
28.4 |
|
(3.3 |
) |
(70.5 |
) |
|
| |||||
Equity in earnings (losses) unconsolidated affiliates |
|
|
|
|
|
0.1 |
|
|
|
0.1 |
| |||||
Net income (loss) |
|
68.4 |
|
25.0 |
|
45.3 |
|
(70.1 |
) |
68.6 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
|
|
|
|
|
(0.2 |
) |
|
|
(0.2 |
) | |||||
Net income (loss) attributable to Oshkosh Corporation |
|
$ |
68.4 |
|
$ |
25.0 |
|
$ |
45.1 |
|
$ |
(70.1 |
) |
$ |
68.4 |
|
Condensed Consolidating Statement of Income
For the Nine Months Ended June 30, 2012
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
3,092.8 |
|
$ |
2,562.0 |
|
$ |
705.1 |
|
$ |
(229.7 |
) |
$ |
6,130.2 |
|
Cost of sales |
|
2,829.8 |
|
2,205.1 |
|
589.9 |
|
(229.6 |
) |
5,395.2 |
| |||||
Gross income |
|
263.0 |
|
356.9 |
|
115.2 |
|
(0.1 |
) |
735.0 |
| |||||
Selling, general and administrative expenses |
|
168.5 |
|
203.2 |
|
43.7 |
|
|
|
415.4 |
| |||||
Amortization of purchased intangibles |
|
0.2 |
|
30.1 |
|
13.6 |
|
|
|
43.9 |
| |||||
Operating income |
|
94.3 |
|
123.6 |
|
57.9 |
|
(0.1 |
) |
275.7 |
| |||||
Interest expense |
|
(140.5 |
) |
(59.9 |
) |
(3.0 |
) |
146.1 |
|
(57.3 |
) | |||||
Interest income |
|
1.7 |
|
22.8 |
|
123.2 |
|
(146.1 |
) |
1.6 |
| |||||
Miscellaneous, net |
|
13.7 |
|
(83.6 |
) |
64.8 |
|
|
|
(5.1 |
) | |||||
Income (loss) from operations before income taxes |
|
(30.8 |
) |
2.9 |
|
242.9 |
|
(0.1 |
) |
214.9 |
| |||||
Provision for (benefit from) income taxes |
|
(12.0 |
) |
|
|
75.8 |
|
|
|
63.8 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
|
(18.8 |
) |
2.9 |
|
167.1 |
|
(0.1 |
) |
151.1 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
|
171.1 |
|
86.3 |
|
17.0 |
|
(274.4 |
) |
|
| |||||
Equity in earnings (losses) of unconsolidated affiliates |
|
(0.4 |
) |
|
|
2.3 |
|
|
|
1.9 |
| |||||
Net income (loss) |
|
151.9 |
|
89.2 |
|
186.4 |
|
(274.5 |
) |
153.0 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
|
|
|
|
|
(1.1 |
) |
|
|
(1.1 |
) | |||||
Net income (loss) attributable to Oshkosh Corporation |
|
$ |
151.9 |
|
$ |
89.2 |
|
$ |
185.3 |
|
$ |
(274.5 |
) |
$ |
151.9 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Income
For the Nine Months Ended June 30, 2011
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net sales |
|
$ |
3,322.3 |
|
$ |
1,666.6 |
|
$ |
646.7 |
|
$ |
(166.3 |
) |
$ |
5,469.3 |
|
Cost of sales |
|
2,760.2 |
|
1,443.1 |
|
574.7 |
|
(170.8 |
) |
4,607.2 |
| |||||
Gross income |
|
562.1 |
|
223.5 |
|
72.0 |
|
4.5 |
|
862.1 |
| |||||
Selling, general and administrative expenses |
|
162.9 |
|
180.9 |
|
45.7 |
|
|
|
389.5 |
| |||||
Amortization of purchased intangibles |
|
|
|
29.9 |
|
15.6 |
|
|
|
45.5 |
| |||||
Operating income |
|
399.2 |
|
12.7 |
|
10.7 |
|
4.5 |
|
427.1 |
| |||||
Interest expense |
|
(154.1 |
) |
(63.3 |
) |
(3.1 |
) |
151.1 |
|
(69.4 |
) | |||||
Interest income |
|
2.3 |
|
20.0 |
|
131.4 |
|
(151.1 |
) |
2.6 |
| |||||
Miscellaneous, net |
|
13.6 |
|
(47.1 |
) |
33.1 |
|
|
|
(0.4 |
) | |||||
Income (loss) from operations before income taxes |
|
261.0 |
|
(77.7 |
) |
172.1 |
|
4.5 |
|
359.9 |
| |||||
Provision for (benefit from) income taxes |
|
95.0 |
|
(26.8 |
) |
55.0 |
|
1.6 |
|
124.8 |
| |||||
Income (loss) from operations before equity in earnings of affiliates |
|
166.0 |
|
(50.9 |
) |
117.1 |
|
2.9 |
|
235.1 |
| |||||
Equity in earnings (losses) of consolidated subsidiaries |
|
69.9 |
|
41.3 |
|
(45.8 |
) |
(65.4 |
) |
|
| |||||
Equity in earnings (losses) of unconsolidated affiliates |
|
|
|
|
|
0.3 |
|
|
|
0.3 |
| |||||
Net income (loss) |
|
235.9 |
|
(9.6 |
) |
71.6 |
|
(62.5 |
) |
235.4 |
| |||||
Net (income) loss attributable to the noncontrolling interest |
|
|
|
|
|
0.5 |
|
|
|
0.5 |
| |||||
Net income (loss) attributable to Oshkosh Corporation |
|
$ |
235.9 |
|
$ |
(9.6 |
) |
$ |
72.1 |
|
$ |
(62.5 |
) |
$ |
235.9 |
|
Condensed Consolidating Balance Sheet
As of June 30, 2012
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
|
$ |
333.1 |
|
$ |
10.2 |
|
$ |
47.4 |
|
$ |
|
|
$ |
390.7 |
|
Receivables, net |
|
488.0 |
|
628.0 |
|
190.6 |
|
(38.0 |
) |
1,268.6 |
| |||||
Inventories, net |
|
241.9 |
|
414.9 |
|
246.8 |
|
(2.0 |
) |
901.6 |
| |||||
Other current assets |
|
51.9 |
|
46.9 |
|
20.0 |
|
|
|
118.8 |
| |||||
Total current assets |
|
1,114.9 |
|
1,100.0 |
|
504.8 |
|
(40.0 |
) |
2,679.7 |
| |||||
Investment in and advances to consolidated subsidiaries |
|
2,549.2 |
|
(1,392.8 |
) |
3,105.8 |
|
(4,262.2 |
) |
|
| |||||
Intangible assets, net |
|
2.5 |
|
1,120.0 |
|
698.4 |
|
|
|
1,820.9 |
| |||||
Other long-term assets |
|
152.9 |
|
150.1 |
|
133.9 |
|
|
|
436.9 |
| |||||
Total assets |
|
$ |
3,819.5 |
|
$ |
977.3 |
|
$ |
4,442.9 |
|
$ |
(4,302.2 |
) |
$ |
4,937.5 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| |||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
|
$ |
355.2 |
|
$ |
294.6 |
|
$ |
108.8 |
|
$ |
(33.0 |
) |
$ |
725.6 |
|
Customer advances |
|
288.0 |
|
171.9 |
|
4.6 |
|
|
|
464.5 |
| |||||
Other current liabilities |
|
264.9 |
|
196.5 |
|
80.2 |
|
(7.0 |
) |
534.6 |
| |||||
Total current liabilities |
|
908.1 |
|
663.0 |
|
193.6 |
|
(40.0 |
) |
1,724.7 |
| |||||
Long-term debt, less current maturities |
|
955.0 |
|
|
|
|
|
|
|
955.0 |
| |||||
Other long-term liabilities |
|
208.7 |
|
148.1 |
|
153.3 |
|
|
|
510.1 |
| |||||
Equity: |
|
|
|
|
|
|
|
|
|
|
| |||||
Oshkosh Corporation shareholders equity |
|
1,747.7 |
|
166.2 |
|
4,096.0 |
|
(4,262.2 |
) |
1,747.7 |
| |||||
Noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
| |||||
Total equity |
|
1,747.7 |
|
166.2 |
|
4,096.0 |
|
(4,262.2 |
) |
1,747.7 |
| |||||
Total liabilities and equity |
|
$ |
3,819.5 |
|
$ |
977.3 |
|
$ |
4,442.9 |
|
$ |
(4,302.2 |
) |
$ |
4,937.5 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Balance Sheet
As of September 30, 2011
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
Assets |
|
|
|
|
|
|
|
|
|
|
| |||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
|
$ |
376.3 |
|
$ |
13.5 |
|
$ |
38.7 |
|
$ |
|
|
$ |
428.5 |
|
Receivables, net |
|
525.8 |
|
521.4 |
|
135.8 |
|
(93.9 |
) |
1,089.1 |
| |||||
Inventories, net |
|
194.0 |
|
336.8 |
|
257.9 |
|
(1.9 |
) |
786.8 |
| |||||
Other current assets |
|
86.0 |
|
34.8 |
|
29.4 |
|
|
|
150.2 |
| |||||
Total current assets |
|
1,182.1 |
|
906.5 |
|
461.8 |
|
(95.8 |
) |
2,454.6 |
| |||||
Investment in and advances to consolidated subsidiaries |
|
2,506.5 |
|
(1,402.6 |
) |
2,902.4 |
|
(4,006.3 |
) |
|
| |||||
Intangible assets, net |
|
2.7 |
|
1,131.4 |
|
746.1 |
|
|
|
1,880.2 |
| |||||
Other long-term assets |
|
167.4 |
|
156.6 |
|
168.1 |
|
|
|
492.1 |
| |||||
Total assets |
|
$ |
3,858.7 |
|
$ |
791.9 |
|
$ |
4,278.4 |
|
$ |
(4,102.1 |
) |
$ |
4,826.9 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
| |||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Accounts payable |
|
$ |
498.6 |
|
$ |
298.7 |
|
$ |
61.3 |
|
$ |
(89.7 |
) |
$ |
768.9 |
|
Customer advances |
|
334.8 |
|
120.2 |
|
13.6 |
|
|
|
468.6 |
| |||||
Other current liabilities |
|
208.3 |
|
167.1 |
|
85.0 |
|
(6.1 |
) |
454.3 |
| |||||
Total current liabilities |
|
1,041.7 |
|
586.0 |
|
159.9 |
|
(95.8 |
) |
1,691.8 |
| |||||
Long-term debt, less current maturities |
|
1,020.0 |
|
|
|
|
|
|
|
1,020.0 |
| |||||
Other long-term liabilities |
|
200.4 |
|
172.4 |
|
145.7 |
|
|
|
518.5 |
| |||||
Equity: |
|
|
|
|
|
|
|
|
|
|
| |||||
Oshkosh Corporation shareholders equity |
|
1,596.5 |
|
33.5 |
|
3,972.7 |
|
(4,006.2 |
) |
1,596.5 |
| |||||
Noncontrolling interest |
|
0.1 |
|
|
|
0.1 |
|
(0.1 |
) |
0.1 |
| |||||
Total equity |
|
1,596.6 |
|
33.5 |
|
3,972.8 |
|
(4,006.3 |
) |
1,596.6 |
| |||||
Total liabilities and equity |
|
$ |
3,858.7 |
|
$ |
791.9 |
|
$ |
4,278.4 |
|
$ |
(4,102.1 |
) |
$ |
4,826.9 |
|
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended June 30, 2012
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net cash provided (used) by operating activities |
|
$ |
(28.3 |
) |
$ |
(69.3 |
) |
$ |
171.9 |
|
$ |
|
|
$ |
74.3 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investing activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Additions to property, plant and equipment |
|
(16.0 |
) |
(11.8 |
) |
(6.1 |
) |
|
|
(33.9 |
) | |||||
Additions to equipment held for rental |
|
|
|
|
|
(5.9 |
) |
|
|
(5.9 |
) | |||||
Proceeds from sale of equity method investments |
|
|
|
|
|
8.7 |
|
|
|
8.7 |
| |||||
Intercompany investing |
|
99.4 |
|
88.2 |
|
(168.0 |
) |
(19.6 |
) |
|
| |||||
Other investing activities |
|
5.0 |
|
8.6 |
|
4.3 |
|
|
|
17.9 |
| |||||
Net cash provided (used) by investing activities |
|
88.4 |
|
85.0 |
|
(167.0 |
) |
(19.6 |
) |
(13.2 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financing activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Repayment of long-term debt |
|
(105.0 |
) |
|
|
|
|
|
|
(105.0 |
) | |||||
Net repayments under revolving credit facility |
|
|
|
|
|
|
|
|
|
|
| |||||
Intercompany financing |
|
(1.0 |
) |
(19.5 |
) |
0.9 |
|
19.6 |
|
|
| |||||
Other financing activities |
|
2.7 |
|
|
|
0.2 |
|
|
|
2.9 |
| |||||
Net cash provided (used) by financing activities |
|
(103.3 |
) |
(19.5 |
) |
1.1 |
|
19.6 |
|
(102.1 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of exchange rate changes on cash |
|
|
|
0.5 |
|
2.7 |
|
|
|
3.2 |
| |||||
Increase (decrease) in cash and cash equivalents |
|
(43.2 |
) |
(3.3 |
) |
8.7 |
|
|
|
(37.8 |
) | |||||
Cash and cash equivalents at beginning of period |
|
376.3 |
|
13.5 |
|
38.7 |
|
|
|
428.5 |
| |||||
Cash and cash equivalents at end of period |
|
$ |
333.1 |
|
$ |
10.2 |
|
$ |
47.4 |
|
$ |
|
|
$ |
390.7 |
|
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Condensed Consolidating Statement of Cash Flows
For the Nine Months Ended June 30, 2011
|
|
Oshkosh |
|
Guarantor |
|
Non-Guarantor |
|
|
|
|
| |||||
|
|
Corporation |
|
Subsidiaries |
|
Subsidiaries |
|
Eliminations |
|
Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net cash provided (used) by operating activities |
|
$ |
176.2 |
|
$ |
(39.8 |
) |
$ |
142.3 |
|
$ |
|
|
$ |
278.7 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investing activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Additions to property, plant and equipment |
|
(31.2 |
) |
(16.3 |
) |
(6.4 |
) |
|
|
(53.9 |
) | |||||
Additions to equipment held for rental |
|
|
|
|
|
(3.1 |
) |
|
|
(3.1 |
) | |||||
Proceeds from sale of equity method investments |
|
|
|
|
|
|
|
|
|
|
| |||||
Intercompany investing |
|
112.7 |
|
77.0 |
|
(168.6 |
) |
(21.1 |
) |
|
| |||||
Other investing activities |
|
(2.8 |
) |
(0.3 |
) |
13.0 |
|
|
|
9.9 |
| |||||
Net cash provided (used) by investing activities |
|
78.7 |
|
60.4 |
|
(165.1 |
) |
(21.1 |
) |
(47.1 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Financing activities: |
|
|
|
|
|
|
|
|
|
|
| |||||
Repayment of long-term debt |
|
(65.2 |
) |
(0.2 |
) |
|
|
|
|
(65.4 |
) | |||||
Net repayments under revolving credit facility |
|
(125.0 |
) |
|
|
|
|
|
|
(125.0 |
) | |||||
Intercompany financing |
|
(1.0 |
) |
(19.5 |
) |
(0.6 |
) |
21.1 |
|
|
| |||||
Other financing activities |
|
9.8 |
|
|
|
|
|
|
|
9.8 |
| |||||
Net cash provided (used) by financing activities |
|
(181.4 |
) |
(19.7 |
) |
(0.6 |
) |
21.1 |
|
(180.6 |
) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Effect of exchange rate changes on cash |
|
|
|
0.3 |
|
3.5 |
|
|
|
3.8 |
| |||||
Increase (decrease) in cash and cash equivalents |
|
73.5 |
|
1.2 |
|
(19.9 |
) |
|
|
54.8 |
| |||||
Cash and cash equivalents at beginning of period |
|
202.2 |
|
2.5 |
|
134.3 |
|
|
|
339.0 |
| |||||
Cash and cash equivalents at end of period |
|
$ |
275.7 |
|
$ |
3.7 |
|
$ |
114.4 |
|
$ |
|
|
$ |
393.8 |
|
21. Subsequent Events
In July 2012, the Company amended its Credit Agreement to lower the applicable variable interest rate spread by 100 basis points, modify the restricted payment language to be consistent with the Senior Notes, lower the maximum amount of the Revolving Credit Facility from $550 million to $525 million and reduce the Term Loan to $455 million (the amount outstanding as of June 30, 2012). Under the amended Credit Agreement, the Company will pay (i) an unused commitment fee ranging from 0.25% to 0.50% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.75% to 1.25% per annum of the maximum amount available to be drawn for each performance letter of credit issued and outstanding under the Credit Agreement.
Additionally, with certain exceptions, the amended Credit Agreement limits the ability of the Company to pay dividends and other distributions, including repurchases of shares of the Companys Common Stock. However, so long as no event of default exists under the Credit Agreement or would result from such payment, the Company may pay dividends and other distributions in an aggregate amount not exceeding the sum of:
(i) |
$485.0 million; plus |
(ii) |
50% of the consolidated net income of the Company and its subsidiaries (or if such consolidated net income is a deficit, minus 100% of such deficit), accrued on a cumulative basis during the period beginning on April 1, 2012 and ending on the last day of the fiscal quarter immediately preceding the date of the applicable proposed dividend or distribution; plus |
(iii) |
100% of the aggregate net proceeds received by the Company subsequent to March 31, 2012 either as a contribution to its common equity capital or from the issuance and sale of its Common Stock. |
On July 26, 2012 the Company initiated a plan to exit its ambulance business. The Company had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida in April 2011 would result in significantly improved performance. Despite efforts by numerous dedicated individuals and teams, the Medtec business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. The Company expects to discontinue production of ambulances in the first quarter of fiscal 2013 following completion of units currently in backlog. As a result of the plan to exit this business, the Company expects to incur pre-tax charges between $8 million to $13 million. The majority of these charges are expected to be recorded in the fourth quarter of fiscal 2012.
OSHKOSH CORPORATION
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company is in negotiations to sell its investment in its European mobile medical business as the business was determined to be a non-core business. The Company expects to incur a pre-tax loss of approximately $7 million on the disposition of this business. The Companys objective is to complete the sale of this business in the fourth quarter of fiscal 2012.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement About Forward-Looking Statements
This Managements Discussion and Analysis of Consolidated Financial Condition and Results of Operations and other sections of this Quarterly Report on Form 10-Q contain statements that Oshkosh Corporation (the Company) believes to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding the Companys future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, including those under the caption Executive Overview, are forward-looking statements. When used in this Quarterly Report on Form 10-Q, words such as may, will, expect, intend, estimate, anticipate, believe, should, project or plan or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Companys control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the Companys access equipment, commercial and fire & emergency markets, especially in the current environment where there are conflicting signs regarding the future global economic outlook; the expected level and timing of the 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; risks that profit on the definitization of contracts with the DoD could differ from the Companys estimates; increasing commodity and other raw material costs, particularly in a sustained economic recovery; the ability to increase prices to raise margins or offset higher input costs; risks related to the Companys exit from its ambulance and European mobile medical businesses, including the amounts of related costs and charges; risks related to facilities consolidation and alignment, including the amounts of related costs and charges and that anticipated cost savings may not be achieved; the Companys ability to produce vehicles under the Family of Medium Tactical Vehicles (FMTV) contract at targeted margins; the duration of the ongoing global economic weakness, which could lead to additional impairment charges related to many of the Companys intangible assets and/or a slower recovery in the Companys cyclical businesses than Company or equity market expectations; the potential for the U.S. government to competitively bid the Companys Army and Marine Corps contracts; the consequences of financial leverage, which could limit the Companys ability to pursue various opportunities; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Companys products; risks related to production or shipment delays arising from quality or production issues; risks associated with international operations and sales, including foreign currency fluctuations and compliance with the Foreign Corrupt Practices Act; risks related to actions of activist shareholders; and the Companys ability to successfully execute on its strategic road map and meet its long-term financial goals. Additional information concerning these and other factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Companys U.S. Securities and Exchange Commission (SEC) filings, including, but not limited to, the Companys Current Report on Form 8-K filed with the SEC on July 26, 2012 and Item 1A. of Part II of this Quarterly Report on Form 10-Q.
All forward-looking statements, including those under the caption Executive Overview, speak only as of the date the Company files this Quarterly Report on Form 10-Q with the SEC. The Company assumes no obligation, and disclaims any obligation, to update information contained in this Quarterly Report on Form 10-Q. Investors should be aware that the Company may not update such information until the Companys next quarterly earnings conference call, if at all.
All references herein to earnings per share refer to earnings per share assuming dilution.
General
Major products manufactured and marketed by each of the Companys business segments are as follows:
Access equipment aerial work platforms and telehandlers used in a wide variety of construction, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, as well as wreckers and carriers. Access equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers, the U.S. military and towing companies in the U.S. and abroad.
Defense tactical trucks and supply parts and services sold to the U.S. military and to other militaries around the world.
Fire & emergency custom and commercial firefighting vehicles and equipment, aircraft rescue and firefighting vehicles, snow removal vehicles, ambulances and other emergency vehicles primarily sold to fire departments, airports and other governmental units, mobile medical trailers sold to hospitals and third-party medical service providers in Europe and broadcast vehicles sold to broadcasters and TV stations in North America and abroad.
Commercial concrete mixers, refuse collection vehicles, portable and stationary concrete batch plants and vehicle components sold to ready-mix companies and commercial and municipal waste haulers in the Americas and other international markets and field service vehicles and truck-mounted cranes sold to mining, construction and other companies in the U.S. and abroad.
Executive Overview
It was evident in the third quarter of fiscal 2012 that improvement in certain of the Companys non-defense markets and the Companys MOVE strategy initiatives are beginning to enhance the Companys results. Over the next few years, the Company believes the effective execution of its MOVE strategy will permit the Company to overcome a declining defense business as a result of lower U.S. defense spending for tactical wheeled vehicles and report earnings growth and improved returns for shareholders.
Earnings per share increased to $0.82 for the third quarter of fiscal 2012 including discrete tax benefits of $0.07, compared to $0.75 in the third quarter of fiscal 2011. Consolidated sales increased 7.6% to $2.18 billion for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. While the Company reported higher sales in all non-defense segments, replacement-driven demand in North America in the access equipment segment led the sales increase to offset a decline in defense segment sales. Consolidated operating income in the third quarter of fiscal 2012 was $124.5 million, or 5.7% of sales, compared to $126.0 million, or 6.2% of sales, in the third quarter of fiscal 2011. Improved operating performance in the Companys non-defense segments offset almost all of the decline in defense operating income which was expected as U.S. defense spending for tactical wheeled vehicles declined and is expected to continue to decline for the next few years. In addition to the benefit of higher sales volumes, price increases in the access equipment segment and improved operational performance in the commercial segment helped boost operating income. As expected, the fire & emergency segment returned to profitability in the third quarter of fiscal 2012 on higher revenues. A shift in defense segment sales mix from higher margin Family of Heavy Tactical Vehicles (FHTV) and aftermarket parts to lower margin FMTVs was the primary driver of the decline in operating income in the defense segment. Margins on sales under the FMTV program continued to show improvement in the third quarter of fiscal 2012 compared to the second quarter of fiscal 2012. Margins on this program remained at low single digits and the Company expects margins on this program to remain well below historical margin levels of the defense segment through the life of the five-year contract.
In the defense segment, the Company recently announced that it received an order for 750 MRAP All-Terrain Vehicle (M-ATV) units from the United Arab Emirates, which is the Companys first large international order for M-ATVs. The Company expects these M-ATVs to be shipped in fiscal 2013. This order is important for the Companys defense business and further reinforces the Companys belief that there are significant opportunities for international sales of the M-ATV and other Oshkosh defense vehicles over the next few years. The Company has been forward deploying business development teams around the world to pursue these opportunities.
In the fire & emergency segment, the Company made progress in the quarter improving the operational efficiency of its fire apparatus manufacturing. Those improvements are key to driving margins in the fire & emergency segment to acceptable levels in the current low volume environment. To allow the Company to focus limited resources on improving the performance of its principal product lines in the fire & emergency segment, the Company made a decision in July 2012 to exit the ambulance and European mobile medical businesses. The Company had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida would result in significantly improved
performance. Despite efforts by numerous dedicated individuals and teams, the business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. As a result of the decisions to exit these businesses, the Company expects to incur pre-tax charges of approximately $15 million to $20 million, with approximately $14 million to $18 million expected in the fourth quarter of fiscal 2012.
The Company recently announced that Mr. Wilson Jones was promoted to President and Chief Operating Officer of the Company, effective August 1, 2012. Mr. Jones has led two of the Companys operating segments, building strong teams and providing customer-focused results. Mr. Jones role as President of the access equipment segment will be filled by Mr. Frank Nerenhausen. Mr. Nerenhausen and his team in the commercial segment led an operation that has been especially hard-hit by the recession and returned it to profitability, with an operating income margin of nearly 7% in the third quarter of fiscal 2012. Mr. Todd Fierro, who has been one of the driving forces for change and improvement in the commercial segment as the Vice President of Operations, will become President of the commercial segment effective August 1, 2012.
The FMTV contract was profitable for the first nine months of fiscal 2012 and the Company expects the contract to remain profitable throughout the remaining life of the contract. The Companys expectation of future profitability is based on certain assumptions including scheduled price increases and estimates of future material and production costs. Management cost assumptions include estimates for future increases in the costs of materials, targeted cost savings and production efficiencies. There are inherent uncertainties related to these estimates. Small changes in estimates can have a significant impact on profitability under the contract. For example, a 1% escalation in material costs over the Companys projection of material costs for FMTV orders currently in backlog would increase the cost of materials by approximately $18 million. While this amount is less than the expected future profitability of the FMTV contract, it would reduce the expected future gross margins on orders currently in backlog. It is possible that other assumptions underlying the analysis could change in such a manner that the Company would determine in the future that this is a loss contract, which could result in a material charge to earnings.
The Company remains focused on its MOVE initiatives. As previously noted, fiscal 2012 is an investment year for the Company as it continues to invest in planning and rolling out MOVE initiatives that the Company expects will positively impact the Companys cost structure, ability to innovate and generate international revenue expansion. With the Companys sequentially improved performance in the third quarter, the Company updated its guidance for fiscal 2012.
The Company believes that access equipment segment sales in fiscal 2012 will be approximately 40% higher than fiscal 2011, compared to the Companys previous estimate of 35% to 40% higher. The Company continues to believe that operating income margins in the access equipment segment will be in the 7.5% to 8.0% range. The Company expects sales and operating income margins in the fourth quarter of fiscal 2012 in the access equipment segment will be lower than in the third quarter of fiscal 2012, reflecting the seasonal pattern that the access equipment segment traditionally experiences.
The Company believes sales in the defense segment for fiscal 2012 will be approximately 10% lower than the prior year. With the continued improvement in FMTV margins, the Company believes that operating income margins in the defense segment in fiscal 2012 will be in the 5.0% to 5.5% range.
Consistent with previous expectations, the Company believes that fire & emergency segment sales in fiscal 2012 will be up slightly compared to fiscal 2011. The Company believes that the fire & emergency segment will report a small operating loss in fiscal 2012 compared to the Companys previous estimate of breakeven. The Companys expectations for operating results do not include expected costs associated with exiting its ambulance and European mobile medical businesses of $14 million to $18 million.
The Company believes that fiscal 2012 sales in the commercial segment will be up approximately 20% compared to fiscal 2011. This is an increase from previous expectations of up 15%. The Company believes that operating income margins in the commercial segment will be in the 3.5% to 4.0% range, reflecting the continued progress being made by the commercial segment management team.
The Company believes that corporate expenses in fiscal 2012 will be approximately flat with fiscal 2011 even considering that fiscal 2012 results include $6.4 million in costs related to the proxy contest in connection with the Companys 2012 annual meeting of shareholders. The Company expects interest expense in fiscal 2012 will be lower than in fiscal 2011 due to the expiration of the Companys interest rate swap and the full year impact of fiscal 2011 debt reduction. The Company believes that the Companys fiscal 2012 effective income tax rate will be 29% to 30%, down from the Companys previous expectations generally as a result of discrete items. The Company estimates its fiscal 2012 capital expenditures will be between $50 million and $60 million.
As the Companys current debt approximates the Companys target level, the Company believes there could be opportunities to increase shareholder value through the use of selective repurchases of Company Common Stock. Accordingly, in July 2012, the Companys Board of Directors authorized the repurchase of an additional 4.0 million shares of its Common Stock. When combined with 3.2 million shares remaining from a previous authorization, the Company now has the authority to repurchase up to approximately 7.2 million shares of its Common Stock.
Results of Operations
Analysis of Consolidated Net Sales
The following table presents net sales by business segment (in millions):
|
|
Third Quarter Fiscal |
|
First Nine Months Fiscal |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
Net sales: |
|
|
|
|
|
|
|
|
| ||||
Access equipment |
|
$ |
814.6 |
|
$ |
580.1 |
|
$ |
2,202.7 |
|
$ |
1,378.6 |
|
Defense |
|
958.5 |
|
1,107.0 |
|
2,996.8 |
|
3,193.0 |
| ||||
Fire & emergency |
|
246.1 |
|
216.0 |
|
590.6 |
|
594.7 |
| ||||
Commercial |
|
176.2 |
|
158.5 |
|
515.5 |
|
429.7 |
| ||||
Intersegment eliminations |
|
(19.1 |
) |
(38.7 |
) |
(175.4 |
) |
(126.7 |
) | ||||
Consolidated |
|
$ |
2,176.3 |
|
$ |
2,022.9 |
|
$ |
6,130.2 |
|
$ |
5,469.3 |
|
Third Quarter Fiscal 2012 Compared to 2011
Consolidated net sales increased 7.6% to $2.18 billion for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. Although sales increased in all non-defense segments, increased replacement-driven demand for aerial work platforms and telehandlers in North America in the access equipment segment led the sales increase to offset a decline in defense segment sales.
Access equipment segment net sales increased 40.4% to $814.6 million for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011 principally as a result of higher unit volumes ($186.4 million) and the realization of previously announced price increases ($37.6 million). Sales grew by double-digit percentages compared to the prior year quarter in all major regions of the globe, with the largest increase in North America, driven largely by demand for replacement of aged equipment.
Defense segment net sales decreased 13.4% to $958.5 million for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. The decrease was primarily due to lower FHTV volume ($256.5 million), lower aftermarket parts sales ($107.0 million) and a decrease in M-ATV volume ($52.9 million), offset in part by higher FMTV volume ($273.9 million) as the Company reached and sustained full rate production under the FMTV contract during the quarter.
Fire & emergency segment net sales increased 13.9% to $246.1 million for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. The increase in sales primarily reflected increased international shipments and the delivery of Rapid Intervention Vehicles under a contract with the United States Air Force.
Commercial segment net sales increased 11.2% to $176.2 million for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. The increase in sales was primarily attributable to a 36% increase in concrete placement vehicle volume compared to very low prior year volume and increased demand for aftermarket parts & service ($9.5 million), offset in part by lower intersegment sales to the defense segment ($9.7 million).
First Nine Months of Fiscal 2012 Compared to 2011
Consolidated net sales increased 12.1% to $6.13 billion for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. Higher FMTV sales and an increase in replacement-driven demand for aerial work platforms and telehandlers in North America were offset in part by expected declines in sales of FHTV vehicles and defense aftermarket parts and service.
Access equipment segment net sales increased 59.8% to $2.20 billion for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. Sales to external customers totaled $2.08 billion for the first nine months of fiscal 2012, a 56.9% increase compared to the first nine months of fiscal 2011. The Company realized double-digit sales increases in all regions of the world and across all product lines, generally as a result of replacement of aged equipment in North America and parts of Europe, as well as economic growth and increased product adoption in emerging markets. In addition, sales included $124.3 million in intersegment M-ATV related sales in the first nine months of fiscal 2012 compared to $54.1 million in the first nine months of fiscal 2011.
Defense segment net sales decreased 6.1% to $3.0 billion for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The decrease was primarily due to reductions in FHTV volume ($637.0 million) and aftermarket parts and service sales ($475.3 million), offset in part by higher FMTV volume ($964.3 million).
Fire & emergency segment net sales decreased 0.7% to $590.6 million for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The decrease in sales primarily reflected lower shipments of airport products ($36.0 million), offset in part by the delivery of Rapid Intervention Vehicles under a contract with the United States Air Force. Revenues for the first nine months of fiscal 2011 included the sale of 24 aircraft rescue and firefighting vehicles to airports in Pakistan.
Commercial segment net sales increased 20.0% to $515.5 million for the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The increase in sales was primarily attributable to a 36% increase in refuse collection vehicle units sales compared to the prior year period, a 31% increase in concrete placement vehicle volume compared to very low prior year volume and increased demand for aftermarket parts & service ($19.7 million), offset in part by lower intersegment production for the defense segment ($33.3 million). Refuse collection vehicle volume was favorably impacted by the expiration of a U.S. bonus tax depreciation deduction at the end of calendar 2011.
Analysis of Consolidated Cost of Sales
Third Quarter 2012 Compared to 2011
Consolidated cost of sales increased to $1.90 billion, or 87.5% of sales, in the third quarter of fiscal 2012 compared to $1.75 billion, or 86.6% of sales, in the third quarter of fiscal 2011. The 90 basis point increase in cost of sales as a percentage of sales in the third quarter of fiscal 2012 was generally due to adverse product mix, largely in the defense segment (210 basis points) and higher material costs (130 basis points), offset in part by the realization of price increases (190 basis points) and higher absorption of fixed costs associated with higher sales (110 basis points).
First Nine Months 2012 Compared to 2011
Consolidated cost of sales increased to $5.40 billion, or 88.0% of sales, in the first nine months of fiscal 2012 compared to $4.61 billion, or 84.2% of sales, in the first nine months of fiscal 2011. The 380 basis point increase in cost of sales as a percentage of sales in the first nine months of fiscal 2012 was generally due to adverse product mix, largely in the defense segment (410 basis points) and higher material costs (170 basis points) offset in part by higher absorption of fixed costs associated with higher sales (150 basis points) and the realization of price increases (110 basis points).
Analysis of Consolidated Operating Income
The following table presents operating income by business segment (in millions):
|
|
Third Quarter Fiscal |
|
First Nine Months Fiscal |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
Operating income (loss): |
|
|
|
|
|
|
|
|
| ||||
Access equipment |
|
$ |
88.2 |
|
$ |
29.5 |
|
$ |
169.7 |
|
$ |
30.5 |
|
Defense |
|
40.2 |
|
112.5 |
|
174.5 |
|
472.0 |
| ||||
Fire & emergency |
|
6.4 |
|
4.4 |
|
(14.9 |
) |
0.4 |
| ||||
Commercial |
|
12.1 |
|
3.7 |
|
22.9 |
|
1.3 |
| ||||
Corporate |
|
(22.5 |
) |
(24.5 |
) |
(76.6 |
) |
(81.2 |
) | ||||
Intersegment eliminations |
|
0.1 |
|
0.4 |
|
0.1 |
|
4.1 |
| ||||
Consolidated |
|
$ |
124.5 |
|
$ |
126.0 |
|
$ |
275.7 |
|
$ |
427.1 |
|
Third Quarter Fiscal 2012 Compared to 2011
Consolidated operating income decreased 1.2% to $124.5 million, or 5.7% of sales, in the third quarter of fiscal 2012 compared to $126.0 million, or 6.2% of sales, in the third quarter of fiscal 2011. Increased earnings on higher access equipment segment sales and improved commercial segment performance were more than offset by lower defense segment earnings.
Access equipment segment operating income increased 199.7% to $88.2 million, or 10.8% of sales, in the third quarter of fiscal 2012 compared to $29.5 million, or 5.1% of sales, in the prior year quarter. The improvement in operating results primarily reflected higher volume, the realization of previously announced price increases ($37.6 million) and manufacturing efficiencies ($4.2 million), offset in part by higher material costs ($19.6 million).
Defense segment operating income decreased 64.3% to $40.2 million, or 4.2% of sales, in the third quarter of fiscal 2012 compared to $112.5 million, or 10.2% of sales, in the prior year quarter. The decrease in operating income as a percentage of sales compared to the prior year quarter reflected adverse changes in product mix, lower sales volumes and charges resulting from revenue and cost estimate changes of $8.0 million on undefinitized contracts, offset in part by the absence of costs incurred in the third quarter of fiscal 2011 in connection with the ramp-up of production under the FMTV contract of $21.8 million. Profit margins under the FMTV program continued to improve in the third quarter compared to the second quarter of fiscal 2012.
Fire & emergency segment operating income increased 44.2% to $6.4 million, or 2.6% of sales, for the third quarter of fiscal 2012 compared to operating income of $4.4 million, or 2.0% of sales, in the prior year quarter. Operating income benefitted from higher sales in the third quarter of fiscal 2012. Operating results during the third quarter of fiscal 2012 and fiscal 2011 were negatively impacted by $4.3 million and $3.6 million, respectively, as a result of inefficiencies related to the transition of ambulance production to the Companys facilities in Florida.
Commercial segment operating income increased 224.3% to $12.1 million, or 6.9% of sales, in the third quarter of fiscal 2012 compared to $3.7 million, or 2.4% of sales, in the prior year quarter. The increase in operating income primarily resulted from improved sales volume and improved manufacturing efficiencies (combined increase of $8.4 million).
Corporate operating expenses decreased $2.0 million, or 8.0%, to $22.5 million for the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011. Corporate operating expenses in the prior year quarter included costs related to the development of the Companys MOVE strategy.
Consolidated selling, general and administrative expenses increased 2.8% to $134.4 million, or 6.2% of sales, in the third quarter of fiscal 2012 compared to $130.8 million, or 6.5% of sales, in the third quarter of fiscal 2011. The increase in selling, general and administrative expenses was due primarily to higher salary and fringe benefits ($7.4 million) principally in the Companys access equipment segment as a result of the sales growth that it experienced. The decrease in consolidated selling, general and administrative expenses as a percentage of sales was largely due to an increase in sales on a relatively fixed cost base.
First Nine Months Fiscal 2012 Compared to 2011
Consolidated operating income decreased 35.4% to $275.7 million, or 4.5% of sales, in the first nine months of fiscal 2012 compared to $427.1 million, or 7.8% of sales, in the first nine months of fiscal 2011. The decrease in consolidated operating income was primarily attributable to the defense segment, where an adverse sales mix negatively impacted operating income comparisons, offset in part by increased earnings on higher access equipment segment sales.
Access equipment segment operating income increased to $169.7 million, or 7.7% of sales, in the first nine months of fiscal 2012 compared to $30.5 million, or 2.2% of sales, in the prior year period. The increase in operating income was primarily due to higher sales to external customers and realization of price increases ($60.5 million), offset in part by higher material costs ($80.7 million) and increased product development spending ($19.3 million).
Defense segment operating income decreased 63.0% to $174.5 million, or 5.8% of sales, in the first nine months of fiscal 2012 compared to $472.0 million, or 14.8% of sales, in the first nine months of fiscal 2011. The decrease in operating income as a percentage of sales reflected an adverse change in product mix and lower sales volumes, offset in part by the absence of FMTV ramp-up costs of $37.1 million.
The fire & emergency segment reported an operating loss of $14.9 million, or 2.5% of sales, for the first nine months of fiscal 2012 compared to operating income of $0.4 million, or 0.1% of sales, in the prior year period. Operating results during the first nine months of fiscal 2012 were negatively impacted by a more competitive pricing environment and higher material costs, as well as costs of $12.3 million related to the transition of ambulance production to the Companys facilities in Florida and $1.3 million related to exiting the U.S. mobile medical trailer product line and workforce reductions at Pierce. Costs to transition ambulance production to the Companys facilities in Florida were $7.8 million in the first nine months of fiscal 2011.
The commercial segment generated operating income of $22.9 million, or 4.4% of sales, in the first nine months of fiscal 2012 compared to operating income of $1.3 million, or 0.3% of sales, in the first nine months of fiscal 2011. The improvement in operating results primarily related to higher sales volumes and improved product mix (combined increase of $14.8 million) and the realization of price increases in excess of higher material costs ($9.3 million) as the segment continued to recover material cost increases incurred in prior quarters.
Corporate operating expenses decreased $4.6 million to $76.6 million in the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011. The decrease in corporate operating expenses was primarily the result of lower spending, net of increased cost allocations to segments, offset in part by $6.4 million of costs related to the proxy contest in connection with the Companys 2012 annual meeting of shareholders in the first nine months of fiscal 2012.
Consolidated selling, general and administrative expenses increased 6.7% to $415.4 million, or 6.8% of sales, in the first nine months of fiscal 2012 compared to $389.5 million, or 7.1% of sales, in the first nine months of fiscal 2011. The increase in selling, general and administrative expenses was due primarily to higher salary and fringe benefits ($12.3 million) principally in the Companys access equipment segment as a result of the sales growth that it experienced, higher costs associated with international expansion and costs related to the proxy contest ($6.4 million). The decrease in consolidated selling, general and administrative expenses as a percentage of sales was largely due to an increase in sales on a relatively fixed cost base.
Intersegment profit of $0.1 million and $4.1 million in the first nine months of fiscal 2012 and 2011, respectively, resulted from profit on intercompany sales between segments (largely M-ATV related sales between access equipment and defense). To the extent that the purchasing segment sells the inventory to an outside party, previously deferred intersegment profits are recognized in consolidated earnings through intersegment profit eliminations.
Analysis of Non-Operating Income Statement Items
Third Quarter Fiscal 2012 Compared to 2011
Interest expense net of interest income decreased $2.3 million to $18.1 million in the third quarter of fiscal 2012 compared to the third quarter of fiscal 2011, largely as a result of the expiration of the Companys interest rate swap in December 2011. In the third quarter of fiscal 2011, interest expense included $3.0 million of expense related to the Companys interest rate swap. Average debt outstanding decreased from $1.1 billion during the third quarter of fiscal 2011 to $1.0 billion during the third quarter of fiscal 2012.
The Company recorded a provision for income taxes of 29.5% of pre-tax income in the third quarter of fiscal 2012 compared to 34.8% in the prior year quarter. Third quarter fiscal 2012 results included $6.3 million in lower tax expense (600 basis points) as a result of changes to previous filing positions.
Equity in earnings of unconsolidated affiliates of $1.2 million in the third quarter of fiscal 2012 and $0.1 million in the third quarter of fiscal 2011 primarily represented the Companys equity interest in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.
First Nine Months Fiscal 2012 Compared to 2011
Interest expense net of interest income decreased $11.1 million to $55.7 million in the first nine months of fiscal 2012 compared to the first nine months of fiscal 2011, largely as a result of the expiration of the Companys interest rate swap in December 2011. In the first nine months of fiscal 2012 and fiscal 2011, interest expense included $2.2 million and $13.5 million, respectively, of expense related to the Companys interest rate swap. Average debt outstanding decreased from $1.11 billion during the first nine months of fiscal 2011 to $1.00 billion during the first nine months of fiscal 2012.
The Companys effective income tax rate was 29.7% of pre-tax income in the first nine months of fiscal 2012 compared to 34.7% for the first nine months of fiscal 2011. The effective tax rate for the first nine months of fiscal 2012 was favorably impacted by net discrete tax benefits of 650 basis points. Net discrete tax benefits included provision to return adjustments, settlement of foreign tax audits and other items. The effective tax rate for the first nine months of fiscal 2011 was favorably impacted by net discrete tax benefits of 150 basis points. Net discrete tax benefits included foreign tax credits related to the decision to repatriate earnings previously fully reinvested, reinstatement of the U.S. research and development tax credit, unbenefitted losses in foreign jurisdictions due to cumulative net operating losses and other items.
Equity in earnings of unconsolidated affiliates of $1.9 million in the first nine months of fiscal 2012 and $0.3 million in the first nine months of fiscal 2011 primarily represented the Companys equity interest in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.
Liquidity and Capital Resources
Financial Condition at June 30, 2012
The Companys capitalization was as follows (in millions):
|
|
June 30, |
|
September 30, |
| ||
|
|
2012 |
|
2011 |
| ||
Cash and cash equivalents |
|
$ |
390.7 |
|
$ |
428.5 |
|
Total debt |
|
955.0 |
|
1,060.1 |
| ||
Oshkosh Corporations shareholders equity |
|
1,747.7 |
|
1,596.5 |
| ||
Total capitalization (debt plus equity) |
|
2,702.7 |
|
2,656.6 |
| ||
Debt to total capitalization |
|
35.3 |
% |
39.9 |
% | ||
The Company repaid $105.0 million of debt during the first nine months of fiscal 2012. During the first nine months of fiscal 2012, the Company prepaid the final scheduled principal payments for fiscal 2012 and all of the scheduled principal payments for fiscal 2013 under the Term Loan (as defined in Liquidity). The Companys debt levels are currently within its targeted range. As such, the Companys use of cash generated from operations in the future could change from primarily debt reduction to other uses, including the repurchase of Common Stock.
In addition to cash and cash equivalents, the Company had $510.9 million of unused available capacity under the Revolving Credit Facility (as defined in Liquidity) as of June 30, 2012. Subsequent to June 30, 2012, the Company amended the Credit Agreement (as defined in Liquidity), which lowered the maximum amount of the Revolving Credit Facility from $550 million to $525 million and, therefore, reduced the amount of unused available capacity. Refer to Note 21 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the amendment to the Credit Agreement. Borrowings under the Revolving Credit Facility could, as discussed below, be limited by the financial covenants contained within the Credit Agreement.
Cash Flows
Operating Cash Flows
The Company generated $74.3 million of cash from operating activities during the first nine months of fiscal 2012 compared to $278.7 million during the first nine months of fiscal 2011. The decrease in cash generated by operating activities was primarily due to lower earnings during the first nine months of fiscal 2012, an increase in working capital in the access equipment segment on increased sales activity and a reduction in amounts collected under undefinitized contracts with the U.S. government. Cash generation (use) from changes in significant working capital accounts was as follows (in millions):
|
|
Nine Months Ended |
| ||||
|
|
June 30, |
| ||||
|
|
2012 |
|
2011 |
| ||
|
|
|
|
|
| ||
Receivables, net |
|
$ |
(190.5 |
) |
$ |
(83.7 |
) |
Inventories, net |
|
(126.4 |
) |
48.4 |
| ||
Accounts payable |
|
(26.1 |
) |
21.7 |
| ||
Customer advances |
|
(1.8 |
) |
(83.0 |
) | ||
Deferred revenue |
|
105.5 |
|
(30.7 |
) | ||
|
|
$ |
(239.3 |
) |
$ |
(127.3 |
) |
Cash utilized in the first nine months of fiscal 2012 for inventory and receivables was generally a result of higher production and sales in the access equipment segment. The decrease in cash resulting from reductions in customer advances primarily related to the timing of performance-based payments in the defense segment. Cash generated as a result of changes in deferred revenue in the first nine months of fiscal 2012 was primarily driven by the receipt of payment from the U.S. government on units as to which the Company was not able to recognize revenue due to a previously communicated tire shortage. In June 2012, the tire shortage which prevented revenue recognition lessened. The Company expects to recognize the revenue related to these trucks during the fourth quarter of fiscal 2012 and the first quarter of fiscal 2013 as tires are received and installed on previously produced trucks. Cash utilized as a result of changes in receivables net of accounts payable in the first nine months of fiscal 2011 was primarily driven by increases in production and sales to external customers in the access equipment segment, offset in part by reductions in M-ATV production in the defense segment. Changes in inventories and customer advances in the first nine months of fiscal 2011 were primarily driven by reductions in M-ATV production in the defense segment.
The Companys cash flow from operations has fluctuated, and will likely continue to fluctuate, significantly from quarter to quarter due to the start-up or conclusion of large defense contracts and the timing of receipt of individually large performance-based payments from the DoD, as well as changes in working capital requirements arising principally from seasonal fluctuations in sales.
Consolidated days sales outstanding (defined as Trade Receivables at quarter end divided by Net Sales for the most recent quarter multiplied by 90 days) increased from 45 days at September 30, 2011 to 51 days at June 30, 2012. The increase in days sales outstanding was primarily due to a delay in the definitization of contracts in the defense segment. Days sales outstanding for segments other than the defense segment were 59 days at June 30, 2012, up slightly from 57 days at September 30, 2011. Consolidated inventory turns (defined as Cost of Sales divided by the average Inventory at the past five quarter end periods) increased from 5.5 times at September 30, 2011 to 6.0 times at June 30, 2012. The increase in inventory turns was primarily related to an increase in production rates.
Investing Cash Flows
Net cash used in investing activities in the first nine months of fiscal 2012 was $13.2 million compared to $47.1 million in the first nine months of fiscal 2011. Capital spending, excluding equipment held for rental, of $33.9 million in the first nine months of fiscal 2012 reflected a decrease of $20.0 million compared to capital spending in the first nine months of fiscal 2011. Fiscal 2011 capital expenditures included equipment purchases related to the ramp-up of production under the FMTV contract. In fiscal 2012, the Company expects capital spending to approximate $50 million to $60 million. Fiscal 2012 investing activities also included a $6.0 million repayment of a note from a dealer and $8.7 million in proceeds from the sale of the Companys investment in a leasing affiliate.
Financing Cash Flows
Financing activities resulted in a net use of cash of $102.1 million during the first nine months of fiscal 2012 compared to $180.6 million during the first nine months of fiscal 2011. In the first nine months of fiscal 2012, the Company used available cash and cash from operations generally for debt reduction.
Liquidity
The Companys primary sources of liquidity are the cash flow generated from operations, availability under the Revolving Credit Facility and available cash and cash equivalents. In addition to cash and cash equivalents of $390.7 million, the Company had $510.9 million of unused availability under the Revolving Credit Facility as of June 30, 2012. Subsequent to June 30, 2012, the Company amended the Credit Agreement which lowered the maximum amount of the Revolving Credit Facility from $550 million to $525 million and accordingly reduced unused availability. Refer to Note 21 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the amendment to the Credit Agreement. These sources of liquidity are needed to fund the Companys working capital requirements, debt service requirements, capital expenditures and share repurchases. The Company expects to have sufficient liquidity to finance its operations over the next twelve months.
Senior Secured Credit Agreement
The Company has a senior secured credit agreement with various lenders (the Credit Agreement). As of June 30, 2012, the Credit Agreement provided for (i) a revolving credit facility (Revolving Credit Facility) that matures in October 2015 with an initial maximum aggregate amount of availability of $550 million and (ii) a $650 million term loan (Term Loan) facility due in quarterly principal installments of $16.25 million with a balloon payment of $341.25 million due at maturity in October 2015. During the first nine months of fiscal 2012, the Company prepaid the principal installments under the Term Loan that were originally due September 30, 2012 through September 30, 2013. In July 2012, the Company completed an amendment to the Credit Agreement to lower the applicable variable interest rate spread by 100 basis points, modify restricted payment language (which increased the Companys ability to effect repurchases of its Common Stock) to be consistent with the Senior Notes (as defined below), lower the maximum amount of the Revolving Credit Facility from $550 million to $525 million and reduce the Term Loan to $455 million (the amount outstanding as of June 30, 2012). Refer to Note 21 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the amendment to the Companys Credit Agreement.
The Companys obligations under the Credit Agreement are guaranteed by certain of its domestic subsidiaries, and the Company will guarantee the obligations of certain of its subsidiaries under the Credit Agreement to the extent such subsidiaries borrow directly under the Credit Agreement. Subject to certain exceptions, the Credit Agreement is secured by (i) a first-priority perfected lien and security interests in substantially all of the personal property of the Company, each material subsidiary of the Company and each subsidiary guarantor, (ii) mortgages upon certain real property of the Company and certain of its domestic subsidiaries and (iii) a pledge of the equity of each material subsidiary and each subsidiary guarantor.
Under the Credit Agreement as amended in July 2012, the Company must pay (i) an unused commitment fee ranging from 0.25% to 0.50% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.75% to 1.25% per annum of the maximum amount available to be drawn for each performance letter of credit issued and outstanding under the Credit Agreement.
Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied, or (ii) for dollar-denominated loans only, the base rate (which is the highest of (a) the administrative agents prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied.
Covenant Compliance
The Credit Agreement contains various restrictions and covenants, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions and make investments in joint ventures and foreign subsidiaries. The Credit Agreement contains the following financial covenants:
· Leverage Ratio: A maximum leverage ratio (defined as, with certain adjustments, the ratio of the Companys consolidated indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (EBITDA)) as of the last day of any fiscal quarter of 4.50 to 1.0.
· Interest Coverage Ratio: A minimum interest coverage ratio (defined as, with certain adjustments, the ratio of the Companys EBITDA to the Companys consolidated cash interest expense) as of the last day of any fiscal quarter of 2.50 to 1.0.
· Senior Secured Leverage Ratio: A maximum senior secured leverage ratio (defined as, with certain adjustments, the ratio of the Companys consolidated secured indebtedness to the Companys EBITDA) of the following:
Fiscal Quarter Ending |
|
|
|
June 30, 2012 and September 30, 2012 |
|
3.00 to 1.0 |
|
Thereafter |
|
2.75 to 1.0 |
|
The Company was in compliance with the financial covenants contained in the Credit Agreement as of June 30, 2012 and expects to be able to meet the financial covenants contained in the Credit Agreement over the next twelve months.
Additionally, with certain exceptions, the Credit Agreement limits the ability of the Company to pay dividends and other distributions, including repurchases of shares of the Companys Common Stock. However, under the Credit Agreement as amended in July 2012, so long as no event of default exists under the Credit Agreement or would result from such payment, the Company may pay dividends and other distributions in an aggregate amount not exceeding the sum of:
(i) |
$485.0 million; plus |
(ii) |
50% of the consolidated net income of the Company and its subsidiaries (or if such consolidated net income is a deficit, minus 100% of such deficit), accrued on a cumulative basis during the period beginning on April 1, 2012 and ending on the last day of the fiscal quarter immediately preceding the date of the applicable proposed dividend or distribution; plus |
(iii) |
100% of the aggregate net proceeds received by the Company subsequent to March 31, 2012 either as a contribution to its common equity capital or from the issuance and sale of its Common Stock. |
Senior Notes
In March 2010, the Company issued $250.0 million of 8¼% unsecured senior notes due March 1, 2017 and $250.0 million of 8½% unsecured senior notes due March 1, 2020 (collectively, the Senior Notes). The Senior Notes were issued pursuant to an indenture (the Indenture) among the Company, the subsidiary guarantors named therein and a trustee. The Indenture contains customary affirmative and negative covenants. The Company has the option to redeem the Senior Notes due 2017 and Senior Notes due 2020 for a premium after March 1, 2014 and March 1, 2015, respectively. Certain of the Companys subsidiaries fully, unconditionally, jointly and severally guarantee the Companys obligations under the Senior Notes. See Note 20 of the Notes to Condensed Consolidated Financial Statements for separate financial information of the subsidiary guarantors.
Refer to Note 8 of the Notes to Condensed Consolidated Financial Statements for additional information regarding the Companys outstanding debt as of June 30, 2012.
Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements
The Companys contractual obligations, commercial commitments and off-balance sheet arrangement disclosures in its Annual Report on Form 10-K for the year ended September 30, 2011 have not materially changed since that report was filed.
Application of Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires the Company to make judgments, assumptions and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. The significant accounting policies and methods used in the preparation of the Condensed Consolidated Financial Statements are described in Note 2 to the Consolidated Financial Statements in the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2011. The Companys application of critical accounting policies has not materially changed since that report was filed.
Critical Accounting Estimates
The Companys disclosures of critical accounting estimates in its Annual Report on Form 10-K for the year ended September 30, 2011 have not materially changed since that report was filed.
New Accounting Standards
Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements for a discussion of the impact on the Companys Condensed Consolidated Financial Statements of new accounting standards.
Customers and Backlog
Sales to the U.S. government comprised approximately 45% of the Companys net sales in the first nine months of fiscal 2012. No other single customer accounted for more than 10% of the Companys net sales for this period. A substantial majority of the Companys net sales are derived from customer orders received prior to commencing production.
During the first quarter of fiscal 2012, the U.S. government awarded the Company a two-year extension on its FHTV contract. Under the extended contract, the U.S. government can place orders through October 2013 and deliveries can continue through September 2014. As part of the extended contract, the Company retained the design rights to the Companys vehicles.
The Companys backlog as of June 30, 2012 decreased 22.9% to $4.67 billion compared to $6.05 billion at June 30, 2011. Access equipment segment backlog increased 18.9% to $729.7 million at June 30, 2012 compared to $613.6 million at June 30, 2011 due to increased orders in North America, including higher telehandler orders from the DoD. Defense segment backlog decreased 32.8% to $3.26 billion at June 30, 2012 compared to $4.86 billion at June 30, 2011 due largely to the fulfillment of FHTV and M-ATV orders and the delay in finalizing the fiscal 2012 U.S. federal budget. Fire & emergency segment backlog increased 15.7% to $530.1 million at June 30, 2012 compared to $458.2 million at June 30, 2011 due largely to higher international demand. Commercial segment backlog increased 18.1% to $148.4 million at June 30, 2012 compared to $125.6 million at June 30, 2011. Unit backlog for concrete mixers was up 11.3% compared to June 30, 2011, primarily as a result of increased international orders. Unit backlog for refuse collection vehicles was down 9.9% compared to June 30, 2011 as customers in the prior year ordered units for delivery prior to the expiration of a U.S. bonus tax depreciation deduction at the end of calendar 2011.
Reported backlog excludes purchase options and announced orders for which definitive contracts have not been executed. Additionally, backlog excludes unfunded portions of the FHTV and FMTV contracts. Backlog information and comparisons thereof as of different dates may not be accurate indicators of future sales or the ratio of the Companys future sales to the DoD versus its sales to other customers. Approximately 61% of the Companys June 30, 2012 backlog is not expected to be filled in fiscal 2012.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Companys quantitative and qualitative disclosures about market risk for changes in interest rates, commodity and foreign currency exchange risk, which are incorporated by reference to Item 7A of the Companys Annual Report on Form 10-K for the year ended September 30, 2011, have not materially changed since that report was filed.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 (the Exchange Act), the Companys management evaluated, with the participation of the Companys President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the quarter ended June 30, 2012. Based upon their evaluation of these disclosure controls and procedures, the President and Chief Executive Officer and the Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of the end of the quarter ended June 30, 2012 to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC rules and forms, and to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Companys management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control. There were no changes in the Companys internal control over financial reporting that occurred during the quarter ended June 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
On January 8, 2010, Control Solutions LLC (Control Solutions) brought suit against the Company in the United States District Court for the Northern District of Illinois for breach of express contract, breach of implied-in-fact contract, unjust enrichment and promissory estoppel related to the Companys contract to supply the United States Department of Defense with M-ATVs. Control Solutions has asserted damages in the amount of $190.3 million. On October 3, 2011, following written and oral discovery, the Company moved for summary judgment. On that same date, Control Solutions filed a cross-motion for summary judgment. The Companys and Control Solutions response briefs have been filed with the Court. While this case is in the early stages of litigation and its outcome cannot be predicted with certainty, the Company believes that the ultimate resolution of this case will not have a material adverse effect on the Companys financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.
The Companys financial position, results of operations and cash flows are subject to various risks, many of which are not exclusively within the Companys control that may cause actual performance to differ materially from historical or projected future performance. In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Item 1A. of our Annual Report on Form 10-K for the year ended September 30, 2011, which have not materially changed other than as reflected below.
Certain of our markets are highly cyclical and the current or any further decline in these markets could have a material adverse effect on our operating performance.
Approximately 94% of our defense segment sales in fiscal 2011 were to the DoD. The high levels of sales in our defense segment in recent years have been due in significant part to demand for defense trucks, replacement parts and services (including armoring) and truck remanufacturing arising from the conflicts in Iraq and Afghanistan. Events such as these are unplanned, as is the demand for our products that arises out of such events. Virtually all U.S. troops were withdrawn from Iraq during 2011, and plans exist regarding the withdrawal of U.S. troops from Afghanistan by December 2014, both of which will likely result in a reduction in the level of defense funding allocated to support U.S. military involvement in those conflicts. In addition, current economic conditions have put significant pressure on the U.S. federal budget, including the defense budget. The DoD budget for fiscal 2012 includes significantly lower funding for purchases of new military vehicles that we manufacture under our FHTV and FMTV contracts than in prior years. In addition, the Presidents fiscal 2013 defense budget request, which includes expected funding requests for defense programs through fiscal 2017, includes significantly lower funding levels for the FHTV and FMTV programs than those that were included in the fiscal 2012 budget and includes no planned funding for the FMTV program starting in fiscal 2015. The Presidents fiscal 2013 budget request reflects previously announced plans to cut U.S. defense spending by $487 billion over the next ten years. The Budget Control Act of 2011 contains an automatic sequestration feature that could require additional cuts to defense spending totaling over $1 trillion during this period if Congress fails to enact the specified $1.2 trillion in U.S. federal deficit reductions. Unless Congress acts, sequestration will result in significant reductions to the defense budget starting in calendar 2013. The magnitude of the adverse impact that federal budget pressures and expected reductions in future defense funding as a result of the withdrawal of U.S. troops from Iraq and planned withdrawal of U.S. troops from Afghanistan and an uncertain DoD tactical wheeled vehicle strategy will have on funding for Oshkosh defense programs is uncertain, but directionally, we expect such funding to decline significantly. Furthermore, our defense business may fluctuate significantly from time to time as a result of the start and completion of existing and new contract awards that we may receive.
The decline, compared to historical levels, in overall customer demand in our commercial and fire & emergency markets that we have experienced since the start of the global economic downturn and any further decline could have a material adverse effect on our operating performance. While demand in our access equipment markets has rebounded from historical lows that we experienced during the Great Recession, such demand is dependent on the global economies and may not be sustainable. Recently, there have been increasing concerns about several European economies. Further, certain countries in Asia and Latin America have experienced slower growth rates than the prior year and there have been mixed economic signs in the U.S. All of these factors, whether taken together or individually, could result in lower demand for our products. The access equipment market is highly cyclical and impacted by the strength of economies in general, by residential and non-residential construction spending, by the ability of rental companies to obtain third party financing to purchase revenue generating assets, by capital expenditures of rental companies in general and by other factors. The ready-mix concrete market that we serve is highly cyclical and impacted by the strength of the economy generally, by the number of housing starts 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 also cyclical and impacted by the strength of economies in general, by municipal tax receipts and by capital expenditures of large waste haulers. Fire & emergency markets are cyclical later in an economic downturn and are impacted by the economy generally and by municipal tax receipts and capital expenditures. Concrete mixer and access equipment sales also are seasonal with the majority of such sales occurring in the spring and summer months, which constitute the traditional construction season in the Northern hemisphere.
The global economy continues to experience weakness, which has negatively impacted sales volumes for our access equipment, commercial and fire & emergency products as compared to historical levels. In addition, the global economic weakness has caused lending institutions to tighten their credit lending standards, which has restricted our customers access to capital. Continued weakness in U.S. and European housing starts and non-residential construction spending in most geographical areas of the world are further contributing to the lower sales volumes. A lack of significant improvement in residential and non-residential construction spending or continued low levels of construction activity generally may cause future weakness in demand for our products. Municipal tax revenues in the U.S. have weakened, which has negatively impacted demand for fire apparatus and refuse collection vehicles and delayed the recovery in these markets. Furthermore, it is possible that emerging market growth has slowed and could slow even further, which could negatively impact our growth in those markets. We cannot provide any assurance that the global economic weakness and tight credit markets will not continue or become more severe. In addition, we cannot provide any assurance that any economic recovery will not progress more slowly than what we or the market expect. If the global economic weakness and tight credit markets continue or become more severe, or if any economic recovery progresses more slowly than what we or the market expect, then there could be a material adverse effect on our net sales, financial condition, profitability and/or cash flows.
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, the withdrawal of U.S. troops from Iraq, the plans to withdraw U.S. troops from Afghanistan by December 2014 and the level of defense funding that will be allocated to the DoDs tactical wheeled vehicle strategy generally.
· 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.
· 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.
· 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. It is possible that the U.S. Army and U.S. Marines will conduct an open competition for programs for which we currently have contracts upon the expiration of the existing contracts. Likewise, the U.S. Army and Marine Corps have, in the past, inquired about purchasing the design rights to the FHTV, M-ATV and Medium Tactical Vehicle Replacement that we produce, respectively. Competition for DoD programs that we currently have could result in the U.S. government awarding future contracts to another manufacturer or the U.S. government awarding the contracts to us at lower prices and operating margins than we experience under the current contracts.
· 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 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 particular, we bid the FMTV contract at very aggressive margins. Although the FMTV contract was profitable in the first three quarters of fiscal 2012, our expected future profitability under this contract is based on certain assumptions, including scheduled price increases and estimates for future increases in the costs of raw materials, targeted cost savings and our ability to achieve certain production efficiencies. There are inherent uncertainties related to these factors and managements judgment in applying them to the analysis of profitability. For example, a 1% escalation in material costs over the Companys projection for FMTV orders currently in backlog would increase the cost of materials by approximately $18 million. Although we do not believe that such an increase would
result in a loss on future sales under this contract, it would reduce our expected future profitability on orders currently in backlog. It is possible that other assumptions underlying the analysis could change in such a manner that the Company would determine in the future that this is a loss contract, which could result in a material charge to earnings.
· We recognize revenue on certain undefinitized contracts with the DoD to the extent that we can reasonably and reliably estimate the expected final contract price and when collectability is reasonably assured. Undefinitized contracts are used when we and the DoD have not agreed upon all contract terms before we begin performance under the contracts. At June 30, 2012, we had recorded $581.8 million in revenue on contracts that remain undefinitized. To the extent that contract definitization results in changes or adjustments to previously recognized revenues or estimated or incurred costs, including charges from subcontractors, we record those adjustments as a change in estimate in the period of change. While we believe the definitization of contracts will not have a material adverse effect on our financial condition, actual results could vary from current estimates.
· 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. Our products are inspected extensively by the DoD prior to acceptance to determine adherence to contractual technical and quality requirements. Any failure to pass these tests or to comply with these requirements could result in unanticipated retrofit and rework costs, vehicle design changes, delayed acceptance of vehicles, late or no payments under such contracts or cancellation of the contract to provide vehicles to the government.
· 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. If we are unable to effectively reduce our cost structure commensurate with the completion of certain large defense contracts, our future earnings and cash flows would be adversely affected. In addition, if we are not able to utilize existing production equipment for alternative purposes, we could incur asset impairment charges as a result of the significant reduction in projected defense funding.
· We have historically received payments in advance of product deliveries, or performance-based payments (PBP), on a number of our U.S. government contracts. In the event that we are not able to meet contractual delivery requirements on these contracts, the U.S. government may discontinue providing PBPs, which could have an adverse effect on our ability to repay debt and cause us to incur higher interest rates on our outstanding debt.
· In the event of component availability constraints, the U.S. government has the ability to unilaterally divert the supply of components used on multiple government programs to those programs rated most urgent (DX-rated programs).
· 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.
We expect to incur costs and charges as a result of measures such as facilities and operations consolidations and workforce reductions that we expect will reduce costs, and those measures also may be disruptive to our business and may not result in anticipated cost savings.
We have been consolidating facilities and operations in an effort to make our business more efficient and expect to continue to review our overall manufacturing footprint. We have incurred, and expect in the future to incur, additional costs and restructuring charges in connection with such consolidations, workforce reductions and other cost reduction measures that have adversely affected and, to the extent incurred in the future would adversely affect, our future earnings and cash flows. Furthermore, such actions may be disruptive to our business. This may result in production inefficiencies, product quality issues, late product deliveries or lost orders as we begin production at consolidated facilities, which would adversely impact our sales levels, operating results and operating margins. In addition, we may not realize the cost savings that we expect to realize as a result of such actions.
In January 2011, we began the consolidation of Medtec Ambulance production into fire & emergency segment facilities in Bradenton, Florida. We had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida would result in significantly improved performance. Despite efforts by numerous dedicated individuals and teams, the business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. Costs to exit this business may
exceed our estimates and could adversely affect our future earnings and cash flows. Furthermore, such actions may be disruptive to our other businesses in the fire & emergency segment.
Our business could be negatively affected as a result of actions of activist shareholders.
Certain funds affiliated with Carl Icahn conducted a proxy contest with respect to the election of directors at our 2012 Annual Meeting of Shareholders. Responding to proxy contests such as this and other actions by activist shareholders can be costly and time-consuming, disrupt our operations and divert the attention of management and our employees. Perceived uncertainties among current and potential customers, employees and other parties as to our future direction may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners. Furthermore, if there is disagreement among our directors about the direction of our business, it could impair our ability to effectively and timely implement our MOVE strategy. These actions could also cause our stock price to experience periods of volatility.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In July 1995, the Companys Board of Directors authorized the repurchase of up to 6,000,000 shares of Common Stock. The Company did not repurchase any shares under this authorization during the quarter ended June 30, 2012. As of June 30, 2012, the Company had repurchased 2,769,210 shares under this program at a cost of $6.6 million, leaving the Company with authority to repurchase 3,230,790 shares of Common Stock under this program. In July 2012, the Companys Board of Directors increased the repurchase authorization by 4,000,000 shares of Common Stock, thereby increasing the aggregate repurchase authorization to 7,230,790 shares of Common Stock. The Company can use this authorization at any time, and there is no expiration date associated with the Board authorization. The Companys credit agreement restricts the Companys ability to repurchase shares of its Common Stock through financial covenants. The Companys credit agreement, as amended in July 2012, also limits the amount of dividends and other distributions, including repurchases of stock, it may pay to $485.0 million; plus (i) 50% of the consolidated net income of the Company and its subsidiaries, accrued on a cumulative basis during the period beginning on April 1, 2012 and ending on the last day of the fiscal quarter immediately preceding the date of the applicable proposed dividend or distribution; plus (ii) 100% of the aggregate net proceeds received by the Company subsequent to March 31, 2012 either as a contribution to its common equity capital or from the issuance and sale of its Common Stock. The Companys indenture also contains restrictive covenants that may limit the Companys ability to repurchase shares of its Common Stock or make dividends and other types of distributions to shareholders.
On July 26, 2012 the Company initiated a plan to exit its ambulance business. The Company had expected that the move of ambulance production from four separate facilities to a dedicated production facility in Florida would result in significantly improved performance. Despite efforts by numerous dedicated individuals and teams, the business continued to operate at a loss and it became apparent that the Medtec product line would not achieve profitability in a reasonable time frame, if at all, and as a result a decision was made to exit the business. The Company expects to discontinue production of ambulances in the first quarter of fiscal 2013 following completion of units currently in backlog. As a result of the plan to exit the ambulance business, the Company expects to incur pre-tax charges between $8 million and $13 million. These charges consist of severance and other termination benefits of approximately $2 million, non-cash excess and obsolete inventory charges of $2 million to $3 million, non-cash asset impairments of $1 million to $2 million and other exit costs of $3 million to $6 million. The majority of these charges are expected to be recorded in the fourth quarter of fiscal 2012.
On July 25, 2012, the Company entered into a non-binding letter of intent to sell its investment in its European mobile medical business as the business was determined to be a non-core business. The Company expects to incur a pre-tax loss of approximately $7 million on the disposition of this business, approximately half of which is related to cash charges. The Company expects to complete the sale of this business in the fourth quarter of fiscal 2012.
Exhibit No. |
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Description |
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3.1 |
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Oshkosh Corporation By-Laws, as amended effective July 16, 2012. |
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4.1 |
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First Amendment to Credit Agreement, dated as of July 13, 2012, among Oshkosh Corporation and various lenders and agents party thereto (incorporated by reference to the Companys Current Report on Form 8-K, dated July 13, 2012 (File No. 001-31371)). |
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31.1 |
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Certification by the President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated July 26, 2012. |
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31.2 |
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Certification by the Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated July 26, 2012. |
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32.1 |
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Written Statement of the President and Chief Executive Officer, pursuant to 18 U.S.C. §1350, dated July 26, 2012. |
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32.2 |
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Written Statement of the Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. §1350, dated July 26, 2012. |
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101 |
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The following materials from Oshkosh Corporations Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. |
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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OSHKOSH CORPORATION |
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July 26, 2012 |
/S/ Charles L. Szews |
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Charles L. Szews |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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July 26, 2012 |
/S/ David M. Sagehorn |
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David M. Sagehorn |
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Executive Vice President and Chief Financial Officer |
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(Principal Financial Officer) |
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July 26, 2012 |
/S/ Thomas J. Polnaszek |
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Thomas J. Polnaszek |
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Senior Vice President Finance and Controller |
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(Principal Accounting Officer) |
Exhibit No. |
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Description |
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3.1 |
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Oshkosh Corporation By-Laws, as amended effective July 16, 2012. |
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4.1 |
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First Amendment to Credit Agreement, dated as of July 13, 2012, among Oshkosh Corporation and various lenders and agents party thereto (incorporated by reference to the Companys Current Report on Form 8-K, dated July 13, 2012 (File No. 001-31371)). |
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31.1 |
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Certification by the President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated July 26, 2012. |
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31.2 |
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Certification by the Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated July 26, 2012. |
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32.1 |
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Written Statement of the President and Chief Executive Officer, pursuant to 18 U.S.C. §1350, dated July 26, 2012. |
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32.2 |
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Written Statement of the Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. §1350, dated July 26, 2012. |
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101 |
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The following materials from Oshkosh Corporations Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Equity, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) Notes to Condensed Consolidated Financial Statements. |
Exhibit 3.1
Amended
July 16, 2012
BY-LAWS
OF
OSHKOSH CORPORATION
(a Wisconsin corporation)
ARTICLE I. OFFICES
1.01 Principal and Business Offices. The corporation may have such principal and other business offices, either within or without the State of Wisconsin, as the Board of Directors may designate or as the business of the corporation may require from time to time.
1.02 Registered Office. The registered office of the corporation required by the Wisconsin Business Corporation Law to be maintained in the State of Wisconsin may be, but need not be, identical with the principal office in the State of Wisconsin, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the corporation shall be identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting. The annual meeting of the shareholders (the Annual Meeting) shall be held on the first Tuesday in February of each year at such time or on such other date as may be fixed by or under the authority of the Board of Directors. If the day fixed for the Annual Meeting shall be a legal holiday in the State of Wisconsin, then such meeting shall be held on the next succeeding Business Day (as defined below). In fixing a meeting date for any Annual Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of its business judgment. At each Annual Meeting, the shareholders shall elect individuals to the Board of Directors in accordance with the articles of incorporation. At any such Annual Meeting, only other business properly brought before the Annual Meeting in accordance with Section 2.11 may be transacted.
2.02 Special Meeting.
(a) A special meeting of the shareholders (a Special Meeting) may be called only by (i) a majority of the Board of Directors, (ii) the Chairman of the Board or (iii) the Chief Executive Officer. The Chief Executive Officer shall call a Special Meeting upon the demand, in accordance with this Section 2.02, of the holders of record representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting.
(b) To enable the corporation to determine the shareholders entitled to demand a Special Meeting, the Board of Directors may fix a record date to determine the
shareholders entitled to make such a demand (the Demand Record Date). The Demand Record Date shall not precede the date on which the Board of Directors adopts the resolution fixing the Demand Record Date and shall not be more than ten days after the date on which the resolution fixing the Demand Record Date is adopted by the Board of Directors. Any shareholder of record entitled to demand a Special Meeting who is seeking to have shareholders demand a Special Meeting shall, by sending written notice to the Secretary at the principal offices of the corporation, by hand or by certified or registered mail, return receipt requested, request the Board of Directors to fix a Demand Record Date. The Board of Directors shall promptly, but in all events within ten days after the date on which a valid request to fix a Demand Record Date is received, adopt a resolution fixing the Demand Record Date and shall make a public announcement of such Demand Record Date. If no Demand Record Date has been fixed by the Board of Directors within ten days after the date on which such request is received by the Secretary at the principal offices of the corporation, then the Demand Record Date shall be the 10th day after the first date on which a valid written request to set a Demand Record Date is received by the Secretary at the principal offices of the corporation. To be valid, such written request shall set forth the purpose or purposes for which the Special Meeting is to be held, shall be signed by one or more shareholders of record and by the beneficial owner or owners, if any, on whose behalf the request is made, shall bear the date of signature of each such shareholder and any such beneficial owner and shall set forth all information that would be required to be set forth in a notice described in Section 2.11(a)(ii) delivered by such shareholder or shareholders as if the notice related to an Annual Meeting.
(c) For a shareholder or shareholders to demand a Special Meeting, a written demand or demands for a Special Meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting, calculated as if the Demand Record Date were the record date for the Special Meeting, must be delivered to the Secretary at the principal offices of the corporation. To be valid, each written demand by a shareholder for a Special Meeting shall set forth the specific purpose or purposes for which the Special Meeting is to be held (which purpose or purposes shall be limited to the purpose or purposes set forth in the written request to set a Demand Record Date received by the corporation pursuant to Section 2.02(b)), shall be signed by one or more persons who as of the Demand Record Date are shareholders of record and by the beneficial owners, if any, on whose behalf the demand is made, shall bear the date of signature of each such shareholder and any such beneficial owner, shall set forth the name and address of each such shareholder (as they appear in the corporations books) and any such beneficial owner signing such demand and the class or series and number of shares of the corporation that are owned of record and/or beneficially by each such shareholder and any such beneficial owner, shall be sent to the Secretary at the principal offices of the corporation, by hand or by certified or registered mail, return receipt requested, and shall be received by the Secretary at the principal offices of the corporation within seventy days after the Demand Record Date.
(d) The corporation shall not be required to call a Special Meeting upon shareholder demand unless, in addition to the documents required by Section 2.02(c), the Secretary receives a written agreement signed by each Soliciting Shareholder (as defined below) pursuant to which each Soliciting Shareholder, jointly and severally, agrees to pay the corporations costs of holding the Special Meeting, including the costs of preparing and
mailing proxy materials for the corporations own solicitation, provided that if each of the resolutions introduced by any Soliciting Shareholder at such meeting is adopted, and each of the individuals nominated by or on behalf of any Soliciting Shareholder for election as a director at such meeting is elected, then the Soliciting Shareholders shall not be required to pay such costs. For purposes of these by-laws, the following terms shall have the respective meanings set forth below:
(i) Affiliate of any Person (as defined herein) shall mean any Person controlling, controlled by or under common control with such first Person.
(ii) Business Day shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of Wisconsin are authorized or obligated by law or executive order to close.
(iii) Participant shall have the meaning assigned to such term in paragraphs (a)(iii), (iv), (v) and (vi) of Instruction 3 to Item 4 of Schedule 14A of the rules promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act).
(iv) Person shall mean any individual, firm, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity.
(v) Proxy shall have the meaning assigned to such term in Rule 14a-1 promulgated under the Exchange Act (and, in such Rule 14a-1, a consent or authorization shall be interpreted to include signature on a demand for purposes of construing all the definitions in this Section 2.02(d)).
(vi) Solicitation shall have the meaning assigned to such term in Rule 14a-1 promulgated under the Exchange Act.
(vii) Soliciting Shareholder shall mean, with respect to any Special Meeting demanded by a shareholder or shareholders, each of the following Persons:
(A) if the number of shareholders signing the demand or demands of meeting delivered to the Secretary at the principal offices of the corporation pursuant to Section 2.02(c) is ten or fewer, each Person signing any such demand; or
(B) if the number of shareholders signing the demand or demands of meeting delivered to the corporation pursuant to Section 2.02(c) is more than ten, each Person who either (I) was a Participant in any Solicitation of such demand or demands or (II) at the time of the delivery to the Secretary at the principal offices of the corporation of the documents described in Section 2.02(c) had engaged or intends to engage in any Solicitation of Proxies for use at such Special Meeting (other than a Solicitation of Proxies on behalf of the corporation).
A Soliciting Shareholder shall also mean each Affiliate of a Soliciting Shareholder described in clause (A) or (B) above who is a member of such Soliciting Shareholders group for purposes of Rule 13d-5(b) under the Exchange Act, and any other Affiliate of such a Soliciting Shareholder, if a majority of the directors then in office determines, reasonably and in good faith,
that such Affiliate should be required to sign the written notice described in Section 2.02(c) and/or the written agreement described in this Section 2.02(d) to prevent the purposes of this Section 2.02 from being evaded.
(e) Except as provided in the following sentence, any Special Meeting shall be held at such date and hour as may be designated by whichever of the Board of Directors, the Chairman of the Board or the Chief Executive Officer shall have called such meeting. In the case of any Special Meeting called by the Chief Executive Officer upon the demand of shareholders (a Demand Special Meeting), such meeting shall be held at such date and hour as may be designated by the Board of Directors; provided, however, that the date of any Demand Special Meeting shall be not more than seventy days after the Meeting Record Date (as defined in Section 2.05(a)); and provided further that in the event that the directors then in office fail to designate a date and hour for a Demand Special Meeting within ten days after the date that valid written demands for such meeting by the holders of record as of the Demand Record Date of shares representing at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting, calculated as if the Demand Record Date were the record date for the Special Meeting, are delivered to the corporation (the Delivery Date), then such meeting shall be held at 10:00 A.M., local time, on the 100th day after the Delivery Date or, if such 100th day is not a Business Day, on the first preceding Business Day. In fixing a meeting date for any Special Meeting, the Board of Directors or the Chairman of the Board may consider such factors as it, he or she deems relevant within the good faith exercise of its, his or her business judgment, including, without limitation, the nature of the action proposed to be taken, the facts and circumstances surrounding any demand for such meeting and any plan of the Board of Directors, the Chairman of the Board or the Chief Executive Officer to call an Annual Meeting or Special Meeting for the conduct of related business.
(f) The corporation may engage regionally or nationally recognized independent inspectors of elections to act as an agent of the corporation for the purpose of promptly performing a ministerial review of the validity of any purported written demand or demands for a Special Meeting received by the Secretary. For the purpose of permitting the inspectors to perform such review, no purported demand shall be deemed to have been delivered to the corporation until the earlier of (i) five Business Days following receipt by the Secretary of such purported demand and (ii) such date as the independent inspectors certify to the corporation that the valid demands received by the Secretary represent at least 10% of all the votes entitled to be cast on any issue proposed to be considered at the Special Meeting, calculated as if the Demand Record Date were the record date for the Special Meeting. Nothing contained in this Section 2.02(f) shall in any way be construed to suggest or imply that the Board of Directors or any shareholder shall not be entitled to contest the validity of any demand, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto).
2.03 Place of Meeting. The Board of Directors or the Chairman of the Board may designate any place, either within or without the State of Wisconsin, as the place of meeting for any Annual Meeting or Special Meeting. If no designation is made, then the place of meeting shall be the principal office of the corporation. Any meeting may be postponed or adjourned
pursuant to Section 2.07 to reconvene at any place designated by vote of the Board of Directors or by the Chairman of the Board.
2.04 Notice of Meeting.
(a) Written notice stating the place, day and hour of an Annual Meeting or Special Meeting shall be delivered not less than ten days nor more than seventy days before the date of the meeting (unless a different date is required by the law or the articles of incorporation), by or at the direction of the Chairman of the Board or the Secretary, to each shareholder of record entitled to vote at such meeting and to such other persons as are required by the Wisconsin Business Corporation Law. In the event of any Demand Special Meeting, such notice of meeting shall be sent prior to the later of (x) two days after the Meeting Record Date for such Demand Special Meeting and (y) thirty days after the Delivery Date. For purposes of this Section 2.04, notice by electronic transmission (as defined in the Wisconsin Business Corporation Law) is written notice. Written notice pursuant to this Section 2.04 shall be deemed to be effective (i) when mailed, if mailed postpaid and addressed to the shareholders address shown in the corporations current record of shareholders or (ii) when electronically transmitted to the shareholder in a manner authorized by the shareholder.
(b) In the case of any Special Meeting, (i) the notice of meeting shall describe any business that the Board of Directors shall have theretofore determined to bring before the meeting and (ii) in the case of a Demand Special Meeting, the notice of meeting (A) shall describe any business set forth in the statement of purpose of the demands received by the corporation in accordance with Section 2.02, (B) shall contain all of the information required in the notice received by the corporation in accordance with Section 2.11(b) and (C) shall describe any business that the Board of Directors shall have theretofore determined to bring before the Demand Special Meeting. Except as otherwise provided in these by-laws, in the articles of incorporation or in the Wisconsin Business Corporation Law, the notice of an Annual Meeting need not include a description of the purpose or purposes for which the meeting is called.
(c) If any Annual Meeting or Special Meeting is adjourned to a different date, time or place, then the corporation shall not be required to give notice of the new date, time or place if the new date, time or place is announced at the meeting before adjournment; provided, however, that if a new Meeting Record Date for an adjourned meeting is or must be fixed, then the corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new Meeting Record Date.
2.05 Fixing of Record Date.
(a) The Board of Directors may fix in advance a date not less than ten days and not more than seventy days prior to the date of an Annual Meeting or Special Meeting as the record date for the determination of shareholders entitled to notice of, or to vote at, such meeting (the Meeting Record Date). In the case of any Demand Special Meeting, (i) the Meeting Record Date shall be not later than the 30th day after the Delivery Date and (ii) if the Board of Directors fails to fix the Meeting Record Date within thirty days after the Delivery Date, then the close of business on such 30th day shall be the Meeting Record Date. The
shareholders of record on the Meeting Record Date shall be the shareholders entitled to notice of and to vote at the Annual Meeting or Special Meeting. When a determination of shareholders entitled to notice of or to vote at the Annual Meeting or Special Meeting has been made as provided in this section, such determination shall be applied to any adjournment thereof unless the Board of Directors fixes a new Meeting Record Date and except as otherwise required by law. A new Meeting Record Date must be set if a meeting is adjourned to a date more than one hundred twenty days after the date fixed for the original meeting.
(b) The Board of Directors may also fix in advance a date as the record date for the purpose of determining shareholders entitled to take any other action or determining shareholders for any other purpose other than those set forth in Section 2.02(a) and Section 2.05(a). Such record date shall not be more than seventy days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the Board of Directors does not fix a record date for the determination of shareholders entitled to receive a share dividend or distribution (other than a distribution involving a purchase, redemption or other acquisition of the corporations shares), then the close of business on the date on which the resolution of the Board of Directors is adopted declaring the dividend or distribution shall be the record date.
2.06 Voting Records. After a Meeting Record Date has been fixed, the corporation shall prepare a list of the names of all of the shareholders entitled to notice of the meeting. The shareholders list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Any shareholder or his, her or its agent or attorney, on written demand, may inspect the shareholders list beginning two Business Days after the corporation gives the notice of the meeting for which the shareholders list was prepared and continuing to the date of the meeting, at the corporations principal office or at a place identified in the meeting notice in the city where the meeting will be held, and if and to the extent entitled to do so under the Wisconsin Business Corporation Law, may copy the shareholders list, during regular business hours and at his, her or its expense, during the period that it is available for inspection hereunder. The corporation shall make the shareholders list available at the meeting and any shareholder or his, her or its agent or attorney may inspect the shareholders list at any time during the meeting or any adjournment thereof. The original stock transfer books of the corporation shall be prima facie evidence as to who are the shareholders entitled to inspect the shareholders list or to vote at any meeting of the shareholders. Refusal or failure to prepare or make available the shareholders list shall not affect the validity of any action taken at a meeting of shareholders.
2.07 Quorum; Postponement; Adjournments.
(a) Shares entitled to vote as a separate voting group may take action on a matter at an Annual Meeting or Special Meeting only if a quorum of those shares exists with respect to that matter. Except as otherwise provided in the articles of incorporation or in the Wisconsin Business Corporation Law, a majority of the votes entitled to be cast on a matter by the voting group shall constitute a quorum of that voting group for action on that matter. Once a share is represented for any purpose at an Annual Meeting or Special Meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of
the meeting and for any adjournment of the meeting unless a new Meeting Record Date is or must be set for the adjourned meeting. If a quorum exists, then action on a matter, other than the election of directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless the articles of incorporation or the Wisconsin Business Corporation Law requires a greater number of affirmative votes. Unless otherwise provided in the articles of incorporation, each director shall be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors at a meeting at which a quorum is present.
(b) The Board of Directors acting by resolution may postpone and reschedule any previously scheduled Annual Meeting or Special Meeting; provided, however, that a Demand Special Meeting shall not be postponed beyond the 100th day following the Delivery Date. Any Annual Meeting or Special Meeting may be adjourned from time to time, whether or not there is a quorum, (i) at any time, upon a resolution by shareholders if the votes cast in favor of such resolution by the holders of shares of each voting group entitled to vote on any matter theretofore properly brought before the meeting exceed the number of votes cast against such resolution by the holders of shares of each such voting group or (ii) at any time prior to the transaction of any business at such meeting, by the Chairman of the Board or pursuant to a resolution of the Board of Directors; provided, however, that a Demand Special Meeting adjourned pursuant to clause (ii) must be reconvened on or before the 100th day following the Delivery Date. No notice of the time and place of adjourned meetings need be given except as required by the Wisconsin Business Corporation Law. At any adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
2.08 Conduct of Meetings. The Chairman of the Board or, in his or her absence, the Chief Executive Officer or, in the Chief Executive Officers absence, the President (if the Chief Executive Officer is not then the President) or a Vice President designated by the Board of Directors shall call any Annual Meeting or Special Meeting to order and shall act as chairman of the meeting, and the Secretary shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. The Board of Directors may, to the extent not prohibited by law, adopt by resolution such rules and regulations for the conduct of an Annual Meeting or Special Meeting as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations or procedures and to do such acts as, in the judgment of the chairman of the meeting, are appropriate for the proper conduct of an Annual Meeting or Special Meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may to the extent not prohibited by law include, without limitation, the following: (a) the establishment of an agenda or order of business for the meeting; (b) rules and procedures for maintaining order at the meeting and the safety of those present; (c) limitations on attendance at or participation in the meeting to shareholders of record of the corporation, their duly authorized and constituted proxies (which shall be reasonable in number) or such other persons as the chairman of the meeting shall determine; (d) restrictions on entry to the meeting after the time fixed for the commencement thereof; (e) limitations on the time allotted to questions or comments by participants; (f) rules and procedures regarding the execution of election ballots before or after
the time fixed for the commencement of the meeting; (g) the appointment of an inspector of election or an officer or agent of the corporation authorized to tabulate votes; and (h) rules and procedures to facilitate the conduct of, and participation in, the meeting by electronic means.
2.09 Proxies. At any Annual Meeting or Special Meeting, a shareholder entitled to vote may vote in person or by proxy. A shareholder entitled to vote at any Annual Meeting or Special Meeting may authorize another person to act for the shareholder by appointing the person as a proxy. The means by which a shareholder or the shareholders authorized officer, director, employee, agent or attorney-in-fact may authorize another person to act for the shareholder by appointing the person as proxy include:
(a) Appointment of a proxy in writing by signing or causing the shareholders signature to be affixed to an appointment form by any reasonable means, including, without limitation, by facsimile signature.
(b) Appointment of a proxy by transmitting or authorizing the transmission of an electronic transmission of the appointment to the person who will be appointed as proxy or to a proxy solicitation firm, proxy support service organization or like agent authorized to receive the transmission by the person who will be appointed as proxy. Every electronic transmission shall contain, or be accompanied by, information that can be used to reasonably determine that the shareholder transmitted or authorized the transmission of the electronic transmission. Any person charged with determining whether a shareholder transmitted or authorized the transmission of the electronic transmission shall specify the information upon which the determination is made.
An appointment of a proxy is effective when a signed appointment form or an electronic transmission of the appointment is received by the inspector of election or the officer or agent of the corporation authorized to tabulate votes. Unless the appointment form or electronic transmission states that the proxy is irrevocable and the appointment is coupled with an interest, a proxy may be revoked at any time before it is voted, either by written notice filed with the Secretary or the secretary of the meeting or by oral notice given by the shareholder to the presiding officer during the meeting. The presence of a shareholder who has made an effective proxy appointment shall not of itself constitute a revocation. A proxy appointment is valid for eleven months unless a different period is expressly provided in the appointment. The Board of Directors, the Chairman of the Board and the Chief Executive Officer each shall have the power and authority to make rules as to the validity and sufficiency of proxies.
2.10 Voting of Shares. Each outstanding share shall be entitled to one vote on each matter submitted to a vote at any Annual Meeting or Special Meeting, except to the extent that the voting rights of the shares of any class or classes are enlarged, limited or denied by the articles of incorporation.
2.11 Notice of Shareholder Business and Nomination of Directors.
(a) Annual Meetings.
(i) Nominations of persons for election to the Board of Directors and the proposal of other business to be considered by the shareholders may be made at an Annual
Meeting (A) pursuant to the corporations notice of meeting, (B) by or at the direction of the Board of Directors or (C) by any shareholder of the corporation who (1) is a shareholder of record at the time of giving of notice provided for in this Section 2.11, (2) is entitled to vote with respect to such nomination or other business at the meeting under the articles of incorporation and (3) complies with the notice procedures set forth in this Section 2.11. Clause (C) in the preceding sentence shall be the exclusive means for a shareholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the corporations notice of meeting) before an Annual Meeting.
(ii) For nominations or other business to be properly brought before an Annual Meeting by a shareholder pursuant to Section 2.11(a)(i)(C), the shareholder must have given timely notice thereof in writing to the Secretary and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholders notice shall be received by the Secretary at the principal offices of the corporation not less than forty-five days nor more than seventy days prior to the first annual anniversary of the date set forth in the corporations proxy statement for the immediately preceding Annual Meeting as the date on which the corporation first mailed or intended to mail definitive proxy materials for the immediately preceding Annual Meeting (the Anniversary Date); provided, however, that if the date for which the Annual Meeting is called is more than thirty days before or more than thirty days after the first annual anniversary of the immediately preceding Annual Meeting, then notice by the shareholder to be timely must be received by the Secretary not earlier than the close of business on the 100th day prior to the date of such Annual Meeting and not later than the later of (A) the 75th day prior to the date of such Annual Meeting or (B) the 10th day following the day on which public announcement of the date of such Annual Meeting is first made. In no event shall any adjournment or postponement of an Annual Meeting or the announcement thereof commence a new time period for the giving of a shareholder notice as described above. To be in proper form, a shareholders notice to the Secretary (whether given pursuant to this Section 2.11(a)(ii) or Section 2.02(b)) shall be signed by the shareholder of record who intends to make the nomination or introduce the other business and by the beneficial owner or owners, if any, on whose behalf the shareholder is acting, shall bear the date of signature of such shareholder and any such beneficial owner and shall set forth: (I) the name and address of such shareholder (as they appear on the corporations books) and any such beneficial owner; (II) the Share Information relating to each such shareholder and beneficial owner (which Share Information shall be supplemented by such shareholder and any such beneficial owner not later than ten days after the Meeting Record Date to disclose such Share Information as of the Meeting Record Date); (III) a representation that such shareholder is a holder of record of shares of the corporation entitled to vote under the articles of incorporation at such meeting with respect to such nomination or other business and intends to appear in person or by proxy at the meeting to make such nomination or introduce such other business; (IV) any other information relating to such shareholder and any such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (V) in the case of any proposed nomination for election or re-election as a director, (1) the name and residence address of the person or persons to be nominated, (2) a description of all agreements, arrangements or understandings between such shareholder and any such beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to
which the nomination is to be made by such shareholder and any such beneficial owner, including without limitation any agreement, arrangement or understanding with any person as to how such nominee, if elected as a director of the corporation, will act or vote on any issue or question, (3) a description of all direct and indirect compensation and other material agreements, arrangements and understandings during the past three years and any other material relationships, between or among such shareholder and any such beneficial owner and their respective Affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective Affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K of the Securities and Exchange Commission if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, or any Affiliate or associate thereof or person acting in concert therewith, were the registrant for purposes of such rule and the nominee were a director or executive officer of such registrant, (4) such other information regarding each nominee proposed by such shareholder and any such beneficial owner as would be required to be disclosed by such shareholder and any such beneficial owner in contested solicitations of proxies for elections of directors, or would be otherwise required to be disclosed, in each case pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, and (5) the written consent of each nominee proposed by such shareholder and any such beneficial owner to be named in a proxy statement and to serve as a director of the corporation if so elected; (VI) in the case of any proposed removal of a director at a meeting called for the purpose of removing such director, (1) the names of the directors to be removed and (2) the reasons of such shareholder and any such beneficial owner for asserting that such directors should be removed; and (VII) in the case of any other business that such shareholder and any such beneficial owner propose to bring before the meeting, (1) a brief description of the business desired to be brought before the meeting and, if such business includes a proposal to amend these by-laws, the language of the proposed amendment, (2) the reasons of such shareholder and any such beneficial owner for conducting such business at the meeting, (3) any material interest in such business of such shareholder and any such beneficial owner and (4) a description of all agreements, arrangements or understandings between such shareholder and any such beneficial owner and any other person or persons (naming such person or persons) in connection with the proposal of such business by such shareholder. In the case of any proposed nomination for election or re-election as a director, the corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable shareholders understanding of the independence, or lack thereof, of such nominee.
For purposes of these by-laws, the term Share Information shall mean (1) the class or series and number of shares of the corporation that are owned, directly or indirectly, of record and/or beneficially by a shareholder, any beneficial owner on whose behalf the shareholder is acting and any of their respective Affiliates, (2) any option, warrant, convertible security, stock appreciation right or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the corporation or otherwise (a Derivative Instrument) directly or indirectly owned beneficially by such shareholder, any such beneficial
owner and any of their respective Affiliates, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation, (3) any proxy, agreement, arrangement, understanding, or relationship pursuant to which such shareholder has a right to vote any shares of any security of the corporation, (4) any short interest in any security of the corporation (for purposes of these by-laws, a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any agreement, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (5) any rights to dividends on the shares of the corporation owned beneficially by such shareholder that are separated or separable from the underlying shares of the corporation, (6) any proportionate interest in shares of the corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such shareholder or beneficial owner is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (7) any performance-related fees (other than asset-based fees) to which such shareholder, any such beneficial owner or any of their respective Affiliates are entitled based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such persons immediate family as defined in Item 404 of Regulation S-K.
(iii) Notwithstanding anything in the second sentence of Section 2.11(a)(ii) to the contrary, if the number of directors to be elected to the Board of Directors is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the corporation at least forty-five days prior to the Anniversary Date, then a shareholders notice required by this Section 2.11 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary at the principal offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.
(b) Special Meetings. Only such business shall be conducted at a Special Meeting as shall have been described in the corporations notice of meeting sent to shareholders pursuant to Section 2.04. Nominations of persons for election to the Board of Directors may be made at a Special Meeting at which directors are to be elected pursuant to the corporations notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the corporation who (A) is a shareholder of record at the time of giving of such notice of meeting, (B) is entitled to vote with respect to such nominations at the meeting under the articles of incorporation and (C) complies with the notice procedures set forth in this Section 2.11. Clause (ii) in the preceding sentence shall be the exclusive means for a shareholder to make nominations before a Special Meeting. Any shareholder permitted to nominate persons for election to the Board of Directors pursuant to such clause (ii) who desires to nominate persons for election to the Board of Directors at such a Special Meeting shall cause a written notice to be received by the Secretary at the principal offices of the corporation not earlier than ninety days prior to such Special Meeting and not later than the close of business on the later of (I) the 60th day prior to such Special Meeting and (II) the 10th day following the day on which public announcement is first made of the date of such Special Meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. Such written notice shall be signed by the shareholder of record who intends to make the
nomination and by the beneficial owner or owners, if any, on whose behalf the shareholder is acting, shall bear the date of signature of such shareholder and any such beneficial owner and shall set forth: (1) the name and address of such shareholder (as they appear in the corporations books) and any such beneficial owner; (2) the Share Information relating to each such shareholder and beneficial owner (which Share Information shall be supplemented by such shareholder and any such beneficial owner not later than ten days after the Meeting Record Date to disclose such Share Information as of the Meeting Record Date); (3) a representation that such shareholder is a holder of record of shares of the corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to make the nomination specified in the notice; (4) any other information relating to such shareholder and any such beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (5) the name and residence address of the person or persons to be nominated; (6) a description of all agreements, arrangements or understandings between such shareholder and any such beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination is to be made by such shareholder and any such beneficial owner, including without limitation any agreement, arrangement or understanding with any person as to how such nominee, if elected as a director of the corporation, will act or vote on any issue or question; (7) a description of all direct and indirect compensation and other material agreements, arrangements and understandings during the past three years and any other material relationships, between or among such shareholder and any such beneficial owner and their respective Affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective Affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K of the Securities and Exchange Commission if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, or any Affiliate or associate thereof or person acting in concert therewith, were the registrant for purposes of such rule and the nominee were a director or executive officer of such registrant; and (8) the written consent of each nominee proposed by such shareholder and any such beneficial owner to be named in a proxy statement and to serve as a director of the corporation if so elected. In no event shall any adjournment or postponement of a Special Meeting commence a new time period for the giving of a shareholders notice as described above.
(c) General.
(i) Only persons who are nominated in accordance with the procedures set forth in this Section 2.11 shall be eligible to be elected as directors at an Annual Meeting or Special Meeting. Only such business shall be conducted at an Annual Meeting or Special Meeting as shall have been brought before such meeting in accordance with the procedures set forth in this Section 2.11. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 2.11 and, if any proposed nomination or business is not in compliance with this Section 2.11, to declare that such defective nomination or proposal shall be disregarded.
(ii) For purposes of this Section 2.11, public announcement shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or l5(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section 2.11, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 2.11; provided, however, that any references in these by-laws to the Exchange Act or the rules and regulations promulgated thereunder are not intended to limit the requirements applicable to nominations or shareholder action pursuant to Sections 2.11(a)(ii) or 2.11(b). Nothing in this Section 2.11 shall be deemed to limit the corporations obligation to include shareholder proposals in its proxy statement if such inclusion is required by Rule 14a-8 under the Exchange Act.
2.12 Voting of Shares by Certain Holders.
(a) Other Corporations. Shares standing in the name of another corporation may be voted, either in person or by proxy, by the president of such other corporation or any other officers appointed by such president. An appointment of a proxy executed by any principal officer of such other corporation or assistant thereto shall be conclusive evidence of the signers authority to act, in the absence of express notice to the contrary, given in writing by the Board of Directors of such other company to the Secretary.
(b) Legal Representatives and Fiduciaries. Shares held by an administrator, executor, guardian, conservator, trustee in bankruptcy, receiver or assignee for creditors may be voted by such person, either in person or by proxy, without a transfer of such shares into such persons name, provided that there is filed with the Secretary before or at the time of the meeting proper evidence of such persons incumbency and the number of shares held. Shares held by a fiduciary may be voted by the person acting in such capacity, either in person or by proxy. A proxy executed by a fiduciary, shall be conclusive evidence of the signers authority to act, in the absence of express notice to the contrary, given in writing to the Secretary.
(c) Pledges. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.
(d) Treasury Stock and Subsidiaries. Neither treasury shares nor shares held by another corporation if a majority of the shares entitled to vote for the election of directors of such other corporation is held by this corporation shall be voted at any Annual Meeting or Special Meeting or counted in determining the total number of outstanding shares entitled to vote, but shares of its own issue held by this corporation in a fiduciary capacity, or held by such other corporation in a fiduciary capacity, shall be entitled to vote and shall be counted in determining the total number of outstanding shares entitled to vote.
(e) Minors. Shares held by a minor may be voted by such minor in person or by proxy, and no such vote shall be subject to disaffirmance or avoidance, unless, prior to such
vote, the Secretary has received written notice or has actual knowledge that such shareholder is a minor.
(f) Incompetents and Spendthrifts. Shares held by a incompetent or spendthrift may be voted by such incompetent or spendthrift in person or by proxy, and no such vote shall be subject to disaffirmance or avoidance, unless, prior to such vote, the Secretary has actual knowledge that such shareholder has been adjudicated an incompetent or spendthrift or has actual knowledge of filing of judicial proceedings for appointment of a guardian.
(g) Joint Tenants. Shares registered in the names of two or more individuals who are named in the registration as joint tenants may be voted in person or by proxy signed by any one or more of such individuals if either (i) no other such individual or his or her legal representative is present at the meeting and claims the right to participate in the voting of such shares or prior to the vote filed with the Secretary a contrary written voting authorization or direction or written denial of authority of the individual present or signing the proxy proposed to be voted or (ii) all such other individuals are deceased and the Secretary has no actual knowledge that the survivor has been adjudicated not to be the successor to the interest of those deceased.
2.13 Waiver of Notice by Shareholders. Whenever any notice is required to be given to any shareholder of the corporation under the articles of incorporation, these by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of the meeting, and delivered to the Secretary for inclusion in the corporations records, by the shareholder entitled to such notice, shall be deemed equivalent to the giving of such notice; provided that such waiver in respect to any matter of which notice is required under any provision of the Wisconsin Business Corporation Law shall contain the same information as would have been required to be included in such notice, except the date, time and place of the meeting. A shareholders attendance at any Annual Meeting or Special Meeting, in person or by proxy, waives objection to all of the following: (a) lack of notice or defective notice of the meeting, unless the shareholder, at the beginning of the meeting or promptly upon arrival, objects to holding the meeting or transacting business at the meeting; and (b) consideration of a particular matter at the meeting that is not within the purpose described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.
2.14 Unanimous Consent Without Meeting. Any action required or permitted by the articles of incorporation, these by-laws or any provision of law to be taken at an Annual Meeting or Special Meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof and delivered to the Secretary for inclusion in the corporations records.
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Number. The business and affairs of the corporation shall be managed by its Board of Directors. The number of directors of the corporation shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors that the corporation would have if
there were no vacancies. The Board of Directors shall annually choose, from among them, a Chairman of the Board, who shall serve as such until a successor is elected. From and after the 2011 Annual Meeting of Shareholders, the Chairman of the Board shall be a director that the Board has determined to be independent in accordance with the listing standards of the New York Stock Exchange Listed Company Rules in effect from time to time who has not previously served as an executive officer of the Company. The Chairman of the Board shall perform such duties and shall have such authority as are specified in these by-laws and as the Board of Directors may from time to time assign to him or her.
3.02 Tenure and Qualifications. Each director shall hold office until the next Annual Meeting, and until his or her successor shall have been elected, or until his or her prior death, resignation or removal. A Director may be removed from office by affirmative vote of a majority of the outstanding shares entitled to vote for the election of such director, taken at a meeting called for that purpose. A director may resign at any time by filing his or her written resignation with the Secretary, which shall be effective when the notice is delivered unless the notice specifies a later date. Directors need not be residents of the State of Wisconsin or shareholders of the corporation. No one shall be eligible for election as a director nor shall any directors be eligible for re-election after attaining the age of seventy-two without the prior approval of the Governance Committee of the Board of Directors, or of such other committee of the Board of Directors then in effect performing a similar function with respect to nomination of directors.
3.03 Certain Director Resignations.
(a) In an uncontested election of directors, any nominee for director who receives a greater number of votes withheld from his or her election than votes for his or her election (a Majority Withheld Vote) will promptly tender his or her resignation to the Chairman of the Board following certification of the shareholder vote. For purposes of this by-law, a contested election is one in which the Chairman of the Board determines that, as of the Determination Date, the number of persons properly nominated to serve as directors of the corporation exceeds the number of directors to be elected. The Determination Date is (i) the day after the meeting of the Board of Directors at which the nominees for director of the Board of Directors for such election are approved, when such meeting occurs after the last day on which a shareholder may propose the nomination of a director for election in such election pursuant to the articles of incorporation or these by-laws, or (ii) the day after the last day on which a shareholder may propose the nomination of a director for election in such election pursuant to the articles of incorporation or these by-laws, when the last day for such a proposal occurs after the meeting of the Board of Directors at which the nominees for director of the Board of Directors for such election are approved, whichever of clause (i) or (ii) is applicable.
(b) The Resignation Committee (as defined in Section 3.03(e)) will promptly consider the resignation submitted by a director receiving a Majority Withheld Vote, and the Resignation Committee will recommend to the Board of Directors whether to accept the tendered resignation or reject it. In considering whether to recommend that the Board of Directors accept or reject the tendered resignation, the Resignation Committee will consider all factors deemed relevant by the members of such committee, including, without limitation, any
stated reasons why shareholders withheld votes for election from such director and the qualifications of the director whose resignation has been tendered.
(c) The Board of Directors will act on the Resignation Committees recommendation no later than 90 days following the date of the shareholders meeting at which the election occurred. In considering such committees recommendation, the Board of Directors will consider the factors considered by such committee and such additional information and factors the Board of Directors believes to be relevant. Following the Board of Directors decision, the corporation will promptly publicly disclose in a Current Report on Form 8-K filed with or furnished to, as applicable, the Securities and Exchange Commission the Board of Directors decision whether to accept the resignation as tendered, including a full explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation.
(d) Any director who tenders a resignation pursuant to this Section 3.03 will not participate in the recommendation of the Resignation Committee regarding whether or not to accept that directors tendered resignation. Any director who tenders a resignation pursuant to this Section 3.03 will not participate in the Board of Directors deliberation or vote regarding whether or not to accept that directors tendered resignation. If directors constituting a quorum of the Board of Directors did not receive a Majority Withheld Vote in the election that prompted one or more directors to tender the resignations upon which the Resignation Committee and the Board of Directors must then act, then no director who tendered a resignation pursuant to this Section 3.03 in connection with such election will participate in the Board of Directors deliberation or vote (i) regarding whether or not to accept any tendered resignations related to such election or (ii) regarding matters relating to the Resignation Committee as it relates to such resignation.
(e) The Resignation Committee shall be (i) the Governance Committee of the Board of Directors, or such other committee of the Board of Directors then in effect performing a similar function, if (A) less than a majority of the members of such committee received Majority Withheld Votes in the election that prompted one or more directors to tender the resignations upon which the Resignation Committee must then act or (B) all of the directors received Majority Withheld Votes in such election or (ii) a committee of the Board of Directors appointed by the Board of Directors and consisting only of directors who did not receive Majority Withheld Votes, if a majority of the members of the Governance Committee of the Board of Directors, or such other committee of the Board of Directors then in effect performing a similar function, but not all of the directors, received Majority Withheld Votes at such election.
(f) This by-law will be summarized or included in each proxy statement relating to an election of directors of the corporation.
3.04 Regular Meetings. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Wisconsin, for the holding of regular meetings without other notice than such resolution.
3.05 Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the Chief Executive Officer or the Secretary and shall be called by the Secretary upon the written request of a majority of the directors then in office. If such meeting shall be called upon the written request of a majority of the directors, the date of the meeting shall be within ten days of receipt by the Secretary or, in his absence by any Assistant Secretary, of their request, at a time determined by such officer. The Chairman of the Board, the Chief Executive Officer or the Secretary calling any special meeting of the Board of Directors, except as otherwise provided by by-law, may fix any place, either within or without the State of Wisconsin, as the place for holding any special meeting of the Board of Directors called by them, and if no other place is fixed, the place of meeting shall be the principal business office of the corporation in the State of Wisconsin.
3.06 Notice; Waiver. Notice of meetings of the Board of Directors (unless otherwise provided pursuant to Section 3.04) shall be given by written notice delivered personally or mailed or given by email, telegram or facsimile to each director at his or her business address or at such other address as such director shall have designated in writing filed with the Secretary, in each case not less five days if by mail and not less than forty-eight hours if by email, telegram, telephone, teletype, telegraph, facsimile or other form of wire or wireless communication, or personal delivery. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram or facsimile, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Whenever any notice whatever is required to be given to any director of the corporation under the articles of incorporation or these by-laws or any provision of law, a waiver thereof in writing, signed at any time, whether before or after the time of meeting, by the director entitled to such notice, shall be deemed equivalent to the giving of such notice. The attendance of a director at a meeting shall constitute a waiver of objects thereat to the transaction of any business because the meeting is not lawfully called or convened. Neither business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need to be specified in the notice or waiver of notice of such meeting.
3.07 Quorum. Except as otherwise provided by law or by the articles of incorporation or these by-laws, a majority of the number of directors as provided in Section 3.01 shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but a majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice.
3.08 Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by law or by the articles of incorporation or these by-laws.
3.09 Conduct of Meetings. In the absence of the Chairman of the Board, the Chief Executive Officer shall call the meeting of the Board of Directors to order, and shall act as chairman of the meeting, and in their absence any director chosen by the Directors present shall call the meeting of the Board of Directors to order and shall act as chairman of the meeting. The Secretary shall act as Secretary of all meetings of the Board of Directors but, in the absence of the Secretary, the presiding officer may appoint any Assistant Secretary or any director or other person present to act as secretary of the meeting.
3.10 Vacancies. Any vacancy occurring in the Board of Directors, including a vacancy created by an increase in the number of directors, may be filled until the next succeeding annual election by the affirmative vote of a majority of the directors then in office, though less than a quorum of the Board of Directors; provided, that in case of a vacancy created by the removal of a director by vote of the shareholders, the shareholders shall have the right to fill such vacancy at the same meeting or any adjournment thereof; and provided further, that a vacancy filled by the Board of Directors shall be filled by the vote of the remaining director(s) elected by the voting group of shareholders which would be entitled to fill that vacancy at a meeting of the shareholders.
3.11 Compensation. The Board of Directors, by affirmative vote of a majority of the directors then in office, and irrespective of any personal interest of any of its members, may establish from time to time a reasonable compensation for directors of the corporation; provided that persons who are directors and also are officers or employees of the corporation eligible shall be ineligible to receive compensation as directors. By affirmative vote of a majority of such directors, and irrespective of any personal interest of any of them, the Board of Directors also may establish, from time to time, reasonable compensation for each of the officers of the corporation. The Board of Directors, from time to time, may delegate its authority under this by-law to an appropriate committee. The Board of Directors also shall have authority to provide for or to delegate authority to an appropriate committee to provide for reasonable pensions, disability or death benefits, and other benefits or payments to directors, officers and employees, and to their estates, families, dependents or beneficiaries on account of services rendered by such directors, officers and employees of the corporation.
3.12 Presumption of Assent. A director of the corporation who is present at a meeting of the Board of Directors or a committee thereof of which he or she is a member at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file his or her written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
3.13 Committees. The Board of Directors by resolution adopted by the affirmative vote of a majority of them then in office may designate one or more committees from time to time. Each such committee shall consist of at least one director and shall have those of the powers of the Board of Directors as shall be granted to such committee. Each such committee may exercise its power at times when the Board of Directors is not in session, subject to these by-laws and the Wisconsin Business Corporation Law. The Board of Directors also at any time may elect one or more of its members as alternate members of any such committee. Any such alternate, upon request by the Chairman of the Board, or in his or her absence the Chief Executive Officer, or in his or her absence the Chairman of such committee, may take the place of any absent member or members of the committee at any of its meetings. Except as provided by these by-laws or by resolution of the Board of Directors, each such committee shall fix its own rules governing the conduct of its activities as the Board of Directors may request.
3.14 Unanimous Consent Without Meeting. Any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken without a meeting, if a consent in writing, setting forth the action so taken, shall be signed by all of the directors then in office.
3.15 Telephonic Meetings. Except as provided by this by-law, any action required or permitted by the articles of incorporation or by-laws or any provision of law to be taken by the Board of Directors at a meeting or by resolution may be taken by a quorum of the Board of Directors at a telephonic meeting or other meeting utilizing electronic communication, if all participating directors are informed that a meeting is taking place at which official business may be transacted; if all participating directors simultaneously may hear each other during the meeting; if each participating director immediately is able to send messages to all other participating directors; and if all communication during the meeting immediately is transmitted to each participating director.
ARTICLE IV. OFFICERS
4.01 Number. The principal officers of the corporation shall be a Chief Executive Officer, a President, any number of Vice Presidents, a Secretary and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors, the Chief Executive Officer or the President. Any two or more offices may be held by the same person, except that the same person may not hold the offices of President and Secretary, President and Treasurer or President and Vice President.
4.02 Election and Term of Office. The officers of the corporation to be elected by the Board of Directors shall be elected annually. Each officer shall hold office until his or her successor shall have been duly elected or until his or her prior death, resignation or removal.
4.03 Resignation; Removal. Any officer may resign at any time by delivering written notice to an officer of the corporation. A resignation shall be effective when delivered unless the notice specifies a later date which is accepted by the corporation. Any officer or agent may be removed by the Board of Directors whenever in its judgment the best interest of the corporation will be served thereby. Any officer or assistant officer elected or appointed by the Chief Executive Officer or the President may be removed by the person then holding the title of the officer that appointed such officer or assistant officer whenever in its judgment the best interest of the corporation will be served thereby. However, such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment shall not of itself create contract rights.
4.04 Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification or otherwise shall be filled by the Board of Directors for the unexpired portion of the term.
4.05 Chief Executive Officer and President. Subject to the control of the Board of Directors, the Chief Executive Officer shall be responsible for the control and general management of all of the business and affairs of the corporation. In the absence of the Chairman
of the Board, he or she may preside at all meetings of the shareholders and of the Board of Directors. He or she shall see that all resolutions and orders of the Board of Directors and its committees are carried into effect. The President (if the President is not then the Chief Executive Officer) shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors, by the Executive Committee or by the Chief Executive Officer from time to time. In the absence of the Chief Executive Officer (if the President is not then the Chief Executive Officer) or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the Chief Executive Officer to act personally, the President shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Chief Executive Officer. Both the Chief Executive Officer and the President (if the President is not then the Chief Executive Officer) shall have authority to sign, execute and acknowledge, on behalf of the corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases, reports and all other documents or instruments necessary or proper to be executed in the course of the ordinary business of the corporation, or which shall be authorized by resolution of the Board of Directors. Except as otherwise provided by law or the Board of Directors, either of them also may authorize any Vice President or other officer or agent of the corporation to sign, execute and acknowledge such documents or instruments in his place and stead. Each shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the Chief Executive Officer and the President.
4.06 The Vice Presidents. In the absence of the President or in the event of his death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Board of Directors may designate a Vice President as the Chief Financial Officer, in which event he or she shall have responsibility for all financial matters which affect the corporation other than those expressly provided for the Treasurer. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, by the President or by the Board of Directors. The execution of any instrument of the corporation by any Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the President.
4.07 The Secretary. The Secretary shall: (a) keep the minutes of the meetings of the shareholders and of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these by-laws or as required by law; (c) be custodian of the corporate records and of the seal of the corporation and see that the seal of the corporation is affixed to all documents the execution of which on behalf of the corporation under its seal is duly authorized; (d) keep or arrange for the keeping of a register of the post office addresses of each shareholder which shall be furnished to the Secretary by such shareholder; (e) sign with the Chief Executive Officer or the President, or a Vice President, certificates for shares of the corporation, the issuance of which shall have been
authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, by the President or by the Board of Directors.
4.08 The Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the corporation; (b) receive and give receipts for money due and payables to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Section 5.04; and (c) in general perform all of the duties incident to the office of Treasurer and have such other duties and exercise such other authority as from time to time may be delegated or assigned to him or her by the Chief Executive Officer, by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine.
4.09 Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors, the Chief Executive Officer or the President may from time to time authorize. The Assistant Secretaries may sign with the Chief Executive Officer, the President or a Vice President certificates for shares of the corporation the issuance of which shall have been authorized by a resolution of the Board of Directors. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the Chief Executive Officer, the President or the Board of Directors.
4.10 Other Assistants and Acting Officers. The Board of Directors, the Chief Executive Officer and the President each shall have the power to appoint any person to act as Assistant to any officer, or as agent for the corporation in his stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed shall have the power to perform all the duties of the office to which he or she is so appointed to be assistant, or as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors, the Chief Executive Officer or the President.
4.11 Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS;
SPECIAL CORPORATE ACTS
5.01 Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute or deliver any instrument in the name of and on behalf of the corporation and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages and instruments of assignment or pledge made by the corporation shall be executed in the name of the corporation by the Chief Executive Officer or the President, or, in the absence of the Chief Executive Officer and the President, by one of the Vice Presidents, and by the Secretary, an Assistant Secretary, the Treasurer, an Assistant Treasurer, or Controller. When necessary or required by law, the Secretary or an Assistant Secretary shall affix the corporate seal to all such instruments. When an instrument has been executed in the manner provided by this Section, no party or third person shall be required to inquire into the authority of the officers signing for the corporation so to act.
5.02 Loans. No indebtedness for borrowed money shall be contracted on behalf of the corporation and no evidences of such indebtedness shall be issued in its name unless authorized by or under the authority of a resolution of the Board of Directors. Such authorization may be general or confined to specific instances.
5.03 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents, of the corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors.
5.04 Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as may be selected by or under the authority of a resolution of the Board of Directors.
5.05 Voting of Securities Owned by this Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by this corporation may be voted at any meeting of security holders of such other corporation by the Chief Executive Officer or the President or, in the absence of both of them, by any Vice President then present, and (b) whenever in the judgment of the Chief Executive Officer or the President or, in the absence of both of them, by any Vice President, it is desirable for this corporation to execute a proxy or written consent in respect to any share or other securities issued by any other corporation and owned by this corporation, such proxy or consent shall be executed in the name of this corporation by the Chief Executive Officer or the President or, in the absence of both of them, by any Vice President, without necessity of any authorization by the Board of Directors, affixation of corporate seal, or counter-signature or attestation by another officer. Any person or persons designated in the manner provided by this Section as the proxy or proxies of this corporation shall have full right, power and authority to vote the shares or other securities issued by such other corporation and owned by this corporation the same as such shares or other securities might be voted by this corporation.
ARTICLE VI. SHARES AND THEIR TRANSFER
6.01 Certificates for Shares. The corporation may issue any shares of the classes or series of capital stock of the corporation without certificates to the full extent that the Secretary or Assistant Secretary of the corporation determines that such issuance is appropriate and allowed by applicable law and rules of the New York Stock Exchange, any such determination to be conclusively evidenced by the delivery to the corporations transfer agent and registrar by the Secretary or Assistant Secretary of the corporation of an instrument referring to this by-law and providing instructions of the Secretary or Assistant Secretary of the corporation to the transfer agent and registrar to issue any such shares without certificates in accordance with applicable law. In any event, the foregoing authorization does not affect shares already represented by certificates until the certificates are surrendered to the corporation. Certificates, if any, representing shares of the corporation shall be in such form, consistent with law, as shall be determined by the Board of Directors. All certificates shall be signed by the Chief Executive Officer or the President or a Vice President and by the Secretary or an Assistant Secretary. All certificates shall be numbered consecutively or otherwise identified. The name and address of each person to whom a certificate is issued, together with the number of shares represented by the certificate and the date of its issue, shall be entered on the stock transfer books of the corporation. The name and address of each person to whom a share is issued without a certificate, together with the number of shares so issued and the date of their issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation shall be canceled. No new certificate for previously issued shares shall be issued until the outstanding certificate(s) for the same share shall have been surrendered and canceled, except as provided by Section 6.06.
6.02 Facsimile Signatures and Seal. The seal of the corporation on any certificate for shares may be a facsimile. The signatures of the Chief Executive Officer or the President or Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or a registrar, other than the corporation itself or an employee of the corporation.
6.03 Signature by Former Officers. In case any officer, who has signed or whose facsimile signature has been placed upon any certificate for shares, shall have ceased to be such officer before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer at the date of its issue.
6.04 Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer, and prior to compliance with the customary procedures for transferring shares issued without a certificate, the corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the corporation with a request to register for transfer, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty. The corporation may require reasonable assurance that said endorsements are genuine and effective and in compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. Where the
corporation receives a request to register for transfer shares issued without a certificate, the corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) the party requesting the transfer has complied with customary procedures for transferring shares issued without a certificate and (b) the corporation had no duty to inquire into adverse claims or has discharged any such duty.
6.05 Restrictions on Transfer. The face or reverse side of each certificate representing shares, or the written statement provided to shareholders for shares issued without a certificate, shall bear a conspicuous notation of any restriction imposed by the corporation upon the transfer of such shares.
6.06 Lost, Destroyed or Stolen Certificates. Where the owner of a share represented by a certificate claims that his certificate has been lost, destroyed or wrongfully taken, a new certificate shall be issued in place thereof, or the corporation shall enter the name and address of such owner on the stock transfer books of the corporation as a person to whom a share has been issued without a certificate, if the owner (a) so requests before the corporation has notice that such shares have been acquired by a bona fide purchaser, and (b) files with the corporation a sufficient indemnity bond, and (c) satisfied such other reasonable requirements as may be prescribed by or under the authority of the Board of Directors.
6.07 Consideration for Shares. The shares of the corporation may be issued for such consideration as shall be fixed from time to time by the Board of Directors, provided that any shares having a par value shall not be issued for a consideration less than the par value thereof. The consideration to be paid for shares may be paid in whole or in part, in money, on other property, tangible or intangible, or in labor or services actually performed for the corporation. When payment of the consideration for which shares are to be issued shall have been received by the corporation, such shares shall be deemed to be fully paid and nonassessable by the corporation. No certificate shall be issued for any share, and no entry on the stock transfer books of the corporation of a share to be issued without a certificate, until such share is fully paid.
6.08 Stock Regulations. The Board of Directors shall have the power and authority to make all such further rules and regulations not inconsistent with the statutes of the State of Wisconsin as it may deem expedient concerning the issue, transfer and registration of shares of the corporation, whether or not represented by certificates.
ARTICLE VII. INDEMNIFICATION
7.01 Certain Definitions. The following capitalized terms (including any plural forms thereof) used in this Article VII shall be defined as follows:
(a) Affiliate shall include, without limitation, any corporation, partnership, limited liability company, joint venture, employee benefit plan, trust or other enterprise, whether domestic or foreign, that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Corporation.
(b) Authority shall mean the entity selected by the Director or Officer to determine his or her right to indemnification pursuant to Section 7.04.
(c) Board shall mean the entire then elected and serving Board of Directors of the Corporation, including all members thereof who are Parties to the subject Proceeding or any related Proceeding.
(d) Breach of Duty shall mean the Director or Officer breached or failed to perform his or her duties to the Corporation and his or her breach of or failure to perform those duties is determined, in accordance with Section 7.04, to constitute conduct as a result of which the Director or Officer is not entitled to mandatory indemnification under the Statute.
(e) Corporation, as used herein and as defined in the Statute and incorporated by reference into the definitions of certain other capitalized terms used herein, shall mean this corporation, including, without limitation, any successor corporation or entity to this corporation by way of merger, consolidation or acquisition of all or substantially all of the capital stock or assets of this corporation.
(f) Director or Officer shall have the meaning set forth in the Statute; provided, that, for purposes of this Article VII, (i) Director or Officer shall include a director or officer of a Subsidiary (whether or not otherwise serving as a Director of Officer), (ii) the term employee benefit plan as used in the Statute shall include an employee benefit plan sponsored, maintained or contributed to by a Subsidiary and (iii) it shall be conclusively presumed that any Director or Officer serving as a director, officer, partner, member, trustee, member of any governing or decision-making committee, manager, employee or agent of an Affiliate shall be so serving at the request of the Corporation.
(g) Disinterested Quorum shall mean a quorum of the Board who are not Parties to the subject Proceeding or any related Proceeding.
(h) Expenses shall mean and include fees, costs, charges, disbursements, attorney fees and any other expenses incurred in connection with a Proceeding.
(i) Liability shall mean and include the obligation to pay a judgment, settlement, penalty, assessment, forfeiture or fine, including an excise tax assessed with respect to an employee benefit plan, and reasonable Expenses.
(j) Party shall have the meaning set forth in the Statute; provided, that, for purposes of this Article VII, the term Party shall also include any Director or Officer or employee of the Corporation who is or was a witness in a Proceeding at a time when he or she has not otherwise been formally named a Party thereto.
(k) Proceeding shall have the meaning set forth in the Statute; provided, that, in accordance with the Statute and for purposes of this Article VII, the term Proceeding shall also include all Proceedings (i) brought under (in whole or in part) the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, their respective state counterparts, and/or any rule or regulation promulgated under any of the foregoing; (ii) brought before an Authority or otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding; and (iv) any Proceeding in which the Director or Officer is a plaintiff or petitioner because he or she is a Director or Officer; provided, however, that any such Proceeding under this subsection (iv) must be authorized by a majority vote of a Disinterested Quorum.
(l) Statute shall mean the provisions of the Wisconsin Business Corporation Law, Chapter 180 of the Wisconsin Statutes, relating to indemnification and insurance for Directors, Officers and others, which are contained in Wisconsin Statutes Sections 180.0850 through 180.0859 as of September 20, 2010, as the same shall then be in effect, including any amendments thereto after September 20, 2010, but, in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than the Statute permitted or required the Corporation to provide prior to such amendment.
(m) Subsidiary shall mean any direct or indirect subsidiary of the Corporation as determined for financial reporting purposes, whether domestic or foreign.
7.02 Mandatory Indemnification of Directors and Officers. To the fullest extent permitted or required by the Statute, the Corporation shall indemnify a Director or Officer against all Liabilities incurred by or on behalf of such Director or Officer in connection with a Proceeding in which the Director or Officer is a Party because he or she is a Director or Officer.
7.03 Procedural Requirements.
(a) A Director or Officer who seeks indemnification under Section 7.02 shall make a written request therefor to the Corporation. Subject to Section 7.03(b), within sixty days of the Corporations receipt of such request, the Corporation shall pay or reimburse the Director or Officer for the entire amount of Liabilities incurred by the Director or Officer in connection with the subject Proceeding (net of any Expenses previously advanced pursuant to Section 7.05).
(b) No indemnification shall be required to be paid by the Corporation pursuant to Section 7.02 if, within such sixty-day period, (i) a Disinterested Quorum, by a majority vote thereof, determines that the Director or Officer requesting indemnification engaged in misconduct constituting a Breach of Duty or (ii) a Disinterested Quorum cannot be obtained.
(c) In either case of nonpayment pursuant to Section 7.03(b), the Board shall immediately authorize by resolution that an Authority, as provided in Section 7.04, determine whether the Directors or Officers conduct constituted a Breach of Duty and, therefore, whether indemnification should be denied hereunder.
(d) (i) If the Board does not authorize an Authority to determine the Directors or Officers right to indemnification hereunder within such sixty-day period and/or (ii) if indemnification of the requested amount of Liabilities is paid by the Corporation, then it shall be conclusively presumed for all purposes that a Disinterested Quorum has affirmatively determined that the Director or Officer did not engage in misconduct constituting a Breach of Duty and, in the case of subsection (i) above (but not subsection (ii)), indemnification by the Corporation of the requested amount of Liabilities shall be paid to the Director or Officer immediately.
7.04 Determination of Indemnification.
(a) If the Board authorizes an Authority to determine a Directors or Officers right to indemnification pursuant to Section 7.03, then the Director or Officer requesting indemnification shall have the absolute discretionary authority to select one of the following as such Authority:
(i) An independent legal counsel; provided, that such counsel shall be mutually selected by such Director or Officer and by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board;
(ii) A panel of three arbitrators selected from the panels of arbitrators of the American Arbitration Association in Wisconsin; provided, that (A) one arbitrator shall be selected by such Director or Officer, the second arbitrator shall be selected by a majority vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be obtained, then by a majority vote of the Board, and the third arbitrator shall be selected by the two previously selected arbitrators, and (B) in all other respects (other than this Article VII), such panel shall be governed by the American Arbitration Associations then existing Commercial Arbitration Rules; or
(iii) A court pursuant to and in accordance with the Statute.
(b) In any such determination by the selected Authority there shall exist a rebuttable presumption that the Directors or Officers conduct did not constitute a Breach of Duty and that indemnification against the requested amount of Liabilities is required. The burden of rebutting such a presumption by clear and convincing evidence shall be on the Corporation or such other party asserting that such indemnification should not be allowed.
(c) The Authority shall make its determination within sixty days of being selected and shall submit a written opinion of its conclusion simultaneously to both the Corporation and the Director or Officer.
(d) If the Authority determines that indemnification is required hereunder, the Corporation shall pay the entire requested amount of Liabilities (net of any Expenses previously advanced pursuant to Section 7.05), including interest thereon at a reasonable rate, as determined by the Authority, within ten days of receipt of the Authoritys opinion; provided, that, if it is determined by the Authority that a Director or Officer is entitled to indemnification against Liabilities incurred in connection with some claims, issues or matters, but not as to other claims, issues or matters, involved in the subject Proceeding, the Corporation shall be required to pay (as set forth above) only the amount of such requested Liabilities as the Authority shall deem appropriate in light of all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is required hereunder shall be binding upon the Corporation regardless of any prior determination that the Director or Officer engaged in a Breach of Duty.
(f) All Expenses incurred in the determination process under this Section 7.04 by either the Corporation or the Director or Officer, including, without limitation, all Expenses of the selected Authority, shall be paid by the Corporation.
7.05 Mandatory Allowance of Expenses.
(a) The Corporation shall pay or reimburse from time to time or at any time, within ten days after the receipt of the Directors or Officers written request therefor, the reasonable Expenses of the Director or Officer as such Expenses are incurred; provided, the following conditions are satisfied:
(i) The Director or Officer furnishes to the Corporation an executed written certificate affirming his or her good faith belief that he or she has not engaged in misconduct which constitutes a Breach of Duty; and
(ii) The Director or Officer furnishes to the Corporation an unsecured executed written agreement to repay any advances made under this Section 7.05 if it is ultimately determined by an Authority that he or she is not entitled to be indemnified by the Corporation for such Expenses pursuant to Section 7.04.
(b) If the Director or Officer must repay any previously advanced Expenses pursuant to this Section 7.05, such Director or Officer shall not be required to pay interest on such amounts.
7.06 Indemnification and Allowance of Expenses of Certain Others.
(a) The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify a director or officer of an Affiliate (who is not otherwise serving as a Director or Officer) against all Liabilities, and shall advance the reasonable Expenses, incurred by such director or officer in a Proceeding to the same extent hereunder as if such director or officer incurred such Liabilities because he or she was a Director or Officer, if such director or officer is a Party thereto because he or she is or was a director or officer of the Affiliate.
(b) The Corporation shall indemnify an employee who is not a Director or Officer, to the extent he or she has been successful on the merits or otherwise in defense of a Proceeding, for all reasonable Expenses incurred in the Proceeding if the employee was a Party because he or she was an employee of the Corporation.
(c) The Board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify (to the extent not otherwise provided in Section 7.06(b)) against Liabilities incurred by, and/or provide for the allowance of reasonable Expenses of, an employee or authorized agent of the Corporation acting within the scope of his or her duties as such and who is not otherwise a Director or Officer.
7.07 Insurance. The Corporation may purchase and maintain insurance on behalf of a Director or Officer or any individual who is or was an employee or authorized agent of the Corporation against any Liability asserted against or incurred by such individual in his or her
capacity as such or arising from his or her status as such, regardless of whether the Corporation is required or permitted to indemnify against any such Liability under this Article VII.
7.08 Notice to the Corporation. A Director, Officer or employee shall promptly notify the Corporation in writing when he or she has actual knowledge of a Proceeding which may result in a claim of indemnification against Liabilities or allowance of Expenses hereunder, but the failure to do so shall not relieve the Corporation of any liability to the Director, Officer or employee hereunder unless the Corporation shall have been irreparably prejudiced by such failure (as determined, in the case of Directors or Officers only, by an Authority selected pursuant to Section 7.04(a)).
7.09 Severability. If any provision of this Article VII shall be deemed invalid or inoperative, or if a court of competent jurisdiction determines that any of the provisions of this Article VII contravene public policy, this Article VII shall be construed so that the remaining provisions shall not be affected, but shall remain in full force and effect, and any such provisions which are invalid or inoperative or which contravene public policy shall be deemed, without further action or deed by or on behalf of the Corporation, to be modified, amended and/or limited, but only to the extent necessary to render the same valid and enforceable; it being understood that it is the Corporations intention to provide the Directors and Officers with the broadest possible protection against personal liability allowable under the Statute.
7.10 Nonexclusivity of Article VII. The rights of a Director, Officer or employee (or any other person) granted under this Article VII shall not be deemed exclusive of any other rights to indemnification against Liabilities or allowance of Expenses which the Director, Officer or employee (or such other person) may be entitled to under any written agreement, Board resolution, vote of shareholders of the Corporation or otherwise, including, without limitation, under the Statute. Nothing contained in this Article VII shall be deemed to limit the Corporations obligations to indemnify against Liabilities or allow Expenses to a Director, Officer or employee under the Statute.
7.11 Contractual Nature of Article VII; Changes to Rights. This Article VII shall be deemed to be a contract between the Corporation and each Director, Officer and employee of the Corporation and any repeal or other limitation of this Article VII or any repeal or limitation of the Statute or any other applicable law shall not limit any rights of indemnification against Liabilities or allowance of Expenses then existing or arising out of events, acts or omissions occurring prior to such repeal or limitation, including, without limitation, the right to indemnification against Liabilities or allowance of Expenses for Proceedings commenced after such repeal or limitation to enforce this Article VII with regard to acts, omissions or events arising prior to such repeal or limitation. If the Statute is amended to permit or require the Corporation to provide broader indemnification rights than this Article VII permits or requires, then this Article VII shall be automatically amended and deemed to incorporate such broader indemnification rights.
ARTICLE VIII. AMENDMENTS
8.01 By Shareholders. These by-laws may be altered, amended or repealed and new by-laws may be adopted by the shareholders by affirmative vote of not less than a majority of the
shares present or represented and entitled to vote thereon under the articles of incorporation at any Annual Meeting or Special Meeting at which a quorum is in attendance.
8.02 By Directors. These by-laws may also be altered, amended or repealed and new by-laws may be adopted by the Board of Directors by affirmative vote of a majority of the number of directors present at any meeting at which a quorum is in attendance; but no by-law adopted by the shareholders shall be amended or repealed by the Board of Directors if the by-law so adopted so provides.
8.03 Implied Amendments. Any action taken or authorized by the shareholders or by the Board of Directors, which would be inconsistent with the by-laws then in effect but is taken or authorized by affirmative vote of not less than the number of shares or the number of directors required to amend the by-laws so that the by-laws would be consistent with such action, shall be given the same effect as though the by-laws had been temporarily amended or suspended so far, but only so far, as is necessary to permit the specific action so taken or authorized.
Exhibit (31.1)
CERTIFICATIONS
I, Charles L. Szews, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Oshkosh Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
July 26, 2012 |
/S/ Charles L. Szews |
|
Charles L. Szews |
|
President and Chief Executive Officer |
Exhibit (31.2)
CERTIFICATIONS
I, David M. Sagehorn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Oshkosh Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
July 26, 2012 |
/S/ David M. Sagehorn |
|
David M. Sagehorn |
|
Executive Vice President and Chief Financial Officer |
Exhibit (32.1)
Written Statement of the President and Chief Executive Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned President and Chief Executive Officer of Oshkosh Corporation (the Company), hereby certify, to the best of my knowledge, that the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2012 (the Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/S/ Charles L. Szews |
|
Charles L. Szews |
|
July 26, 2012 |
|
Exhibit (32.2)
Written Statement of the Executive Vice President and Chief Financial Officer
Pursuant to 18 U.S.C. §1350
Solely for the purposes of complying with 18 U.S.C. §1350, I, the undersigned Executive Vice President and Chief Financial Officer of Oshkosh Corporation (the Company), hereby certify, to the best of my knowledge, that the quarterly report on Form 10-Q of the Company for the quarter ended June 30, 2012 (the Report) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/S/ David M. Sagehorn |
|
David M. Sagehorn |
|
July 26, 2012 |
|
Restructuring and Other Charges (Tables)
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Restructuring and Other Charges | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of pre-tax restructuring charges (credits) |
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Schedule of changes in the restructuring reserves, included within other current liabilities |
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Investments in Unconsolidated Affiliates (Details)
In Millions, unless otherwise specified |
9 Months Ended | 3 Months Ended | 9 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2012
USD ($)
|
Sep. 30, 2011
USD ($)
|
Jun. 30, 2012
Oshkosh/McNeilus Financial Services Partnership (OMFSP,)
USD ($)
|
Sep. 30, 2011
Oshkosh/McNeilus Financial Services Partnership (OMFSP,)
USD ($)
|
Jun. 30, 2012
RiRent. Europe, B.V. (RiRent)
USD ($)
Y
|
Jun. 30, 2012
RiRent. Europe, B.V. (RiRent)
EUR (€)
Y
|
Jun. 30, 2012
RiRent. Europe, B.V. (RiRent)
USD ($)
|
Jun. 30, 2011
RiRent. Europe, B.V. (RiRent)
USD ($)
|
Sep. 30, 2011
RiRent. Europe, B.V. (RiRent)
USD ($)
|
Jun. 30, 2012
RiRent. Europe, B.V. (RiRent)
Minimum
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Jun. 30, 2012
Other.
USD ($)
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Sep. 30, 2011
Other.
USD ($)
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Investment in unconsolidated affiliates, Accounted under equity method | ||||||||||||
Ownership percentage of investee under equity method | 50.00% | 50.00% | 50.00% | |||||||||
Investment in unconsolidated affiliates | $ 18.4 | $ 31.8 | $ 13.4 | $ 10.5 | $ 10.5 | $ 10.9 | $ 7.9 | $ 7.5 | ||||
Cash distributions and proceeds from the sale interest in OMFSP | 16.5 | |||||||||||
Sales to equity investee | 5.0 | 3.1 | ||||||||||
Estimated useful life of equipment (in years) | 5 | 5 | ||||||||||
Bank credit facility | € 15.0 | |||||||||||
Equity to asset ratio required to be maintained under bank credit facility (as a percent) | 30.00% | |||||||||||
Overall equity to asset ratio (as a percent) | 62.60% | 62.60% | 62.60% |
Derivative Financial Instruments and Hedging Activities (Details) (Not designated as hedging instruments, USD $)
In Millions, unless otherwise specified |
Jun. 30, 2012
|
---|---|
Open derivative instruments | |
Notional amounts of outstanding forward foreign exchange contracts | $ 128.6 |
Sell Euros
|
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Open derivative instruments | |
Notional amounts of outstanding forward foreign exchange sale contracts to buy dollars | 65.0 |
Sell Australian dollars
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Open derivative instruments | |
Notional amounts of outstanding forward foreign exchange sale contracts to buy dollars | 51.5 |
Sell U.K. pounds sterling and buy Euros
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Open derivative instruments | |
Notional amounts of outstanding forward foreign exchange sale contracts to buy dollars | $ 7.7 |
Receivables (Details 3) (Notes, Credit Concentration)
|
Jun. 30, 2012
party
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Notes | Credit Concentration
|
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Finance and notes receivables | |
Receivables due (as a percent) | 95.00% |
Number of parties | 3 |
Goodwill and Purchased Intangible Assets (Tables)
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Goodwill and Purchased Intangible Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in goodwill |
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Schedule of company's goodwill allocated to the reportable segments |
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Schedule of purchased intangible assets |
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Derivative Financial Instruments and Hedging Activities (Details 3) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2012
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Jun. 30, 2011
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Jun. 30, 2012
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Jun. 30, 2011
|
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Pre-tax gains (losses) on derivative instruments | ||||
Total pre-tax effects of derivative instruments | $ 3.8 | $ (6.3) | $ (5.3) | $ (21.5) |
Foreign exchange contracts | Miscellaneous, net
|
||||
Pre-tax gains (losses) on derivative instruments | ||||
Not designated as hedges | 3.8 | (3.3) | (3.1) | (8.0) |
Cash flow hedges | Interest rate contracts | Interest expense
|
||||
Pre-tax gains (losses) on derivative instruments | ||||
Reclassified from other comprehensive income (effective portion): | $ (3.0) | $ (2.2) | $ (13.5) |
Contingencies, Significant Estimates and Concentrations
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9 Months Ended | |
---|---|---|
Jun. 30, 2012
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Contingencies, Significant Estimates and Concentrations | ||
Contingencies, Significant Estimates and Concentrations |
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Business Segment Information (Tables)
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2012
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Business Segment Information | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net sales by product lines and reportable segments |
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Schedule of income (loss) from continuing operations by product lines and reportable segments |
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Schedule of identifiable assets by business segments and by geographical segments |
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Schedule of net sales by geographical segments |
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Derivative Financial Instruments and Hedging Activities (Tables)
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Jun. 30, 2012
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Derivative Financial Instruments and Hedging Activities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values of all open derivative instruments |
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Schedule of pre-tax effects of derivative instruments |
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Business Segment Information (Details 2) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2012
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Jun. 30, 2011
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Jun. 30, 2012
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Jun. 30, 2011
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Net sales: | ||||
External Customers | $ 2,176.3 | $ 2,022.9 | $ 6,130.2 | $ 5,469.3 |
Net sales | 2,176.3 | 2,022.9 | 6,130.2 | 5,469.3 |
Operating income (loss): | ||||
Operating income (loss) | 124.5 | 126.0 | 275.7 | 427.1 |
Interest expense, net of interest income | (18.1) | (20.4) | (55.7) | (66.8) |
Miscellaneous, net | (0.8) | (0.5) | (5.1) | (0.4) |
Income from operations before income taxes and equity in earnings of unconsolidated affiliates | 105.6 | 105.1 | 214.9 | 359.9 |
Access Equipment
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Net sales: | ||||
External Customers | 813.9 | 562.7 | 2,078.4 | 1,324.5 |
Inter-segment | 0.7 | 17.4 | 124.3 | 54.1 |
Net sales | 814.6 | 580.1 | 2,202.7 | 1,378.6 |
Operating income (loss): | ||||
Operating income (loss) | 88.2 | 29.5 | 169.7 | 30.5 |
Access Equipment | Aerial work platforms
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Net sales: | ||||
External Customers | 426.1 | 294.4 | 1,059.8 | 636.0 |
Net sales | 426.1 | 294.4 | 1,059.8 | 636.0 |
Access Equipment | Telehandlers
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Net sales: | ||||
External Customers | 260.8 | 144.3 | 643.4 | 358.8 |
Net sales | 260.8 | 144.3 | 643.4 | 358.8 |
Access Equipment | Other (access equipment)
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Net sales: | ||||
External Customers | 127.0 | 124.0 | 375.2 | 329.7 |
Inter-segment | 0.7 | 17.4 | 124.3 | 54.1 |
Net sales | 127.7 | 141.4 | 499.5 | 383.8 |
Defense
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Net sales: | ||||
External Customers | 957.9 | 1,105.8 | 2,994.6 | 3,188.9 |
Inter-segment | 0.6 | 1.2 | 2.2 | 4.1 |
Net sales | 958.5 | 1,107.0 | 2,996.8 | 3,193.0 |
Operating income (loss): | ||||
Operating income (loss) | 40.2 | 112.5 | 174.5 | 472.0 |
Fire and Emergency
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Net sales: | ||||
External Customers | 234.0 | 211.3 | 563.0 | 580.8 |
Inter-segment | 12.1 | 4.7 | 27.6 | 13.9 |
Net sales | 246.1 | 216.0 | 590.6 | 594.7 |
Operating income (loss): | ||||
Operating income (loss) | 6.4 | 4.4 | (14.9) | 0.4 |
Commercial
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Net sales: | ||||
External Customers | 170.5 | 143.1 | 494.2 | 375.1 |
Inter-segment | 5.7 | 15.4 | 21.3 | 54.6 |
Net sales | 176.2 | 158.5 | 515.5 | 429.7 |
Operating income (loss): | ||||
Operating income (loss) | 12.1 | 3.7 | 22.9 | 1.3 |
Commercial | Concrete placement
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Net sales: | ||||
External Customers | 67.4 | 48.7 | 166.8 | 123.3 |
Net sales | 67.4 | 48.7 | 166.8 | 123.3 |
Commercial | Refuse collection
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Net sales: | ||||
External Customers | 77.5 | 71.5 | 252.5 | 194.2 |
Net sales | 77.5 | 71.5 | 252.5 | 194.2 |
Commercial | Other (commercial)
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Net sales: | ||||
External Customers | 25.6 | 22.9 | 74.9 | 57.6 |
Inter-segment | 5.7 | 15.4 | 21.3 | 54.6 |
Net sales | 31.3 | 38.3 | 96.2 | 112.2 |
Corporate
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Operating income (loss): | ||||
Operating income (loss) | (22.5) | (24.5) | (76.6) | (81.2) |
Intersegment eliminations
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Net sales: | ||||
Inter-segment | (19.1) | (38.7) | (175.4) | (126.7) |
Net sales | (19.1) | (38.7) | (175.4) | (126.7) |
Operating income (loss): | ||||
Operating income (loss) | $ 0.1 | $ 0.4 | $ 0.1 | $ 4.1 |
Inventories (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2012
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Sep. 30, 2011
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Inventories | ||
Raw materials | $ 503.9 | $ 587.4 |
Partially finished products | 305.4 | 377.7 |
Finished products | 437.9 | 237.8 |
Inventories at FIFO cost | 1,247.2 | 1,202.9 |
Less: Progress / performance-based payments on U.S. government contracts | (266.1) | (341.7) |
Excess of FIFO cost over LIFO cost | (79.5) | (74.4) |
Inventory net | $ 901.6 | $ 786.8 |
New Accounting Standards
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9 Months Ended | |
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Jun. 30, 2012
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New Accounting Standards | ||
New Accounting Standards |
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Income Taxes (Details)
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9 Months Ended | |
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Jun. 30, 2012
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Jun. 30, 2011
|
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Effective Rate Reconciliation | ||
Effective income tax rate (as a percent) | 29.70% | 34.70% |
Favorable impact on effective tax rate related to net discrete tax benefits (as a percent) | 6.50% | 1.50% |