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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-K

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ý ANNUAL REPORT PURSUANT TO SECTION13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 20092012


or

oro

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

TRANSITION REPORT PURSUANT TO SECTION13 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

Wisconsin39-0520270
(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)

Registrant’s telephone number, including area code:(920) 235-9151


Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Titleofeachclass
Nameofeachexchangeonwhichregistered
Common Stock ($.01 par value)

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    xý Yes        oNo


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    oYes        xý No


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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        xý Yes        oNo


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File requirerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
ý oYes        oNo


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    o


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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

(Do not check if a smaller reporting company)

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     xý No


At March 31, 2009,2012, the aggregate market value of the registrant’s Common Stock held by non-affiliates was $501,614,424$2,123,214,322 (based on the closing price of $6.74$23.17 per share on the New York Stock Exchange as of such date).


As of November 16, 2009, 89,462,6519, 2012, 91,565,824 shares of the registrant’s Common Stock were outstanding.


DOCUMENTS INCORPORATED BY REFERENCE:


Portions of the Proxy Statement for the 2013 Annual Meeting of Shareholders to be held on February 4, 2010 (to be filed with the Commission under Regulation 14A within 120 days after the end of the registrant’s fiscal year and, upon such filing, to be incorporated by reference into Part III).


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OSHKOSH CORPORATION

FISCAL 20092012 ANNUAL REPORT ON FORM10-K

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Page

Page
PART I

ITEM 1.

BUSINESS

1

ITEM 1A.

RISK FACTORS

15

16

ITEM 1B.

UNRESOLVED STAFF COMMENTS

21

24

ITEM 2.

PROPERTIES

21

25

ITEM 3.

LEGAL PROCEEDINGS

23

26

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSMINE SAFETY DISCLOSURES

24

26

EXECUTIVE OFFICERS OF THE REGISTRANT

24

27

PART II

ITEM 5.

MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

26

29

ITEM 6.

SELECTED FINANCIAL DATA

28

32

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

30

34

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

52

53

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

53

54

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

98

111

ITEM 9A.

CONTROLS AND PROCEDURES

98

111

ITEM 9B.

OTHER INFORMATION

98

111

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

99

112

ITEM 11.

EXECUTIVE COMPENSATION

99

112

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

99

112

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

100

113

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

100

113

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

101

114

SIGNATURES

102

115


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As used herein, the “Company”“Company,” “we,” “us” and “our” refers to Oshkosh Corporation and its consolidated subsidiaries. “Oshkosh” refers to Oshkosh Corporation, not including JLG Industries, Inc. and its wholly-owned subsidiaries (“JLG”), Pierce Manufacturing Inc. (“Pierce”), McNeilus Companies, Inc. (“McNeilus”) and its wholly-owned subsidiaries, Kewaunee Fabrications, LLC (“Kewaunee”), Medtec Ambulance Corporation (“Medtec”), JerrDan Corporation (“JerrDan”), Concrete Equipment Company, Inc. and its wholly-owned subsidiary (“CON-E-CO”), London Machinery Inc. and its wholly-owned subsidiary (“London”), BAI Brescia Antincendi International S.r.l. and its wholly-owned subsidiary (“BAI”), Oshkosh Specialty Vehicles, Inc., AK Specialty Vehicles B.V. and their wholly-owned subsidiaries (together, “OSV”) and Iowa Mold Tooling Co., Inc. (“IMT”).  “Oshkosh” refers to Oshkosh Corporation, not including JLG, Pierce, McNeilus, Kewaunee, Medtec, JerrDan, CON-E-CO, London, BAI, OSV, IMT or any other subsidiaries.


The “OshkoshÒ®,” “JLGÒ®,” “PierceÒ®,” “McNeilus®,” “MEDTECÒ®,” “Jerr-DanÒ®,” “FrontlineÔ ;,” “SMITÔ,” “McNeilusÒ“Frontline™,” “CON-E-COÒ®,” “LondonÒ®,” “IMTÒ®,” “SkyTrakÒ®,” “LullÒ,” “ToucanÒ,” “LiftluxÒ®,” “RevolutionÒ®,” “Command ZoneÔ,” “All-SteerÒZone™,” “TAK-4Ò®,” “HerculesÔ“Hercules™,” “Husky,Ô“ “VelocityÔ“Husky™,” “ImpelÔ“PUC™,” “Smart-PakÒ“ClearSky™,” “PUCÔ“TerraMax™,” “LiftpodÔ,“SandCat™” “ClearSkyÔ,” “Auto ReachÒ,” “Sky-ArmÒ,” “TerraMaxÔ“ and “ProPulseÒ®” trademarks and related logos are trademarks or registered trademarks of the Company. All other product and service names referenced in this document are the trademarks or registered trademarks of their respective owners.


All references herein to earnings per share refer to earnings per share assuming dilution.

dilution, unless noted otherwise.


For ease of understanding, the Company refers to types of specialty vehicles for particular applications as “markets.” When the Company refers to “market” positions, these comments are based on information available to the Company concerning units sold by those companies currently manufacturing the same types of specialty vehicles and vehicle bodies and are therefore only estimates. Unless otherwise noted, these market positions are based on sales in the United States of America. There can be no assurance that the Company will maintain such market positions in the future.


Cautionary Statement About Forward-Looking Statements


The Company believes that certain statements in “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other statements located elsewhere in this Annual Report on Form 10-K are “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 report, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, including those under the caption “Executive Overview” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”Operations,” are forward-looking statements. When used in this Annual Report on Form 10-K, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include the cyclical nature of the Company's 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; the ability to increase prices to raise margins or offset higher input costs; increasing commodity and other raw material costs, particularly in a sustained economic recovery; risks related to the Company's exit from its ambulance business, 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 duration of the ongoing global economic weakness, which could lead to additional impairment charges related to many of the Company's intangible assets and/or a slower recovery in the Company's cyclical businesses than Company or equity market expectations; the potential for the U.S. government to competitively bid the Company's Army and Marine Corps contracts; risks related to the collectability of receivables, particularly for those businesses with exposure to construction markets; the cost of any warranty campaigns related to the Company's products; risks related to production 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, including the amount of related costs; the Company's ability to successfully execute on its strategic road map and meet its long-term financial goals; risks and uncertainties associated with the tender offer for the Company's shares, the outcome of any litigation related to the offer or any other offer or proposal, and the Board's recommendation to the shareholders concerning the offer or any other offer or proposal. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in Item 1A of Part I of this report.


All forward-looking statements, including those under the caption “Executive Overview” in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” speak only as of November 18, 2009.19, 2012. The Company assumes no obligation, and disclaims any obligation, to update information contained in this Annual Report on Form 10-K. Investors should be aware that the Company may not update such information until the Company’s next quarterly earnings conference call, if at all.


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PARTI

ITEM 1.    BUSINESS


The Company

The Company


Oshkosh Corporation is a leading designer, manufacturer and marketer of a broad range of specialty vehicles and vehicle bodies. The Company partners with customers to deliver superior solutions that safely and efficiently move people and materials at work, around the globe, and around the clock. The Company began business in 1917 and was among theas an early pioneerspioneer of four-wheel drive technology.technology, and off road mobility technology remains one of its core competencies. The Company currently operates inmaintains four business segments: defense,reportable segments for financial reporting purposes: access equipment, defense, fire & emergency and commercial, which comprised 49%34%, 20%48%, 21%10% and 10%8%, respectively, of the Company’s consolidated net sales duringin fiscal 2009.

2012. These segments, in some way, all share common customers and distribution channels, leverage common components and suppliers, utilize common technologies and manufacturing processes and share manufacturing and distribution facilities, which results in the Company being an integrated specialty vehicle manufacturer. The Company made approximately 45%, 56% and 72% of its net sales for fiscal 2012, 2011 and 2010, respectively, to the U.S. government, a substantial majority of which were under multi-year contracts and programs in the defense vehicle market. See Note 23 to the Consolidated Financial Statements for financial information related to the Company’s defensebusiness segments.


JLG, a global manufacturer of aerial work platforms and telehandlers used in a wide variety of construction, agricultural, industrial, institutional and general maintenance applications to position workers and materials at elevated heights, forms the base of the Company’s access equipment segment. JLG’s customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and the U.S. military. The access equipment segment also includes Jerr-Dan branded tow trucks (“wreckers”) and roll-back vehicle carriers (“carriers”) sold to towing companies in the U.S. and abroad.

The Company has sold products to the U.S. Department of Defense (“DoD”)DoD for over 80 years.90 years and operates its military tactical wheeled vehicles business as its defense segment. In 1981, Oshkosh was awarded the first Heavy Expanded Mobility Tactical Truck (“HEMTT”) contract for the DoD, and quicklythereafter its defense segment developed into the DoD’s leading supplier of severe-duty, heavy-payload tactical trucks. In recent years, the CompanyOshkosh has broadened its defense product offerings to become the leading manufacturer of severe-duty, heavy- and medium-payload tactical trucks for the DoD, manufacturing vehicles that perform a variety of demanding tasks such as hauling tanks, missile systems, ammunition, fuel, troops and cargo for combat units.

In June 2009, the DoD awarded the Company a sole source contract for 2,244 MRAP All Terrain Vehicles (“M-ATVs”)units and associated aftermarket parts packages, valued at $1.06 billion.  Through November 18, 2009, the DoD awarded the Company an additional 3,975 M-ATVs and associated aftermarket parts packages, valued at $2.23 billion.  Unit deliveries under the contract are scheduled through April 2010, with aftermarket parts packages to be delivered through May 2010.  Key attributes of the M-ATV include superior survivability and mobility required for the current conflict in Afghanistan.  The M-ATV represents the Company’s first major entry into the market for vehicles used in small unit combat operations.

In August 2009, the DoD awarded the Company a contract valued at $280.9 million for the production and delivery of 2,571 trucks and trailers under the U.S. Army’s Family of Medium Tactical Vehicles (“FMTV”) Rebuy program.  The FMTV Rebuy program is a five-year requirements contract award for the production of up to 23,000 medium-payloadlight tactical vehicles, and trailers as well as support services and engineering.  Competitors have filed protests with the Government Accountability Office (“GAO”) regarding the award of the FMTV contract, and the DoD has issued a stop work order on the FMTV program pending resolution of the protests.  The Company expects the GAO to issuethrough its decision on the protests in December 2009.

In fiscal 2009, the Company received orders totaling $195 million to retrofit approximately 2,400 Mine Resistant Ambush Protected All-Terrain Vehicles (“MRAP”M-ATVs”). In October 2011, the Company introduced the Light Combat All-Terrain Vehicle (“L-ATV”) vehicles originally manufactured by other companiesto continue to expand its light protected tactical wheeled vehicle offering. The L-ATV was selected for the DoD Joint Light Tactical Vehicle (“JLTV”) Engineering Manufacturing & Development ("EMD") contract in August 2012. Under the JLTV EMD contract, Oshkosh will deliver 22 Oshkosh-designed and manufactured JLTV prototype vehicles within 365 days of the contract award, and support U.S. government testing and evaluation of the prototypes. The L-ATV incorporates field-proven technologies, advanced armor solutions and expeditionary levels of off-road mobility to redefine safety and performance standards. The L-ATV also is designed for future growth, with the Company’s patented TAK-4 independent suspension system.  The Company is actively supportingability to accept additional armor packages and technology upgrades as the engineering and testing for retrofit installation of TAK-4 under other MRAP models that could lead to additional TAK-4 sales in the future.  The existing MRAP fleet maintained by the U.S. military consists of over 16,000 vehicles.

The Company’s access equipment segment manufactures aerial work platforms and telehandlers used in a wide variety of construction, agricultural, industrial, institutional and general maintenance applications to position workers and materials at elevated heights.  Access equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and the U.S. military.

mission requires.


The Company’s fire & emergency segment manufactures commercial and custom firefighting vehicles and equipment, aircraft rescue and firefighting (“ARFF”) vehicles, snow removal vehicles, ambulances, wreckers, carrierssimulators and other emergency vehicles primarily sold to fire departments, airports and other governmental units and towing companies in the U.S.Americas and abroad; mobile medical trailers sold to hospitals and third-party medical service providers in the U.S., Europe and a growing number of other regions;abroad, and broadcast vehicles sold to broadcasters and television stations in North Americathe Americas and abroad.  In October 2009, the Company sold its 75% interest in its European fire apparatus business, BAI.


The Company’s commercial segment manufactures rear- and front-discharge 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 North America and other international markets and field service vehicles and truck-mounted cranes sold to mining, construction and other companies in the U.S.Americas and abroad.  On July 1, 2009, the Company completed

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the sale of its European refuse collection vehicle business, Geesink Group B.V., Norba A.B. and Geesink Norba Limited and their wholly-owned subsidiaries (together, “Geesink”).  Geesink has been reflected as a discontinued operation in this Form 10-K.

See Note 21 to the Consolidated Financial Statements for financial information related to the Company’s business segments.


Competitive Strengths


The following competitive strengths support the Company’s business strategy:


Strong Market Positions. The Company has developed strong market positions and brand recognition in its core businesses, which it attributes to its reputation for quality products, advanced engineering, innovation, vehicle performance, reliability, customer service and low total product life cycle costs. The Company maintains leading market shares in most of its businesses and is the sole-source supplier of a number of vehicles to the DoD, including M-ATVs.DoD.


Diversified Product Offering. The Company believes its broad product offerings and target markets serve to diversify its sources of revenues, mitigate the impact of economic cycles and provide multiple platforms for potential internalorganic growth and acquisitions. The Company’s product offerings provide extensive opportunities for bundling of products for sale to customers, co-location of manufacturing, leveraging purchasing power and sharing technology within and between segments. For each of its target markets, the Company has developed or acquired a broad product line in an effort to become a single-source provider of specialty vehicles, vehicle bodies, parts and service and related products to its customers. In addition, the Company has established an extensive domestic and international distribution system for specialty vehicles and vehicle bodies tailored to each market.


Quality Products and Customer Service. The Company has developed strong brand recognition amongfor its products as a result of its commitment to meet the stringent product quality and reliability requirements of its customers andin the specialty vehicle and vehicle body markets it serves. The Company frequently achieves premium pricing due to the durability and low life cycle costs for its products. The Company also achievesprovides high quality customer service through its extensive parts and service support programs, which are generally available to domestic customers 365 days a year in all product lines throughout the Company’s distribution systems.


Innovative and Proprietary Components. The Company’s advanced design and engineering capabilities have contributed to the development of innovative and/or proprietary, severe-duty components that enhance vehicle performance, reduce manufacturing costs and strengthen customer relationships. The Company’s advanced design and engineering capabilities have also allowed it to integrate many of these components across various product lines, which enhances its ability to compete for new business and reduces its costs to manufacture its products compared to manufacturers who simply assemble purchased components.  Examples of the Company’s innovative components include:

·The TAK-4 independent suspension system, which the Company is able to install on other manufacturers’ MRAP vehicles and which the Company believes was critical to the Company winning the M-ATV contract;

·The Pierce Ultimate Configuration (“PUC”) vehicle configuration, which eliminates the bulky pumphouse from firefighting vehicles, making such vehicles easier to use and service;

·McNeilus compressed natural gas-powered refuse collection vehicles, which reduce fuel costs and emissions; and

·ClearSky telematics solution for JLG aerial work platforms, which remotely connects a rental fleet, providing information on location, operating status and equipment health.


Flexible and Efficient Manufacturing. Over the past 1315 years, the Company has significantly increased manufacturing efficiencies. The Company believes it has competitive advantages over larger vehicle manufacturers in its specialty vehicle markets due to its manufacturing flexibility, vertical integration, purchasing power in specialty vehicle components and custom fabrication capabilities. In addition, the Company believes it has competitive advantages over smaller vehicle and vehicle body manufacturers due to its relatively higher volumes of similar products that permit the use of moving assembly lines and which allow it to leverage purchasing power and technology opportunities across product lines.  The Company believes its plan to meet the aggressive delivery requirements for M-ATVs under the recently awarded DoD contract is an example of its robust manufacturing capability.  In addition to the Company’s existing defense truck manufacturing facilities in Oshkosh, Wisconsin, the Company is assembling M-ATV crew capsules and complete M-ATVs at its JLG manufacturing facility in McConnellsburg, Pennsylvania.

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Strong Management Team. The Company is led by Chairman and Chief Executive Officer Robert G. Bohn,Charles L. Szews and President and Chief Operating Officer Charles L. Szews,Wilson R. Jones who have been employed by the Company since 19921996 and 1996,2005, respectively. Messrs. BohnSzews and SzewsJones are complemented by an experienced senior management team that has been assembled through internal promotions, new hires and acquisitions. The management team has successfully executed a strategic reshaping and expansion of its business since 1996, which has positioned the Company to significantly improve its financialbe a global leader in the specialty vehicle and operating performance.vehicle body markets.


Business Strategy


The Company is focused on increasing its net sales, profitability and cash flow and strengthening its balance sheet by capitalizing on its competitive strengths and pursuing a comprehensive,an integrated business strategy. Key elementsThe Company completed a comprehensive strategic planning process in fiscal 2011 with the assistance of a globally recognized consulting firm that culminated in the creation of the Company’s businessroadmap, named MOVE, to deliver outstanding long-term shareholder value. On September 14, 2012, the Company announced its target of achieving earnings per share of $4.00 to $4.50 by fiscal 2015. The MOVE strategy, include:

which is a key component in achieving the targeted earnings per share range, consists of four key strategies:



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Pursuing Global GrowthMarket Recovery and Profitability.Growth. The Company plans to continue to capture and improve its focus on those specialty vehicle and vehicle body markets where it has or can acquire stronghistoric share in a market positions over time and where it believes it can leverage synergies in purchasing, manufacturing, technology and distribution to increase sales and profitability.  As it focuses in the near-term on ramping up production to meet the delivery requirementsrecovery. A number of the recently awarded M-ATV and TAK-4 independent suspension contracts,markets in which the Company willparticipates have been down anywhere from 40% to more than 90% from peak levels, some since 2007, and customer vehicle fleets continue to pursue follow-on orders and additional contracts from its largest customer, the DoD.  Business development teams actively pursue new customers, including those in adjacent markets.  In addition, the Company believes that opportunities exist to develop or increase distribution of its products, particularly in the access equipment segment, in global markets including developing countries in Asia, Eastern Europe, the Middle East and Latin America.  After it accomplishes its plan to significantly reduce debt, the Company intends to selectively pursue strategic acquisitions, both domestically and internationally, to enhance the Company’s product offerings and expand its international presence in specialty vehicle and vehicle body markets.

Introducing New Products.age. The Company intendsis working to maintainimprove its emphasis on new product developmentsales, inventory and operations planning and sales capture processes to more effectively respond to customers’ needs as it seeks to expand sales by leading its core markets in the introduction of new or improved products and new technologies, through internal development, strategic acquisitions or licensing of technology.  The Company actively seeks to commercialize emerging technologies that are capable of expanding customer uses of its products.

Providing Superior Quality and Service to Each Market.  The Company generally sells premium product linesrecovery occurs in each of its markets and seeks to provide superior quality and service in each market to sustain its premium product positioning.  In timesmarkets. Also, throughout the extended period of weak economic conditions, the Company has continued to focus on staying close to its customers and providing high quality customer service through its extensive parts and service support programs, which are generally available to customers 365 days a year in all product lines throughout the Company’s distribution systems. The Company believes that providing superior qualityeven a modest market recovery represents a $220 million operating income opportunity in its non-defense businesses between fiscal 2012 and service is even more important as customers look to partner with suppliers they know will be there to help them through tough conditions.  Each of the Company’s businesses maintains active programs involving customer outreach, designfiscal 2015 at historical margins and manufacturing qualityassuming no major market share gains.


Optimize Cost and supplier certification to assure superior product quality.Capital Structure.

Focusing on Lean Operations. The Company seeksplans to deliver high performance productsoptimize its cost and capital structure to provide value for customers at both low totaland shareholders by aggressively attacking its product, life cycle costsprocess and low acquisition prices.  Historically, the Company has utilized teams of industrial engineers and procurement specialists to re-engineer manufacturing processes and leverage purchasing volumes to meet these objectives.overhead costs. The Company also utilizes a comprehensive, lean enterprise focus to continue its drive to be a low cost producer in all of its product lines while sustaining premium product features and quality, and to deliver low product life cycle costs for its customers. Lean is a methodology to eliminate non-value added work from a process stream. During the last few years, the Company has implemented this strategy by:

·

Combining the Company’s strategic purchasing teams globally into a single organization led by an externally recruitedexternally-recruited chief procurement officer to capture its full purchasing power across all of its businesses and to promote low cost country sourcing;

·

Managing the business to target breakthrough objectives, including aggressive cost reduction targets, via the Company-wide use of strategy deployment scorecards to provide effective, timely assessment of progress toward objectives and implementation of countermeasures as needed;
Utilizing integrated project teams to reduce product costs for the Family of Medium Tactical Vehicles (“FMTV”) program and other key products;
Creating chartered cost reduction teams at all businesses and introducing broad-based training programs;

·

Creating a new global manufacturing teamsingle quality management system to further promotedrive enhanced quality throughout all of the Company’s businesses resulting in satisfied customers and lean initiatives;a lower cost of quality;
Launching and

·Launching leveraging the Oshkosh Operating System (“OOS”) to create common practices across the Company to enhance its performance.

The OOS is a system of doing business that is focused on serving and delighting customers by utilizing continuous improvement and lean practices. The Company believes that the OOS enables it to sustain superior performance for its customers, shareholders, employees and other stakeholders; and

Changing the Company's defined benefit pension plans, retiree health plan, and supplemental executive retirement plan to reduce the cash flow and expense volatility associated with these defined benefit plans. These changes included:
◦Freezing the qualified non-contributory defined benefit plans for salaried employees as of December 31, 2012.
◦Eliminating the retiree health plan for salaried employees that provides coverage for employees retiring at age 55 or older effective December 31, 2012, except for existing eligible employees who are at least age 55 with at least five years of service by December 31, 2012. This group of “grandfathered” employees will have until December 31, 2013 to elect this benefit if they retire by this date.
◦Freezing the non-qualified defined benefit supplemental executive retirement pension plan as of December 31, 2012.
◦Providing pension benefits to impacted employees under new, qualified and non-qualified defined contribution pension plans effective January 1, 2013.

As a result of this focus on cost optimization, the Company expects to more efficiently utilize its manufacturing facilities, increase inventory turns and reduce product, process and overhead costs, and lower manufacturing lead times and new product development cycle times over the next several years.

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The Company is targeting 250 basis points of incremental consolidated operating income margin improvement by fiscal 2015 from this initiative compared to fiscal 2012.

The Company has repaid more than $2 billion of acquisition-related debt since fiscal 2008. As a result, the Company believes that its capital structure at September 30, 2012 is within its targeted range for indebtedness. Because the Company continues to expect to have ample free cash flow to support its existing businesses, cash deployment in the future is likely to shift from debt reduction to returning cash to shareholders and investing in external growth opportunities. To this effect, the Company repurchased

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546,965 shares of Common Stock during the fourth quarter of fiscal 2012 at a cost of $13.3 million. On November 15, 2012, the Company's Board of Directors increased the Company's stock repurchase authorization such that the Company has authority to repurchase 11,000,000 shares of Common Stock after the Board action. The Company is targeting spending $300 million to repurchase shares over the 12 to 18 months following that date and expects to spend at least $75 million to repurchase shares over the three months following that date.

V

Focusingalue Innovation. The Company intends to maintain its emphasis on Cost Managementnew product development as it seeks to expand sales and Debt Reduction.  In lightmargins by leading its core markets in the introduction of significantly lower demandnew or improved products and new technologies. The Company primarily uses internal development but also uses licensing of technology and strategic acquisitions to execute multi-generational product plans in certaineach of the Company’s businessesbusinesses. The Company actively seeks to commercialize emerging technologies that are capable of expanding customer uses of its products. Examples of the Company’s innovation include:

The Rental Series scissor lift, which targets the price-value segment of the access equipment market;
The JLG 150-foot articulating boom, the largest self-propelled articulating boom on the market, which enables operators to tackle high level access needs for construction and maintenance applications;
The TAK-4 independent suspension system, which the Company uses on multiple vehicle platforms in its defense and fire & emergency segments and which it has installed on other manufacturers’ Mine Resistant Ambush Protected (“MRAP”) vehicles;
The L-ATV, which incorporates field-proven technologies, advanced armor solutions and expeditionary levels of mobility to redefine safety and performance standards;
The Command Zone multiplexing technology, which the Company has applied to numerous products in each of its segments to control, monitor and diagnose electronic components;
The Pierce Ultimate Configuration (“PUC”) vehicle configuration, which eliminates the bulky pumphouse from firefighting vehicles, making such vehicles easier to use and service;
The Dash Cab Forward, which is a new firefighting vehicle featuring an innovative tilting cab-forward design that repositions the engine rearward and lower between the frame rails, with an open interior configuration that enables firefighters to better prepare for the unexpected situations they face when arriving on the scene of a fire or other emergency situation; and
The integration of compressed natural gas to power McNeilus’ refuse collection vehicles and concrete mixers, which reduces fuel costs and emissions.

The Company is targeting $350 million of incremental annual revenue by fiscal 2015 compared to fiscal 2012 as a result of the global recession, fluctuating steel and other costs, and its significant leverage, thethis initiative.

Emerging Market Expansion. The Company plans to continue its expansion into those specialty vehicle and vehicle body markets globally where it has or can acquire strong market positions over time and where it believes it can leverage synergies in purchasing, manufacturing, technology and distribution to focus on cost managementincrease sales and reduction as well as generating cash for debt reduction.profitability. Business development teams actively pursue new customers in targeted developing countries in Asia, Eastern Europe, the Middle East, Latin America and Africa. In late fiscal 2008 and fiscal 2009,pursuit of this strategy, the Company quicklyopened a 193,000 square foot facility in Tianjin, China in May 2010 to produce JLG access equipment for the Asian market. In fiscal 2011, the Company commenced concrete mixer manufacturing in Brazil and proactively took actions, including reducing its global workforce by approximately 20%opened new sales and cutting discretionary spending, which resultedservice offices in significant overheadRussia, India, Saudi Arabia and operating cost reductions.China to pursue various opportunities in each of those countries. The Company expectswould also consider selectively pursuing strategic acquisitions, primarily internationally, to continueenhance the Company’s product offerings and expand its international presence in the specialty vehicle and vehicle body markets. Sales to focus on cost reduction initiativescustomers outside of the U.S. comprised 21.8%, 17.1% and 9.6% of the Company’s consolidated sales for fiscal 2012, 2011 and 2010, respectively. Some of the Company's recent success in generating multi-unit orders included a combination order for 120 fire apparatus and wrecker vehicles to Ghana, an order for 245 border patrol vehicles to Mexico and more than 30 fire apparatus vehicles to Brazil. In addition, the Company received an order for 750 M-ATV units from the United Arab Emirates ("UAE") in fiscal 2010 to reduce its cost structure and accelerate debt reduction, even as the2012 for delivery in fiscal 2013. The Company is currently addingtargeting to derive more than 25% of its workforce to appropriately staff forrevenues from outside the M-ATV contract.  The Company has also focused significant attention on reducing working capital to free up cash for debt reduction, primarily through tighter controls over production and inventory reduction programs.U.S. by fiscal 2015.



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Products


The Company is focused on the following core segments of the specialty vehicle and vehicle body markets:

Defense Segment.  The Company has sold products to the DoD for over 80 years.  By successfully responding to the DoD’s changing vehicle requirements, the Company has become the leading manufacturer of severe-duty, heavy- and medium-payload tactical trucks for the DoD. The Company manufactures vehicles that perform a variety of demanding tasks such as hauling tanks, missile systems, ammunition, fuel and cargo for combat units.  The Company’s proprietary military all-wheel drive product line of heavy-payload tactical trucks includes the HEMTT, the Heavy Equipment Transporter (“HET”), the Palletized Load System (“PLS”), the Common Bridge Transporter and the Logistic Vehicle System Replacement (“LVSR”).  The Company’s proprietary military medium-payload tactical trucks include the Medium Tactical Vehicle Replacement (“MTVR”), and the Medium Tactical Truck (“MTT”), a line of lower-cost, severe-duty, medium-payload tactical trucks suitable for less demanding requirements than the MTVR.  The Company also exports severe-duty, heavy- and medium-payload tactical trucks to approved foreign customers.

In May 2006, the DoD awarded the Company a production contract for the LVSR vehicle and associated manuals, vehicle kits, test support and training for the U.S. Marine Corps.  The Company estimates that this fixed-price indefinite delivery, indefinite quantity (“ID/IQ”) contract will approximate $740.2 million based on a production quantity of 1,592 units over a six-year period.  The contract allows for the purchase of up to 1,900 cargo, wrecker and fifth-wheel LVSR variants.  The Company delivered the first units under the contract in fiscal 2007.

In October 2008, the DoD awarded the Company a three-year, firm, fixed-priced requirements contract for the continued production of the Family of Heavy Tactical Vehicles (“FHTV”).  To date, the Company has received orders totaling $3.1 billion under this contract.  The contract includes the production of the HEMTT, HEMTT-ESP, PLS and PLS Trailer as well as associated logistics and configuration management support.

In June 2009, the DoD awarded the Company a sole source contract for 2,244 M-ATVs and associated aftermarket parts packages, valued at $1.06 billion.  Through November 18, 2009, the DoD awarded the Company an additional 3,975 M-ATVs and associated aftermarket parts packages, valued at $2.23 billion.  Unit deliveries under the contract are scheduled through April 2010, with aftermarket parts packages to be delivered through May 2010.  Key attributes of the M-ATV include superior survivability and mobility required for the current conflict in Afghanistan.  The M-ATV represents the Company’s first major entry into the market for vehicles used in small unit combat operations, which presents an opportunity to broaden and strengthen the Company’s defense business.

In August 2009, the DoD awarded the Company a contract valued at $280.9 million for the production and delivery of 2,571 trucks and trailers under the U.S. Army’s FMTV Rebuy program.  The FMTV Rebuy program is a five-year requirements contract award for the production of up to 23,000 vehicles and trailers as well as support services and engineering.  Competitors have filed protests with the GAO regarding the award of the FMTV contract, and the DoD has issued a stop work order on the FMTV program pending resolution of the protests.  The Company expects the GAO to issue its decision on the protests in December 2009.  The Company believes the U.S. Army conducted a fair and objective source selection process and believes that the contract award to the Company should be upheld.  This contract would represent a significant expansion of the Company’s medium-payload tactical truck business.

In fiscal 2009, the Company received orders totaling $195 million to retrofit approximately 2,400 MRAP vehicles originally manufactured by other companies for the DoD with the Company’s  patented TAK-4 independent suspension system.  The Company is actively supporting the engineering and testing for retrofit installation of TAK-4 under other

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MRAP models that could lead to additional TAK-4 sales in the future.  The existing MRAP fleet maintained by the U.S. military consists of over 16,000 vehicles.

The Company’s objective is to continue to diversify into other areas of the U.S. and international defense truck markets by expanding applications, uses, and vehicle body styles of its current tactical truck lines.  As the Company enters tactical truck competitions in the defense market segment, the Company believes it has multiple competitive advantages, including:

·Truck engineering and testing.  DoD and international truck contract competitions require significant defense truck engineering expertise to ensure that a company’s truck excels under demanding test conditions.  The Company has a team of engineers and draftsmen and engages contract engineers to support current business and truck contract competitions.  These personnel have significant expertise designing new trucks, using sophisticated computer-aided tools, supporting grueling testing programs at test sites and submitting detailed, comprehensive, successful contract proposals.

·Proprietary components.  The Company’s patented TAK-4 independent suspension and proprietary transfer case enhance its trucks’ off-road performance.  In addition, because these are two of the higher cost components in a truck, the Company has a competitive cost-advantage based on the in-house manufacturing of these two truck components.  The Company’s Command Zone tool also simplifies maintenance troubleshooting.

·Past performance.  The Company has been building trucks for the DoD for over 80 years.  The Company believes that its past success in delivering reliable, high quality trucks on time, within budget and meeting specifications is a competitive advantage in future defense truck procurement programs.  The Company understands the special contract procedures used by the DoD and other foreign militaries and has developed substantial expertise in contract management and accounting.

·Flexible manufacturing.  The Company’s ability to produce a variety of truck models on the same moving assembly line permits it to avoid facilitation costs on most new contracts and maintain competitive manufacturing efficiencies. In addition, the Company is able to leverage its global manufacturing scale to supplement its existing defense truck manufacturing facilities in Oshkosh, Wisconsin.  The Company’s decision to co-locate M-ATV production at its JLG manufacturing facility in McConnellsburg, Pennsylvania provided the Company a competitive advantage.

·Logistics.  The Company has gained significant experience in the development of operators’ manuals and training and in the delivery of parts and services worldwide in accordance with the DoD’s expectations, which differ materially from commercial practices.  The Company has logistics capabilities to permit the DoD to order parts, receive invoices and remit payments electronically.

Access Equipment Segment.equipment segment. The access equipment segmentJLG manufactures aerial work platforms and telehandlers used in a wide variety of construction, agricultural, industrial, institutional and general maintenance applications to position workers and materials at elevated heights. JLG has recently introduced new products such as the LiftPod personal aerial work platform and the ClearSky telematics solution for use by rental companies in managing access equipment fleets.  In addition, through a long-term license with Caterpillar Inc., JLG entered into a 20-year license to produceproduces Caterpillar-branded telehandlers through 2025 for distribution through the worldwide Caterpillar Inc. dealer network.network through 2025.


Access equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and the U.S. military. JLG’s products are marketed in over 3,500 locations worldwide through independent rental companies and distributors that purchase these products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations in which the Company holds equity positions.


JLG through its wholly-owned subsidiary Access Financial Solutions, Inc., also arranges equipment financing and leasing solutions for its customers, primarily through private-labelthird-party funding arrangementswith independent third-party financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements. Financing arrangements that JLG offers or arranges through this segment include installment sale contracts, capitalvarious types of rental fleet loans and leases, operating leasesas well as floor plan and rental purchase guarantees.retail financing. Terms of these arrangements vary depending on the type of transaction, but typically range between 36 and 72 months and generally require the customer to be responsible for insurance, taxes and maintenance of the equipment, and to bear the risk of damage to or loss of the equipment.


The Company, through its Jerr-Dan brand, is a leading manufacturer and marketer of towing and recovery equipment in the U.S. The Company believes Jerr-Dan is recognized as an industry leader in quality and innovation. Jerr-Dan offers a complete line of both carriers and wreckers. In addition to manufacturing equipment, Jerr-Dan provides its customers with one-stop service for carriers and wreckers and generates revenue from the installation of equipment, as well as the sale of chassis and service parts.

Defense segment. The Company has sold products to the DoD for over 90 years. The Company also exports tactical wheeled vehicles to approved foreign customers. By successfully responding to the DoD's changing vehicle requirements, the Company has become the leading manufacturer of Heavy, Medium, and MRAP wheeled vehicles and related service and sustainment for the DoD and is rapidly expanding its portfolio of light vehicles. The Company manufactures vehicles that perform a variety of demanding tasks such as hauling tanks, missile systems, ammunition, fuel, troops and cargo for a broad range of missions. The Company's proprietary military product line of heavy-payload tactical wheeled vehicles includes the HEMTT, the Heavy Equipment Transporter (“HET”), the Palletized Load System (“PLS”), and the Logistic Vehicle System Replacement (“LVSR”). The Company's proprietary military medium-payload tactical wheeled vehicles include the Medium Tactical Vehicle Replacement (“MTVR”). The Company's proprietary M-ATV was specifically designed with superior survivability as well as extreme off-road mobility for use in the conflict in Afghanistan.

The Defense segment also makes a multi-role light protected tactical vehicle, the SandCat, which supports military, national security, peace keeping and law enforcement operations. In October 2011, the Company introduced the L-ATV to continue to expand its light protected tactical wheeled vehicle offering. The L-ATV, which was selected for the DoD JLTV EMD contract in August 2012, incorporates field-proven technologies, advanced armor solutions and expeditionary levels of off-road mobility to redefine safety and performance standards. The L-ATV also is designed for future growth, with the ability to accept additional armor packages and technology upgrades as the mission requires. In September 2012, Oshkosh unveiled the lightest vehicle in its Defense portfolio, the Special Purpose All-Terrain Vehicle, or S-ATV, based on emerging global requirements for forces performing unconventional and reconnaissance missions including counterinsurgency operations, special reconnaissance, site seizure, long-range surveillance and direct combat. The Oshkosh S-ATV is ultra-transportable and utilizes battle-proven off-road technologies to travel across rugged, remote and urban terrains at high speeds.

In October 2008, the U.S. DoD awarded the Company a three-year, firm, fixed-priced requirements contract for the continued production of the Family of Heavy Tactical Vehicles (“FHTV”). The contract included the production of the HEMTT, HET and PLS as well as associated logistics and configuration management support. The FHTV contract for new orders expired in September 2011, with expected vehicle deliveries to continue through March 2013. The Company was awarded an extension contract in fiscal 2012 for the FHTV program under which it would continue producing FHTVs through fiscal 2014.


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In June 2009, the U.S. DoD awarded the Company a sole source contract for M-ATVs and associated aftermarket parts packages. The Company completed the contract requirements in fiscal 2012, delivering more than 8,700 M-ATVs, along with aftermarket parts and services through the life of the contract with a total contract value of $6.5 billion. The Company is actively marketing M-ATVs to approved international customers. In July 2012, Oshkosh received its first large international order, totaling 750 units for the UAE.
In August 2009, the U.S. DoD awarded the Company a contract to be the sole producer of FMTVs under the U.S. Army's FMTV Rebuy program. The FMTV Rebuy program is a five-year requirements contract for the production of vehicles and trailers through December 2015. The Company began delivery of vehicles under this contract in the first quarter of fiscal 2011. The Company has received orders totaling $4.0 billion under this contract, of which $1.7 billion remained in backlog at September 30, 2012.
In addition to retaining its current defense truck contracts, the Company’s objective is to continue to diversify into other areas of the U.S. and international defense vehicle markets by expanding applications, uses and vehicle body styles of its current tactical truck lines. As the Company enters competitions in the defense tactical wheeled vehicle market, the Company believes it has multiple competitive advantages, including:
Engineering and testing. Domestic and international vehicle contract competitions require significant defense engineering expertise to ensure that vehicle designs excel under demanding test conditions. The Company has teams of engineers and engages highly-specialized contract engineers to improve current products and develop new products. Oshkosh defense engineers have significant expertise designing new vehicles, using sophisticated modeling and simulation, supporting disciplined testing programs at military and approved test sites, and producing detailed, comprehensive, successful contract proposals.
Proprietary components. The Company's patented TAK-4 independent suspension family has been expanded to include the TAK-4 "intelligent" or TAK-4i configuration, which brings 25% more wheel travel and ride height control compared to the original TAK-4 to address the evolving requirements of the Company's customers. Integrating the TAK-4 suspension with the Company's proprietary power train components allows the Company to deliver the market-leading off-road performance for which its defense vehicles are known. In addition, because these are typically some of the higher cost components in a vehicle, the Company has a competitive cost advantage based on the in-house manufacturing and assembly of these items.
Past performance. The Company has been building tactical wheeled vehicles for the DoD for more than 90 years. The Company's past success in delivering reliable, high quality vehicles on time, within budget and meeting specifications is a competitive advantage in future defense vehicle procurement programs. The Company understands the special contract procedures used by the DoD and other international militaries and has developed substantial expertise in contract management, quality management, program management and accounting.
Flexible manufacturing. The Company's ability to produce a variety of vehicle models on a lean, automated assembly line enables manufacturing efficiencies and a competitive cost position. In addition, the Company is able to leverage its global manufacturing scale to supplement its existing defense vehicle manufacturing facilities in Oshkosh, Wisconsin.
Logistics. The Company has gained significant experience in the development of operators' manuals and training, and in the delivery of parts and services worldwide in accordance with its customers' expectations and requirements, which differ materially from commercial practices. The Company has logistics capabilities to permit the DoD to order parts, receive invoices and remit payments electronically.

Fire& Emergency Segment.emergency segment. Through Pierce, the Company is athe leading domestic manufacturer of fire apparatus assembled on custom chassis, designed and manufactured by Pierce to meet the special needs of firefighters. Pierce also manufactures fire apparatus assembled on commercially available chassis, which are produced for multiple end-customer applications. Pierce’s engineering expertise allows it to design its vehicles to meet stringent industry guidelines and

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government regulations for safety and effectiveness. Pierce primarily serves domestic municipal customers, but also sells fire apparatus to the DoD, airports, universities and large industrial companies, and increasingly in international markets. Pierce’s history of innovation and research and development in consultation with firefighters has resulted in a broad product line that features a wide range of innovative, high-quality custom and commercial firefighting equipment with advanced fire suppression capabilities. In an effort to be a single-source supplier for its customers, Pierce offers a full line of custom and commercial fire apparatus and emergency vehicles, including pumpers, aerial and ladder trucks, tankers, light-, medium- and heavy-duty rescue vehicles, wildland rough terrain response vehicles, mobile command and control centers, bomb squad vehicles, hazardous materials control vehicles and other emergency response vehicles.


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The Company, through its Oshkosh brand, is among the leaders in sales of ARFF vehicles to domestic and international airports. These highly specializedhighly-specialized vehicles are required to be in service at most airports worldwide to support commercial airlines in the event of an emergency. Many of the world’s largest airports, including LaGuardia International Airport, O’Hare International Airport, Hartsfield-Jackson International Airport, Denver International Airport and Dallas/Fort Worth International Airport in the U.S. and airports located in Montreal andSingapore; Toronto, Canada; Beijing and Shanghai, Hangzhou,Shenzhen, China; Indonesia; Egypt and Beijing, China,Ecuador are served by the Company’s ARFF vehicles. The Company believes that the performance and reliability of its ARFF vehicles contribute to the Company’s strong position in this market.


The Company, through its Oshkosh brand, is a global leader in airport snow removal vehicles. The Company’s portfolio of specially designed airport snow removal vehicles can cast up to 5,000 tons of snow per hour and are used by some of the largest airports in the world, including Denver International Airport, LaGuardia International Airport, Minneapolis-St. Paul International Airport and O’Hare International Airport in the U.S. and Beijing, China,China; Montreal, Canada and St. Petersburg, Russia internationally. The Company believes that the reliability of its high performancehigh-performance snow removal vehicles and the speed with which they clear airport runways contribute to its strong position in this market.

Through JerrDan, the Company is a leading manufacturer and marketer of towing and recovery equipment in the U.S. 


The Company, believes JerrDanthrough its Frontline and Oshkosh Specialty Vehicles brands, is recognized as an industry leader in quality and innovation.  JerrDan offers a complete line of both roll-back carriers (“carriers”) and traditional tow trucks (“wreckers”).  In addition to manufacturing equipment, JerrDan provides its customers with one-stop service for carriers and wreckers and generates revenue from the installation of equipment, as well as the sale of chassis and service parts.

Through Medtec, the Company is one of the leading U.S. manufacturers of custom ambulances for private and public transporters and fire departments.  Medtec markets a full line of ambulances including smaller Type II van style ambulances, larger Type I and Type III ambulances, as well as large “Additional Duty” ambulances.  Type I ambulances feature a conventional style, light- or medium-duty chassis with a modular patient transport body mounted separately behind the vehicle cab.  Type II ambulances are smaller van style ambulance units typically targeted to value conscious and transport ambulance services.  Type III ambulances are built on light-duty van chassis with a walk-through opening into the patient transport body which is mounted behind the vehicle cab.

Through OSV, the Company is one of the leaders in the manufacturing of mobile medical vehicles for North American and European medical centers and service providers.  OSV is the only mobile medical vehicle manufacturer certified by all major original equipment manufacturers of medical diagnostic imaging equipment - - General Electric Company, Royal Philips Electronics and Siemens AG.  OSV is also a leading manufacturer, system designer and integrator of custombroadcast and communication vehicles, for the broadcast industry, where the Company, under its Frontline brand, markets a full line of television broadcast,including electronic field production trailers, satellite news gathering and microwave transmission electronic news gathering vehicles for broadcasters, command trucks for local and federal governments along with being the leading supplier of military simulator shelters and trailers. The Company’s vehicles have been used worldwide to broadcasters, TV stations, broadcast production, radio stationsthe NFL Superbowl, the FIFA World Cup and NASA. OSV also manufactures mobile command and control centers and simulation units for sale to police, fire and other government agencies in the U.S.

Olympics.


The Company offers three- to fifteen-year municipal lease financing programs to its fire & emergency segment customers in the U.S. through Oshkosh Equipment Finance, L.L.C., doing business as Oshkosh Capital (“Oshkosh Capital”).Capital. Programs include competitive lease financing rates, creative and flexible finance arrangements and the ease of one-stop shopping for customers’ equipment and financing. The lease financing transactions are executed through a private label arrangement with an independent third-party finance company.


Commercial Segment.segment. Through McNeilus, the Company is a leading North American manufacturer of refuse collection vehicles for the waste services industry.industry throughout the Americas. Through Oshkosh, McNeilus, London and CON-E-CO, the Company is a leading manufacturer of front- and rear-discharge concrete mixers and portable and stationary concrete batch plants for the concrete

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ready-mix industry throughout the Americas.


Through IMT, the Company is a leading North American manufacturer of field service vehicles and truck-mounted cranes for the construction, equipment dealer, building supply, utility, tire service and mining industries. The Company believes its commercial segment vehicles and equipment have a reputation for efficient, cost-effective, dependable and low maintenance operation.

In March 2002,


The Company also arranges equipment financing and leasing solutions for its customers, primarily through third-party funding arrangementswith independent financial companies, and occasionally provides credit support in connection with these financing and leasing arrangements. Terms of these arrangements vary depending on the Company introducedtype of transaction, but typically range between 24 and 72 months and generally require the rear-discharge Revolution concrete mixer drum, which is constructed of lightweight composite materials.  In fiscal 2006, the Company launched the sale of front-discharge Revolution drums.  Since the introductioncustomer to be responsible for insurance, taxes and maintenance of the first concrete mixer drum about 90 years ago,equipment, and to bear the Company believes all commercially successful drums worldwide had been produced utilizing steel until the launchrisk of damage to or loss of the Revolution.  The Revolution drum offers improved concrete payload on a vehicle and longer drum life, which lowers the cost per yard of concrete delivered.  The Company’s strategy has been to sell the Revolution drum as a premium-priced product as the Company believes the Revolution drum yields a quick payback to customers through increased productivity and lower operating costs.  The Company is required to pay to its Australian partner royalty fees for each drum sold.  The Company believes that the Revolution mixer drum will create an important competitive advantage over competitors that manufacture steel concrete mixer drums during the next economic upturn.

The Company, through Oshkosh/McNeilus Financial Services Partnership (“OMFSP”), an affiliated financial services partnership, offers three- to seven-year tax advantaged lease financing to concrete mixer customers, concrete batch plant customers and commercial waste haulers in the U.S.  Offerings include competitive lease financing rates and the ease of one-stop shopping for customers’ equipment and financing.

equipment.


Marketing, Sales, Distribution and Service


The Company believes it differentiates itself from many of its competitors by tailoring its distribution to the needs of its specialty vehicle and vehicle body markets and with its national and global sales and service capabilities. Distribution personnel showdemonstrate to customers how to use the Company’s vehicles and vehicle bodies properly. In addition, the Company’s flexible distribution is focused on meeting customers on their terms, whether on a job site, in an evening public meeting or at a municipality’s offices, compared to the showroom sales approach of the typical dealers of large vehicle manufacturers. The Company backs all products with same-day parts shipment, and its service technicians are available in person or by telephone to domestic customers 365 days a year. The Company believes its dedication to keeping its products in-service in demanding conditions worldwide has contributed to customer loyalty.


The Company provides its salespeople, representatives and distributors with product and sales training on the operation and specifications of its products. The Company’s engineers, along with its product managers, develop operating manuals and provide field support at vehicle delivery.


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U.S. dealers and representatives enter into agreements with the Company that allow for termination by either party generally upon 90 days notice.notice, subject to applicable laws. Dealers and representatives, except for those utilized by JLG JerrDan, Medtec and IMT, are generally not permitted to market and sell competitive products.


Access equipment segment. JLG’s products are marketed in over 3,500 locations across six continents through independent rental companies and distributors that purchase JLG products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations in which the Company holds equity positions. JLG’s sales force is comprised of more than 140 employees worldwide. Sales employees are dedicated to specific major customers, channels or geographic regions. JLG’s international sales employees are spread among JLG’s approximately 20 international sales and service offices.

JLG produces a variety of its own branded telehandlers and manufactures the Caterpillar-branded telehandlers under license to Caterpillar for their worldwide Caterpillar distribution network. JLG also produces a line of telehandlers for the agricultural market under a license from SAME Deutz-Fahr and sells SAME Deutz-Fahr-branded telehandlers directly to SAME Deutz-Fahr’s dealer network.

JLG 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 short notice rental requirements. RiRent does not provide rental services directly to end users.

The Company markets its Jerr-Dan branded carriers and wreckers through its network of approximately 50 independent distributors.

Defense Segmentsegment.. The Company sells substantially all of its domestic defense products directly to principal branches of the DoD.DoD, and sells its defense products to more than 20 international militaries around the globe. The Company maintains a liaison office in Washington, D.C. to represent its interests with the Pentagon,U.S. Congress, and the offices of the Executive Branch of the U.S. governmentGovernment, the Pentagon, as well as international embassies and other national government agencies. The Company locates its business development, consultants and engineering professionals near its customers' principal commands, both domestically and internationally. The Company also sells and services defense products to approved foreigninternational governments directlyas Direct Commercial Sales or Foreign Military Sales via U.S. government channels. The Company supports international sales through a limited number of international sales offices, as well as through dealers, consultantsdistributors and representatives and through the U.S. Foreign Military Sales (“FMS”) program.representatives.

The Company maintains a business development staff and engages consultants to regularly meet with all branches of the Armed Services, Reserves and National Guard, with representatives of key military bases and with other defense contractors to determine their vehicle requirements and identify specialty truck variants and apparatus required to fulfill their missions.


In addition to marketing its current trucktactical wheeled vehicle offerings and competing for new contracts, in the heavy- and medium-payload segment, the Company actively works with the Armed Services to develop new applications for its vehicles and expand its services.


Logistics services are increasingly important toin the DoD, especially following the commencement of Operation Iraqi Freedom and Operation Enduring Freedom.defense market. The Company believes that its proven worldwide logistics capabilities and

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internet-based ordering, invoicing and electronic payment systems have significantly contributed to the expansion of its defense parts and service business since fiscal 2002, following the commencement of Operation Iraqi Freedom and Operation Enduring Freedom. The Company maintains a large parts distribution warehouse network in Milwaukee, Wisconsin to fulfill stringent parts delivery schedule requirements, as well as satellite facilities near DoD bases in the U.S., Europe, Asia and the Middle East. The Company has been particularly active in recent years performing maintenance and armoringproduct upgrade services for the DoD at areas near or in the theater of military conflicts.

Access Equipment Segment.  JLG’s products are marketed in over 3,500 locations worldwide through independent rental companies and distributors that purchase JLG products and then rent or sell them and provide service support, as well as through other sales and service branches or organizations in which the Company holds equity positions.  North American customers are located in all 50 states in the U.S., as well as in Canada and Mexico.  International customers are located in Europe, the Asia/Pacific region, Australia, Africa, the Middle East and Latin America.  JLG’s sales force is comprised of approximately 100 employees worldwide.  In North America, teams of sales employees are dedicated to specific major customers, channels or geographic regions.  JLG’s sales employees in Europe and the rest of the world are spread among JLG’s approximately 20 international sales and service offices.


Fire & Emergency Segmentemergency segment.. The Company believes the geographic breadth, size and quality of its Pierce fire apparatus sales and service organization are competitive advantages in a market characterized by a few large manufacturers and numerous small, regional competitors. Pierce’s fire apparatus are sold through over 30 independent sales and service organizations with more than 275approximately 300 sales representatives in the U.S., and Canada, which combine broad geographical reach with frequency of contact with fire departments and municipal government officials. These sales and service organizations are supported by approximately 75 product and marketing support professionals and contract administrators at Pierce. The Company believes frequency of contact and local presence are important to cultivate major, and typically infrequent, purchases involving the city or town council, fire department, purchasing, finance and mayoral offices, among others, that may participate in a fire apparatus bid and selection. After the sale, Pierce’s nationwide local parts and service capability is available to help municipalities maintain peak readiness for this vital municipal service. Pierce also sells directly to the DoD and other U.S. government agencies. Many of the Pierce fire apparatus sold to the DoD are placed in service at U.S. military bases, camps and stations overseas. Additionally, Pierce sells fire apparatus to numerous international municipal and industrial fire departments through a network of international


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dealers. The Company markets its Frontline-branded broadcast vehicles through sales representatives and its Frontline-branded command vehicles through both sales representatives and dealer organizations that are directed at government and commercial customers.

The Company markets its Oshkosh-branded ARFF vehicles through a combination of five direct sales representatives domestically and 30over 60 representatives and distributors in international markets. Certain of these international representatives and distributors also handle Pierce products. The Company has over 30 full-time sales and service representatives and 2019 distributor locations focused on the sale of snow removal vehicles, principally to airports, but also to municipalities, counties and other governmental entities in the U.S. and Canada. In addition, the Company maintains offices in Dubai, United Arab EmiratesUAE; Beijing, China; Moscow, Russia; and Beijing, ChinaSingapore to support airport product vehicle sales in the Middle East, China, Russia and Southeast Asia.

Medtec sells ambulances through more than 20 independent distributor organizations with over 70 representatives focused on sales to the ambulance market.  JerrDan markets its carriers and wreckers through its worldwide network of approximately 75 independent distributors, supported by JerrDan’s direct sales force.  OSV markets its mobile medical trailers and broadcast vehicles through 20 in-house sales and service representatives in the U.S. and three in-house sales and service representatives in Europe.


Commercial Segmentsegment.. The Company operates 2023 distribution centers with over 150275 in-house sales and service representatives in the U.S. to sell and service refuse collection vehicles, rear- and front-discharge concrete mixers and concrete batch plants. These centers are in addition to sales and service activities at the Company’s manufacturing facilities, and they provide sales, service and parts distribution to customers in their geographic regions. ThreeTwo of the distribution centers also have paint facilities and can provide significant additional paint and mounting services during peak demand periods. The Company also uses overapproximately 30 independent sales and service organizations to market its CON-E-CO branded concrete batch plants. The Company believes this network represents one of the largest concrete mixer, concrete batch plant and refuse collection vehicle distribution networks in the U.S.


In Canada, the Company operates two distribution centers with eight outside and in-house sales and service representatives to sell and service its rear-discharge concrete mixers, refuse collection vehicles and concrete batch plants.


The Company believes its direct distribution to customers is a competitive advantage in concrete mixer and refuse collection vehicle markets, particularly in the U.S. waste services industry where principal competitors distribute through dealers, and to a lesser extent in the ready mix concrete industry, where several competitors and the Company in part use dealers. The Company believes direct distribution permits a more focused sales force in the U.S. concrete mixer and refuse

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collection vehicle markets, whereas dealers frequently offer a very broad and mixed product line, and accordingly, the time dealers tend to devote to concrete mixer and refuse collection vehicle sales activities is limited.


With respect to distribution, the Company has been applying Oshkosh’s and Pierce’s sales and marketing expertise in municipal markets to increase sales of McNeilus refuse collection vehicles to municipal customers. While the Company believes commercial customers represent a majority of the refuse collection vehicle market, many municipalities purchase their own refuse collection vehicles. The Company believes it is positioned to create an effective municipal distribution system in the refuse collection vehicle market by leveraging its existing commercial distribution capabilities and by opening service centers in major metropolitan markets. During fiscal 2009, the Company received its first order for refuse collection vehicles from the city of New York, which the Company believes has the largest municipal refuse collection vehicle fleet in the U.S.


The Company also has established an extensive network of representatives and dealers throughout the Americas for the sale of Oshkosh, McNeilus, CON-E-CO and London concrete mixers, concrete batch plants and refuse collection vehicles. The Company coordinates among its various businesses to respond to large international sales tenders with its most appropriate product offering for the tender.


IMT distributes its products through approximately 10090 dealers with a total of 110 locations worldwide, including approximately 30 international dealers. International dealers are primarily located in Central and South America, Australia and Asia and are primarily focused on mining and construction markets.  The Company believes this network represents one

McNeilus owns a 49% interest in Mezcladores Trailers de Mexico, S.A. de C.V. (“Mezcladoras”), a manufacturer of concrete mixers and small refuse collection vehicle bodies for distribution in Mexico and Latin America. McNeilus also owns a 45% interest in McNeilus Equipamentos Do Brasil LTDA (“McNeilus Brazil”). McNeilus Brazil manufactures and distributes McNeilus-branded concrete mixers and batch plants in the most extensive networks in its market.

Mercosur region (Argentina, Brazil, Paraguay and Uruguay).



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Manufacturing

Manufacturing

As of November 18, 2009,19, 2012, the Company manufactures vehicles and vehicle bodies at 5140 manufacturing facilities. To reduce production costs, the Company maintains a continuing emphasis on the development of proprietary components, self-sufficiency in fabrication, just-in-time inventory management, improvement in production flows, interchangeability and simplification of components among product lines, creation of jigs and fixtures to ensure repeatability of quality processes, utilization of robotics, and performance measurement to assure progress toward cost reduction targets. The Company encourages employee involvement to improve production processes and product quality.  The Company is in the process of adopting lean manufacturing management practices across all facilities.


The Company educates and trains all employees at its facilities in quality principles. The Company encourages employees at all levels of the Company to understand customer and supplier requirements, measure performance, develop systems and procedures to prevent nonconformance with requirements and produce continuous improvement in all work processes. The Company utilizes quality gates at its manufacturing facilities to catch quality issues earlier in the process and to perform a root cause analysis at their source, resulting in improved quality and fewer defects and less rework. ISO 9001 is a set of internationally acceptedinternationally-accepted quality requirements established by the International Organization for Standardization. ISO 9001 certification indicates that a company has established and follows a rigorous set of requirements aimed at achieving customer satisfaction by preventing nonconformity in design, development, production, installation and servicing of products. Most of the Company’s facilities are ISO 9001 certified.


The Company has a team of employees dedicated to leading the implementation of the Oshkosh Operating System (OOS). The team is comprised of members with diverse backgrounds in quality, lean, finance, product and process engineering, and culture change management. OOS is a lean business system, which defines and seeks to enhance customers' experiences with the Company's products and services. OOS includes tools to eliminate waste out of the Company's processes to provide better value for customers. OOS enables the Company to efficiently execute its MOVE strategy, delivering value to both customers and shareholders. Within the Company’s facilities, OOS improvement projects have contributed to manufacturing efficiency gains, materials management improvements, steady quality improvements and reduction of lead times.

Engineering, Research and Development


The Company believes its extensive engineering, research and development capabilities have been key drivers of the Company’s marketplace success. The Company maintains fiveeight facilities for new product development and testing with a staff of approximately 260325 engineers and technicians who are dedicated to improving existing products and development and testing of new vehicles, vehicle bodies and components. The Company prepares annualmulti-year new product development plans for each of its markets and measures progress against those plans each month.


Virtually all of the Company’s sales of fire apparatus and broadcast vehicles and mobile medical trailers require some custom engineering to meet the customer’s specifications and changing industry standards. Engineering is also a critical factor in defense vehicle markets due to the severe operating conditions under which the Company’s vehicles are utilized, new customer requirements and stringent government documentation requirements. In the access equipment and commercial segments, product innovation is highly important to meet customers’ changing requirements. Accordingly, in addition to new product development engineers and technicians, the Company maintains aan additional permanent staff of over 400approximately 450 engineers and engineering technicians, and it regularly outsources some engineering activities in connection with new product development projects.

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For fiscal 2009, 20082012, 2011 and 2007,2010, the Company incurred engineering, research and development expenditures of $73.3$109.1 million $90.1, $99.9 million and $73.5$92.4 million, respectively, portions of which were recoverable from customers, principally the U.S. government.


Competition


In all of the Company’s segments, competitors include smaller, specialized manufacturers as well as large, mass producers. The Company believes that, in its specialty vehicle and vehicle body markets, it has been able to effectively compete against large, mass producers due to its product quality, flexible manufacturing and tailored distribution systems. The Company believes that its competitive cost structure, strategic global purchasing capabilities, engineering expertise, product quality and global distribution and service systems have enabled it to compete effectively.



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Certain of the Company’s competitors have greater financial, marketing, manufacturing, distribution and governmental affairs resources than the Company. There can be no assurance that the Company’s products will continue to compete successfully with the products of competitors or that the Company will be able to retain its customer base or improve or maintain its profit margins on sales to its customers, all of which could have a material adverse effect on the Company’s financial condition, results of operations and cash flows.

Defense Segment.  The Company produces heavy-payload and medium-payload tactical wheeled vehicles for the U.S. and other militaries.  Competition for sales of these tactical wheeled vehicles includes BAE Systems plc, Man Group plc, Mercedes-Benz (a subsidiary of Daimler AG), Navistar Defense LLC (a subsidiary of Navistar International Corporation), The Volvo Group, Force Protection Inc. and General Dynamics Corp.  The principal method of competition in the defense segment involves a competitive bid that takes into account factors as determined by the applicable military customer, such as price, product performance, product quality, adherence to bid specifications, production capability, past performance and product support.  Usually, the Company’s truck systems must also pass extensive testing.  The Company believes that its competitive strengths include:  strategic global purchasing capabilities leveraged across multiple business segments; extensive pricing/costing and defense contracting expertise; a significant installed base of vehicles currently in use throughout the world; large-scale, flexible and high-efficiency vertically-integrated manufacturing capabilities; patented and/or proprietary vehicle components such as TAK-4 independent suspension, Oshkosh power transfer cases and Command Zone vehicle diagnostics; ability to develop new and improved product capabilities responsive to the needs of its customers; product quality and after-market parts sales and service capabilities.


Access Equipment Segmentequipment segment.. JLG operates in the global construction, maintenance, industrial and agricultural equipment markets. JLG’s competitors range from some of the world’s largest multi-national construction equipment manufacturers to small single-product niche manufacturers. Within this global market, competition for sales of aerial work platform vehiclesequipment includes Genie Industries, Inc. (a subsidiary of Terex Corporation), Haulotte Group, Skyjack Inc. (a subsidiary of Linamar Corporation), Haulotte Group, Aichi Corporation (a subsidiary of Toyota Industries Corporation) and over 2040 smaller manufacturers. Global competition for sales of telehandler vehiclesequipment includes Genie Industries, Inc. (a subsidiary of Terex Corporation),the Manitou Group, J C Bamford Excavators Ltd., the Manitou Group, Merlo SpA and Genie Industries, Inc. and over 2030 smaller manufacturers. In addition, JLG faces competition from numerous manufacturers of other niche products such as boom vehicles, cherry pickers, skid steer loaders, mast climbers, straight mast and vehicle-mounted fork-lifts, rough-terrain and all-terrain cranes, vehicle-mounted cranes, portable material lifts, various types of material handling equipment, scaffolding and the common ladder that offer functionality that is similar to or overlaps that of JLG’s products. Principal methods of competition include brand awareness, product innovation and performance, quality, service and support, product availability and the extent to which a company offers single-source customer solutions. The Company believes its competitive strengths include: premium brand names; broad and single-source product offerings; product quality; worldwide distribution; safety record; service and support network; global procurement scale andscale; extensive manufacturing capabilities.

Fire & Emergency Segment.  The Company produces and sells custom and commercial firefighting vehicles in the U.S. under the Pierce brand.  Competitors include Rosenbauer International AG, Emergency One, Inc. (owned by American Industrial Partners), Kovatch Mobile Equipment Corp., and numerous smaller, regional manufacturers.  Principal methods of competition include brand awareness, the extent to which a company offers single-source customer solutions, product quality, product innovation, dealer distribution, service and support and price.  The Company believes that its competitive strengths include: recognized, premium brand name; nationwide network of independent Pierce dealers; extensive, high-quality and innovative product offerings, which include single-source customer solutions for aerials, pumpers and rescue units; large-

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scale and high-efficiency custom manufacturing capabilities; and proprietary technologies such as the PUC vehicle configuration, TAK-4 independent suspension, Hercules and Husky foam systems and Command Zone electronics.

cross-division synergies with other segments within Oshkosh manufactures ARFF vehicles for sale in the U.S. and abroad.  Oshkosh’s principal competitors for ARFF sales are Rosenbauer International AG and Emergency One, Inc.  Oshkosh also manufactures snow removal vehicles, principally for U.S. airports.  Corporation.


The Company’s principal competitors for snow removal vehicle sales are Øveraasen AS and Schmidt Equipment & Engineering (a subsidiary of FWD/Seagrave Holdings LP).  Principal methods of competition for airport products are product quality and innovation, product performance, price and service.  The Company believes its competitive strengths in these airport markets include its high-quality, innovative products and low-cost manufacturing capabilities.

JerrDan produces carriers and wreckers, primarily for sale in the U.S. and Mexico.  JerrDan’s principal competitor for Jerr-Dan branded products is Miller Industries, Inc. Principal methods of competition for carriers and wreckers include product quality and innovation, product performance, price and service. The Company believes its competitive strengths in this market include its high quality, innovative and high-performance product line and its low-cost manufacturing capabilities.

Medtec


Defense segment. The Company produces heavy- and medium-payload, MRAP and light-payload tactical wheeled vehicles for the military and security forces around the world. Competition for sales of these vehicles includes, among others, Man Group plc, Mercedes-Benz (a subsidiary of Daimler AG), Navistar Defense LLC (a subsidiary of Navistar International Corporation), General Dynamics Corp, Lockheed Martin, AM General, BAE Systems plc and Textron Inc. The principal method of competition in the defense segment involves a competitive bid that takes into account factors as determined by the customer, such as price, product performance, small and disadvantaged business participation, product quality, adherence to bid specifications, production capability, project management capability, past performance and product support. Usually, the Company's vehicle systems must also pass extensive testing. The Company believes that its competitive strengths include: strategic global purchasing capabilities leveraged across multiple business segments; extensive pricing/costing and defense contracting expertise; a significant installed base of vehicles currently in use throughout the world; flexible and high-efficiency vertically-integrated manufacturing capabilities; patented and/or proprietary vehicle components such as TAK-4 independent suspension system, Oshkosh power transfer cases and Command Zone integrated vehicle diagnostics; ability to develop new and improved product capabilities responsive to the needs of its customers; product quality; and aftermarket parts sales and service capabilities.

The Weapon Systems Acquisition Reform Act requires competition for defense programs in certain circumstances. Accordingly, it is possible that the U.S. Army and U.S. Marine Corps will conduct competitions for programs for which the Company currently has contracts upon the expiration of the existing contracts. Competition for these and other domestic programs could result in future contracts being awarded based upon different competitive factors than those described above and would primarily include price, production capability and past performance. Current economic conditions have also put significant pressure on the U.S. Federal budget, including a manufacturer45% reduction in tactical wheeled vehicle spending from fiscal 2013 to fiscal 2017, as included in the most recent President's budget proposal. In addition, the Budget Control Act of ambulances, primarily2011 contains an automatic sequestration feature that would order cuts to the U.S. defense budget starting in calendar 2013 if Congress fails to enact by December 31, 2012, the specified $1.2 trillion in U.S. federal deficit reductions to be recommended by the Joint Committee. The overall military drawdown in Iraq and Afghanistan, stated defense budget reductions, and potential sequestration scenario could result in lower demand for saletactical wheeled vehicles and future program competitions weighting price more heavily than the past competitive factors described above.


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Fire & emergency segment. The Company produces and sells custom and commercial firefighting vehicles in the U.S. Medtec’s principal competition for ambulance sales is from Halcore Group,and Canada under the Pierce brand and broadcast vehicles in the U.S. and abroad under the Frontline brand. Competitors include Rosenbauer International AG, Emergency One, Inc. (owned by TransOcean Capital, Inc.)Allied Specialty Vehicles), Wheeled Coach Industries (owned by American Industrial Partners)Kovatch Mobile Equipment Corp., and Marque Inc./McCoy-Miller, LLC.  Principal methods of competition are price, service and product quality.  The Company believes its competitive strengths in the ambulance market include its high-quality, fully customizable value-priced products.

OSV is a manufacturer of mobile medical trailers, broadcast and command vehicles.  OSV’s principal competition for mobile medical trailers is from Med Coach, LLC and Ellis and Watts International, Inc.  OSV’snumerous smaller, regional manufacturers. Pierce’s principal competition for broadcast vehicles is from Wolf Coach (a subsidiary of L-3 Communication Holdings, Inc.)Accelerated Media Technologies and Television Engineering Corporation. Principal methods of competition include brand awareness, ability to meet or exceed customer specifications, price, the extent to which a company offers single-source customer solutions, product innovation, product quality, dealer distribution, and service and support. The Company believes that its competitive strengths include: recognized, premium brand name; nationwide network of independent Pierce dealers; extensive, high-quality and innovative product offerings, which include single-source customer solutions for aerials, pumpers and rescue units; large-scale and high-efficiency custom manufacturing capabilities; and proprietary technologies such as the PUC vehicle configuration, TAK-4 independent suspension, Hercules and Husky foam systems and Command Zone electronics.


Oshkosh manufactures ARFF vehicles for sale in the U.S. and abroad. Oshkosh’s principal competitor for ARFF sales is Rosenbauer International AG. Oshkosh also manufactures snow removal vehicles, principally for U.S. airports. The Company’s principal competitors for snow removal vehicle sales are Fortbrand Services, Inc., Wausau-Everest LP (a subsidiary of Specialized Industries LP) and M-B Companies, Inc. Principal methods of competition for airport products are price, product performance, service, product quality and availability, price and service.innovation. The Company believes its competitive strengths in OSV’sthese airport markets include its high-quality, innovative products excellent relationships with manufacturers of equipment installed in its vehicles and low-cost manufacturing capabilities.

strong dealer support network.


Commercial Segmentsegment.. The Company produces front- and rear-discharge concrete mixers and batch plants for the Americas under the Oshkosh, McNeilus, CON-E-CO and London brands. Competition for concrete mixer and batch plant sales includes Continental Manufacturing Co. (a subsidiary of Navistar International Corporation), Terex Corporation and Kimble Manufacturing Company (a subsidiary of The Hines Corporation). Principal methods of competition are price, service, product features, product quality and product availability and price.availability. The Company believes its competitive strengths includeinclude: strong brand recognition,recognition; large-scale and high-efficiency manufacturing,manufacturing; extensive product offerings,offerings; high product quality,quality; a significant installed base of concrete mixers in use in the marketplacemarketplace; and its nationwide, Company-owned network of sales and service centers.


McNeilus also produces refuse collection vehicles for the Americas.North America and international markets. Competitors include The Heil Company (a subsidiary of Dover Corporation), LaBrie Equipment Ltd. and New Way (a subsidiary of Scranton Manufacturing Company, Inc.). The principal methods of competition are service, product quality, product performance, service and price. Increasingly, the Company is competing for municipal business and large commercial business in the Americas, which is based on lowest qualified bid. The Company believes its competitive strengths in the Americas refuse collection vehicle markets includeinclude: strong brand recognition,recognition; comprehensive product offerings,offerings; a reputation for high-quality products,products; large-scale and high-efficiency manufacturingmanufacturing; and extensive networks of Company-owned sales and service centers located throughout the U.S.


IMT is a manufacturer of field service vehicles and truck-mounted cranes for the construction, equipment dealer, building supply, utility, tire service and mining industries. IMT’s principal field service competition is from Auto Crane Company (owned by Gridiron Capital), Stellar Industries, Inc., Maintainer Corporation of Iowa, Inc. and other regional companies. Competition in truck-mounted cranes comes primarily from European companies including Palfinger AG, Cargotec Corporation and Fassi Group SpA. Principal methods of competition are product quality, price and service. The Company believes its competitive strengths include its high-quality products, global distribution network and low-cost manufacturing capabilities.

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Customers and Backlog


Sales to the U.S. government comprised approximately 52%45% of the Company’s net sales in fiscal 2009.2012. No other single customer accounted for more than 10% of the Company’s net sales for this period. A substantial majority of the Company’s net sales are derived from customer orders prior to commencing production.


The Company’s backlog as of September 30, 2009 increased 138.6%2012 decreased 37.5% to $5,615.4 million$4.05 billion compared to $2,353.8 million$6.48 billion at September 30, 2008.  Defense segment backlog increased 307.2% to $4,883.8 million at September 30, 2009 compared to $1,199.2 million at September 30, 2008 due largely to the award of the M-ATV contract in June 2009, the renewal of the FHTV contract in October 2008, including a supplemental FHTV award in August 2009, and the award of the FMTV contract in August 2009.  The $266.8 million delivery order under the recently-awarded FMTV contract is under a government issued stop work order until resolution of protests filed with the GAO by the Company’s competitors under that competition.2011. Access equipment segment backlog decreased 70.2%50.5% to $98.3$361.1 million at September 30, 2012 compared to $729.2 million at September 30, 2011. Backlog at September 30, 20092011 included a very large, early cycle order and was also favorably impacted by anticipated capacity constraints in the industry. Defense segment backlog decreased 40.5% to $3.05 billion at September 30, 2012 compared to $330.0 million$5.13 billion at September 30, 20082011 due largely to the global recessionfulfillment of FHTV and related impact on credit markets.  Access equipment backlog asFMTV orders and the delay in finalizing the fiscal 2012 U.S. federal budget, which has delayed receipt of September 30, 2009 included $46.5 million relating to telehandler orders fromfor the DoD.  Backlog figures reported for prior periods did not include amounts relating to telehandler orders from the DoD.  The amount of these DoD orders on hand, but not included in backlog, as of September 30, 2008 was $42.7 million.Company's products. Fire & emergency segment backlog decreased 11.8%0.3% to $558.7$477.6 million at September 30, 20092012 compared to $633.2$479.0 million at September 30, 20082011 due in large part to weakening domestic municipal markets, the fulfillmentCompany no longer taking orders for Medtec ambulances in

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Table of domestic fire apparatus orders in fiscal 2009 received in advance of price increases and new National Fire Protection Association standards that became effective January 1, 2009.  Fire & emergency segment backlog at September 30, 2009 included $49.7 million relatedContents

connection with its decision to BAI.  BAI was sold in October 2009.exit the Medtec business. Commercial segment backlog decreased 61.0%increased 11.2% to $74.6$155.8 million at September 30, 20092012 compared to $191.4$140.0 million at September 30, 2008.  Backlog at September 30, 2008 included $70.7 million of backlog for Geesink.  Geesink was sold in July 2009.2011. Unit backlog for domesticconcrete mixers was up 79.7% compared to September 30, 2011. The Company believes that aged fleets and recent increases in housing starts contributed to recent larger, multiple-unit orders. Unit backlog for refuse collection vehicles was down 32.4%29.7% at September 30, 2012 compared to September 30, 2008 partly due2011. Prior year orders and backlog were positively impacted as customers scheduled delivery of units prior to the timingDecember 31, 2011 expiration of orders from several large waste haulers.  Unit backlogs for front-discharge and rear-discharge concrete mixers were down 54.5% and 77.2%, respectively, compared to September 30, 2008 as a result of continued weak construction markets in the U.S as a result of the global recession and related impact on credit markets.

U.S. bonus tax depreciation deduction.


Reported backlog excludes purchase options and announced orders for which definitive contracts have not been executed. Additionally, backlog excludes unfunded portions of the FHTV MTVR, ID/IQ, LVSR 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 Company’s future sales to the DoD versus its sales to other customers. Approximately 10.8%14% of the Company’s September 30, 20092012 backlog is not expected to be filled in fiscal 2010.

2013.


Government Contracts


Approximately 52%45% of the Company’s net sales for fiscal 20092012 were made to the U.S. government, a substantial majority of which were under long-termmulti-year contracts and programs in the defense vehicle market. Accordingly, a significant portion of the Company’s sales are subject to risks specific to doing business with the U.S. government, including uncertainty of economic conditions, changes in government policies and requirements that may reflect rapidly changing military and political developments, the availability of funds and the ability to meet specified performance thresholds. Long-termMulti-year contracts may be conditioned upon continued availability of congressional appropriations, which could be impacted by the uncertainty regarding the future level of U.S. military involvement in Iraq and Afghanistan and federal budget pressures arising from the federal bailout of financial institutions, insurance companies and others.pressures. Variances between anticipated budget and congressional appropriations may result in a delay, reduction or termination of these contracts.

In addition, continued weak economic conditions have put significant pressure on the U.S. federal budget. The Budget Control Act of 2011 contains an automatic sequestration feature that would order cuts to the defense budget starting in calendar 2013 if Congress fails to enact by December 31, 2012 the specified $1.2 trillion in U.S. federal deficit reductions to be recommended by the Joint Committee. Budgetary concerns could result in future defense vehicle contracts being awarded more on price than the past competitive factors described above.


The Company’s sales into defense vehicle markets are substantially dependent upon periodic awards of new contracts and the purchase of base vehicle quantities and the exercise of options under existing contracts. The Company’s existing contracts with the DoD may be terminated at any time for the convenience of the U.S. government. Upon such termination, the Company would generally be entitled to reimbursement of its incurred costs and in general, to payment of a reasonable profit for work actually performed.


Defense truck contract awards that the Company receives 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 the Company and an inability of the Company to recover amounts the Company has expended during the protest period in anticipation of initiating productionwork under any such contract.  In particular, the FMTV contract recently awarded to the Company is currently

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being protested by two unsuccessful bidders for that contract.  The Company continues to invest in the start-up of the FMTV program.  Should the FMTV protests be upheld, the Company is unlikely to be able to recover these program start-up costs.

Under firm, fixed-price contracts with the U.S. government, the price paid to the Company is generally not subject to adjustment to reflect the Company’s actual costs, except costs incurred as a result of contract changes ordered by the U.S. government. The Company generally attempts to negotiate with the U.S. government the amount of increased compensation to which the Company is entitled for government-ordered changes that result in higher costs. If the Company is unable to negotiate a satisfactory agreement to provide such increased compensation, then the Company may file an appeal with the Armed Services Board of Contract Appeals or the U.S. Claims Court. The Company has no such appeals pending. The Company seeks to mitigate risks with respect to fixed-price contracts by executing firm, fixed-price contracts with a substantial majority of its suppliers for the duration of the Company’s contracts.


The Company, as a U.S. government contractor, is subject to financial audits and other reviews by the U.S. government of performance of, and the accounting and general practices relating to, U.S. government contracts. Like most large government contractors, the Company is audited and reviewed by the government on a continual basis. Costs and prices under such contracts may be subject to adjustment based upon the results of such audits and reviews. Additionally, such audits and reviews can lead and have led to civil, criminal or administrative proceedings. Such proceedings could involve claims by the government for fines, penalties, compensatory and treble damages, restitution and/or forfeitures. Under government regulations, a company or one or more of its subsidiaries can also be suspended or debarred from government contracts, or lose its export privileges based on the results

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of such proceedings. The Company believes that the outcome of all such audits reviews and proceedingsreviews that are now pending will not have a material adverse effect on its financial condition, results of operations or cash flows.


Suppliers


The Company is dependent on its suppliers and subcontractors to meet commitments to its customers, and many components are procured or subcontracted on a sole-source basis with a number of domestic and foreign companies. Components for the Company’s products are generally available from a number of suppliers, although the transition to a new supplier may require several months to conclude. The Company purchases chassis components, such as vehicle frames, engines, transmissions, radiators, axles, tires, drive motors, bearings and hydraulic components and vehicle body options, such as cranes, cargo bodies and trailers, from third-party suppliers. These body options may be manufactured specific to the Company’s requirements; however, most of the body options could be manufactured by other suppliers or the Company itself. Through reliance on this supply network for the purchase of certain components, the Company is able to reduce many of the preproduction and fixed costs associated with the manufacture of these components and vehicle body options. The Company purchases a large amount of fabrications and outsources certain manufacturing services, each generally from small companies located near its facilities. While providing low-cost services and product surge capability, such companies often require additional management attention during difficult economic conditions or contract start-up. The Company also purchases complete vehicle chassis from truck chassis suppliers in its commercial segment and, to a lesser extent, in its fire & emergency segment.and access equipment segments. Increasingly, the Company is sourcing components globally, which may involve additional inventory requirements and introduces additional foreign currency exposures. The Company maintains an extensive qualification, on-site inspection, assistance and performance measurement system to attempt to control risks associated with reliance on suppliers. The Company occasionally experiences problems with supplier and subcontractor performance and component, chassis and body availability and must identify alternate sources of supply and/or address related warranty claims from customers.


While the Company purchases many costly components such as chassis, engines transmissions and axles,transmissions, it manufactures certain proprietary components.components and systems. These components include front drive and steer axles, transfer cases, transaxles, cabs, the TAK-4 independent suspension system, the McNeilus Auto Reach arm, the Hercules and Husky compressed air foam system,systems, the Command Zone vehicle control and diagnostic system, technology, the Revolution composite concrete mixer drum, body structures and many smaller parts that add uniqueness and value to the Company’s products. The Company believes internalcontrolling the production of these components provides a significant competitive advantage and also serves to reduce the manufacturingproduction costs of the Company’s products.

The credit crisis and rapidly escalating steel, fuel and other raw material costs in fiscal 2008 created additional risks for the Company’s supplier base.  The ongoing global recession and continuing challenges in accessing financing in fiscal 2009 further challenged the Company’s supplier base.  A limited number of small suppliers have discontinued business due to the

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global recession, tight credit conditions or the inability to either absorb cost increases or pass them on to their customers.  In fiscal 2010, additional suppliers could face financial difficulties as a result of the global recession and tight credit conditions.  The Company is actively monitoring its suppliers’ financial conditions, but to date has no significant concerns with the financial stability of any major suppliers.

The M-ATV contract requires that the Company ramp up M-ATV production levels to 1,000 vehicles per month by December 2009.  The Company’s ability to meet the required production levels is largely dependent on procuring the necessary material and components in sufficient quantities and on a timely basis.  The Company has previously experienced, and may in the future experience, significant disruption or termination of the supply of some of its parts, materials, components and final assemblies that it obtains from sole source suppliers or subcontractors.  Should the Company’s suppliers not plan or execute appropriately, the Company may not achieve its planned rate of production.  The Company may also incur a significant increase in the cost of these parts, materials, components or final assemblies.

Intellectual Property


Patents and licenses are important in the operation of the Company’s business, as oneCompany's business. One of management’smanagement's objectives is developing proprietary components to provide the Company’sCompany's customers with advanced technological solutions at attractive prices. The Company holds in excess of 550560 active domestic and foreign patents. The Company believes patents for the TAK-4independent suspension system, which expire between 2016 and 2029, provide the Company with a competitive advantage in the defense and fire & emergency segments. In the defense segment, the TAK-4independent suspension system was added tohas been incorporated into the U.S. Marine Corps’Corps' MTVR and LVSR programs, the U.S. Army's PLS A1 program and is a key feature on the Company’s M-ATVs.MRAP - Joint Program Office M-ATV program. The Company believes the TAK-4 independent suspension system provided a performance and cost advantage that led to the Company winning and successfully executing these programs. In the fire & emergency segment, TAK-4 independent suspension systems are standard on all Pierce custom fire trucks, as well as Striker and Global Striker ARFF vehicles, which the Company believes brings a similar competitive advantage to these markets.

The Company has recently introduced the TAK-4i independent suspension system, where the “i” stands for “intelligent.” The TAK-4i which has been developed for rigorous military applications, provides 20 inches of wheel travel, a 25% improvement compared to the original TAK-4, and incorporates an adjustable ride height feature. The TAK-4i was a key factor in the successfulCompany's L-ATV entrant in the JLTV EMD competition, forallowing the production contracts for these programs.  L-ATV to exceed all of the ride quality requirements of the JLTV EMD specification.

The Company believes that patents for certain components of its ProPulse hybrid electric drive system, Command Zone electronics system and TerraMax autonomous vehicle systems offer potential competitive advantages to product lines across all its segments. To a lesser extent, other proprietary components provide the Company a competitive advantage in each of the Company’sCompany's segments.

In fiscal 2002, the Company introduced the Revolution composite concrete mixer drum in the U.S. 



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The Company has purchased exclusive, renewable licenses for the rights to manufacture and market this technologythe Revolution composite concrete mixer drum in the Americas and Europe. These licenses require the Company to make royalty fee payments to its Australian partner for each Revolution drum sold.  The Company believes that the Revolution mixer drum has the potential to create an important competitive advantage over competitors that manufacture steel concrete mixer drums during the next economic upturn. The Revolution composite drum is substantially lighter than a comparable steel drum permitting greater payload capacity and is easier to clean, which together lower the cost of delivered concrete.  The Company offers the Revolution composite drum at prices substantially higher than prices for steel drums.


As part of the Company’s 20-yearlong-term alliance with Caterpillar Inc., the Company acquired a non-exclusive, non-transferable worldwide license to use certain Caterpillar intellectual property through 2025 in connection with the design and manufacture of Caterpillar’s current telehandler products. Additionally, Caterpillar assigned to JLG certain patents and patent applications relating to the Caterpillar-branded telehandler products.


The Company holds trademarks for “Oshkosh,” “TAK-4,” “ProPulse,” “JLG,” “SkyTrak,” “Lull,” “Toucan,” “Pierce,” “McNeilus,” “Revolution,” “Medtec,” “Jerr-Dan,” “CON-E-CO,” “London,” “Frontline,” “SMIT”“London” and “IMT” among others. These trademarks are considered to be important to the future success of the Company’s business.


Employees

Employees

As of September 30, 2009,2012, the Company had approximately 12,30013,200 employees. The United Auto Workers union (“UAW”) represented approximately 2,7003,000 production employees at the Company’s Oshkosh, Wisconsin facilities; the Boilermakers, Iron Shipbuilders, Blacksmiths, and Forgers Union (“Boilermakers”) represented approximately 230240 employees at the Company’s Kewaunee, Wisconsin facilities;facility; and the International Brotherhood of Teamsters Union (“Teamsters”) represented approximately 75130 employees at the Company’s Garner, Iowa facilities.facility. The Company’s five-year agreement with the UAW extends through September 2011,2016, and the Company’s agreement with the Boilermakers extends through May 2012.2017. The Company’s three-year agreement with the Teamsters extends through October 2011.2014. In addition, the majority of the Company’s approximately 1,400 employees located outside the U.S. are represented by separate works councils or unions. The Company believes its relationship with employees is satisfactory.

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Table In October 2012, the Company announced the layoff of Contents450 employees in the defense segment effective January 2013 due to a reduction in production levels.


Seasonal Nature of Business


In the Company’s access equipment and commercial segments, business tends to be seasonal with an increase in sales occurring in the spring and summer months that constitute the traditional construction season.season in the northern hemisphere. In addition, sales are generally lower in the first fiscal quarter in all segments due to the relatively high number of holidays which reduce available shipping days.


Industry Segments


Financial information concerning the Company’s industry segments is included in Note 2123 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.


Foreign and Domestic Operations and Export Sales


The Company manufactures products in the U.S., Belgium, Canada, The Netherlands, France, Australia, Romania and RomaniaChina and through investments in joint ventures in Mexico and Brazil for sale throughout the world. Sales to customers outside of the U.S. were 15.3%21.8%, 28.0%17.1% and 22.7%9.6% of the Company’s consolidated sales for fiscal 2009, 20082012, 2011 and 2007,2010, respectively.


Financial information concerning the Company’s foreign and domestic operations and export sales is included in Note 2123 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.


Available Information


The Company maintains a website with the address www.oshkoshcorporation.com. The Company is not including the information contained on the Company’s website as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. The Company makes available free of charge (other than an investor’s own Internet access charges) through its website its Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after the Company electronically files such materials with, or furnishes such materials to, the Securities and Exchange Commission (“SEC”).



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ITEM 1A.RISK FACTORS


The Company’s financial position, results of operations and cash flows are subject to various risks, many of which are not exclusively within the Company’s control, thatwhich may cause actual performance to differ materially from historical or projected future performance. InformationInvestors should consider carefully information in this Form 10-K should be considered carefully by investors in light of the risk factors described below and the information set forth under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Certain Assumptions.”

The M-ATV contract is a high profile and urgent priority for the DoD, which requires a significant and rapid increase in the rate of production of these vehicles.  If we are not able to meet the required delivery schedule for this contract, our ability to secure future military business may be materially adversely impacted.

The M-ATV contract requires that we quickly ramp up M-ATV production levels to 1,000 vehicles per month by December 2009.  Our ability to meet the required production levels is largely dependent on procuring the necessary material and components in sufficient quantities and on a timely basis.We may incur costs beyond our estimates to ramp up production. In addition, the DoD continues to perform significant levels of testing of the initial vehicles delivered by us. This testing could lead to material retrofits to vehicles that have already been produced or the need to change the configuration of vehicles yet to be built. Material retrofits could involve higher costs than we have estimated for the program.If we are unable to timely complete any of the foregoing items or if we are required to perform significant retrofits to existing vehicles or change the configuration of the vehicles, we may not be able to timely deliver the quantity of vehicles required by the contract.  This could negatively impact our ability to win future business with the DoD or other foreign military customers, which, along with the other risks to our costs in this program, would adversely affect our future earnings and cash flows. See “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” and “A disruption or termination of the supply of parts, materials, components and

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final assemblies from third-party suppliers could delay sales of our vehicles and vehicle bodies” for additional risks associated with the M-ATV contract.

Certain of our markets are highly cyclical and the current or any further decline in these markets could have a material adverse effect on our operating performance.


The high levels of sales in our defense 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 are in place for 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 or any furthereconomic 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 President's 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 President's 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 by December 31, 2012. 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 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 cyclical access equipmentcommercial and commercial markets and in our modestly cyclical 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 and housing starts have begun to improve to support recovery in several of our product lines, 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 yearand 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 that JLG operates in is highly cyclical and impacted by the strength of economies in general, by prevailing mortgage and other interest rates, by residential and non-residential construction spending, by the ability of rental companies to obtain third party financing to purchase revenue generating assets, by capital expenditures of rental companies in general and by other factors. The ready-mix concrete market that we serve is highly cyclical and impacted by the strength of the economy generally, by prevailing mortgage and other interest rates, by the number of housing starts and by other factors that may have an effect on the level of concrete placement activity, either regionally or nationally. Refuse collection vehicle markets are 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 modestly 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.

season in the Northern hemisphere.


The global economy is currently experiencing a severe recession,continues to experience weakness, which has negatively impacted our sales volumes for our access equipment, commercial and to a lesser extent, fire & emergency products.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 from historical levels 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. In addition, many customersOrder rates in the access equipment segment in the fourth quarter of ours have been reducing their expenditures for access equipment. Furthermore, municipalfiscal 2012 were significantly lower than in the fourth quarter of fiscal 2011. While we believe that this is largely due to a shift

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in the timing of orders, we cannot offer any assurances that the slower order rate will not continue into the foreseeable future. Municipal tax revenues in the U.S. have weakened, which has negatively impacted demand for refuse collection vehicles and fire apparatus. The towingapparatus and delayed the recovery equipmentin these markets. Furthermore, it is possible that emerging market is also beinggrowth has slowed and could slow even further, which could negatively impacted by the global economy and tight creditimpact our growth in those markets. We cannot provide any assurance that the global recessioneconomic 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 recessioneconomic 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.

The high levels of sales in our defense business in recent years have been due in significant part to demand for defense trucks, replacement parts and services (including armoring) and truck remanufacturing arising from the conflicts in Iraq and Afghanistan. Events such as these are unplanned, and we cannot predict how long these conflicts will last or the demand for our products that will arise out of such events. Accordingly, we cannot provide any assurance that the increased defense business as a result of these conflicts will continue. Furthermore, our defense business may fluctuate significantly from time to time as a result of the start and completion of new contract awards that we may receive, such as the M-ATV and FMTV contracts. New vehicle production under the M-ATV contract is currently scheduled to continue only through April 2010. In addition, the bailout of U.S. financial institutions, insurance companies and others as well as the U.S. economic stimulus package are expected to put significant pressure on the U.S. federal budget, including the defense budget. Moreover, uncertainty exists regarding the future level of U.S. military involvement in Iraq and Afghanistan and the related level of defense funding that will be allocated to support this involvement. It is too early to tell what the impact of federal budget pressures and future defense funding for U.S. military involvement in Iraq and Afghanistan will mean to funding for Oshkosh defense programs. As such, we cannot provide any assurance that funding for our defense programs will not be impacted by defense policies and federal budget pressures.

An impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect our operating results.

We have a substantial amount of goodwill and purchased intangible assets on our balance sheet as a result of acquisitions we have completed. Approximately 85% of these intangibles are concentrated in the access equipment segment. The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of indefinite-lived intangible assets represents the fair value of trademarks and trade names as of the acquisition date. Goodwill and indefinite-lived intangible assets that are expected to contribute indefinitely to our cash flows are not amortized, but instead are evaluated for impairment at least annually, or more frequently if potential

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interim indicators exist that could result in impairment. In testing for impairment, if the carrying value of a reporting unit exceeds its current fair value as determined based on the discounted future cash flows of the reporting unit, the goodwill or intangible asset is considered impaired and is reduced to fair value via a non-cash charge to earnings. Events and conditions that could result in impairment include a prolonged period for the current global recession and tight credit markets, further decline in economic conditions or a slow, weak economic recovery, as well as sustained declines in the price of our common stock, adverse changes in the regulatory environment, or other factors leading to reductions in expected long-term sales or profitability. Determination of the fair value of a reporting unit includes developing estimates which are highly subjective and incorporate calculations that are sensitive to minor changes in underlying assumptions. Management’s assumptions change as more information becomes available. Changes in these assumptions could result in an impairment charge in the future, which could have a significant adverse impact on our reported earnings.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Estimates — Goodwill” for more information regarding the potential impact of changes in assumptions.

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. Approximately 91% of our defense segment sales in fiscal 2012 were to the DoD. 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 uncertainty that exists regarding the future levelwithdrawal of U.S. military involvement introops from Iraq, andthe plans to withdraw U.S. troops from Afghanistan by December 2014 and the related level of defense funding that will be allocated to support this involvement.

·the DoD's 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.

·                  Most


Certain of our government contracts are fixed-pricefor 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 actual costs on anydefense segment.

The Weapon Systems Acquisition Reform Act requires competition for U.S. 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 these contracts may exceed our projected costs, whichthe existing contracts. Competition for DoD programs that we currently have could result in profitsthe U.S. government awarding future contracts to another manufacturer or the U.S. government awarding the contracts to us at lower than historically realized orprices and operating margins than we anticipate or net lossesexperience under thesethe current contracts.

·                  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.

·


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.  In particular, the FMTV contract recently awarded to us is currently being protested by certain unsuccessful bidders for the contract and we continue to invest in the start-up of this program.  We may not be able to recover these amounts if the protests are upheld.

·                  Certain


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 be suspended, opened for competitionresult in profits lower than historically realized or terminatedthan we anticipate or net losses under these contracts.

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 suchcontract terms before we begin performance under the contracts. At September 30, 2012, we had recorded $83.4 million in revenue on contracts expirethat 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 futureperiod 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 may nottesting, bid and proposal activities and pre-contract engineering, tooling and design activities in competitions to have the opportunity to be replaced, which could reduce expected revenues fromawarded these contracts.

·                  The amount


Competitions for the award of orders for defense trucks or componentstruck contracts are intense, and we cannot provide any assurance that we may receive under certainwill be successful in the defense truck procurement competitions in which we participate.

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Table of our government contracts is uncertain, and we may not receive additional or follow-on orders relating to contract awards we have received, including for M-ATVs, FMTVs or TAK-4 independent suspension retrofits.

·Contents



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 testsor to comply with these requirements could result in unanticipated retrofit and rework costs, vehicle design changes, delayed acceptance of trucks,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. This was the case in October 2012 when we announced the layoff of 450 full time employees and 40 contractors effective January 2013 due to a reduction in production levels. 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 particular, ordersaddition, if we are not able to utilize existing production equipment for M-ATVs are requiring substantial personnel and production resources at severalalternative 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 facilitiesU.S. government contracts. In the event that we are not able to enablemeet contractual delivery requirements on these contracts, the U.S. government may discontinue providing PBPs. The U.S. government may also become less willing to offer PBPs. If we stop receiving PBPs or receive PBPs at lower levels, it could have an adverse effect on our ability to repay debt and cause us to quickly ramp up productionincur higher interest rates on our outstanding debt.

In the event of component availability constraints, the U.S. government has the ability to meetunilaterally divert the delivery requirements for such orders.

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·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 may not be able to execute on our MOVE strategy and meet our long-term financial goals.

We have announced a roadmap, our MOVE strategy, to deliver long-term growth and earnings for our shareholders and to meet our long-term financial goals. The long-term financial goals that we expect to achieve as a result of our MOVE strategy are based on certain assumptions we have made, which assumptions may prove to be incorrect. We cannot provide any assurance we will be able to successfully execute our MOVE strategy, which is subject to a variety of risks, including the following:

A lower or slower than expected recovery in housing starts and non-residential construction spending;

Greater than expected declines in DoD tactical wheeled vehicle spending;

Our inability to adjust our cost structure in response to lower defense spending;

Greater than expected pressure on municipal budgets;

Our inability to raise prices to offset cost increases or increase margins;

The possibility that commodity cost escalations could erode profits;

Low cost competitors aggressively entering one or more of our markets with significantly lower pricing;

Primary competitors vying for share gains through aggressive price competition;

Our inability to obtain and retain adequate resources to support production ramp-ups, including management personnel;

The inability of our supply base to keep pace with the economic recovery;


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Our failure to realize product, process and overhead cost reduction targets;

Not winning key large defense contracts, such as the JLTV production contract and additional international M-ATV contracts;

Our inability to innovate effectively and rapidly to expand sales and margins; and

Slow adoption of our products in emerging markets and/or our inability to successfully execute our emerging market growth strategy.

An impairment in the carrying value of goodwill and other indefinite-lived intangible assets could negatively affect our operating results.

We have a substantial amount of debt. Ourgoodwill and purchased intangible assets on our balance sheet as a result of acquisitions we have completed. At September 30, 2012, approximately 88% of these intangibles were concentrated in the access equipment segment. The carrying value of goodwill represents the fair value of an acquired business in excess of identifiable assets and liabilities as of the acquisition date. The carrying value of indefinite-lived intangible assets represents the fair value of trademarks and trade names as of the acquisition date. We do not amortize goodwill and indefinite-lived intangible assets that we expect to contribute indefinitely to our cash flows, but instead we evaluate these assets for impairment at least annually, or more frequently if potential interim indicators exist that could result in impairment. In testing for impairment, if the carrying value of a reporting unit exceeds its current debt levels, includingfair value as determined based on the associated financingdiscounted future cash flows of the reporting unit and market comparable sales and earnings multiples, the goodwill or intangible asset is considered impaired and is reduced to fair value via a non-cash charge to earnings. Events and conditions that could result in impairment include a prolonged period of global economic weakness and tight credit markets, further decline in economic conditions or a slow, weak economic recovery, as well as sustained declines in the price of our common stock, adverse changes in the regulatory environment, adverse changes in interest rates, or other factors leading to reductions in the long-term sales or profitability that we expect. Determination of the fair value of a reporting unit includes developing estimates which are highly subjective and incorporate calculations that are sensitive to minor changes in underlying assumptions. Management's assumptions change as more information becomes available. Changes in these assumptions could result in an impairment charge in the future, which could have a significant adverse impact on our reported earnings.

Financing costs and restrictive covenants in our current debt facilities could limit our flexibility in managing our business and increase our vulnerability to general adverse economic and industry conditions.

As a result of the JLG acquisition, we have a substantial amount of debt.


Our credit agreement contains financial and restrictive covenants which, among other things, require us to satisfy quarter-end financial ratios, including a leverage ratio, a senior secured leverage ratio and an interest coverage ratio. The global recession and credit crisis and related decline in our earnings have increased the leverage ratios under which we operate. As a result, the financial and restrictive covenants may limit our ability to, among other things, borrow under our credit agreement to take advantage of business opportunities. Our ability to meet the financial ratios in such covenants may be affected by a number of risks or events, including the risks described in this Report on Form 10-K and events beyond our control. AThe indenture governing our senior notes also contains restrictive covenants. Any failure by us to comply with suchthese restrictive covenants or the financial and restrictive covenants in our credit agreement could have a material adverse effect on our financial condition, results of operations and debt service capability.


Our access to debt financing at competitive risk-based interest rates is partly a function of our credit ratings. Our current long-term debt ratings are B+BB with “negative” watch from Standard & Poor's Rating Services and Ba3 with “stable” outlook from Moody's Investors Service. The downgrade from “stable” watch to “negative” watch by Standard & Poor’s Rating ServicesPoor's in October 2012 was directly related to the announcement of the unsolicited tender offer by Mr. Carl Icahn and B2 with negative outlook from Moody’s Investors Service. Anyrelated entities for any and all outstanding shares of our common stock. A downgrade to our credit ratings such as the downgrades that occurred in the first half of fiscal 2009, could increase our interest rates, could limit our access to public debt markets, could limit the institutions willing to provide us credit facilities, and could make any future credit facilities or credit facility amendments more costly and/or difficult to obtain. In particular, under the terms of our credit agreement, we would incur a usage fee equal to 0.50% per annum on the aggregate principal amount of all outstanding loans under the credit agreement for any day on which we have a corporate family rating from Moody’s Investors Service of B3 with “negative” watch or lower or a corporate credit rating from Standard & Poor’s Rating Services of B- with “negative” watch or lower.


We had approximately $2.0 billion$955 million of debt outstanding as of September 30, 2009,2012, which consisted primarily of a $455 million term loan under our credit agreement maturing in October 2015 and $500 million of senior notes, $250 million of which $1.9 billion maturesmature in fiscal 2014.March 2017 and $250 million of which mature in March 2020. Our ability to make required payments of principal and interest on our debt will depend on our future performance, which, to a certain extent, is subject to general economic, financial, competitive, political and other factors, some of which are beyond our control. WhileAs we havediscuss above, our dependency on contracts with U.S. and foreign government agencies subjects us to a favorable near term outlook for earningsvariety of risks that, if realized, could materially reduce our revenues, profits and cash flow, the global recessionflows. In addition, among other risks that we face that could affect our revenues, profits and cash flows, current continued economic uncertainty, declining U.S. defense budgets and tight credit markets could become more severe or prolonged, government funding levels for our military programs could decline significantly or changes could occur that alter our ability to effectively compete in our markets. Should one or moreprolonged.

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Accordingly, conditions could arise whichthat could limit our ability to generate sufficient cash flows or access borrowings to enable us to fund our liquidity needs, further limit our financial flexibility or impair our ability to obtain alternative financing sufficient to repay our debt at maturity.


The covenants that are contained in our credit agreement and the indenture governing our senior notes, our credit rating, our substantial amount ofcurrent debt levels and the current credit market conditions could have important consequences for our operations, including:

·


Render us more vulnerable to general adverse economic and industry conditions in our highly cyclical markets or economies generally;

·


Require us to dedicate a substantial portion of our cash flow from operations to higher interest costs or higher required payments on debt, thereby reducing the availability of such cash flow to fund working capital, capital expenditures, research and development, stock repurchases, dividends and other general corporate activities;

·


Limit our ability to obtain additional financing in the future to fund growth working capital, capital expenditures, new product development expenses and other general corporate requirements;

·


Limit our ability to enter into additional foreign currency and interest rate derivative contracts;

·


Make us vulnerable to increases in interest rates as a portion of our debt under our credit agreement is at variable rates;

·


Limit our flexibility in planning for, or reacting to, changes in our business and the markets we serve;

·


Place us at a competitive disadvantage compared to less leveraged competitors; and

·


Limit our ability to pursue strategic acquisitions that may become available in our markets or otherwise capitalize on business opportunities if we had additional borrowing capacity.

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Raw material price fluctuations may adversely affect our results.

We purchase, directly and indirectly through component purchases, significant amounts of steel, aluminum, petroleum based products and other raw materials annually. Steel, aluminum, fuel and other commodity prices have historically been highly volatile. There are indications that costs for these items may increase in the future due to one or more of the following: a sustained economic recovery, political unrest in certain countries or a weakening U.S. dollar. Increases in commodity costs negatively impact the profitability of orders in backlog as prices on those orders are usually fixed. If we are not able to recover commodity cost increases through price increases to our customers on new orders, then such increases will have an adverse effect on our results of operations. Additionally, if we are unable to negotiate timely component cost decreases commensurate with any decrease in commodity costs, our higher component prices could put us at a material disadvantage as compared to our competition.

Furthermore, we largely do business in the defense segment under multi-year firm, fixed-price contracts with the DoD, which typically contain annual price increases. We attempt to limit the risk related to raw material price fluctuations in the defense segment by obtaining firm pricing from suppliers at the time a contract is awarded. However, if these suppliers do not honor their contracts, then we could face margin pressure in our defense business.

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 on-going 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.


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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.

In October 2012, we announced the layoff of 450 full time employees and 40 contractors in the defense segment effective January 2013. This action was in response to a reduction in production levels due to lower demand from the DoD. We may incur additional costs and restructuring charges in connection with such workforce reductions that could adversely affect our future earnings and cash flows. Furthermore, such actions may be disruptive to our business.

We may experience losses in excess of our recorded reserves for doubtful accounts, finance receivables, notes receivable and guarantees of indebtedness of others.


As of September 30, 2009,2012, we had consolidated gross receivables of $679.0 million.$1.05 billion. In addition, we were a party to agreements in the access equipment segment whereby we haveestimate our maximum exposure of $137.9to be $94.6 million under guarantees of customer indebtedness to third parties aggregating approximately $290.8 million.$363.8 million. We evaluate the collectability of open accounts, finance and pledged finance receivables, notes receivable and our guarantees of indebtedness of others based on a combination of factors and establish reserves based on our estimates of potential losses. In circumstances where we believe it is probable that a specific customer will have difficulty meeting its financial obligations, a specific reserve is recorded to reduce the net recognized receivable to the amount we expect to collect, and/or we recognize a liability for a guarantee we expect to pay, taking into account any amounts that we would anticipate realizing if we are forced to repossess the equipment that supports the customer’scustomer's financial obligations to us. We also establish additional reserves based upon our perception of the quality of the current receivables, the current financial position of our customers and past collections experience. The level of specific reserves recorded in fiscal 2009, primarily related to JLG’s customers, was significantly higher than historically recorded as a result of the impact of the global recession and tight credit markets. Continued economic weakness and tight credit markets may result in additional requirements for specific reserves. During a recession,periods of economic weakness, the collateral underlying our guarantees of indebtedness of customers or receivables can decline sharply, thereby increasing our exposure to losses. We also face a concentration of credit risk as JLG’sthe access equipment segment's ten largest debtors at September 30, 20092012 represented approximately 23%26% of our consolidated gross receivables. Some of these customers are highly leveraged. In fiscal 2009, we recorded $50.1 million in charges for credit losses, the vast majority of which was in the access equipment segment, reflecting the economic weakness throughout the world. In the future, weWe may incur losses in excess of our recorded reserves if the financial condition of our customers were to deteriorate further or the full amount of any anticipated proceeds from the sale of the collateral supporting our customers’customers' financial obligations is not realized. Our cash flows and overall liquidity may be materially adversely affected if any of the financial institutions that finance our customer receivables become unable or unwilling, due to current economic conditions, a weakening of our or their financial position or otherwise, to continue providing such credit.


Systemic failures that the customer may identify could exceed recorded reserves or negatively affect our ability to win future business with the DoD or other foreign military customers.

As a result of the accelerated timetable from product design to full-scale production, the accelerated production schedule and limited field testing under the M-ATV contract and our rapid ramp up to full-scale production of FMTVs, these vehicles could encounter systemic failures during fielding and use of the vehicles for which we may have responsibility. Additionally, we did not design the FMTV portfolio of trucks and trailers, and the design for this portfolio includes requirements that have caused us to implement manufacturing processes that we have not used extensively under previous contracts. If we do not implement these manufacturing processes correctly, then there could be systemic failures for which we may have responsibility. We have established reserves for the estimated cost of such systemic-type repairs based upon historical warranty rates of other defense programs in which we participate. If systemic issues arise, rectification costs could be in excess of the established reserves. If the DoD identifies systemic issues, this situation could impact our ability to win future business with the DoD or other foreign military customers, which would adversely affect our future earnings and cash flows.


21

A disruption or termination of the supply of parts, materials, components and final assemblies from third-party suppliers could delay sales of our vehicles and vehicle bodies.


We have experienced, and may in the future experience, significant disruption or termination of the supply of some of our parts, materials, components and final assemblies that we obtain from sole source suppliers or subcontractors. We may also incur a significant increase in the cost of these parts, materials, components or final assemblies. These risks are increased in the current difficulta weak economic environment andwith tight credit conditions and for contracts like the M-ATV contract where we are expected to quickly ramp up to a very high ratewhen demand increases coming out of production.an economic downturn. Such disruptions, terminations or cost increases have resulted and could further result in manufacturing inefficiencies due to us having to wait for parts to arrive on the production line, could delay sales of our vehicles and vehicle bodies and could result in a material adverse effect on our net sales, financial condition, profitability and/or cash flows. These risks are particularly serious with respect to our suppliers who participate in the automotive industry, from whom we obtain a significant portion of our parts, materials, components and final assemblies. Suppliers to the automotive industry have been severely impacted by the financial difficulties of auto manufacturers, the economic environment and credit conditions and face potential failure if the auto manufacturers’ businesses, the economic environment and credit conditions do not improve. These risks are also serious for suppliers for our M-ATV contract who must quickly ramp up to very high rates of production. Should they or their suppliers not plan or execute appropriately, we may not achieve our planned rate of production.

Raw material price fluctuations may adversely affect our results.

We purchase, directly and indirectly through component purchases, significant amounts of steel, petroleum based products and other raw materials annually. During fiscal 2008, steel and fuel prices increased significantly resulting in us paying higher prices for these items. Although fuel and steel prices declined during the first quarter of fiscal 2009, the cost of fuel has fluctuated and there are indications that the costs of fuel and steel may continue to fluctuate significantly in the future. Although we have firm, fixed-price contracts for some steel requirements and have some firm pricing contracts for components, we may not be able to hold all of our steel and component suppliers to pre-negotiated prices or negotiate timely component cost decreases commensurate with any steel and fuel cost decreases. Without limitation, these conditions could impact us in the following ways:

19



Table of Contents

·                  In the access equipment, fire & emergency and commercial segments, we implemented selling price increases to recover increased steel, component and fuel costs experienced in fiscal 2008. However, any such new product prices applied only to new orders, and we were not able to recover all cost increases from customers due to the amount of orders in our backlog prior to the effective dates of new selling prices. In the access equipment segment, some customers reacted adversely to these price increases in light of the subsequent declines in fuel and steel prices, and competitive conditions limited price increases in a time of global recession. Given the current global recession, it is possible that any price increases in any of our markets in response to rising costs could face unfavorable reaction from our customers. Price increases implemented in response to significantly higher fuel and steel prices were largely removed during the second half of fiscal 2009. If fuel and steel costs increase significantly again in the future, there are no assurances that we will be able to raise prices sufficiently to fully offset the impact of the higher fuel and steel costs.

·                  In the defense business, we are generally limited in our ability to raise prices in response to rising steel, component and fuel costs as we largely do business under annual firm, fixed-price contracts with the DoD. We attempt to limit this risk by obtaining firm pricing from suppliers at the time a contract is awarded. However, if these suppliers, including steel suppliers, do not honor their contracts, then we could face margin pressure in our defense business.

Our objective is to expand international operations and sales, the conduct of which subjects us to risks that may have a material adverse effect on our business.


Expanding international operations and sales is a part of our growth strategy. Our outlook depends in part upon increases in international orders and sales that may not materialize. International operations and sales are subject to various risks, including political, religious and economic instability, local labor market conditions, the imposition of foreign tariffs and other trade barriers, the impact of foreign government regulations and the effects of income and withholding taxes, governmental expropriation and differences in business practices. We may incur increased costs and experience delays or disruptions in product deliveries and payments in connection with international manufacturing and sales that could cause loss of revenues and earnings. Among other things, there are additional logistical requirements associated with international sales, which increase the amount of time between the completion of vehicle production and our ability to recognize related revenue. In addition, expansion into foreign markets requires the establishment of distribution networks and may require modification of products to meet local requirements or preferences. Establishment of distribution networks or modification to the design of our products to meet local requirements and preferences may take longer or be more costly than we anticipate and could have a material adverse effect on our ability to achieve international sales growth. In addition, our entry into certain markets that we wish to enter may require us to establish a joint venture. Identifying an appropriate joint venture partner and creating a joint venture could be more time consuming, more costly and more difficult than we anticipate.

As a result of our international operations and sales, we are subject to the Foreign Corrupt Practices Act (“FCPA”) and other laws that prohibit improper payments or offers of payments to foreign governments and their officials for the purpose of obtaining or retaining business. Our international activities create the risk of unauthorized payments or offers of payments in violation of the FCPA by one of our employees, consultants, sales agents or distributors, because these parties are not always subject to our control. Any violations of the FCPA could result in significant fines, criminal sanctions against us or our employees, and prohibitions on the conduct of our business, including our business with the U.S. government. We are also increasingly subject to export control regulations, including, without limitation, the United States Export Administration Regulations and the International Traffic in Arms Regulations. Unfavorable changes in the political, regulatory andor business climate could have a material adverse effect on our net sales, financial condition, profitability and/or cash flows.


We are subject to fluctuations in exchange rates and other risks associated with our non-U.S. operations that could adversely affect our results of operations and may significantly affect the comparability of our results between financial periods.

Approximately

For the fiscal year ended September 30, 2009, approximately 15%22% of our net sales in fiscal 2012 were attributable to products sold outside of the United States, including approximately 10%18% that involved export sales from the United States. The majority of export sales are denominated in U.S. dollars. Sales outside the United States are typically made in the local currencies of those countries. Fluctuations in foreign currency can have an adverse impact on our sales and profits as amounts that are measured in foreign currency are translated back to U.S. dollars. We have sales of inventory denominated in U.S. dollars to certain of our subsidiaries that have functional currencies other than the U.S. dollar. The exchange rates between many of these currencies and the U.S. dollar have fluctuated significantly in recent years and may fluctuate significantly in the future. Such fluctuations, in particular those with respect to the Euro, the U.K. pound sterling,Chinese Renminbi, the Canadian dollar, the Brazilian real and the Australian dollar, may have a material effect on our net sales, financial condition, profitability and/or cash flows and may significantly affect the comparability of our results between financial periods. Any appreciation in the value of the U.S. dollar in relation to the value of the local currency will adversely affect our revenues from our foreign operations when translated into U.S. dollars. Similarly, any appreciation in the value of the U.S. dollar in relation to the value of the local currency of those countries where our products are sold will increase our costs in our foreign operations, to the extent such costs are payable in foreign currency, when translated into U.S. dollars.



22

Changes in regulations could adversely affect our business.


Both our products and the operation of our manufacturing facilities are subject to statutory and regulatory requirements. These include environmental requirements applicable to manufacturing and vehicle emissions, government contracting regulations and domestic and international trade regulations. A significant change to these regulatory requirements could substantially increase manufacturing costs or impact the size or timing of demand for our products, all of which could make our business results more variable.

20


In particular, climate change is receiving increasing attention worldwide. Many scientists, legislators and others attribute climate change to increased levels of greenhouse gases, including carbon dioxide, which has led to significant legislative and regulatory efforts to limit greenhouse gas emissions. Congress has previously considered and may in the future implement restrictions on greenhouse gas emissions through a cap-and-trade system under which emitters would be required to buy allowances to offset emissions of greenhouse gas. In addition, several states, including states where we have manufacturing plants, are considering various greenhouse gas registration and reduction programs. Our manufacturing plants use energy, including electricity and natural gas, and certain of our plants emit amounts of greenhouse gas that may be affected by these legislative and regulatory efforts. Greenhouse gas regulation could increase the price of the electricity we purchase, increase costs for our use of natural gas, potentially restrict access to or the use of natural gas, require us to purchase allowances to offset our own emissions or result in an overall increase in our costs of raw materials, any one of which could increase our costs, reduce our competitiveness in a global economy or otherwise negatively affect our business, operations or financial results.

Disruptions within our dealer network could adversely affect our business.

Although we sell the majority of our products directly to the end user, we market, sell and service products through a network of independent dealers in the fire & emergency segment and in a limited number of markets for the access equipment and commercial segments. As a result, our business with respect to these products is influenced by our ability to establish and manage new and existing relationships with dealers. While we have relatively low turnover of dealers, from time to time, we or a dealer may choose to terminate the relationship as a result of difficulties that our independent dealers experience in operating their businesses due to economic conditions or other factors, or as a result of an alleged failure by us or an independent dealer to comply with the terms of our dealer agreement. We do not believe our business is dependent on any single dealer, the loss of which would have a sustained material adverse effect upon our business. However, disruption of dealer coverage within a specific state or other geographic market could cause difficulties in marketing, selling or servicing our products and have an adverse effect on our business, operating results or financial condition.

In addition, our ability to terminate our relationship with a dealer is limited due to state dealer laws, which generally provide that a manufacturer may not terminate or refuse to renew a dealer agreement unless it has first provided the dealer with required notices. Under many state laws, dealers may protest termination notices or petition for relief from termination actions. Responding to these protests and petitions may cause us to incur costs and, in some instances, could lead to litigation resulting in lost opportunities with other dealers or lost sales opportunities, which may have an adverse effect on our business, operating results or financial condition.

Our business could be negatively affected as a result of an unsolicited tender offer and threatened proxy contest.

On October 17, 2012, Mr. Carl Icahn and related entities (the “Icahn Entities”) commenced an unsolicited tender offer for “any and all” issued and outstanding shares of our common stock for $32.50 per share in cash (the “Offer”). On October 26, 2012, the Icahn Entities also submitted to the Company a notice of intention to nominate a slate of candidates to replace the entire Board of Directors of the Company at the Company's 2013 annual meeting of shareholders. The Company's Board of Directors carefully reviewed the Offer, in consultation with the Company's financial and legal advisors, and unanimously determined that the Offer is inadequate, undervalues the Company and is not in the best interests of the Company and its shareholders and recommended that the Company's shareholders reject the Offer and not tender their shares into the Offer.

These events may have an adverse effect on our business, operating results or financial condition because, among other things:

Our review and consideration of the Offer, proxy contest and related actions by the Icahn Entities have been, and may continue to be, a significant distraction for our management and employees and have required, and may continue to require, our expenditure of significant time and resources. Costs associated with the Offer and related proxy contest may be substantial.

23
Table of Contents

The mobile medical equipment market continues



Perceived uncertainties among current and potential customers, suppliers, employees and other constituencies as to be negatively impacted by previously implemented reductionsour future direction as a consequence of these events may result in lost sales, weaker execution of our MOVE strategy and the loss of potential business opportunities and may make it more difficult to Medicare reimbursement rates.  There currently are proposals in Congress to change Medicare reimbursement rates, which if enacted, could further reduce demand for mobile medical equipment.

We are the defendant in a purported class action lawsuit.

On September 19, 2008, a purported shareholderattract and retain qualified personnel and business partners.


Actions that our Board of ours filed a complaint seeking certification of a class action lawsuitDirectors has taken, and may take in the United States District Court forfuture, in response to the Eastern District of Wisconsin docketed as Iron Workers Local No. 25 Pension Fund on behalf of itselfOffer, proxy contest and all others similarly situated v. Oshkosh Corporation and Robert G. Bohn. The lawsuit alleges, amongrelated actions by the Icahn Entities or any other things, that we violated the Securities Exchange Act of 1934 by making materially inadequate disclosures and material omissions leading to our issuance of revised earnings guidance and announcement of an impairment charge on June 26, 2008. Since the initial lawsuit, other suits containing substantially similar allegations were filed.offer or proposal may result in litigation against us. These lawsuits have been consolidatedmay be a significant distraction for our management and an amended complaint has been filed. The amended complaint substantially expands the class period in which securities law violations are allegedemployees and may require us to have occurred and names Charles L. Szews, David M. Sagehorn and our independent auditor as additional defendants. On July 24, 2009, the defendants filed their motionsincur significant costs. Moreover, if determined adversely to dismiss the lawsuit, and the motions have been fully briefed. The motions are currently pending before the court. The uncertainty associated with this substantial unresolved lawsuitus, these lawsuits could harm our business financial condition and reputation. The defense of the lawsuit diverts management’s time and attention away from business operations, and negative developments with respect to the lawsuit could cause a decline in the price of our stock. In addition, although we believe the lawsuit is entirely without merit and we intend to continue to vigorously defend against it, the outcome of the lawsuit cannot be predicted and ultimately may have a material adverse effect on our results of operations.

We believe the future trading price of our common stock could be subject to wide price fluctuations based on uncertainty associated with the Offer and the related proxy contest. If the Icahn Entities consummate the Offer with the result that they become the owners of additional shares of our common stock or if Icahn Entities' nominees are elected such that they constitute a majority of our Board of Directors, then additional consequences are likely to follow that could have a material adverse effect on our business, operating results or financial condition, profitability and/the value of our shares of common stock or cash flows.

Competitionshareholders' interests in our industries is intense and we may not be able to continue to compete successfully.

We operate in highly competitive industries. Severalcompany.


ITEM 1B.    UNRESOLVED STAFF COMMENTS

The Company has no unresolved staff comments regarding its periodic or current reports from the staff of our competitors have greater financial, marketing, manufacturing and distribution resources than us and we are facing competitive pricing from new entrants in certain markets. Our products may not continue to compete successfully with the productsSEC that were issued 180 days or more preceding September 30, 2012.

24
Table of competitors, and we may not be able to retain or increase our customer base or to improve or maintain our profit margins on sales to our customers, all of which could adversely affect our net sales, financial condition, profitability and/or cash flows.

Contents



ITEM 2.    PROPERTIES

ITEM 1B.

UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

The Company believes its equipment and buildings are well maintained and adequate for its present and anticipated needs. As of November 18, 2009,19, 2012, the Company operated in 5140 manufacturing facilities. The location, size and focus of the Company’s manufacturing facilities are provided in the table below:

 

 

Approximate

 

 

 

 

Square Footage

 

Principal

Location (# of facilities)

 

Owned

 

Leased

 

Products Manufactured

 

 

 

 

 

 

 

Defense

 

 

 

 

 

 

Oshkosh, Wisconsin (8)

 

967,000

 

14,000

 

Defense Trucks; Front-Discharge Mixers; Snow Removal Vehicles

Killeen, Texas (1)

 

238,000

 

 

 

Defense Aftermarket Components

Oakes, North Dakota (1)

 

 

 

78,000

 

Defense Vehicle Components

Appleton, Wisconsin (1)

 

 

 

80,000

 

Defense Trucks

21

  
Approximate
Square Footage
 
Principal
Products Manufactured
Location (# of facilities) Owned Leased 
Access Equipment      
McConnellsburg, Pennsylvania (4) 560,000
 37,000
 Boom Lifts; Telehandlers; Carriers; Wreckers
Orrville, Ohio (1) 333,000
  
 Telehandler and Boom Lift Subassemblies; Telehandlers; Vertical Mast Lifts
Shippensburg, Pennsylvania (1) 320,000
  
 Boom Lifts; Scissor Lifts; Trailer Boom Lifts; Carriers; Wreckers
Bedford, Pennsylvania (2) 216,000
  
 Boom Lifts; After-Sales Service and Support
Greencastle, Pennsylvania (1) 110,000
  
 Fabrications
Riverside, California (1)  
 55,000
 Trailers; After-Sales Service and Support
Medias, Romania (1)   307,000
 Boom Lifts; Heavy Steel Fabrications; Vertical Mast Lifts
Tianjin, China (1) 193,000
   Boom Lifts; Scissor Lifts
Maasmechelen, Belgium (1)  
 64,000
 Scissor Lifts; Telehandlers; After-Sales Service and Support
Tonneins, France (1)   62,000
 Vertical Mast Lifts
Port Macquarie, Australia (1) 25,000
   Light Towers; After-Sales Service and Support
       
Defense      
Oshkosh, Wisconsin (9) 1,100,000
 119,000
 Defense Trucks; Front-Discharge Mixers; Snow Removal Vehicles
Appleton, Wisconsin (2)  
 196,000
 Defense Vehicle Components
       
Fire & Emergency      
Appleton, Wisconsin (3) 557,000
 16,000
 Fire Apparatus; ARFF Vehicles; Vehicle Refurbishment
Bradenton, Florida (1) 300,000
   Fire Apparatus; Simulators
Kewaunee, Wisconsin (1) 216,000
   Aerial Devices; Heavy Steel Fabrications
Clearwater, Florida (1)   96,000
 Broadcast Equipment; Command Vehicles
       
Commercial      
Dodge Center, Minnesota (1) 711,000
   Rear-Discharge Mixers; Refuse Collection Vehicles
Garner, Iowa (1) 262,000
   Field Service Vehicles; Articulating Cranes
Blair, Nebraska (2) 91,000
 20,000
 Concrete Batch Plants
Riceville, Iowa (1) 108,000
   Components for Rear-Discharge Mixers, Concrete Batch Plants and Refuse Collection Vehicles
Dexter, Minnesota (1)   53,000
 Revolution Composite Concrete Mixer Drums
Audubon, Iowa (1) 15,000
   Components for Concrete Batch Plants
London, Canada (1)   156,000
 Rear-Discharge Mixers

Table of Contents

 

 

Approximate

 

 

 

 

Square Footage

 

Principal

Location (# of facilities)

 

Owned

 

Leased

 

Products Manufactured

 

 

 

 

 

 

 

Access Equipment

 

 

 

 

 

 

McConnellsburg, Pennsylvania (3)

 

560,000

 

27,000

 

Boom Lifts; Telehandlers; M-ATVs

Shippensburg, Pennsylvania (1)

 

330,000

 

 

 

Boom Lifts; Scissor Lifts; Trailer Boom Lifts; Telehandlers

Bedford, Pennsylvania (1)

 

133,000

 

 

 

Boom Lifts; After-Sales Service and Support

Riverside, California (1)

 

 

 

55,000

 

Trailers; After-Sales Service and Support

Maasmechelen, Belgium (1)

 

 

 

80,000

 

Boom Lifts; Scissor Lifts; Telehandlers; After-Sales Service and Support

Orrville, Ohio (1)

 

333,000

 

 

 

Telehandler and Boom Lift Subassemblies; Telehandlers; Vertical Mast Lifts

Tonneins, France (1)

 

38,000

 

 

 

Vertical Mast Lifts

Fauillett, France (2)

 

 

 

91,000

 

Vertical Mast Lifts; After-Sales Service and Support

Port Macquarie, Australia (1)

 

102,000

 

 

 

Light Towers; After-Sales Service and Support

Medias, Romania (1)

 

 

 

126,000

 

Heavy Steel Fabrications

 

 

 

 

 

 

 

Fire & Emergency

 

 

 

 

 

 

Appleton, Wisconsin (3)

 

557,000

 

16,000

 

Fire Apparatus; ARFF Vehicles

Bradenton, Florida (1)

 

300,000

 

 

 

Fire Apparatus

Kewaunee, Wisconsin (1)

 

292,000

 

 

 

Aerial Devices and Heavy Steel Fabrication

Greencastle, Pennsylvania (3)

 

136,000

 

142,000

 

Carriers and Wreckers

Goshen, Indiana (5)

 

87,000

 

 

 

Ambulances

White Pigeon, Michigan (1)

 

64,000

 

 

 

Ambulances

Calumet City, Illinois (1)

 

87,000

 

 

 

Mobile Medical Trailers

Harvey, Illinois (1)

 

78,000

 

 

 

Mobile Medical Trailers

Oud-Beijerland, Holland (1)

 

 

 

98,000

 

Mobile Medical Trailers

Clearwater, Florida (1)

 

 

 

96,000

 

Broadcast Equipment

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

Dodge Center, Minnesota (1)

 

711,000

 

 

 

Rear-Discharge Mixers; Refuse Collection Vehicles

Dexter, Minnesota (1)

 

 

 

53,000

 

Revolution Composite Concrete Mixer Drums

Riceville, Iowa (1)

 

108,000

 

 

 

Components for Rear-Discharge Mixers, Concrete Batch Plants and Refuse Collection Vehicles

McIntire, Iowa (1)

 

28,000

 

 

 

Components for Load Handling Systems

Blair, Nebraska (2)

 

91,000

 

20,000

 

Concrete Batch Plants

Audubon, Iowa (1)

 

15,000

 

 

 

Components for Concrete Batch Plants

London, Canada (1)

 

 

 

110,000

 

Rear-Discharge Mixers

Garner, Iowa (1)

 

262,000

 

 

 

Field Service Vehicles and Articulating Cranes

The Company’s manufacturing facilities generally operate five days per week on one or two shifts, except for seasonal shutdowns for one to three week periods. The Company implemented additional periodic shutdowns in multiple businesses in fiscal 2009 in response to lower demand resulting from the global recession.  The Company expects periodic shutdowns to continue in fiscal 2010.  The Company believes its manufacturing capacity could be significantly increased with limited capital spending by workingoperating an additional shift at each facility.


25
Table of Contents


The Company also performs contract maintenance services out of multiple warehousing and service facilities owned and/or operated by the U.S. government and third parties, including locations in the U.S., Japan, Kuwait, Iraq, Afghanistan and multiple other countries in Europe and the Middle East.


In addition to sales and service activities at the Company’s manufacturing facilities, the Company maintains 2023 sales and service centers in the U.S. These facilities are used primarily for sales and service of concrete mixers and refuse collection vehicles.

22


Table of Contents

JLG The access equipment segment also leases executive offices in Hagerstown, Maryland and a number of small distribution, engineering, administration or service facilities throughout the world.

ITEM 3.

LEGAL PROCEEDINGS


ITEM 3.    LEGAL PROCEEDINGS

The Company is subject to environmental matters and legal proceedings and claims, including patent, antitrust, shareholder, 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, the Company believes that the ultimate resolution of all such matters and claims will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

Securities Class Action - On September 19, 2008, a purported shareholder of the Company filed a complaint seeking certification of a class action lawsuit in the United States District Court for the Eastern District of Wisconsin docketed as Iron Workers Local No. 25 Pension Fund on behalf of itself and all others similarly situated v. Oshkosh Corporation and Robert G. Bohn.  The lawsuit alleges, among other things, that the Company violated the Securities Exchange Act of 1934 by making materially inadequate disclosures and material omissions leading to the Company’s issuance of revised earnings guidance and announcement of an impairment charge on June 26, 2008.  Since the initial lawsuit, other suits containing substantially similar allegations were filed.  These lawsuits have been consolidated and an amended complaint has been filed.  The amended complaint substantially expands the class period in which securities law violations are alleged to have occurred and names Charles L. Szews, David M. Sagehorn and the Company’s independent auditor as additional defendants.  On July 24, 2009, the defendants filed their motions to dismiss the lawsuit, and the motions have been fully briefed.  The motions are currently pending before the court.  The Company believes the lawsuit to be entirely without merit and plans to continue to vigorously defend against the lawsuit.


Environmental Mattersmatters. - 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 cost.  The Company has been named a PRP with regard to three multiple-party sites.  Based on current estimates, the Company believes its liability at these sites will not be material and any responsibility of the Company is adequately covered through established reserves.

The Company has been addressing a regional trichloroethylene (“TCE”) groundwater plume on the south side of Oshkosh, Wisconsin.  The Company believes there may be multiple sources of TCE in the area.  TCE was detected at the Company’s North Plant facility with testing showing the highest concentrations in a monitoring well located on the upgradient property line.  In July 2009, upon completion of additional testing with favorable results at the Company’s North Plant facility, the State of Wisconsin Department of Natural Resources (“WDNR”) agreed to close its investigation of the North Plant facility and not to require any remediation at the North Plant facility at this time provided that the Company and any subsequent owner of the North Plant facility comply with certain conditions.  The WDNR may reopen its investigation of the matter if additional evidence of contamination at the North Plant facility is discovered.  Also, as part of the regional TCE groundwater investigation, the Company conducted a groundwater investigation of a former landfill located on Company property.  The landfill, acquired by the Company in 1972, is approximately 2.0 acres in size and is believed to have been used for the disposal of household waste.  Based on the investigation, the Company believes, and the WDNR has concurred, that the landfill is not one of the sources of the TCE contamination.  As such, in March 2009, the WDNR agreed to close its investigation of the landfill as a possible source of the TCE and not to require any remediation at the landfill at this time, provided that the Company and any subsequent owner of the landfill comply with certain conditions.  The landfill will remain on the State of Wisconsin’s registry of former landfills.  The WDNR may reopen its investigation of the matter if additional evidence of contamination at the landfill is discovered.  Based upon current knowledge, the Company believes its liability associated with the TCE issue will not be material and is adequately covered through reserves established by the Company.  However, this may change as investigations by unrelated property owners and the government proceed.

23



Table of Contents

The Company had reserves of $2.1$2.0 million for environmental matters at September 30, 20092012 for losses that were probable and estimable. 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 to be 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 materiallymaterial adverse effect on itsthe Company’s financial position, results of operations or liquidity.

cash flows.


Personal Injury Actionsinjury actions and Other — other.At September 30, 2009,2012, the Company had product and general liability reserves of $46.8 million.$45.6 million. Although the final results of all such matters and claims cannot be predicted with certainty, the Company believes that the ultimate resolution of all such matters and claims, after taking into account the liabilities accrued with respect to all such matters and claims, will not have a material adverse effect on the Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.

Since all of these matters are


On January 8, 2010, Control Solutions LLC (“Control Solutions”) brought suit against the Company in the preliminary stages,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 Company’s contract to supply the DoD with M-ATVs. Control Solutions asserted damages in the amount of $190.3 million. On October 3, 2011, following written and oral discovery, the Company is unable to predictmoved for summary judgment. On that same date, Control Solutions filed a cross-motion for summary judgment. On July 27, 2012, the scope or outcome or quantify their eventual impact, if any, onCourt granted the Company. At this time, the Company is also unable to estimate associated expenses or possible losses. The Company maintains insurance that may limit its financial exposureCompany's motion for defense costs and liability for an unfavorable outcome, should it not prevail, for claims covered by the insurance coverage.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a votesummary judgment.


ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

26
Table of security holders during the three months ended September 30, 2009.

Contents




EXECUTIVE OFFICERS OF THE REGISTRANT


The following table sets forth certain information as of November 18, 200919, 2012 concerning the Company’s executive officers. All of the Company’s officers serve terms of one year and until their successors are elected and qualified.


Name

Age

Title

Robert G. Bohn

56

Chairman and

NameAgeTitle
Charles L. Szews55Chief Executive Officer

Charles L. Szews

Wilson R. Jones

52

51

President and Chief Operating Officer

Bryan J. Blankfield

48

51

Executive Vice President, General Counsel and Secretary

Thomas D. Fenner

Gregory L. Fredericksen

53

51

Executive Vice President, Global Manufacturing Services

R. Andrew Hove

47

Executive Vice President and President, Defense Business

Chief Procurement Officer

Wilson R. Jones

James W. Johnson

48

47

Executive Vice President and President, Fire & Emergency Segment

Joseph H. Kimmitt

59

62

Executive Vice President, Government Operations and Industry Relations

Craig E. Paylor

Frank R. Nerenhausen

53

48

Executive Vice President and President, JLG Industries, Inc.

Access Equipment Segment

Michael K. Rohrkaste

51

54

Executive Vice President, Chief Administration Officer-Elect

and Human Resources Officer

David M. Sagehorn

46

49

Executive Vice President and Chief Financial Officer

Donald H. Verhoff

Gary W. Schmiedel

63

51

Executive Vice President, Technology

Michael J. Wuest

John M. Urias

50

59

Executive Vice President and President, Defense Segment

Todd S. Fierro48Senior Vice President and President, Commercial Segment

Matthew J. Zolnowski

R. Scott Grennier

56

48

ExecutiveSenior Vice President Chief Administration Officer

and Treasurer
Colleen R. Moynihan52Senior Vice President, Quality & Continuous Improvement
Thomas J. Polnaszek55Senior Vice President, Finance and Controller
Mark M. Radue48Senior Vice President, Business Development

Robert G. Bohn.  Mr. Bohn joined the Company in 1992 as Vice President-Operations.  He was appointed President and Chief Operating Officer in 1994.  He was appointed Chief Executive Officer in 1997 and Chairman of the Board in 2000.  Mr. Bohn��s title was changed to Chairman and Chief Executive Officer in 2007.  Mr. Bohn was elected a Director of the Company in 1995.  He is a director of Carlisle Companies Inc. and Menasha Corporation.

_________________________

Charles L. Szews. Mr. Szews joined the Company in 1996 as Vice President and Chief Financial Officer. He served as Executive Vice President and Chief Financial Officer from 1997 until 2007, at which time he was appointed President and Chief Operating Officer. Effective January 1, 2011, Mr. Szews assumed the position of President and Chief Executive Officer. Effective with the promotion of Wilson Jones to President and Chief Operating Officer in August 2012, Mr. Szews no longer holds the title of President, but remains Chief Executive Officer. Mr. Szews was elected a Directordirector of the Company in 2007. He is also a director of Gardner Denver, Inc.

24



TableWilson R. Jones. Mr. Jones joined the Company in 2005 as Vice President and General Manager of Contentsthe Airport Products business and was appointed to his present position of President and Chief Operating Officer in August 2012. He previously served as President, Pierce from 2007 to 2008, Executive Vice President and President, Fire & Emergency Segment from 2008 to 2010 and Executive Vice President and President, Access Equipment Segment from 2010 to 2012.


Bryan J. BlankfieldBlankfield.. Mr. Blankfield joined the Company in 2002 as Vice President, General Counsel and Secretary and was appointed to his present position of Executive Vice President, General Counsel and Secretary in 2003.


Thomas D. FennerGregory L. Fredericksen.. Mr. FennerFredericksen joined the Company in 19822008 as a scheduler and has served in various assignments, including Plant Manager, Vice President — Manufacturing of McNeilus, Vice President — Manufacturing Operations, Vice President and General Manager of Operations of Pierce andSenior Vice President, Chief Procurement Officer and was appointed to his present position of Executive Vice President, Chief Procurement Officer in 2010. He previously served as Executive Director, Global Purchasing and Supply Chain - Current/Future Business, Business Process, Structures & Closures at General Manager, Airport Business.Motors Corporation from 2006 to 2008.

James W. Johnson. Mr. Johnson joined the Company in 2007 as Director of Dealer Development for Pierce. He was appointed to Senior Vice President of Sales and Marketing for Pierce in 2009 and was appointed to his current position of Executive Vice President and President, Fire & Emergency GroupSegment in 2007 and was appointed to his current position in 2008.

R. Andrew Hove.  Mr. Hove joined the Company’s defense business in 2009 as Executive Vice President and President, Defense.2010. He previously served as Vice President — Corporate Internal AuditDealer Development Manager at BAE Systems from 2008 to 2009.  He served as Vice PresidentForest River, Inc. (a manufacturer primarily of Combat Systems Programs at BAE Systemsrecreational vehicles) from 2006 to 2008, where he was responsible for a portfolio2007.



27
Table of domestic and international ground combat vehicle programs.  Prior to that, he served as Director of Bradley Programs at BAE Systems from 2002 to 2006.  He also serves on the National Defense Industrial Association national board of directors and is a member of its Ethics Committee.

Wilson R. Jones.  Mr. Jones joined the Company in 2005 as Vice President and General Manager of the Airport Products business.  He was appointed President, Pierce in 2007 and was appointed to his current position in 2008.  Prior to joining the Company, Mr. Jones was the Vice President of Sales and Marketing for Akron Brass Company from 2002 to 2005.

Contents


Joseph H. Kimmitt. Mr. Kimmitt joined the Company in 2001 as Vice President, Government Operations and was appointed to his current position of Executive Vice President, Government Operations and Industry Relations in 2006. He previously served as a Professional Staff Member of the U.S. House and Senate Appropriations Committees from 1984 to 2001.  He was appointed Deputy Staff Director of the Senate Appropriations Committee in 1997.


Craig E. Paylor.Frank R. Nerenhausen. Mr. PaylorNerenhausen joined the Company in 2006 with1986 and has served in various assignments, including Vice President Concrete Placement from 2005 to 2008, Vice President of Concrete & Refuse Sales & Marketing from 2008 to 2010 for McNeilus and Executive Vice President and President, Commercial Segment from 2010 to 2012. He was appointed to his current position in 2012.

Michael K. Rohrkaste. Mr. Rohrkaste joined the acquisition of JLGCompany in 2003 as Vice President, Human Resources. He was appointed Executive Vice President, Chief Administration Officer in 2009 and was appointed to his current position in 2007.  Mr. Paylor joined JLG in 1983 as a sales representative.  Mr. Paylor became an officer of JLG in 1996 and was appointed Senior Vice President of Sales and Market Development in 1999.  In 2002, he was appointed JLG’s Senior Vice President, Sales, Marketing and Customer Support.  In 2006, he was appointed JLG’s Senior Vice President, Marketing.  In 2007, he was appointed as a Senior Vice President of the Company and President of JLG.

Michael K. Rohrkaste.  Mr. Rohrkaste joined the Company as Vice President—Human Resources in 2003.  Effective December 31, 2009, Mr. Rohrkaste will be promoted to the position of Executive Vice President, Chief Administration Officer.and Human Resources Officer in January 2010.


David M. SagehornSagehorn.. Mr. Sagehorn joined the Company in 2000 as Senior Manager —- Mergers & Acquisitions and has served in various assignments, including Director—Director - Business Development, Vice President—President - Defense Finance, Vice President-McNeilusPresident - McNeilus Finance and Vice President-BusinessPresident - Business Development. In 2005, he was appointed Vice President and Treasurer, and he was appointed to his presentcurrent position of Executive Vice President and Chief Financial Officer in 2007.


Donald H. Verhoff.Gary W. Schmiedel. Mr. VerhoffSchmiedel joined the Company in 19731983 and has served in various engineering assignments, including Director Test and Development/NewVice President - Advanced Product Development, Director CorporateEngineering from 2005 to 2009, Vice President - Defense Engineering and Technology from 2009 to 2010 and Senior Vice President of Technology.  Mr. Verhoff- Defense Engineering and Technology from 2010 to 2011. He was appointed to his present positionExecutive Vice President, Technology in 1998.February 2011.


Michael J. WuestJohn M. Urias. Mr. WuestUrias joined the Company in 1981October 2011 as an analyst and has served in various assignments, including Senior Buyer, Director of Purchasing, Vice President — Manufacturing Operations,Executive Vice President and General Manager of Operations of Pierce and ExecutivePresident, Defense Segment. He previously served as Vice President Chief Procurement Officerof Programs in 2011; Vice President, Programs and UAE Surface Launched AMRAAM Capture Lead, National and Theater Strategic Programs from 2010 to 2011, and Vice President, Force Application Programs for Integrated Defense Systems from 2009 to 2010, in each case, at Raytheon Company. From 2006 to 2007, he served as Vice President and Sector Manager, Defense Systems Sector for Quantum Research International, Inc. Mr. Urias retired from the U.S. Army with the rank of Major General Manager, Airport Business. in 2006.

Todd S. Fierro. Mr. Wuest was appointed to his present position in 2004.

Matthew J. Zolnowski.  Mr. ZolnowskiFierro joined the Company in April 2011 as Vice President—Human Resources in 1992, was appointedCommercial Segment Vice President Administration in 1994of Operations and was appointed to his present position of Senior Vice President and President, Commercial Segment in 1999.August 2012. He previously served as Vice President, Manufacturing Operations at Eclipse Aviation Corporation from 2007 to 2009. He held the position of Director of Manufacturing at Bloom Energy from 2009 to 2011.


R. Scott Grennier. Mr. Zolnowski intends to retire fromGrennier joined the Company in 2008 as Vice President and in connection with his retirement,Treasurer and was appointed to resign from his present position effective December 31, 2009.of Senior Vice President and Treasurer in 2012. From 1995 to 2008, he served in various treasury assignments at Johnson Controls, Inc., including Treasurer, the Americas.

25


Colleen R. Moynihan. Ms. Moynihan joined the Company in July 2011 as Senior Vice President, Quality & Continuous Improvement. She previously served as Director of Global Quality & Manufacturing Engineering at Caterpillar Inc. from 2007 to 2011. Prior to her employment at Caterpillar Inc., Ms. Moynihan served as Director of Global Powertrain Quality at Ford Motor Company from 2003 to 2007.

Thomas J. Polnaszek. Mr. Polnaszek joined the Company in 1998 as Controller. He was promoted to Vice President and Controller in 1998 and appointed to his current position of Senior Vice President, Finance and Controller in 2007.

Mark M. Radue. Mr. Radue joined the Company in 2005 as Senior Director of Financial Analysis and Controls. He was promoted to Vice President of Business Development in 2005 and was appointed to his current position of Senior Vice President, Business Development in 2011.



28
Table of Contents


PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


The information relating to dividends included in Notes 15 and 22Note 25 of the Notes to Consolidated Financial Statements contained herein under Item 8 and the information relating to dividends per share contained herein under Item 6 are hereby incorporated by reference in answer to this item.

In July 1995,


Common Stock Repurchases

The following table sets forth information with respect to purchases of Common Stock made by the Company’sCompany or on the Company's behalf during the fourth quarter of fiscal 2012:
Period 



Total Number of
Shares
Purchased
 




Average Price
Paid per Share
 
Total Number of
Shares
Purchased as
Part of Publicly
Announced Plans or
Programs (1)
 

Maximum Number of
Shares that May
Yet Be Purchased
Under the Plans or
Programs (1)
July 1 - July 31 —
 $—
 —
 7,230,790
August 1 - August 31 515,981
 24.39
 515,981
 6,714,809
September 1 - September 30 30,984
 25.00
 30,984
 6,683,825
Total 546,965
 24.42
 546,965
 6,683,825
 _________________________

(1)In July 1995, the Company's Board of Directors authorized the repurchase of up to 6,000,000 shares of Common Stock. In July 2012, the Company's Board of Directors increased the repurchase authorization by 4,000,000 shares of Common Stock. On November 15, 2012, the Company's Board of Directors further increased the repurchase authorization from the remaining 6,683,825 shares of Common Stock to 11,000,000 shares of Common Stock. As of September 30, 2012, the Company had repurchased 3,316,175 shares of Common Stock under this authorization. The Company can use this authorization at any time as there is no expiration date associated with the authorization.

The Company's credit agreement limits the amount of dividends and other distributions, including repurchases of stock, the Company 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 Company did not repurchase any shares under this authorization during fiscal 2009.  As of September 30, 2009,Company's indenture also contains restrictive covenants that may limit the Company had repurchased 2,769,210 shares under this program at a cost of $6.6 million, leaving the Company with authorityCompany's ability to repurchase 3,230,790 shares of its Common Stock under this program.  There is no expiration date associated with the Board authorization.

or make dividends and other types of distributions to shareholders.


Dividends and Common Stock Price


The Company suspended the payment ofdid not pay dividends on its Common Stock effective April 2009.during the past three fiscal years. The payment of future dividends is at the discretion of the Company’s Board of Directors and will depend upon, among other things, future earnings and cash flows, capital requirements, the Company’s general financial condition, general business conditions or other factors. In addition, the Company’sCompany's credit agreement limits the amount of dividends it may pay. Under the most restrictive limitation, when the Company’s Leverage Ratio (as defined in the credit agreement) asand other distributions, including repurchases of the end of a fiscal quarter is greater than 4.0 to 1.0,stock, the Company may not makepay 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 payment if, after giving effect to such dividend payment,or distribution; plus (ii) 100% of the aggregate amountnet 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 all such dividend paymentsits Common Stock. The Company's indenture also contains restrictive covenants that may limit the Company's ability to repurchase shares of its Common Stock or make dividends and other types of distributions made in such fiscal quarter would exceed the sum of $0.01 per outstanding share of the Company’s Common Stock plus $250,000 or the aggregate amount of all such dividend payments and other distributions made in the applicable fiscal year would exceed $3.85 million.to shareholders. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for further discussion about the Company’s financial covenants under its credit agreement.

agreement and indenture.



29
Table of Contents

The Company’s Common Stock is listed on the New York Stock Exchange (“NYSE”) under the symbol OSK. As of November 16, 2009,9, 2012, there were 1,4641,435 holders of record of theOshkosh Common Stock. The following table sets forth prices reflecting actual sales of the Common Stock as reported on the NYSE and dividends paid for the periods indicated.

 

 

Fiscal 2009

 

Fiscal 2008

 

Quarter Ended

 

High

 

Low

 

Dividends

 

High

 

Low

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30

 

$

34.99

 

$

17.80

 

$

—

 

$

20.95

 

$

9.05

 

$

0.10

 

June 30

 

15.76

 

6.35

 

—

 

42.59

 

19.75

 

0.10

 

March 31

 

12.23

 

4.74

 

0.10

 

48.21

 

35.00

 

0.10

 

December 31

 

13.09

 

3.85

 

0.10

 

63.55

 

44.85

 

0.10

 


 Fiscal 2012 Fiscal 2011
Quarter EndedHigh Low High Low
September 30$29.79
 $19.02
 $33.78
 $15.65
June 3024.04
 18.49
 36.73
 25.25
March 3126.34
 21.74
 40.11
 32.37
December 3122.92
 14.07
 35.98
 27.35

Item 12 of this Annual Report on Form 10-K contains certain information relating to the Company’s equity compensation plans.


The following information in this Item 5 is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 (“Exchange Act”) or to the liabilities of Section 18 of the Exchange Act, and will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent the Company specifically incorporates it by reference into such a filing: thefiling. The SEC requires the Company to include a line graph presentation comparing cumulative five year Common Stock returns with a broad-based stock index and either a nationally recognized industry index or an index of peer companies selected by the Company. The Company has chosen to use the Standard & Poor’s MidCap 400 market index as the broad-based index and the companies currently in the Standard Industry Classification Code 371 Index (motor vehicles and equipment) (the “SIC Code 371 Index”) as a more specific comparison.

26



30
Table of Contents


The comparisons assume that $100 was invested on September 30, 20042007 in each of: ourthe Company’s Common Stock, the SIC Code 371 Index and the Standard & Poor’s MidCap 400 market index.index and the SIC Code 371 Index. The total return assumes reinvestment of dividends and is adjusted for stock splits. The fiscal 20092012 return listed in the charts below is based on closing prices per share on September 30, 2009.2012. On that date, the closing price for the Company’s Common Stock was $30.93.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*$27.43.

Among Oshkosh Corporation, The S&P Midcap 400 Index

And SIC Code 371 Index


 _________________________

*$100 $100 invested on September 30, 20042007 in stock or index, including reinvestment of dividends.

Fiscal year ended September 30,

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oshkosh Corporation

 

$

100.00

 

$

152.19

 

$

179.27

 

$

221.77

 

$

47.70

 

$

115.20

 

S&P Midcap 400 market index

 

$

100.00

 

$

122.16

 

$

130.17

 

$

154.59

 

$

128.81

 

$

124.80

 

SIC Code 371 Index

 

$

100.00

 

$

88.35

 

$

91.13

 

$

119.27

 

$

67.25

 

$

63.71

 

27

Fiscal Year Ended September 30,2007 2008 2009 2010 2011 2012
Oshkosh Corporation$100.00
 $21.51
 $51.95
 $46.19
 $26.44
 $46.07
S&P Midcap 400 market index100.00
 83.32
 80.73
 95.08
 93.87
 120.65
SIC Code 371 Index100.00
 66.26
 66.41
 95.20
 82.73
 97.74


31
Table of Contents

ITEM 6.

SELECTED FINANCIAL DATA

Fiscal Year

(In millions, except per share amounts)

 

2009 (3)

 

2008

 

2007 (4)

 

2006

 

2005 (5) (6)

 

Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

5,295.2

 

$

6,936.4

 

$

6,139.3

 

$

3,233.4

 

$

2,779.4

 

Gross income

 

706.0

 

1,178.3

 

1,086.5

 

577.9

 

474.6

 

Intangible asset impairment charges (1)

 

1,199.8

 

1.0

 

—

 

—

 

—

 

Depreciation

 

75.7

 

73.4

 

54.7

 

25.1

 

19.8

 

Amortization of purchased intangible assets, deferred financing costs and stock-based compensation

 

86.7

 

91.0

 

83.5

 

19.4

 

10.5

 

Operating (loss) income

 

(992.0

)

615.0

 

609.1

 

322.5

 

275.8

 

(Loss) income from continuing operations

 

(1,172.3

)

286.9

 

285.3

 

204.4

 

168.6

 

Per share assuming dilution

 

(15.33

)

3.83

 

3.81

 

2.75

 

2.29

 

(Loss) income from discontinued operations

 

73.5

 

(207.6

)

(17.2

)

1.1

 

(8.4

)

Per share assuming dilution

 

0.96

 

(2.77

)

(0.23

)

0.01

 

(0.11

)

Net (loss) income

 

(1,098.8

)

79.3

 

268.1

 

205.5

 

160.2

 

Per share assuming dilution

 

(14.37

)

1.06

 

3.58

 

2.76

 

2.18

 

Dividends per share:

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock (2)

 

—

 

—

 

—

 

—

 

0.0750

 

Common Stock

 

0.2000

 

0.4000

 

0.4000

 

0.3675

 

0.2213

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

Total assets (1)

 

4,768.0

 

6,081.5

 

6,399.8

 

2,110.9

 

1,718.3

 

Net working capital

 

484.6

 

689.2

 

646.9

 

121.4

 

178.8

 

Long-term debt (including current maturities)

 

2,024.3

 

2,757.7

 

3,022.0

 

2.9

 

3.1

 

Shareholders’ equity

 

514.1

 

1,388.6

 

1,393.6

 

1,061.9

 

818.7

 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

Expenditures for property, plant and equipment

 

46.2

 

75.8

 

83.0

 

56.0

 

43.2

 

Backlog

 

5,615.4

 

2,353.8

 

3,177.8

 

1,914.3

 

1,944.1

 

Book value per share

 

5.75

 

18.66

 

18.78

 

14.40

 

11.16

 


ITEM 6.    SELECTED FINANCIAL DATA

Income Statement data below has been revised to exclude from continuing operations the results of the Company's mobile medical trailer business, which was reclassified to discontinued operations in fiscal 2012 for all periods presented. See Note 3 of the Notes to Consolidated Financial Statements.
Fiscal Year          
(In millions, except per share amounts) 2012 
2011 (1)
 
2010 (1)
 2009 2008
Income Statement Data:  
  
  
  
  
Net sales $8,180.9
 $7,567.5
 $9,820.6
 $5,222.5
 $6,823.8
Gross income 991.0
 1,078.3
 1,970.0
 697.0
 1,166.2
Intangible asset impairment charges —
 2.0
 2.3
 1,132.1
 1.0
Depreciation 65.6
 78.2
 80.5
 74.4
 72.0
Amortization of purchased intangibles, deferred financing costs and stock-based compensation (2)
 83.2
 79.9
 102.3
 84.3
 87.6
Operating income (loss) 366.0
 508.0
 1,424.8
 (918.9) 623.2
Income (loss) attributable to Oshkosh Corporation common shareholders:  
  
  
  
  
From continuing operations 229.9
 278.6
 815.8
 (1,133.7) 292.3
From discontinued operations (3)
 0.3
 (5.6) (26.0) 34.9
 (213.0)
Net income (loss) 230.2
 273.0
 789.8
 (1,098.8) 79.3
Income (loss) attributable to Oshkosh Corporation common shareholders per share assuming dilution:  
  
  
  
  
From continuing operations $2.51
 $3.05
 $8.97
 $(14.82) $3.91
From discontinued operations —
 (0.06) (0.28) 0.45
 (2.85)
Net income (loss) 2.51
 2.99
 8.69
 (14.37) 1.06
Dividends per share $—
 $—
 $—
 $0.20
 $0.40
           
Balance Sheet Data:  
  
  
  
  
Total assets $4,947.8
 $4,826.9
 $4,708.6
 $4,768.0
 $6,081.5
Net working capital 990.0
 762.8
 403.9
 484.6
 689.2
Long-term debt (including
current maturities) (4)
 955.0
 1,060.1
 1,152.1
 2,024.3
 2,757.7
Oshkosh Corporation shareholders’ equity 1,853.5
 1,596.5
 1,326.6
 514.1
 1,388.6
           
Other Financial Data:  
  
  
  
  
Expenditures for property, plant and equipment $55.9
 $82.3
 $83.2
 $46.2
 $75.8
Backlog 4,046.2
 6,478.4
 5,401.4
 5,615.4
 2,353.8
Book value per share $20.24
 $17.48
 $14.63
 $5.75
 $18.66
 _________________________

(1)

(1)
In the secondfourth quarter of fiscal 2009, the Company recorded non-cash charges totaling $1.20began production on a sole source contract awarded by the DoD for M-ATVs. During fiscal 2011 and 2010, the Company delivered 645 and 7,539 M-ATV units, respectively, and related aftermarket parts and services under this contract with a combined sales value of $1.25 billion pre-tax ($15.38 per share, net of taxes) to record impairment of goodwill and other long-lived assets.

$4.49 billion, respectively.

(2)

Includes amortization of deferred financing costs of $7.0 million in fiscal 2012, $5.1 million in fiscal 2011, $28.6 million in fiscal 2010, $13.4 million in fiscal 2009 and $7.2 million in fiscal 2008.

32
Table of Contents

(2)

(3)

In May 2005, a sufficient numberfiscal 2012, the Company completed the sale of shareholdersits European mobile medical business, Oshkosh Specialty Vehicles (UK), Limited and AK Specialty Vehicles and its wholly-owned subsidiary (together, "SMIT") and discontinued production of unlisted Class A Common Stock converted their shares to New York Stock Exchange — listed Common Stock, on a share-for-share basis, which resultedU.S mobile medical units. In fiscal 2010, the Company completed the sale of its 75% interest in BAI Brescia Antincendi International S.r.l. and its wholly-owned subsidiary (“BAI’), the remaining Class A shares automatically converting into shares of Common Stock onCompany’s European fire apparatus and equipment business. In fiscal 2009, the same basis. As a result of this conversion to a single class of stock, shares of Common Stock that previously had limited voting rights now carry full voting rights.

Company sold its European refuse collection vehicle business, Geesink Group B.V., Norba A.B. and Geesink Norba Limited (together, “Geesink”).

(4)

(3)

On August 12, 2009, the Company completed a public equity offering of 14,950,000 shares of Common Stock, which included the exercise of the underwriters’ over-allotment option for 1,950,000 shares of Common Stock, at a price of $25.00 per share. The Company paid $15.1 million in underwriting discounts and commissions and approximately $0.6 million of offering expenses. The net proceeds of the equity offering of approximately $358.1 million, along with cash flow from operations, allowed the Company to repay $731.6 million of debt in fiscal 2009, which substantially strengthened the Company’s capital structure.

(4)

On December 6, 2006, the Company acquired all of the issued and outstanding capital stock of JLG for $3.1 billion in cash. Amounts include acquisition costs and are net of cash acquired. Fiscal 2007 results included sales of $2.5 billion and operating income of $268.4 million related to JLG following its acquisition.

2009.

28



33
Table of Contents


(5)

In fiscal 2006, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised 2004), “Share-Based Payment,” requiring the Company to recognize expense related to the fair value of the Company’s stock-based compensation awards. Had SFAS No. 123(R) been in effect for the earliest period presented, results would have been as follows for fiscal 2005: operating income - $272.3 million; income from continuing operations - $165.1 million; earnings from continuing operations per share - $2.24; net income - $156.7 million; earnings per share - $2.13.

(6)

In fiscal 2005, the Company recorded cumulative life-to-date adjustments to increase the overall margin percentage on the MTVR base contract by 2.5 percentage points as a result of contract modifications and favorable cost performance compared to previous estimates. This change in estimate, recorded as a cumulative life-to-date adjustment, increased operating income, income from continuing operations, net income, earnings per share from continuing operations and earnings per share by $24.7 million, $15.1 million, $15.1 million, $0.21 and $0.21 in fiscal 2005, including $23.1 million, $14.2 million, $14.2 million, $0.20 and $0.20 in fiscal 2005 relating to prior year revenues.

29


Table of Contents

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General


The Company is a leading designer, manufacturer and marketer of a wide range of specialty vehicles and vehicle bodies, including access equipment, defense trucks, access equipment, fire & emergency vehicles, and concrete mixers and refuse collection vehicles.  The Company manufactures defense trucks under the “Oshkosh” brand name and is a leading manufacturer of severe-duty heavy- and medium-payload tactical trucks for the DoD. The Company is a leading global manufacturer of aerial work platforms under the “JLG” brand name. The Company is among the worldwide leaders in the manufacturing of telehandlers under the “JLG,” “SkyTrak” and “Lull” brand names. Under the “Pierce” brand name, the Company is among the leading domestic manufacturers of fire apparatus assembled on both custom and commercial chassis.  Under the “Jerr-Dan” brand name, the Company is a leading domestic manufacturer and marketer of towing and recovery equipment. The Company manufactures ARFF and airport snow removal vehiclesdefense trucks under the “Oshkosh” brand name and ambulances underis a leading manufacturer of severe-duty, tactical wheeled vehicles for the “Medtec”U.S. Department of Defense (“DoD”). Under the “Pierce” brand name.  Thename, the Company manufactures mobile medical trailers underis among the “Oshkosh Specialty Vehicles”leading global manufacturers of fire apparatus assembled on both custom and “SMIT” brand names.commercial chassis. Under the “Frontline” brand name, the Company is a leading domestic manufacturer and marketer of broadcast vehicles. The Company manufactures ARFF and airport snow removal vehicles under the “Oshkosh” brand name and ambulances under the “MEDTEC” brand name. Under the “McNeilus,” “Oshkosh,” “London” and “CON-E-CO” brand names, the Company manufactures rear- and front-discharge concrete mixers and portable and stationary concrete batch plants. Under the “McNeilus” brand name, the Company manufactures a wide range of automated, rear, front, side and top loading refuse collection vehicles. Under the “IMT” brand name, the Company is a leading domestic manufacturer of field service vehicles and truck-mounted cranes.


Major products manufactured and marketed by each of the Company’s business segments are as follows:

Defense — heavy- and medium-payload tactical trucks and supply parts and services sold to the U.S. military and to other militaries around the world.


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.heights, as well as wreckers and carriers. Access equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers, and the U.S. military.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, ARFF vehicles, snow removal vehicles, simulators, ambulances wreckers, carriers and other emergency vehicles primarily sold to fire departments, airports and other governmental units, and towing companies in the U.S. and abroad, mobile medical trailers sold to hospitals and third-party medical service providers in the U.S. and Europe and broadcast vehicles sold to broadcasters and TV stations in North Americathe U.S. 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 North Americathe 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.


All estimates referred to in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refer to the Company’s estimates as of November 18, 2009.

19, 2012Recent Acquisitions.


Executive Overview

Consolidated net sales increased $613.4 million, or 8.1%, to $8.18 billion in fiscal 2012 compared to fiscal 2011. Replacement driven demand in the access equipment segment, coupled with a slow economic recovery in the United States, resulted in a significant increase in sales in both the access equipment and Dispositionscommercial segments, which more than offset an expected decrease in defense sales as U.S. defense spending for tactical wheeled vehicles declined and is expected to continue to decline for the next few years. While sales were higher, consolidated operating income in fiscal 2012 decreased $

Since 1996,142.0 million, or 28.0%, from fiscal 2011 to $366.0 million, or 4.5% of sales. The decrease in consolidated operating income was primarily attributable to the defense segment, which experienced a shift from higher margin Family of Heavy Tactical Vehicles (“FHTV”) and MRAP All-Terrain Vehicle (“M-ATV”) parts sales to lower margin Family of Medium Tactical Vehicles (“FMTV”) sales.



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In the defense segment, the Company recently announced that it received an order for 750 M-ATV units from the United Arab Emirates ("UAE"), which is the Company's first large international order for M-ATVs. The Company expects these M-ATVs to be sold in fiscal 2013. This order reinforces the Company's 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 selectively pursued strategic acquisitionsbeen forward deploying business development teams around the world to enhancepursue these opportunities.

In the fire & emergency segment, the Company exited several small, underperforming businesses in fiscal 2012 to allow the Company to focus its resources on improving the performance of its principal product offeringslines in this segment. The exited businesses included the discontinuance of domestic mobile medical trailer production and diversifythe sale of the Company's European mobile medical trailer business, Oshkosh Specialty Vehicles (UK), Limited and AK Specialty Vehicles and its wholly-owned subsidiary (together, "SMIT"). In addition, the Company made a decision in the fourth quarter of fiscal 2012 to exit its Medtec 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, the Company made a decision to exit the business. Upon completion of on-hand Medtec orders, the Company will exit the ambulance business and reclassify Medtec historical operating results to discontinued operations. With the decision made to exit these businesses, the Company was able to focus on improving operational performance of its principal product lines, which drove the fire & emergency segment to operating income of $0.9 million, or 0.4% of sales, in the fourth quarter of fiscal 2012.

In fiscal 2011, the Company completed a comprehensive strategic planning process to, among other things, assess the outlook for each of its markets, consider strategic alternatives and develop strategic initiatives to address the current difficult market forces then facing the Company. Those difficult market forces involved non-defense markets, which were down 40% to more than 90% from peak, an uncertain economic recovery and a likely sharp downturn in U.S. defense spending beginning in 2011. The study culminated in the creation of the Company’s planned roadmap to deliver superior long-term earnings growth and increased shareholder value over the next business cycle and beyond. The Company’s roadmap, named MOVE, entails aggressive cost reduction and prudent organic growth initiatives until a market recovery provides an opportunity for both significant earnings leverage and cash flow at which time the Company's strategic options could expand. By focusing on its MOVE strategy, the Company is targeting earnings per share of $4.00 to $4.50 in fiscal 2015.

The MOVE strategy consists of four key strategic initiatives:
Market recovery and growth — The Company believes that the recovery in certain of its non-defense markets began in fiscal 2012. The Company has focusedplans to capture or improve its acquisitionhistorical share of a market recovery. The Company believes that even a modest market recovery represents a $220 million operating income opportunity in its non-defense businesses between fiscal 2012 and fiscal 2015 at historical margins and assuming no major market share gains.
Optimize cost and capital structure — The Company plans to optimize its cost and capital structure to provide value for customers and shareholders by aggressively attacking its product, process and overhead costs. The Company is targeting 250 basis points of operating income improvement between fiscal 2012 and 2015 through this initiative. The Company achieved an eight basis point improvement in operating income margins in fiscal 2012 from this initiative and expects that the actions implemented in fiscal 2012 will result in 62 basis points of a targeted 75 basis point operating income margin improvement for all of fiscal 2013 from this initiative. The Company has also announced a prudent capital allocation strategy on providingto be implemented over the next several years, which the Company expects to incrementally benefit earnings as well as returns for shareholders. To this effect, the Company repurchased 546,965 shares of Common Stock during the fourth quarter of fiscal 2012 at a full rangecost of $13.3 million. On November 15, 2012, the Company's Board of Directors increased the Company's stock repurchase authorization such that the Company had authority to repurchase 11,000,000 shares of Common Stock after the Board action. The Company is targeting spending $300 million to repurchase shares over the 12 to 18 months following that date and expects to spend at least $75 million to repurchase shares over the three months following that date.
Value innovation — The Company plans to further strengthen its multi-generational product plans, which incorporate its newest technologies, to drive increased demand for the Company's products and increased penetration into new markets globally. The Company is targeting $350 million of incremental annual revenue by fiscal 2015 compared to customersfiscal 2012 as a result of this initiative.
Emerging market expansion — The Company plans to drive expansion in specialty vehicle and vehicle body markets that are growing andinternational targeted geographies where it can develop strong market positions and achieve acquisition synergies.  Acquisitions and dispositions completed duringbelieves that there are significant opportunities for growth. The Company is targeting to derive more than 25% of its revenues from outside the past threeU.S. by fiscal years were as follows:

30

2015.

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In



The Company is in the early stages of implementing many of its MOVE initiatives. The Company expects the investments that it made in its MOVE strategy in fiscal 2007,2012 to drive an improved cost structure, support the Company's drive for continued product innovation leadership and expand the Company's international sales in future years. As a result of the MOVE strategy, in fiscal 2012 the Company acquired JLGwas able to capture a larger portion of the access equipment recovery, turn the FMTV contract to profitability in all four fiscal quarters, exit underperforming businesses and increase international sales by 38% compared to fiscal 2011 to 21.8% of consolidated sales. These actions led to Oshkosh significantly beating Wall Street consensus earnings estimates for $3.1 billion, including transactioneach quarter of fiscal 2012. Over the next few years, the Company believes the effective execution of its MOVE strategy will permit the Company to overcome the impact of lower U.S. defense spending for tactical wheeled vehicles on its defense segment and report strong earnings growth and improved returns for shareholders.

The benefits of the MOVE strategy are evident in the Company's outlook for fiscal 2013, as despite a projected decrease in consolidated sales of 4% to 8% as compared to fiscal 2012, the Company expects operating income margins to improve 100 basis points. The Company's sales estimate assumes stable to slightly higher sales in its non-defense segments, as a result of a slow economic recovery in the United States, coupled with an approximate 15% decline in defense segment sales. The improved operating income margins lead the Company to believe that earnings from continuing operations will be $2.35 to $2.60 per share in fiscal 2013. This estimate does not consider any costs, which may be substantial, associated with the Offer (as defined below) and related threatened proxy contest discussed below. The Company believes its first quarter of fiscal 2013 will be the lowest quarter of the year in terms of sales and earnings per share, driven by seasonality of the Company's non-defense businesses and the assumptionexpectation that the Company will not begin to recognize revenue from M-ATV sales to the UAE until the second fiscal quarter.

On October 17, 2012, Mr. Carl Icahn and related entities (the “Icahn Entities”) commenced an unsolicited tender offer for “any and all” issued and outstanding shares of debt and netthe Company's Common Stock (the “Offer”). On October 26, 2012, the Icahn Entities also submitted to the Company a notice of cash acquired.  JLG isintent to nominate a slate of candidates to replace the leading global manufacturerentire Board of access equipment based on gross revenues.  The results of JLG’s operations are included in the consolidated resultsDirectors of the Company at the Company's 2013 annual meeting of shareholders. The Company's Board of Directors carefully reviewed the Offer, in consultation with the Company's financial and legal advisors, and unanimously determined that the Offer is inadequate, undervalues the Company and is not in the best interests of the Company and its shareholders and recommended that the Company's shareholders reject the Offer and not tender their shares into the Offer. The Company expects to incur significant costs in connection with the Offer and threatened proxy contest.

Results of Operations

Consolidated Net Sales — Three Years Ended September 30, 2012

The following table presents net sales (see definition of net sales contained in Note 2 of the Notes to Consolidated Financial Statements) by business segment (in millions):
 Fiscal Year Ended September 30,
 2012 2011 2010
Net sales 
  
  
Access equipment$2,919.5
 $2,052.1
 $3,011.9
Defense3,950.5
 4,365.2
 7,161.7
Fire & emergency808.4
 783.1
 894.2
Commercial697.0
 564.9
 622.1
Intersegment eliminations(194.5) (197.8) (1,869.3)
Consolidated$8,180.9
 $7,567.5
 $9,820.6


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The following table presents net sales by geographic region based on product shipment destination (in millions):
 Fiscal Year Ended September 30,
 2012 2011 2010
Net sales 
  
  
United States$6,397.0
 $6,275.4
 $8,873.1
Other North America248.3
 179.7
 110.3
Europe, Africa and the Middle East974.9
 695.1
 497.0
Rest of the world560.7
 417.3
 340.2
Consolidated$8,180.9
 $7,567.5
 $9,820.6

Fiscal 2012 Compared to Fiscal 2011

Consolidated net sales increased $613.4 million, or 8.1%, to $8.18 billion in fiscal 2012 compared to fiscal 2011 as replacement driven demand in the access equipment segment, coupled with a slow economic recovery in the United States, resulted in a significant increase in sales in both the access equipment and commercial segments, which more than offset an expected decline in defense sales.

Access equipment segment net sales increased $867.4 million, or 42.3%, to $2.92 billion in fiscal 2012 compared to fiscal 2011. Sales to external customers totaled $2.79 billion in fiscal 2012, a 43.7% increase compared to fiscal 2011. The increase in sales to external customers was principally as a result of higher unit volumes ($671.3 million) and the realization of previously announced price increases ($101.7 million). Sales grew by double-digit percentages compared to the prior year 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 $414.7 million, or 9.5%, to $3.95 billion in fiscal 2012 compared to fiscal 2011. The decrease was primarily due to a 48% decline in FHTV units and lower aftermarket parts sales primarily resulting from December 6, 2006 (the datefewer spares kits for M-ATVs ($596.6 million), offset in part by a 162% increase in sales of acquisition)FMTV trucks and trailers. The Company reached and sustained full rate production under the FMTV contract during the third quarter of fiscal 2012.

Fire & emergency segment net sales increased $25.3 million, or 3.2%, to $808.4 million in fiscal 2012 compared to fiscal 2011. The increase in sales primarily reflected the delivery of Rapid Intervention Vehicles under a contract with the United States Air Force.

Commercial segment net sales increased $132.1 million, or 23.4%, to $697.0 million in fiscal 2012 compared to fiscal 2011. The increase in sales was primarily attributable to a 52% increase in concrete placement vehicle volume compared to very low prior year volume and increased demand for aftermarket parts and services ($26.9 million), offset in part by lower intersegment sales to the defense segment ($39.1 million).


Fiscal 2011 Compared to Fiscal 2010

Consolidated net sales decreased $2.25 billion, or 22.9%, to $7.57 billion in fiscal 2011 compared to fiscal 2010 largely due to the expected decrease in sales under the M-ATV contract, offset in part by increased demand for access equipment and sales under the start-up of the FMTV program. In fiscal 2009,2010, the Company's defense sales increased sharply as the DoD rushed M-ATVs and related spares kits into Afghanistan to protect U.S. troops from improvised explosive devices.

Access equipment segment net sales decreased $959.8 million, or 31.9%, to $2.05 billion in fiscal 2011 compared to fiscal 2010. Sales in fiscal 2011 included $0.11 billion in intersegment M-ATV related sales compared to $1.73 billion in fiscal 2010. Sales to external customers totaled $1.94 billion in fiscal 2011, a 53.5% increase compared to fiscal 2010. The increase in sales to external customers compared with the prior year period was primarily a result of higher replacement of aged equipment in North America (up 88%) and parts of Europe (up 44%).


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Defense segment net sales decreased $2.80 billion, or 39.0%, to $4.37 billion in fiscal 2011 compared to fiscal 2010. The decrease in sales was primarily due to the completion of initial M-ATV production requirements. The start-up of FMTV production added $548.8 million in sales during fiscal 2011, offsetting some of the M-ATV sales decrease. Combined vehicle and parts and services sales related to the M-ATV program totaled $1.25 billion in fiscal 2011, a decrease of $3.24 billion compared to the prior year.

Fire & emergency segment net sales decreased $111.1 million, or 12.4%, to $783.1 million in fiscal 2011 compared to fiscal 2010. The decrease in sales reflected a $120.3 million decrease in fire apparatus volume due to soft demand attributable to weak municipal spending in the U.S.

Commercial segment net sales decreased $57.2 million, or 9.2%, to $564.9 million in fiscal 2011 compared to fiscal 2010. The decrease in sales was primarily the result of a $56.1 million decline in refuse collection vehicles volume due to lower volume with large waste haulers.

Consolidated Cost of Sales — Three Years Ended September 30, 2012

Fiscal 2012 Compared to Fiscal 2011

Consolidated cost of sales was $7.19 billion, or 87.9% of sales, in fiscal 2012 compared to $6.49 billion, or 85.8% of sales, in fiscal 2011. The 210 basis point increase in cost of sales as a percentage of sales in fiscal 2012 was primarily due to adverse product mix, largely in the defense segment (290 basis points), and higher material costs (110 basis points), offset in part by the realization of price increases (130 basis points) and higher absorption of fixed costs associated with higher sales (100 basis points).

Fiscal 2011 Compared to Fiscal 2010

Consolidated cost of sales was $6.49 billion, or 85.8% of sales, in fiscal 2011 compared to $7.85 billion, or 79.9% of sales, in fiscal 2010. The 590 basis point increase in cost of sales as a percentage of sales in fiscal 2011 compared to the prior year was generally due to adverse product mix (290 basis points), under absorption of fixed costs and inefficiencies associated with lower sales and restructuring actions (100 basis points) and higher new product development spending (90 basis points).

Consolidated Operating Income (Loss) — Three Years Ended September 30, 2012

The following table presents operating income (loss) by business segment (in millions):

 Fiscal Year Ended September 30,
 2012 2011 2010
Operating income (loss): 
  
  
Access equipment$229.2
 $65.3
 $97.3
Defense236.5
 543.0
 1,320.7
Fire & emergency(12.9) (1.1) 88.3
Commercial32.1
 3.9
 19.4
Corporate(119.1) (107.1) (99.0)
Intersegment eliminations0.2
 4.0
 (1.9)
Consolidated$366.0
 $508.0
 $1,424.8

Fiscal 2012 Compared to Fiscal 2011

Consolidated operating income decreased 28.0%, to $366.0 million, or 4.5% of sales, in fiscal 2012 compared to $508.0 million, or 6.7% of sales, in 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.


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Access equipment segment operating income increased 251.1% to $229.2 million, or 7.9% of sales, in fiscal 2012 compared to $65.3 million, or 3.2% of sales, in fiscal 2011. The improvement in operating income was primarily the result of higher sales volumes and improved price realization ($101.7 million), offset in part by higher material costs ($94.1 million) and increased product development spending ($20.7 million).

Defense segment operating income decreased 56.4% to $236.5 million, or 6.0% of sales, in fiscal 2012 compared to $543.0 million, or 12.4% of sales, in fiscal 2011. The decrease in operating income as a percentage of sales was primarily the result of adverse changes in product mix. Although the FMTV program was profitable in each quarter of fiscal 2012, margins on this program were significantly below the Company's historical margin levels of most other programs in the defense segment, and the Company soldexpects that margins will remain low through the life of the five-year contract.

The fire & emergency segment reported an operating loss of $12.9 million, or 1.6% of sales, in fiscal 2012, compared to an operating loss of $1.1 million, or 0.1% of sales, in fiscal 2011. The increase in the operating loss was primarily the result of additional losses related to the Company's Medtec ambulance business, which the Company announced in July 2012 it would close. 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, the Company decided to exit the business. The Company expects to discontinue production of ambulances in the second quarter of fiscal 2013 following completion of units currently in backlog.

Commercial segment operating income increased 717.9% to $32.1 million, or 4.6% of sales, in fiscal 2012 compared to $3.9 million, or 0.7% of sales, in fiscal 2011. The increase in operating income primarily resulted from improved sales volumes, the realization of price increases in excess of higher material costs ($15.8 million), as the segment continued to recover material cost increases incurred in fiscal 2011, as well as an increased volume of higher priced compressed natural gas vehicles, and improved absorption of overhead on higher sales volume, offset in part by the restoration of higher employee pay and benefits that had been eliminated during the Great Recession.

Corporate operating expenses increased $12.0 million to $119.1 million in fiscal 2012 compared to fiscal 2011, largely due to $6.6 million of costs related to the proxy contest in connection with the Company's 2012 annual meeting of shareholders, higher share-based compensation costs and additional incentive compensation costs, offset in part by cost reductions.

Intersegment profit of $4.0 million in fiscal 2011 resulted from profit on intersegment sales (largely M-ATV related sales between access equipment and defense). When the purchasing segment sells the inventory to an outside party, profits earned by the selling segment are recorded in consolidated earnings through intersegment profit eliminations.

Consolidated selling, general and administrative expenses increased 11.5% to $567.3 million, or 6.9% of sales, in fiscal 2012 compared to $509.0 million, or 6.7% of sales, in fiscal 2011. The increase in selling, general and administrative expenses was due primarily to higher salaries and fringe benefits ($24.2 million) principally in the Company's access equipment segment as a result of the sales growth that it experienced, investments in the Company's MOVE strategy initiatives and costs related to the proxy contest in connection with the Company's 2012 annual meeting of shareholders ($6.6 million). The increase in consolidated selling, general and administrative expenses as a percentage of sales was largely due to a shift in sales to segments that have a higher percentage of selling, general and administrative expenses.

Fiscal 2011 Compared to Fiscal 2010

Consolidated operating income decreased 64.3%, to $508.0 million, or 6.7% of sales, in fiscal 2011 compared to $1.42 billion, or 14.5% of sales, in fiscal 2010. The decrease in operating income was primarily the result of lower sales volumes and a shift from higher margin M-ATV sales to loss generating FMTV sales in the defense segment. Operating income in fiscal 2011 and 2010 included pre-tax, non-cash charges for the impairment of goodwill and other long-lived intangible assets of $2.0 million and $2.3 million, respectively.

In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350-20, Goodwill, the Company reviews goodwill annually for impairment, or more frequently if potential interim indicators exist that could result in impairment. Following the impairment testing, the Company recorded impairment charges for goodwill and other long-lived intangible assets of $2.0 million in the fire & emergency segment during the fourth quarter of fiscal 2011.

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Access equipment segment operating income decreased 32.9% to $65.3 million, or 3.2% of sales, in fiscal 2011 compared to $97.3 million, or 3.2% of sales, in fiscal 2010. The decline in operating results was due to the decrease in intersegment M-ATV related sales and higher material costs ($37.0 million), offset in part by higher sales to external customers and the reversal of provisions for credit losses of $11.2 million, primarily related to a customer settlement of a credit exposure compared to a provision for credit losses of $13.3 million in the prior year. In the prior year, the access equipment segment recognized $1.73 billion of intersegment M-ATV related sales at mid single-digit margins compared to intersegment M-ATV related sales of $0.11 billion at similar margins in fiscal 2011.

Defense segment operating income decreased 58.9% to $543.0 million, or 12.4% of sales, in fiscal 2011 compared to $1.32 billion, or 18.4% of sales, in fiscal 2010. The decrease in operating income compared to the prior year reflected the much lower sales volume as well as adverse product mix as a result of the shift from higher margin M-ATV sales to loss generating FMTV sales and ramp-up costs on the FMTV contract.

The fire & emergency segment reported an operating loss of $1.1 million, or 0.1% of sales, in fiscal 2011 compared to operating income of $88.3 million, or 9.9% of sales, in fiscal 2010. Operating results in fiscal 2011 included pre-tax, non-cash charges for the impairment of goodwill and other long-lived intangible assets of $2.0 million. The decrease in operating income largely reflected lower sales volumes along with restructuring charges and other costs related to the Company’s plans to rationalize and optimize its global manufacturing footprint ($12.4 million).

Commercial segment operating income decreased 79.8% to $3.9 million, or 0.7% of sales, in fiscal 2011 compared to $19.4 million, or 3.1% of sales, in fiscal 2010. The decrease in operating income was largely a result of lower sales volumes, a LIFO inventory charge of $2.5 million in fiscal 2011 compared to a $1.7 million LIFO credit in fiscal 2010 and the restoration of some employee pay and benefits.

Corporate operating expenses increased $8.1 million to $107.1 million in fiscal 2011 compared to fiscal 2010, largely due to the Company’s investments to support its growth initiatives for fiscal 2012 and beyond.

Intersegment profit of $4.0 million in fiscal 2011 resulted from profit on intersegment sales between segments (largely M-ATV related sales between access equipment and defense). When the purchasing segment sells the inventory to an outside party, profits earned by the selling segment are recorded in consolidated earnings through intersegment profit eliminations.

Consolidated selling, general and administrative expenses increased 5.2% to $509.0 million, or 6.7% of sales, in fiscal 2011 compared to $483.9 million, or 4.9% of sales, in fiscal 2010. The increase in selling, general and administrative expenses was due primarily to higher salaries and fringe benefits in part due to elimination of certain employee furloughs and restoration of employee benefits ($21.1 million), outside services ($20.3 million) and travel ($6.8 million), offset in part by a lower provision for credit losses ($25.3 million). Consolidated selling, general and administrative expenses as a percentage of sales increased largely due to lower sales in fiscal 2011.

Non-Operating Income — Three Years Ended September 30, 2012

Fiscal 2012 Compared to Fiscal 2011

Interest expense net of interest income decreased $11.9 million to $74.1 million in fiscal 2012 compared to fiscal 2011, largely as a result of the expiration of the Company's interest rate swap in December 2011, offset in part by the write-off of deferred financing costs associated with the refinancing of the Company's credit agreement in the fourth quarter of fiscal 2012. In fiscal 2012 and 2011, interest expense included $2.2 million and $16.6 million, respectively, of expense related to the Company's interest rate swap. Included within fiscal 2012 and 2011 interest expense were $2.3 million and $0.1 million, respectively, related to the write-off of deferred financing fees associated with the early repayment and refinancing of debt.

Other miscellaneous expense of $5.2 million in fiscal 2012 primarily related to net foreign currency transaction losses.


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Fiscal 2011 Compared to Fiscal 2010

Interest expense net of interest income decreased $98.1 million to $86.0 million in fiscal 2011 compared to fiscal 2010, largely as a result of the effect of lower borrowings, the impact of the scheduled reduction of an interest rate swap and a write-off of deferred financing costs in the prior year period associated with debt pre-payment. Average debt outstanding decreased from $1.61 billion during fiscal 2010 to $1.10 billion during fiscal 2011. In fiscal 2011 and 2010, interest expense included $16.6 million and $41.6 million, respectively, of expense related to the Company's interest rate swap. Included within fiscal 2011 and 2010 interest expense were $0.1 million and $20.4 million, respectively, related to the write-off of deferred financing fees associated with the early repayment and refinancing of debt.

Other miscellaneous income of $1.6 million in fiscal 2011 primarily related to net foreign currency transaction gains.

Provision for Income Taxes — Three Years Ended September 30, 2012

Fiscal 2012 Compared to Fiscal 2011

The Company recorded a provision for income taxes of 20.0% of pre-tax income in fiscal 2012 compared to 34.3% for fiscal 2011. The fiscal 2012 effective tax rate included discrete tax benefits resulting from a settlement of tax audits (410 basis points), changes to previous filing positions (340 basis points), benefits related to European tax incentives and net operating losses benefitted (320 basis points), adjustments to deferred tax balances (200 basis points), tax contingency reserve reductions related to expiring state statutes (130 basis points) and miscellaneous other items (180 basis points). The fiscal 2011 effective tax rate included discrete tax benefits resulting from a decision to repatriate earnings previously fully reinvested (100 basis points), the December 2010 reinstatement of the U.S. research and development tax credit (60 basis points) and reductions of tax reserves associated with expiration of statutes of limitations (110 basis points), offset in part by unbenefitted foreign losses (140 basis points) due to cumulative net operating losses.

Fiscal 2011 Compared to Fiscal 2010

The Company recorded a provision for income taxes of 34.3% of pre-tax income in fiscal 2011 compared to 33.9% for fiscal 2010. The fiscal 2011 effective tax rate included discrete tax benefits resulting from a decision to repatriate earnings previously fully reinvested (100 basis points), the December 2010 reinstatement of the U.S. research and development tax credit (60 basis points) and reductions of tax reserves associated with expiration of statutes of limitations (110 basis points), offset in part by unbenefitted foreign losses (140 basis points) due to cumulative net operating losses. The fiscal 2010 effective tax rate benefitted from a favorable income tax audit settlement (130 basis point reduction).

Equity in Earnings (Losses) of Unconsolidated Affiliates — Three Years Ended September 30, 2012

Fiscal 2012 Compared to Fiscal 2011

Equity in earnings (losses) of unconsolidated affiliates of $2.3 million in fiscal 2012 and $0.5 million in fiscal 2011 primarily represented the Company's equity interest in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.

Fiscal 2011 Compared to Fiscal 2010

Equity in earnings (losses) of unconsolidated affiliates of $0.5 million in fiscal 2011 and $(4.3) million in fiscal 2010 primarily represented the Company’s equity interest in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.

Analysis of Discontinued Operations - Three Years Ended September 30, 2012

Fiscal 2012 Compared to Fiscal 2011

In September 2012, the Company settled an income tax audit, which resulted in the release of previously accrued amounts for uncertain tax positions related to worthless stock and bad debt deductions claimed in fiscal 2009 associated with its European refuse collection vehicle business, Geesink,which was sold in fiscal 2009 and subsequently recorded as a discontinued operation. Fiscal 2012 results from discontinued operations include a $6.1 million income tax benefit related to a third partythis audit settlement.

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In April 2012, the Company discontinued mobile medical trailer production in the United States. In August 2012, the Company sold its European mobile medical trailer business, SMIT, for nominal cash consideration. In spiteThe mobile medical trailer business, which was included in the Company's fire & emergency segment, had sales of aggressive actions during$12.5 million, $17.2 million and $21.8 million in fiscal 2012, 2011 and 2010, respectively. The Company recorded a loss of $4.4 million on the previous three fiscal years to restructure this business and return it to profitability,sale of SMIT in the business continued to incur operating losses for the first nine monthsfourth quarter of fiscal 2009.  The Company believes that its performance can be enhanced by redeploying its resources from Geesink to support the Company’s other businesses.2012. The Company has reflected the financial results of Geesinkits mobile medical businesses as discontinued operations in the Consolidated Statements of OperationsIncome for all periods presented.  The Company recorded a $33.8 million non-cash, pre-tax gain on

Fiscal 2011 Compared to Fiscal 2010
In the sale.  In addition, in the fourthfirst quarter of fiscal 2009, the Company reorganized Geesink’s European parent holding company and claimed a worthless stock and bad debt deduction, which resulted in a $71.5 million tax benefit, of which $54.0 million was included in discontinued operations.

In October 2009,2010, the Company completed the sale of its 75% interest in BAI, the Company’s European fire apparatus and equipment business, to BAI’s management team for nominal cash consideration. BAI which was included in the Company’s fire & emergency segment, had sales of $42.2 million, $58.7 million and $49.9 million in fiscal 2009, 2008 and 2007, respectively.  This business did not meet the criteria to be recorded as assets held for sale as of September 30, 2009 as the Company did not receive Board of Directors approval for the sale until October 2009.segment. The Company expects to recordrecorded a small loss on the sale of BAI, in the first quarter of fiscal 2010.

Executive Overview

During fiscal 2009, economies worldwide were impacted by what has come to be known as the “Great Recession” and credit crisis, as evidenced by lower residential and non-residential construction, lower municipal and consumer spending, increased unemployment levels and lower manufacturing utilization. The impact of the Great Recession and credit crisis on a number of the Company’s businesses was severe, ultimately leading to large non-cash impairment charges described below.  For instance, the Company’s access equipment and domestic concrete placement products businesses each experienced sales declines of more than 60% compared to the prior year. In the midst of the greatest financial crisis since the Great Depression, the Company’s defense, domestic fire apparatus and airports products businesses delivered strong results, partially offsetting the downturns experienced in its other businesses.  During fiscal 2009, the Company took numerous actions to address the impact of the Great Recession and credit crisis on its businesses and aggressively pursued new business.  These actions, coupled with major defense contract wins, have significantly improved the Company’s outlook for fiscal 2010.

As order intake for a number of its businesses deteriorated in fiscal 2009, the Company initiated additional cost reductions beyond actions taken in fiscal 2008 to partially offset the earnings impact of lower demand.  These actions included significant reductions in staffing, salary cuts for all domestic salaried employees, elimination of 401(k) contribution matches for most employees, periodic furloughs for a large percentage of employees and additional reductions in other discretionary spending.  The Company also dramatically reduced capital spending.  Late in fiscal 2009, as a result of an improved financial outlook for fiscal 2010, the Company restored a portion of the compensation adjustments for those employees subject to reductions.

Due largely to the downturn in the Company’s businesses with exposure to construction markets, the Company amended its credit agreement in the second quarter of fiscal 2009 to avoid a potential financial covenant violation.  The amendment provided additional room under the financial covenants for the remainder of the term of the credit agreement.  In exchange for the changes to the financial covenants, the Company incurred significant up-front fees and increased interest spreads for the remaining term of the agreement.  The Company also agreed, among other things, to limitations on capital expenditures, dividends, investments and acquisitions.  The Company’s Board of Directors subsequently elected to suspend the payment of dividends.

During the second quarter of fiscal 2009, the Company also determined that goodwill and other long-lived assets were impaired at certain of the Company’s reporting units, with the vast majority of the impairments concentrated in the access equipment segment.  This determination was based upon a sustained decline in the price of the Company’s Common Stock subsequent to the Company’s fiscal 2008 year end when its share price approximated book value, depressed order rates during the second quarter, which historically has been a strong period for orders in advance of the North American construction season, as well as further deterioration in credit markets and the macro-economic environment.  Following the completion of the impairment assessment, which was performed with the assistance of a third-party valuation firm, the Company recorded pre-tax, non-cash impairment charges of $1.20 billion in the second quarter of

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fiscal 2009.  These charges were driven by current projections and valuation assumptions that reflected the Company’s belief that the current recession would be deeper and longer than previously expected, that credit markets would remain tight and that costs of capital had risen significantly since the Company last performed its annual impairment testing.  Despite the requirement to record this impairment charge, the Company continues to believe the long-term prospects for its businesses remain strong.

In June 2009, the DoD awarded the Company a sole source contract for 2,244 M-ATVs and associated aftermarket parts packages, valued at $1.06 billion.  Through November 18, 2009, the DoD awarded the Company an additional 3,975 M-ATVs and associated aftermarket parts packages, valued at $2.23 billion.  Unit deliveries under the contract are scheduled through April 2010, with aftermarket parts packages to be delivered through May 2010.  Key attributes of the M-ATV include superior survivability and mobility required for the current conflict in Afghanistan.  The M-ATV represents the Company’s first major entry into the market for vehicles used in small unit combat operations.

In fiscal 2009, the Company received orders totaling $195 million to retrofit approximately 2,400 MRAP vehicles originally manufactured by other companies for the DoD with the Company’s patented TAK-4 independent suspension system.  The Company is actively supporting the engineering and testing for retrofit installation of TAK-4 under other MRAP models that could lead to additional TAK-4 sales in the future.

In August 2009, the Company completed a public equity offering of 14,950,000 shares of Common Stock, which included the exercise of the underwriters’ over-allotment option of 1,950,000 shares of Common Stock, at a price of $25.00 per share.  The Company paid $15.1 million in underwriting discounts and commissions and approximately $0.6 million of offering expenses.  The net proceeds of the equity offering of approximately $358.1 million, along with cash flow from operations, allowed the Company to repay $731.6 million of debt in fiscal 2009, which substantially strengthened the Company’s capital structure.

In August 2009, the DoD awarded the Company a contract valued at $280.9 million for the production and delivery of 2,571 trucks and trailers under the U.S. Army’s FMTV Rebuy program.  The FMTV Rebuy program is a five-year requirements contract award for the production of up to 23,000 medium-payload tactical trucks and trailers as well as support services and engineering.  Competitors have filed protests with the GAO regarding the award of the FMTV contract, and the DoD has issued a stop work order on the program pending resolution of the protests, which is expected to occurreflected in mid-December 2009.  The Company believes the U.S. Army conducted a fair and objective source selection process and further believes that the contract award to the Company should be upheld.  This contract would represent a significant expansion of the Company’s medium-payload tactical truck business.

While not providing specific quantitative guidance for fiscal 2010, the Company expects fiscal 2010 financial results to be solidly profitable and significantly improved as compared to fiscal 2009.  The Company expects significant sales growth in fiscal 2010discontinued operations in the defense segment due largely to the significant quantity of M-ATVs ordered by the DoD for delivery in fiscal 2010.  The Company expects minimal FMTV sales volume in fiscal 2010 as deliveries of significant quantities of vehicles under this contract are not scheduled until early in fiscal 2011, assuming a successful resolution of the protests.  The Company is incurring costs on the FMTV program during the protest phase so that it is ready to move forward quickly if, as the Company expects, the GAO denies the protests.  The Company does not expect to sustain the margins it experienced in its defense segment in the fourth quarter of fiscal 2009 in fiscal 2010 as the Company does not expect the reoccurrence of a LIFO inventory benefit. In addition, the Company expects an adverse sales mix and increased investment in future business opportunities to more than offset the absorption benefits of increased volume.  Sales in the Company’s access equipment segment remain soft, and the Company does not expect a significant change in this market until fiscal 2011.  The Company expects that margins on JLG’s traditional access equipment business will improve in fiscal 2010 due to the expectation that charges for increased bad debt reserves and restructuring costs, along with the impact from higher material costs in inventory, will not be as significant in the segment as they were in fiscal 2009.  The access equipment segment will also benefit in fiscal 2010 from M-ATV production volume.  The Company expects lower sales in its fire & emergency segment in fiscal 2010 as a result of ongoing municipal spending weakness due to the impact of the recession on tax receipts.  However, this segment is traditionally the Company’s least cyclical, and the Company believes that the percentage decrease in its sales for fiscal 2010 compared to fiscal 2009 will be significantly less than the Company experienced in the access equipment and commercial segments in fiscal 2009.  The Company believes that its concrete placement products businesses will remain soft in fiscal 2010 until a modest pickup that the Company expects to begin in the middle of calendar 2010.  The Company estimates that refuse collection vehicle sales will be flat to up modestly in fiscal

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2010 due to the timing of deliveries for certain large national waste haulers in fiscal 2010.

Results of Operations

Consolidated Net Sales – Three Years Ended September 30, 2009

The following table presents net sales (see definition of net sales contained in Note 2 of the Notes to Consolidated Financial Statements) by business segment (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Net sales

 

 

 

 

 

 

 

Defense

 

$

2,594.8

 

$

1,891.9

 

$

1,416.5

 

Access equipment

 

1,139.4

 

3,085.9

 

2,539.5

 

Fire & emergency

 

1,169.0

 

1,192.8

 

1,142.2

 

Commercial

 

590.0

 

835.1

 

1,080.3

 

Intersegment eliminations

 

(198.0

)

(69.3

)

(39.2

)

Consolidated

 

$

5,295.2

 

$

6,936.4

 

$

6,139.3

 

The following table presents net sales by geographic region based on product shipment destination (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Net sales

 

 

 

 

 

 

 

United States

 

$

4,487.1

 

$

4,997.2

 

$

4,745.5

 

Other North America

 

89.7

 

180.6

 

212.8

 

Europe, Africa and the Middle East

 

510.7

 

1,342.2

 

915.7

 

Rest of the world

 

207.7

 

416.4

 

265.3

 

Consolidated

 

$

5,295.2

 

$

6,936.4

 

$

6,139.3

 

Fiscal 2009 Compared to Fiscal 2008

Consolidated net sales decreased 23.7% to $5.30 billion in fiscal 2009 compared to fiscal 2008. The decrease in sales was a result of unprecedented reductions in the Company’s access equipment segment sales and continued reductions in the Company’s commercial segment sales as a result of the global recession and credit crisis.  These decreases were partially offset by increased sales in the Company’s defense and domestic fire apparatus businesses.

Defense segment net sales increased 37.2% to $2.59 billion in fiscal 2009 compared to fiscal 2008.  The increase was attributable to higher sales of heavy-payload tactical vehicles and parts & service sales to fulfill the continuing requirements of the Company’s largest customer, the DoD.  Sales of new and remanufactured heavy-payload tactical vehicles to the U.S. Army were up significantly in fiscal 2009 compared to the prior year.  Defense segment sales in fiscal 2009 also benefited from the sale and installation of reducible-height armor kits for MTVR trucks for the U.S. Marine Corps and the sale of TAK-4 independent suspension systems to third-party MRAP original equipment manufacturers.

Access equipment net sales decreased 63.1% to $1.14 billion in fiscal 2009 compared to fiscal 2008.  Sales reflected substantially lower demand globally arising from recessionary economies and tight credit markets.  European, African and Middle East and North American new machine sales each declined approximately 75% in fiscal 2009, while the rest of world equipment sales were down about 45%.  Access equipment sales in fiscal 2009 included $86.7 million of intercompany sales to the defense segment related to the M-ATV program.

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Fire & emergency segment net sales decreased 2.0% to $1.17 billion in fiscal 2009 compared to fiscal 2008.  Increased shipments of domestic fire apparatus as well as a favorable sales mix in the segment’s airport products business offset in part lower sales in other businesses in this segment.  Lower sales in fiscal 2009 were driven by weak demand for towing & recovery equipment as a result of the global recession and the inability of end customers to obtain adequate financing, a shift in component production from the fire & emergency segment to the commercial segment, and a decrease in international fire apparatus shipments as a result of production delays.

Commercial segment net sales declined 29.3% to $0.59 billion in fiscal 2009 compared to fiscal 2008.  The decrease in sales was largely the result of a 60.4% decline in sales of concrete placement products due to continued weakness in U.S. residential and nonresidential construction activity, and a 15.0% decrease in refuse collection vehicle sales.  The decline in refuse collection vehicle sales was primarily the result of lower international sales as well as the timing of deliveries to large fleet customers.  This was offset in part by a shift in component production from the fire & emergency segment to the commercial segment.

Fiscal 2008 Compared to Fiscal 2007

Consolidated net sales increased 13.0% to $6.94 billion in fiscal 2008 compared to fiscal 2007.  The inclusion of JLG in the results for the entire fiscal year in 2008 as compared to only ten months in fiscal 2007, strong access equipment sales in Europe, significantly higher defense sales and favorable foreign currency exchange rates drove the increase in consolidated net sales.

Defense segment net sales increased 33.6% to $1.89 billion in fiscal 2008 compared to fiscal 2007.  The increase was attributable to an increase in sales of new and remanufactured trucks, as well as higher parts & service sales.  Sales of new and remanufactured trucks were up 32.3% versus the prior year as an increase in sales of new and remanufactured heavy-payload trucks was partially offset by a decrease in medium-payload truck sales and international truck sales.  Parts & service sales increased nearly 40% in fiscal 2008 on significantly higher armor kit shipments and service work.

Access equipment net sales increased 21.5% to $3.09 billion in fiscal 2008 compared to fiscal 2007.  The increase was driven by the inclusion of JLG sales for the entire year compared to the Company’s ownership for ten months in the prior year period and significantly stronger demand for aerial work platforms outside North America.  Favorable foreign currency exchange rates also increased sales by $130.0 million.  These increases were offset in part by lower demand in North America in fiscal 2008 compared to the prior year as a result of slowing non-residential construction markets.  Access equipment sales in the prior year represented sales of JLG from December 6, 2006, the date of acquisition, through the end of the fiscal year.

Fire & emergency segment net sales increased 4.4% to $1.19 billion in fiscal 2008 compared to fiscal 2007.  The increase in sales reflected higher domestic fire apparatus sales as a result of continued market share gains and higher airport product sales, due partially to higher international sales, offset in part by weaker demand for towing equipment as well as mobile medical trailers and broadcast vehicles.  The towing equipment vehicle market was negatively impacted by lower demand as a result of rising fuel prices and uncertainty in the U.S. economy.  A reduction in medical reimbursement rates by the U.S. government to providers of mobile medical imaging services had a negative effect on sales of mobile medical trailers, and during the first half of fiscal 2008, a writers’ strike reducing television networks’ advertising revenues negatively impacted the broadcast vehicle market.

Commercial segment net sales decreased 22.7% to $0.84 billion in fiscal 2008 compared to fiscal 2007.  The decrease was largely the result of lower domestic concrete placement product sales in fiscal 2008 compared to fiscal 2007 due to a slowdown in U.S. residential construction and low volume subsequent to the pre-buy ahead of the January 2007 diesel engine emissions standards changes.

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Consolidated Operating (Loss) Income – Three Years Ended September 30, 2009

The following table presents operating (loss) income by business segment (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Operating income (expense):

 

 

 

 

 

 

 

Defense

 

$

403.3

 

$

265.2

 

$

245.0

 

Access equipment

 

(1,105.6

)

360.1

 

268.4

 

Fire & emergency

 

(14.7

)

93.9

 

107.5

 

Commercial

 

(183.7

)

4.7

 

76.5

 

Corporate and other

 

(91.3

)

(108.9

)

(88.3

)

Consolidated

 

$

(992.0

)

$

615.0

 

$

609.1

 

Fiscal 2009 Compared to Fiscal 2008

The Company incurred a consolidated operating loss of $992.0 million in fiscal 2009 as compared to operating income of $615.0 million in fiscal 2008.  The operating loss in fiscal 2009 was driven by $1.20 billion of pre-tax, non-cash charges for the impairment of goodwill and other long-lived assets.  Sharply lower sales volume in the access equipment and commercial segments also contributed to the decrease in operating results in fiscal 2009.

In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 350-20, Goodwill, the Company reviews goodwill annually for impairment, or more frequently if potential interim indicators exist that could result in impairment.  At February 28, 2009, given the sustained decline in the price of the Company’s Common Stock subsequent to the Company’s fiscal 2008 year end when its share price approximated book value, depressed order rates during the second quarter which historically has been a strong period for orders in advance of the North American construction season, as well as further deterioration in credit markets and the macro-economic environment, the Company determined that the appropriate triggers had been reached to perform additional impairment testing on goodwill and its long-lived intangible assets.  Accordingly, the Company conducted an assessment of the fair values of the Company’s reporting units.  The results of that assessment indicated that impairment charges to the values of goodwill and other long-lived assets were required in the Company’s access equipment, fire & emergency and commercial segments.

Defense segment operating income increased 52.1% to $403.3 million, or 15.5% of sales, in fiscal 2009 compared to $265.2 million, or 14.0% of sales, in fiscal 2008.  The increase in operating income as a percent of sales compared to fiscal 2008 reflected better absorption of fixed costs, lower material costs, improved performance on service work and favorable LIFO inventory adjustments of $8.7 million as compared with a charge of $5.7 million in fiscal 2008.

The access equipment segment incurred an operating loss of $1,105.6 million, including $892.5 million in pre-tax, non-cash impairment charges for goodwill and other long-lived assets, in fiscal 2009 compared to operating income of $360.1 million in fiscal 2008.  In addition to the non-cash impairment charges, the decline in operating income was due to the impact of sharply lower sales volume, sale of units comprised of higher cost materials purchased in fiscal 2008 when steel costs were high, and an increase in the provision for credit losses.  The impact of these factors was reduced by lower operating expenses as a result of aggressive cost reduction efforts.

The fire & emergency segment incurred an operating loss of $14.7 million, including $123.0 million in pre-tax, non-cash impairment charges for goodwill and other long-lived assets, in fiscal 2009 compared to operating income of $93.9 million in fiscal 2008.  The impairment charges more than offset otherwise favorable operating results for the segment due to a favorable product mix and improved performance at the Company’s domestic fire apparatus and airport product businesses as well as lower operating expenses throughout the segment as a result of cost reduction initiatives.

The commercial segment incurred an operating loss in fiscal 2009 of $183.7 million, including $184.3 million in pre-tax, non-cash impairment charges for goodwill and other long-lived assets, compared to operating income of $4.7 million in fiscal 2008.  The decrease in operating results was the result of the non-cash impairment charges and the impact of sharply lower concrete placement products sales volume, offset in part by reductions in operating expenses due to cost reduction efforts and a LIFO inventory benefit of $5.9 million due to significant reductions in inventory levels.

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Corporate operating expenses and inter-segment profit elimination decreased $17.6 million to $91.3 million in fiscal 2009 compared to fiscal 2008 largely due to focused cost reduction efforts, including lower outside professional services, travel and recruiting costs.

Consolidated selling, general and administrative expenses decreased $57.7 million to $435.8 million, or 8.2% of sales, in fiscal 2009 compared to $493.5 million, or 7.1% of sales, in fiscal 2008 as a result of focused cost reduction efforts, including reductions in staffing, salary reductions and furloughs, the elimination of 401(k) contribution matches and other cost reductions.  Selling, general and administrative expenses in fiscal 2009 included provisions for credit losses of $50.1 million, or 0.9% of sales, compared to $1.0 million in fiscal 2008, with the increase in provisions principally concentrated in the access equipment segment due to the effects of the global recession on the financial health of its customers and due to reductions in the underlying collateral value of the equipment.

Fiscal 2008 Compared to Fiscal 2007

Consolidated operating income increased 1.0% to $615.0 million, or 8.9% of sales, in fiscal 2008 compared to $609.1 million, or 9.9% of sales, in fiscal 2007.  The increase in operating income in fiscal 2008 was principally due to the inclusion of JLG for the entire fiscal year and favorable results in the defense segment as a result of higher sales, offset in part by a decrease in operating income in the commercial segment due to a drop in concrete placement product sales, lower operating performance for certain operating units within the fire & emergency segment as a result of lower sales and higher corporate costs.

Defense segment operating income increased 8.2% to $265.2 million, or 14.0% of sales, in fiscal 2008 compared to $245.0 million, or 17.3% of sales, in fiscal 2007.  The decrease in operating income as a percentage of sales during fiscal 2008 reflected a higher mix of lower-margin truck sales, lower negotiated margins on the FHTV contract and inefficiencies on the start-up of a contract, offset in part by the reduction of a warranty reserve upon the expiration of a systemic warranty.

Access equipment segment operating income increased 34.1% to $360.1 million, or 11.7% of sales, in fiscal 2008 compared to $268.4 million, or 10.6% of sales, in fiscal 2007.  Operating income margins in the prior year were negatively affected by the timing of the JLG acquisition just prior to JLG’s seasonal holiday shut-down and charges of $14.0 million related to the revaluation of inventory at the acquisition date of JLG.  In addition, operating income for fiscal 2008 benefited from favorable foreign currency exchange rates and a favorable product and customer mix.

Fire & emergency segment operating income decreased 12.6% to $93.9 million, or 7.9% of sales, in fiscal 2008 compared to $107.5 million, or 9.4% of sales, in fiscal 2007.  The decrease in both operating income and operating income margin was the result of softness in the towing equipment market and adverse product mix as well as operating losses at OSV, the Company’s domestic mobile medical trailer and broadcast vehicle business.

Commercial segment operating income decreased 93.8% to $4.7 million, or 0.6% of sales, in fiscal 2008 compared to $76.5 million, or 7.1% of sales, in fiscal 2007.  Operating income performance was negatively impacted by significantly lower domestic concrete mixer sales as a result of a slowdown in the U.S. residential construction market combined with lower unit volumes subsequent to the pre-buy ahead of the January 2007 diesel engine emissions standards changes.

Corporate operating expenses and inter-segment profit eliminations increased $20.6 million to $108.9 million, or 1.5% of consolidated sales, in fiscal 2008 compared to $88.3 million, or 1.4% of consolidated sales, in fiscal 2007.  The increase was largely due to higher personnel costs and additional information technology spending to support the Company’s growth objectives and the reduction of litigation expense reserves in the prior year period.

Consolidated selling, general and administrative expenses increased 19.8% to $493.5 million, or 7.1% of sales, in fiscal 2008 compared to $411.9 million, or 6.7% of sales, in the prior year due largely to inclusion of JLG for a full twelve months in fiscal 2008.  Consolidated selling, general and administrative expenses as a percentage of sales increased largely due to increased corporate expenses.

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Table of Contents

Non-Operating Income – Three Years Ended September 30, 2009

Fiscal 2009 Compared to Fiscal 2008

Interest expense net of interest income increased $3.0 million to $208.0 million in fiscal 2009 compared to fiscal 2008 on lower average outstanding debt, as a result of higher interest rates after the effective date of an amendment of the Company’s Credit Agreement.  In March 2009, the Company amended its Credit Agreement to provide additional room under its financial covenants to address lower earnings as a result of the impact of the global recession and tight credit markets.  In connection with this amendment, interest rate spreads were increased significantly.  See “Liquidity” and Note 11 to the Notes to Consolidated Financial Statements for further information regarding the amendment to the Credit Agreement.

Other miscellaneous income of $8.5 million in fiscal 2009 related primarily to net foreign currency transaction gains.

Fiscal 2008 Compared to Fiscal 2007

Interest expense net of interest income increased $10.4 million to $205.0 million in fiscal 2008 compared to fiscal 2007, largely as a result of interest on borrowings incurred in connection with the JLG acquisition for a full year in fiscal 2008 compared to approximately ten months in the prior fiscal year.

Other miscellaneous loss of $9.3 million in fiscal 2008 related primarily to net foreign currency transaction losses.

(Benefit from) Provision for Income Taxes – Three Years Ended September 30, 2009

Fiscal 2009 Compared to Fiscal 2008

The Company recorded a $19.7 million tax benefit in fiscal 2009, or 1.7% of pre-tax losses, compared to tax expense of $120.8 million, or 30.1% of pre-tax earnings, for fiscal 2008.  The expected tax benefit for fiscal 2009, at the U.S. federal rate of 35%, of $417.0 million was reduced by the tax effect of non-deductible impairment charges of $396.2 million and by $17.3 million related to the reduction in accrued benefits previously recorded under a European tax incentive due to losses incurred during the period, offset in part by a worthless stock deduction and other tax benefits.

Fiscal 2008 Compared to Fiscal 2007

The effective income tax rate for fiscal 2008 was 30.1% compared to 33.1% in fiscal 2007.  The fiscal 2008 effective tax rate was positively impacted by a European tax incentive which benefited the effective rate by 5.2 percentage points.  Increased benefits of the domestic manufacturing deduction was more than offset by lower research and development tax credits due to the expiration of the credit in December 2007.

Equity in (Losses) Earnings of Unconsolidated Affiliates – Three Years Ended September 30, 2009

Fiscal 2009 Compared to Fiscal 2008

The Company recorded a loss of $1.4 million related to equity in (losses) earnings of unconsolidated affiliates, net of income taxes, in fiscal 2009 compared to $6.3 million of income in fiscal 2008.  The Company has equity interests in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.  Earnings for these entities decreased due to lower financing activity and increased credit losses due to the impact of the global recession.

Fiscal 2008 Compared to Fiscal 2007

Equity in earnings of unconsolidated affiliates, net of income taxes, of $6.3 million in fiscal 2008 and $7.3 million in fiscal 2007 primarily represent the Company’s equity interest in a lease financing partnership, a commercial entity in Mexico and a joint venture in Europe.

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Table of Contents

Analysis of Discontinued Operations – Three Years Ended September 30, 2009

On July 1, 2009, the Company completed the sale of its ownership in Geesink to a third party for nominal cash consideration.  Geesink, a European refuse collection vehicle manufacturer, was previously included in the Company’s commercial segment.  Due to the reclassification of $92.0 million of cumulative translation adjustments out of shareholders’ equity, the Company recorded a pre-tax gain on the sale of Geesink of $33.8 million.  The historical results of operations of Geesink have been reclassified in the Company’s Consolidated Statements of Operations and are included in “Income (loss) from discontinued operations,” for all periods presented.

Fiscal 2009 Compared to Fiscal 2008

Geesink sustained a pre-tax loss of $14.8 million in fiscal 2009 compared to a loss of $210.3 million in fiscal 2008.  Fiscal 2009 includes the nine month period ended July 1, 2009 (the date of the sale).  During fiscal 2009, Geesink continued to incur high costs related to the rationalization of manufacturing facilities and inefficiencies associated with the relocation and start-up of production of Norba-branded products in The Netherlands.  In fiscal 2008, the Company recorded pre-tax, non-cash charges for the impairment of intangible assets of $174.2 million which were largely non-deductible for local tax purposes.  Geesink recorded a tax benefit for operating losses of $0.5 million in fiscal 2009 compared to $2.7 million in fiscal 2008.  A valuation allowance was recorded against a majority of the non-impairment losses incurred by Geesink as the Company determined that it was unlikely that the foreign tax benefits would be realized.  In the fourth quarter of fiscal 2009, the Company made a “check-the-box” election to treat its foreign subsidiary, the European holding company parent of Geesink, as a disregarded entity for U.S. federal income tax purposes.  As a result of the election, the Company recorded a $71.5 million worthless stock and bad debt income tax benefit, of which $54.0 million related to Geesink and has been recorded in discontinued operations.

Fiscal 2008 Compared to Fiscal 2007

Sales at the Company’s European refuse collection vehicle business were $201.9 million in fiscal 2008, up 20.2% as compared to the prior year, due largely to stronger demand in The Netherlands and favorable foreign currency exchange rates.  Geesink sustained a pre-tax loss of $210.3 million in fiscal 2008 compared with a pre-tax loss of $19.7 million in fiscal 2007.  The increase in the operating loss was primarily due to non-cash charges for the impairment of intangible assets of $174.2 million, costs associated with the rationalization of manufacturing facilities, inefficiencies associated with the relocation and start-up of production of Norba-branded products from Sweden to The Netherlands and increased material and warranty costs.  In June 2008, it became evident that synergies related to Geesink’s facility rationalization program would be lower than expected and costs to execute the rationalization would be higher than anticipated.  The resulting slower than expected and more difficult return to profitability of Geesink’s business, further escalation of raw material costs and a reduction in fabrication volume for the Company’s access equipment segment at Geesink’s Romania facility due to a slowdown in the European access equipment market led to the Company’s conclusion that the charges for impairment were required.  With the assistance of a third-party valuation firm, the Company determined that Geesink goodwill and non-amortizable intangible assets were impaired and the Company recorded non-cash impairment charges of $174.2 million in the third quarter of fiscal 2008.

Income.


Liquidity and Capital Resources


Financial Condition at September 30, 2009

2012


The Company’s capitalization was as follows (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

Cash and cash equivalents

 

$

530.4

 

$

88.2

 

Total debt

 

2,038.2

 

2,774.0

 

Shareholders’ equity

 

514.1

 

1,388.6

 

Total capitalization (debt plus equity)

 

2,552.3

 

4,162.6

 

Debt to total capitalization

 

79.9

%

66.6

%

38


 September 30,
 2012 2011
Cash and cash equivalents$540.7
 $428.5
Total debt955.0
 1,060.1
Oshkosh Corporation shareholders’ equity1,853.5
 1,596.5
Total capitalization (debt plus equity)2,808.5
 2,656.6
Debt to total capitalization34.0% 39.9%

TableThe Company repaid $105.1 million of Contents

Debt decreased $735.8 milliondebt during fiscal 2009 as2012. As of September 30, 2012, the Company utilizedbelieves that its capital structure is within its targeted range for indebtedness. As such, the Company's use of cash flowsgenerated from operations and the proceeds from a public equity offering in August 2009 to pay down outstanding debt.  The decrease in shareholders’ equity was primarily the result of $1.20 billion of pre-tax, non-cash charges for the impairment of goodwill and other long-lived assets recorded in the second quarterfuture could change from primarily debt reduction to other uses, including the repurchase of fiscal 2009, offsetCommon Stock, as was the case in part by the proceeds from the Company’s public equity offering in August 2009.

The Company entered into a performance-based payments agreement on the M-ATV program during the fourth quarter of fiscal 2009.  This resulted in a significant cash payment to2012 when the Company nearrepurchased 546,965 shares of its Common Stock at a cost of $13.3 million. On November 15, 2012, the endCompany's Board of Directors increased the Company's stock repurchase authorization such that the Company had authority to repurchase 11,000,000 shares of Common Stock after the Board action. The Company is targeting spending $300 million to repurchase shares over the 12 to 18 months following that date and expects to spend at least $75 million to repurchase shares over the three months following that date.


Approximately 8% of the fiscal year which contributed toCompany’s cash on hand of $530.4 millionand cash equivalents at September 30, 2009.  In October 2009,2012 was located outside the United States. The Company prepaid $117.7 million of debt (all remaining outstanding Term Loan A debt)does not anticipate any requirements to utilize foreign cash and utilized much of its cash as of September 30, 2009equivalents to pay M-ATV suppliers.

meet liquidity needs in the United States during fiscal 2013. In addition to cash and cash equivalents, the Company had $515.9$345.2 million of unused available capacity under the Revolving Credit Facility (as defined in “Liquidity”) as of September 30, 2009.2012. Borrowings under the Revolving Credit Facility could, as discussed below, be limited by the financial covenants contained within the Credit Agreement.

Agreement (as defined in “Liquidity”).


Cash Flows


Operating Cash Flows


The Company generated $898.9$268.3 million of cash from operating activities during fiscal 20092012 compared to $390.4$387.7 million for during fiscal 2008.  While the Company incurred a loss from continuing operations2011. The decrease in fiscal 2009 compared to income in fiscal 2008, the loss resulted from non-cash impairment charges.  The higher generation of cash generated from operating activities in fiscal 2009 was the result of a substantial reduction in working capital, particularly relatedprimarily due to trade accounts receivable, inventory, accounts payable and customer advances.  The changes in receivables, inventories and accounts payable were primarily driven by the decrease in sales duringoperating income of $142.0 million. In addition, operating cash flows were further impacted as the Company made a $50.0 million prepayment of its income taxes in the fourth quarter of fiscal 2009 versus fiscal 2008.  A significant increase in customer advances2012. Cash utilized for working capital in fiscal 2009 was due to the timing2012 remained fairly consistent with fiscal 2011.


42
Table of performance-based payments from the U.S. government on the FHTV contract awarded in October 2008 and, more significantly, the M-ATV contract awarded in June 2009.  In September 2009, after receipt of a M-ATV performance-based payment, the Company prepaid a supplier $100.0 million for inventory deliveries scheduled to occur beginning in early fiscal 2010.  Contents

The pre payment is recorded with in “Other current assets” in the Consolidated Balance Sheets.

Cash generated (used) from changes in significant working capital accounts were as follows (in millions):

 

 

Fiscal Year Ended

 

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Receivables, net

 

$

377.2

 

$

65.6

 

Inventories, net

 

112.6

 

(38.7

)

Accounts payable

 

(55.8

)

15.6

 

Customer advances

 

435.6

 

(41.3

)

 

 

$

869.6

 

$

1.2

 

The Company’sCompany's 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) decreased to 33from 45 days at September 30, 2009 from2011 to 43 days at September 30, 20082012. Days sales outstanding for segments other than the defense segment were 52 days at September 30, 2012, down from 57 days at September 30, 2011. The decrease in days sales outstanding was primarily due to improvements in collections in the access equipment segment. 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 September 30, 2012. The increase in inventory turns was primarily due to improvements in the manufacturing process as a result of a higher proportion of consolidated sales concentrated in segments with shorter payment terms, offset in part by a 18-day deterioration in days sales outstanding inapplying continuous improvement and lean practices utilizing the access equipment segment, which was driven in part by the granting of longer payment terms on new sales for competitive reasons.  Consolidated inventory turns decreased from 5.0 times at September 30, 2008 to 4.3 times at September 30, 2009 largely as a result of access equipment segment sales declining at a faster pace than inventory.

39

Oshkosh Operating System.


Table of Contents

Investing Cash Flows

Cash flows relating to investing activities consist primarily of cash used for capital expenditures. 


Net cash used in investing activities in fiscal 20092012 was $56.1$41.8 million compared to $100.2$68.3 million in fiscal 2008.2011. Capital spending, excluding equipment held for rental, of $46.2$55.9 million in fiscal 2009 was down $29.62012 reflected a decrease of $26.4 million compared to capital spending in fiscal 2008.2011. Fiscal 2011 capital expenditures included equipment purchases related to the ramp-up of production under the FMTV contract. Fiscal 2012 investing activities also included receipt of $6.0 million upon repayment of a note from a deconsolidated variable interest entity and $8.7 million in proceeds from the sale of the Company's investment in a leasing affiliate. In fiscal 2009, the Company sharply curtailed capital spending in response to the global recession.  In fiscal 2010,2013, the Company expects capital spending to increase to approximately $90 to $100 million as it continues to invest in the M-ATV production ramp-up, the JLG manufacturing facility in China, and as it prepares for FMTV full rate production in fiscal 2011.

approximate $70 million.


Financing Cash Flows

Financing activities consists primarily of proceeds from the issuance of long-term debt and equity and cash used by financing activities consists primarily of repayments of indebtedness and payments of dividends to shareholders. 


Financing activities resulted in a net use of cash of $408.1$117.3 million during in fiscal 20092012 compared to $273.6a net use of cash of $231.5 million during in fiscal 2008.

On August 12, 2009,2011. In the first nine months of fiscal 2012, the Company completed a public equity offeringused available cash and cash from operations primarily for debt reduction. In the fourth quarter of 14,950,000fiscal 2012, the Company repurchased 546,965 shares of Common Stock which included the exercise of the over-allotment option of 1,950,000 shares of Common Stock,under its share repurchase program at a pricecost of $25.00 per share.  $13.3 million.


Liquidity

The Company paid $15.1 million in underwriting discounts and commissions and approximately $0.6 million of offering expenses.  The Company used the $358.1 million in net proceeds from the offering to repay debt under the Company’s credit agreement.

The Company repaid $731.6 million of debt in fiscal 2009 compared to $250.0 million in fiscal 2008.  In addition, the Company incurred $20.1 million of debt amendment costs and paid dividends totaling $14.9 million in fiscal 2009.  The Company suspended dividend payments in April 2009 resulting in a $14.9 million reduction in cash used for dividend payments in fiscal 2009 compared to fiscal 2008.

Liquidity

The Company’sCompany's primary sources of liquidity are the cash flow generated from operations, availability under the $550.0 million Revolving Credit Facility (as defined below) and available cash and cash equivalents. In addition to cash and cash equivalents of $530.4$540.7 million, the Company had $515.9$345.2 million of unused availability under the terms of its Revolving Credit Facility as of September 30, 2009.2012. These sources of liquidity are needed to fund the Company’sCompany's working capital requirements, debt service requirements, capital expenditures and capital expenditures.  Based on the Company’s current outlook for fiscal 2010, theshare repurchases. The Company expects to have sufficient liquidity to finance its operations over the next twelve months.


Senior Secured Credit Agreement


In December 2006,July 2012, the Company entered into a syndicatedamended its senior secured credit agreement (“Creditwith various lenders (as amended the “Credit Agreement”) to lower the applicable variable interest rate spread by 100 basis points and modify the restricted payment language to be consistent with various financial institutions, which consisted ofthe Senior Notes. The Credit Agreement provides for (i) a five-year $550.0 million revolving credit facility (“Revolving Credit Facility”) that matures in October 2015 with an initial maximum aggregate amount of availability of $525 millionand two(ii) a $455 million term loan facilities (“Term Loan A”Loan”) facility due in quarterly principal installments of $16.25 million commencing December 31, 2013 with a balloon payment of $341.25 million due at maturity in October 2015. Refer to Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the amendment to the Company's Credit Agreement.

The Company’s obligations under the Credit Agreement are guaranteed by certain of its domestic subsidiaries, and “Term Loan B,” and collectively, the “Term Loan Facility”).  In March 2009, the Company entered into a second amendment (the “Amendment”) towill guarantee the obligations of certain of its subsidiaries under the Credit Agreement to provide reliefthe extent such subsidiaries borrow directly under its Leverage Ratio (as defined in the Credit Agreement) financial covenant.  The Company believed that the Amendment was requiredAgreement. Subject to avoid a potential financial covenant violation at the end of its second quarter of fiscal 2009 as a result of lower demand for certain of the Company’s products due to continued weakening in the global economy and tight credit.  The Amendment also included an increase in the margin on LIBOR loans to 600 basis points, compared with 150 basis points immediately prior to the Amendment, and a requirement that the Company prepay $14.5 million and $86.0 million of debt related to Term Loan A and Term Loan B, respectively.  The Amendment also involved other changes toexceptions, the Credit Agreement including placing limitations on capital expenditures, dividends, investmentsis secured by (i) a first-priority perfected lien and acquisitions, an increasesecurity interests in substantially all of the frequencypersonal property of mandatory prepayments, adding a Senior Secured Leverage Ratio (as defined in the Credit Agreement),Company, each material subsidiary of the Company and requiring the grant of mortgage liens oneach subsidiary guarantor, (ii) mortgages upon certain real estate owned byproperty of the Company and certain of its subsidiaries.

The Amendment also addeddomestic subsidiaries and (iii) a usagepledge of the equity of each material subsidiary and each subsidiary guarantor.



43
Table of Contents

Under the Credit Agreement, the Company must pay (i) an unused commitment fee equalranging from 0.25% to an annualized rate0.50% per annum of 50 basis points onthe average daily unused portion of the aggregate principal amount of all outstanding loansrevolving credit commitments under the Credit Agreement for any day on which the Company hasand (ii) a corporate family ratingfee ranging from Moody’s Investors Service of B3 with “negative” watch or lower or a corporate credit rating from Standard & Poor’s Rating Services of B- with “negative” watch or lower.  The Company’s credit ratings are reviewed regularly by these major debt

40


Table of Contents0.75%

rating agencies.  In January 2009, Standard & Poor’s Rating Services lowered the Company’s long-term debt rating from BB- to B and credit watch “negative” citing weaker-than-expected operating results and the Company’s need to seek an amendment1.25% per annum of the financial covenants contained inmaximum amount available to be drawn for each performance letter of credit issued and outstanding under the Credit Agreement.  Likewise, in January 2009, Moody’s Investors Service lowered the Company’s long-term debt rating from Ba3 to B2 with ratings


Borrowings under review for possible downgrade pending resolution of the negotiations with its bank, citing expectations of further erosion in the Company’s credit metrics due to the deterioration in several of the Company’s businesses, particularly the access equipment segment.  In March 2009, following the Amendment, both Standard & Poor’s Rating Services and Moody’s Investors Service lowered the Company’s long-term debt ratings to “negative” outlook.  In August 2009, following the Company’s Common Stock offering and award of the M-ATV contract, Standard & Poor’s Rating Services upgraded the Company’s long-term debt rating to B+ with a “stable” outlook citing improved covenant headroom and good near-term prospects for the Company’s defense segment.

The Company accounted for the Amendment in accordance with ASC Topic 470-50, Debt Modifications and Extinguishments.  As the terms of the Credit Agreement both prior to and after the Amendment allowed for the prepayment of the amounts due withoutbear interest at a penalty, the Company determined that the debt was callable on the date of the Amendment.  As such, the present value of the cash flows both prior to and after the Amendment was not determined to be substantially different.  Accordingly, fees of $20.1 million paid by the Company to the parties to the Credit Agreement were capitalized in connection with the Amendment, along with the existing unamortized debt fees, and will be amortized as an adjustment of interest expense over the remaining term of the Credit Agreement using the interest method.  Furthermore, in accordance with ASC Topic 470-50, costs incurred with third parties of $0.5 million were expensed as incurred.

Term Loan A required principal payments of $12.5 million, plus interest, due quarterly from December 2009 through September 2011, with a final principal payment of $248.0 million due December 6, 2011.  As a result of excess available cash, through September 30, 2009, the Company prepaid all of the quarterly principal payments related to Term Loan A as well as $130.3 million of the final principal payment under Term Loan A.  The remaining outstanding balance under Term Loan A of $117.7 million at September 30, 2009 was prepaid in full in October 2009.  The outstanding balance under Term Loan B at September 30, 2009 of $1,902.6 million is due December 6, 2013.

Interest rates on borrowings under the Revolving Credit Facility and Term Loan Facility are variable and arerate 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”base rate (which is equal to the higherhighest of a bank’s reference(a) the administrative agent's prime rate, and(b) the federal funds rate plus 0.5%, a bank’s “Prime Rate”0.50% or (c) the sum of 1.0%1% plus the “Off-Shore” rate that would be applicable for an interest period of one month beginning on such day) or the “Off-Shore” or “LIBOR Rate” (which is a bank’s inter-bank offered rate for U.S. dollars in off-shore markets)one-month LIBOR) plus a specified margin.  The margins on the Revolving Credit Facility and Term Loan A are subject to adjustment, upmargin, which may be adjusted upward or down, baseddownward depending on whether certain financial criteria are met.  At September 30, 2009, the interest rate spread on the Revolving Credit Facility and Term Loan Facility was 600 basis points.  The weighted-average interest rate on borrowings outstanding at September 30, 2009 was 6.60% and 6.42% for Term Loans A and B, respectively.

To manage a portion of the Company’s exposure to changes in LIBOR-based interest rates on its variable-rate debt, the Company entered into an amortizing interest rate swap agreement on January 11, 2007 that effectively fixes the interest payments on a portion of the Company’s variable-rate debt.  The swap, which has a termination date of December 6, 2011, effectively fixes the LIBOR-based interest rate on the debt in the amount of the notional amount of the swap at 5.105% plus the applicable spread based on the terms of the Credit Agreement, as amended (11.105% at September 30, 2009).  The notional amount of the swap at September 30, 2009 was $1.25 billion and reduces to $750 million on December 7, 2009 and $250 million on December 6, 2010.  Neither the Company nor the counterparty is required to collateralize its obligations under these swaps.  The Company is exposed to loss if the counterparty defaults.  However, as of the date of this filing, the counterparty is a large Aa1 rated global financial institution and the Company believes that the risk of default is remote.

satisfied.


Covenant Compliance


The Credit Agreement as amended, 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 among other things, consolidate or merge, create liens, incur additional indebtedness, and dispose of assets.assets, consummate acquisitions and make investments in joint ventures and foreign subsidiaries. The Credit Agreement as amended, also requires the Company to maintaincontains the following financial ratios:

·covenants:

Leverage Ratio: TheA maximum leverage ratio (defined as, with certain adjustments, the ratio of Consolidated Indebtedness outstanding at quarter-endthe Company’s consolidated indebtedness to Consolidated Earnings Before Interest, Taxes, Depreciationconsolidated net income before interest, taxes, depreciation, amortization, non-cash charges and Amortizationcertain other items (“EBITDA”) for) as of the most recently ended fourlast day of any fiscal quarters,quarter of 4.50 to 1.0.
Interest Coverage Ratio: A minimum interest coverage ratio (defined as, such terms are defined inwith certain adjustments, the Credit Agreement,ratio of the Company’s consolidated EBITDA to the Company’s consolidated cash interest expense) as amended.

41


Table of Contents

Thethe last day of any fiscal quarter of 2.50 to 1.0.

Senior Secured Leverage Ratio is not permittedRatio: A maximum senior secured leverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated secured indebtedness to be greater thanthe Company’s consolidated EBITDA) of the following:

Fiscal Quarters Ending

September 30, 2009

7.25 to 1.0

December 31, 2009

7.00 to 1.0

March 31, 2010

6.75 to 1.0

June 30, 2010 through June 30, 2011

6.50 to 1.0

September 30, 2011 through June 30, 2012

5.50 to 1.0

September 30, 2012 through June 30, 2013

4.253.00 to 1.0

Thereafter

3.752.75 to 1.0

As of September 30, 2009, the


The Company was in compliance with the Leverage Ratio with a ratio of 4.68 to 1.0.

·Interest Coverage Ratio: The ratio of Consolidated EBITDA for the most recently ended four fiscal quarters to Cash Interest Expense for the most recently ended four fiscal quarters, as such terms are definedfinancial covenants contained in the Credit Agreement as amended.  The Interest Coverage Ratio is not permitted to be less than the following:

Fiscal Quarters Ending

September 30, 2009

1.58 to 1.0

December 31, 2009

1.49 to 1.0

March 31, 2010

1.52 to 1.0

June 30, 2010 through December 31, 2010

1.56 to 1.0

March 31, 2011 and June 30, 2011

1.70 to 1.0

September 30, 2011 through June 30, 2012

1.88 to 1.0

September 30, 2012 through June 30, 2013

2.48 to 1.0

Thereafter

2.47 to 1.0

As of September 30, 2009, the Company was in compliance with the Interest Coverage Ratio with a ratio of 2.43 to 1.0.

2012·Senior Secured Leverage Ratio: The ratio of outstanding Loans under the Credit Agreement, as amended, at quarter-end to Consolidated EBITDA for the most recently ended four fiscal quarters, as such terms are defined in the Credit Agreement, as amended.  The Senior Secured Leverage Ratio is not permitted to be greater than the following:

Fiscal Quarters Ending

June 30, 2011

5.00 to 1.0

September 30, 2011 through June 30, 2012

4.50 to 1.0

September 30, 2012 through June 30, 2013

3.25 to 1.0

September 30, 2013

3.00 to 1.0

The Senior Secured Leverage Ratio limitation is not applicable until June 30, 2011.

The Credit Agreement, as amended, limits the amount of dividends, stock repurchases and other types of distributions during any fiscal year in excess of certain limits based upon the Leverage Ratio as of the end of the fiscal quarter preceding the proposed distribution.  When the Leverage Ratio as of the end of a fiscal quarter is greater than 4.0 to 1.0, then no such distribution may be made if, after giving effect to such distribution, the aggregate amount of all such payments made in such fiscal quarter would exceed the sum of $0.01 per outstanding share of the Company’s Common Stock plus $250,000 or the aggregate amount of all such payments made in the applicable fiscal year would exceed $3.85 million.  The Company suspended payment of dividends effective April 2009.

Based on the Company’s current outlook for fiscal 2010, the Company 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 Company's 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.

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 Company’s subsidiaries fully, unconditionally, jointly and severally guarantee the Company’s obligations under the Senior Notes. See Note 24 of the Notes to Consolidated Financial Statements for separate financial information of the subsidiary guarantors.

44
Table of Contents


Refer to Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s outstanding debt as of September 30, 2009.

42

2012.


Table of Contents

Contractual Obligations, Commercial Commitments and Off-Balance Sheet Arrangements


Following is a summary of the Company’s contractual obligations and payments due by period following September 30, 20092012 (in millions):

 

 

Payments Due by Period

 

 

 

 

 

Less Than

 

 

 

 

 

More Than

 

Contractual Obligations

 

Total

 

1 Year

 

1-3 Years

 

3-5 Years

 

5 Years

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt (including interest)

 

$

2,638.8

 

$

162.4

 

$

408.0

 

$

2,068.4

 

$

—

 

Leases:

 

 

 

 

 

 

 

 

 

 

 

Capital

 

2.4

 

0.6

 

0.8

 

1.0

 

—

 

Operating

 

92.6

 

24.4

 

35.6

 

14.5

 

18.1

 

Purchase obligations(1)

 

1,351.9

 

1,350.5

 

1.4

 

—

 

—

 

Other long-term liabilities:

 

 

 

 

 

 

 

 

 

 

 

Uncertain tax positions(2)

 

—

 

—

 

—

 

—

 

—

 

Fair value of derivatives

 

51.1

 

36.8

 

14.3

 

—

 

—

 

Other

 

2.3

 

0.4

 

0.7

 

0.4

 

0.8

 

Total contractual obligations

 

$

4,139.1

 

$

1,575.1

 

$

460.8

 

$

2,084.3

 

$

18.9

 


 Payments Due by Period
   Less Than     More Than
 Total 1 Year 1-3 Years 3-5 Years 5 Years
Contractual Obligations 
  
  
  
  
Long-term debt (including interest)(1)
$1,228.6
 $51.0
 $213.4
 $662.9
 $301.3
Operating leases67.7
 22.4
 24.8
 14.9
 5.6
Purchase obligations(2)
1,775.1
 1,773.0
 2.1
 —
 —
Other long-term liabilities: 
  
  
  
  
Uncertain tax positions(3)
—
 —
 —
 —
 —
Other0.8
 0.3
 0.3
 —
 0.2
Total contractual obligations$3,072.2
 $1,846.7
 $240.6
 $677.8
 $307.1
 _________________________

(1)

(1)
Interest was calculated based upon the interest rate in effect at September 30, 2012.
(2)
The Company utilizes blanket purchase orders to communicate expected annual requirements to many of its suppliers or contractors. Requirements under blanket purchase orders generally do not become “firm” until four weeks prior to the Company’s scheduled unit production. The purchase obligations amountamounts included above representsrepresent the valuevalues of commitments considered firm, plus the value of all outstanding subcontracts.

(3)

(2)

Due to the uncertainty of the timing of settlement with taxing authorities, the Company is unable to make reasonably reliable estimates of the period of cash settlement of unrecognized tax benefits for the remaining uncertain tax liabilities. Therefore, $63.8$32.9 million of unrecognized tax benefits as of September 30, 20092012 have been excluded from the Contractual Obligations table above. See Note 1920 of the Notes to Consolidated Financial Statements for additional information regarding the Company’s unrecognized tax benefits as of September 30, 2009.

2012.


The Company incurs contingent limited recourse liabilities with respect to customer financing activities primarily in the access equipment segment. For additional information relative to guarantees, see Note 1213 of the Notes to Consolidated Financial Statements.


The following is a summary of the Company’s commercial commitments (in millions):

 

 

Amount of Commitment Expiration Per Period

 

 

 

 

 

Less Than

 

 

 

 

 

More Than

 

Commercial Commitments

 

Total

 

1 Year

 

1-3 Years

 

3-5 Years

 

5 Years

 

 

 

 

 

 

 

 

 

 

 

 

 

Customer financing guarantees to third parties

 

$

76.0

 

$

7.8

 

$

20.0

 

$

20.2

 

$

28.0

 

Standby letters of credit

 

34.1

 

25.2

 

8.9

 

—

 

—

 

Corporate guarantees

 

3.2

 

3.0

 

0.2

 

—

 

—

 

Total commercial commitments

 

$

113.3

 

$

36.0

 

$

29.1

 

$

20.2

 

$

28.0

 

43


 Amount of Commitment Expiration Per Period
   Less Than     More Than
 Total 1 Year 1-3 Years 3-5 Years 5 Years
Commercial Commitments 
  
  
  
  
Customer financing guarantees to third parties$94.6
 $22.9
 $21.2
 $14.2
 $36.3
Standby letters of credit179.8
 33.4
 145.5
 0.9
 —
Corporate guarantees2.9
 2.9
 —
 —
 —
Total commercial commitments$277.3
 $59.2
 $166.7
 $15.1
 $36.3

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Table of Contents




Fiscal 2013 Outlook

The Company believes that consolidated sales will decrease 4% to 8% in fiscal 2013 compared to fiscal 2012. This estimate assumes stable to slightly higher sales in the Company's non-defense segments, as a result of a slow economic recovery in the United States, coupled with an approximate 15% decline in defense segment sales. The Company is confident that its MOVE strategy will be a significant contributor to its results in fiscal 2013, leading to a consolidated operating income margin approximately 100 basis points higher in fiscal 2013 than in fiscal 2012. The Company believes that earnings from continuing operations will be $2.35 to $2.60 per share in fiscal 2013. This estimate does not consider any costs, which may be substantial, associated with the Offer and related threatened proxy contest that were launched in October 2012.

The Company believes access equipment segment sales will be between $2.8 billion and $3.0 billion in fiscal 2013. In spite of orders in the fourth quarter of fiscal 2012 that were lower than the prior year quarter, customer equipment utilization rates and fleet ages, as well as used equipment values, remain high for access equipment. The Company expects operating income margins in the access equipment segment will be in the 9.5% to 10.0% range, reflecting the progress this segment is making in recovering from the depths of the Great Recession.

The Company expects sales in its defense segment to be between $3.3 billion and $3.4 billion in fiscal 2013 as a result of lower FMTV and aftermarket part sales. The Company expects operating income margins for this segment to be 5.0% to 5.5%, reflecting the decrease in sales on a relatively fixed cost base.

The Company believes fire & emergency segment sales will be between $720 million and $750 million in fiscal 2013, reflecting the expected bottoming of the United States fire apparatus market. The Company believes operating income margins in the fire & emergency segment will be between 2.0% and 2.5% in fiscal 2013, reflecting the exit of the ambulance business and continued improved performance, offset by investments in the Company's MOVE strategy.

The Company expects sales in the commercial segment will also be in the range of $720 million to $750 million in fiscal 2013, largely driven by expected higher concrete mixer sales as housing starts appear to be gaining momentum. The Company believes operating income margins in the segment will be approximately 4.5% to 5.0% in fiscal 2013, reflecting the benefit of higher sales volumes largely offset by investments in the MOVE strategy.

The Company believes that corporate expenses in fiscal 2013 will be up slightly as compared to fiscal 2012 due to further investments in information technology. The Company estimates its effective income tax rate for fiscal 2013 will be 33%.

The Company believes its first quarter of fiscal 2013 will be the lowest quarter of the year in terms of sales and earnings per share, driven by seasonality of the Company's non-defense businesses and the expectation that the Company will not begin to recognize revenue from M-ATV sales to the UAE until the second fiscal quarter.

The Company believes that it will generate free cash flow of $75 million to $100 million in fiscal 2013. This estimate includes the Company's expectation of strong free cash flow in the access equipment segment and cash usage in the remaining three segments.

Critical Accounting Policies


The Company’s significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements. The Company considers the following policies to be the most critical in understanding the judgments that are involved in the preparation of the Company’s consolidated financial statements and the uncertainties that could impact the Company’s financial condition, results of operations and cash flows.


Revenue Recognition:Recognition. The Company recognizes revenue on equipment and parts sales when contract terms are met, collectability is reasonably assured and a product is shipped or risk of ownership has been transferred to and accepted by the customer. Revenue from service agreements is recognized as earned, when services have been rendered. Appropriate provisions are made for discounts, returns and sales allowances. Sales are recorded net of amounts invoiced for taxes imposed on the customer such as excise or value-added taxes.



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Sales to the U.S. government of non-commercial products manufactured to the government’s specifications are recognized using the units-of-delivery measure under the percentage-of-completion accounting method as units are accepted by the government. The Company includes amounts representing contract change orders, claims or other items in sales only when they can be reliably estimated and realization is probable. The Company charges anticipated losses on contracts or programs in progress to earnings when identified.

Approximately 37% of the Company’s revenues for fiscal 2012 were recognized under the percentage-of-completion accounting method.


The Company accounts for certain equipment lease contracts as sales-type leases. The present value of all payments, net of executory costs (such as legal fees), is recorded as revenue, the related cost of the equipment is charged to cost of sales, certain profit is deferred in accordance with lease accounting rules and interest income is recognized over the terms of the leases using the effective interest method.


The Company enters into rental purchase guarantee agreements with some of its customers. These agreements are normally for a term of no greater than twelve months and provide for rental payments with a guaranteed purchase at the end of the agreement. At the inception of the agreement, the Company records the full amount due under the agreement as revenue and the related cost of the equipment is charged to cost of sales.


Sales Incentives:Incentives. The terms for sales transactions with some of the Company’s distributors and customers may include specific volume-based incentives, which are calculated and paid or credited on account as a percentage of actual sales. The Company accounts for these incentives as sales discounts at the time of revenue recognition, which are recorded as a direct reduction of sales. The Company reviews its accrual for sales incentives on a quarterly basis and any adjustments are reflected in current earnings.


Impairment of Long-Lived and Amortized Intangible AssetsAssets.: The Company performs impairment evaluations of its long-lived assets, including property, plant and equipment and intangible assets with finite lives, whenever business conditions or events indicate that those assets may be impaired. When the estimated future undiscounted cash flows to be generated by the assets are less than the carrying value of the long-lived assets, the assets are written down to fair market value and a charge is recorded to current operations.


Impairment ofGoodwill and Indefinite-Lived Intangible Assets:Assets. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the assets might be impaired. The Company performs its annual review at the beginning of the fourth quarter of each fiscal year.


The Company evaluates the recoverability of goodwill by estimating the future discounted cash flowsfair value of the businesses to which the goodwill relates.  Estimated cash flows and related goodwill are grouped at the reporting unit level. A reporting unit is an operating segment or, under certain circumstances, a component of an operating segment that constitutes a business. When estimated future discounted cash flows arethe fair value of the reporting unit is less than the carrying value of the net assets and related goodwill, an impairment testreporting unit, a further analysis is performed to measure and recognize the amount of the impairment loss, if any. Impairment losses, limited to the carrying value of goodwill, represent the excess of the carrying amount of a reporting unit’s goodwill over the implied fair value of that goodwill.

The Company evaluates the recoverability of indefinite-lived trade names, based upon a “relief from royalty” method. This methodology determines the fair value of each trade name through use of a discounted cash flow model that incorporates an estimated “royalty rate” the Company would be able to charge a third party for the use of the particular trade name. In determining the estimated future cash flows, the Company considers current and projected future levelssales, a fair market royalty rate for each applicable trade name and an appropriate discount rate to measure the present value of income as well as business trends, prospects and market and economic conditions.

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The Company cannot predict the occurrence of certain events that might adversely affect the carrying value of goodwill and indefinite-lived intangible assets. Such events may include, but are not limited to, the impact of the economic environment, a material negative change in relationships with significant customers, or strategic decisions made in response to economic and competitive conditions. See “Critical Accounting Estimates.”


Guarantees of the Indebtedness of Others:Others. The Company enters into agreements with finance companies whereby the Company will guarantee the indebtedness of third-party end-users to whom the finance company lends to purchase the Company’s equipment. In some instances, the Company retains an obligation to the finance companies in the event the customer defaults on the financing. In accordance with FASB ASC Topic 460, Guarantees, the Company recognizes the greater of the fair value of the guarantee or the contingent liability required by FASB ASC Topic 450, Contingencies. Reserves are initially established related to these guarantees at the fair value of the guarantee based upon the Company’s understanding of the current financial

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position of the underlying customers and based on estimates and judgments made from information available at that time. If the Company becomes aware of deterioration in the financial condition of the customer/borrower or of any impairment of the customer/borrower’s ability to make payments, additional allowances are considered. Although the Company may be liable for the entire amount of a customer/borrower’s financial obligation under guarantees, its losses would generally be mitigated by the value of any underlying collateral including financed equipment, the finance company’s inability to provide clear title of foreclosed equipment to the Company, loss pools established in accordance with the agreements and other conditions. During periods of economic downturn, the value of the underlying collateral supporting these guarantees can decline sharply to further increase losses in the event of a customer/borrower’s default.


Critical Accounting Estimates


The Company prepares its consolidated financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts and related disclosures. Actual results could differ from those estimates. Management of the Company has discussed the development and selection of the following critical accounting estimates with the Audit Committee of the Company’s Board of Directors, and the Audit Committee has reviewed the Company’s disclosures relating to such estimates in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”


Definitization of Undefinitized Contracts. The Company recognizes revenue on undefinitized contracts with the DoD to the extent that it can reasonably and reliably estimate the expected final contract price and when collectability is reasonably assured. Undefinitized contracts are used when the Company and the DoD have not agreed upon all contract terms before the Company begins performance under the contracts. At September 30, 2012, the Company had recorded $83.4 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, the Company records those adjustments as a change in estimate in the period of change. The Company definitized certain defense segment contracts during fiscal 2012 and recorded operating income of $7.8 million related to previously recorded revenue. As the costs associated with these contracts had been previously expensed, the change increased net income by $5.0 million or $0.05 per share. In fiscal 2011, the Company updated its estimated costs under several undefinitized change orders and recorded $1.8 million of operating income related to such updates. As all costs associated with these contracts had been previously expensed, the change increased net income by $1.2 million or $0.01 per share.

Allowance for Doubtful Accounts:Accounts. The allowance for doubtful accounts requires management to estimate a customer’s ability to satisfy its obligations. The estimate of the allowance for doubtful accounts is particularly critical in the Company’s access equipment segment where the majority of the Company’s trade receivables are recorded. The Company evaluates the collectability of receivables based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded against amounts due to reduce the net recognized receivable to the amount reasonably expected to be collected. Additional reserves are established based upon the Company’s perception of the quality of the current receivables, including the length of time the receivables are past due, past experience of collectability and underlying economic conditions. If the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments, additional reserves would be required.


Goodwill:Goodwill and Indefinite-Lived Intangible Assets. In evaluating the recoverability of goodwill, it is necessary to estimate the fair value of the reporting units. The estimate of fair value of intangible assets is generally determined on the basis of discounted future cash flows.  The estimate of fair value of the reporting units is generally determined on the basis of discounted future cash flows supplemented by theand a market approach. In estimating the fair value, management must make assumptions and projections regarding such items as future cash flows, future revenues, future earnings and other factors. The assumptions used in the estimate of fair value are generally consistent with the past performance of each reporting unit and are also consistent with the projections and assumptions that are used in current operating plans. Such assumptions are subject to change as a result of changing economic and competitive conditions. The rate used to discount estimated cash flows is a rate corresponding to the Company’s cost of capital, adjusted for risk where appropriate, and is dependent upon interest rates at a point in time. The Company weighted the income approach more heavily (75%) as the income approach uses long-term estimates that consider the expected operating profit of each reporting unit during periods where residential and non-residential construction and other macroeconomic indicators are nearer historical averages. The Company believes the income approach more accurately considers the expected recovery in the U.S. and European construction markets than the market approach. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. It is possible that assumptions underlying the impairment analysis will change in such a manner to cause further impairment of goodwill, which could have a material impact on the Company’s results of operations.

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At February 28, 2009, given the sustained decline in the priceJuly 1, 2012, approximately 88% of the Company’s Common Stock subsequent to the Company’s fiscal 2008 year end when its share price approximated book value, depressed order rates during the second fiscal quarter which historically has been a strong period for orders in advance of the North American construction season, as well as further deterioration in credit markets and the macro-economic environment, the Company determined that the appropriate triggers had been reached to perform additional impairment testing onrecorded goodwill and its indefinite-lived intangible assets.

To derivepurchased intangibles were concentrated within the fair value of its reporting units, the Company performed extensive valuation analyses with the assistance of a third-party valuation advisor, utilizing both income and market approaches.  Under the income approach, the Company determined fair value based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of aJLG reporting unit and the rate of return an outside investor would expect to earn.  Estimated future cash flows were based on the Company’s internal projection models, industry projections and other assumptions deemed reasonable by management.  The sum of the fair values of the reporting units was reconciled to the Company’s market capitalization as of February 28, 2009 plus an estimated control premium.  For the second quarter of fiscal 2009 impairment analysis, the Company used a weighted-average cost of capital of 14.5% and a terminal growth rate of 3%.  This resulted in a control premium of 67%, based upon the relatively low price of the Company’s Common Stock on February 28, 2009 of $6.26 per share.  Under the market approach, the Company derived the fair value of its reporting units based on revenue multiples of comparable publicly-traded companies.  Changes in estimates or the application of alternative assumptions could produce significantly different results.

As a result of this analysis, $1,167.8 million of goodwill and $25.8 million of other long-lived intangible assets, including tradenames, technology and customer relationships, were written off during the second quarter of fiscal 2009.  An increase in the discount rate of 50 basis points would have resulted in an additional impairment charge of approximately $100 million.  These charges were driven by current projections and valuation assumptions that reflected the Company’s belief that the current recession would be deeper and longer than previously expected, that credit markets would remain tight and that costs of capital had risen significantly since the Company last performed its annual impairment testing.

Throughout the third quarter of fiscal 2009, access equipment order rates remained very weak and did not reflect a normal seasonal uptick.  Further, during the quarter it became apparent to the Company that federal stimulus actions would not contribute to access equipment orders in the near term, that credit availability to the Company’s access equipment customers would continue to be constrained, that U.S. residential and nonresidential spending could remain at very low levels for an extended period beyond the Company’s previous estimates and that the global economic recovery would occur at a slower pace than previously expected.  These factors all contributed to the Company’s belief that this business would experience lower orders in fiscal 2010 and beyond than previously estimated.  As a result, the Company initiated actions to further reduce its costs in its access equipment segment, including reductions in workforce and plant closings.  The Company considered these factors together to be an indicator of potential impairment of goodwill in the access equipment reporting unit which comprisessegment. The impairment model assumes that the entireU.S. economy and construction spending (and hence access equipment segment.  The Company therefore performed a detailed Step 1 analysis of the access equipment segment utilizing a discounted cash flow model that employed a 14.5% discount rate and a terminal growth rate of 3%.  As a result of the Company’s receipt of a contract award and related large delivery order for M-ATVs from the DoD on June 30, 2009 and the Company’s decision to subcontract component manufacture and assembly of many M-ATVs to JLG, this model included expected cash flows related to this subcontract.  The resulting estimated fair value of JLG calculated in the impairment analysis was in excess of net book value of JLG. Based on this analysis, the Company concluded that no additional impairment charge was required in the third quarter of fiscal 2009.

During the fourth quarter of fiscal 2009, the Company performeddemand) will continue its annual impairment review relative to goodwill and indefinite-lived intangible assets (principally tradenames) utilizing a discounted cash flow model that employed a 14.5% discount rate and a terminal growth rate of 3%.  This resulted in a control premium of 59%, based on the price of the Company’s Common Stock on July 1, 2009 of $18.43 per share.  As a result of this testing, the Company recorded impairment charges of $1.4 million and $0.6 million for goodwill and tradenames, respectively, within the fire & emergency segment.  In addition, based on this analysis, the Company concluded that impairment charges were not required for any other reporting units.slow improvement. Assumptions utilized in the impairment analysis are highly judgmental, especially given the severity and global scale of the current recession.most recent recession and the subjective assumptions regarding a recovery. Changes in estimates or the application of alternative assumptions could have produced significantly different results. For example, a discount rateWhile the Company currently believes that an impairment of approximately 15% would have likely resulted in further impairment chargesintangible assets at JLG OSVis unlikely, events and IMT.

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Tableconditions that could result in the impairment of Contents

Approximately 85%intangibles at JLG include a sharp decline in economic conditions, pricing pressure on JLG's margins or other factors leading to reductions in expected long-term sales or profitability at JLG.


At July 1, 2012, approximately 7% of the Company’s recorded goodwill and indefinite-lived purchased intangibles arewere concentrated within the Pierce reporting unit in the access equipmentfire & emergency segment. The access equipment segment consists of only oneThis reporting unit JLG.has been severely impacted by the decrease in municipal revenue during the past two years. The estimated fair value of JLG calculatedCompany believes that municipal demand is stabilizing as its municipal orders increased in the fourth quarter of fiscal 2009 impairment analysis exceeded JLG’s net book value by approximately 4.0%.2012. The Company expects Pierce sales to decline in fiscal 2013 as federal demand is expected to bottom and that Pierce sales will begin a slow recovery starting in fiscal 2014 as municipal demand continues to rebound. The impairment model assumes that the U.S. economy and construction spending (and hence access equipment demand) will show markedcontinue its slow improvement, beginning in fiscal 2011.reversing the recent trend of decreasing municipal tax revenues. Assumptions utilized in the impairment analysis are highly judgmental, especially given the severity and global scale of the current recession.most recent recession and the subjective assumptions regarding a recovery. Changes in estimates or the application of alternative assumptions could have produced significantly different results. A discount rate of approximately 15% would have resulted in the fair value of the access equipment segment being $20 million lower than its net book value.  For each 50 basis point increase in the discount rate above 15%, the fair value of the access equipment segment would decrease by approximately $95 million.  Furthermore, ifWhile the Company had used cash flows which were 5% lower than used in itscurrently believes that an impairment testing of goodwill, the fair value of the access equipment segment would be approximately $25 million lower than its net book valueintangible assets at September 30, 2009.  EventsPierce is unlikely, events and conditions that could result in the impairment of intangibles at JLGPierce include a further decline in economic conditions a slower or weaker economic recovery than currently estimated by the Company or other factors leading to reductions in expected long-term sales or profitability at JLG.

Pierce.


The Company has no other reporting units that have material amounts of goodwill and indefinite-lived intangible assets that are at risk of impairment.

Guarantees of the Indebtedness of Others:Others. The reserve for guarantees of the indebtedness of others requires management to estimate a customer’s ability to satisfy its obligations. The estimate is particularly critical in the Company’s access equipment segment where the majority of the Company’s guarantees are granted. The Company evaluates the reserve based on a combination of factors. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations, a specific reserve is recorded in accordance with FASB ASC Topic 450, Contingencies. In most cases, the financing company is required to provide clear title to the equipment under the financing program. The Company considers the residual value of the equipment to reduce the amount of exposure. Residual values are estimated based upon recent auctions, used equipment sales and periodic studies performed by a third-party. Additional reserves, based upon historical loss percentages, are established at the time of sale of the equipment based upon the requirement of FASB ASC Topic 460, Guarantees. If the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments, additional reserves would be required.


Product Liability:Liability. Due to the nature of the Company’s products, the Company is subject to product liability claims in the normal course of business. A substantial portion of these claims and lawsuits involve the Company’s access equipment, concrete placement and refuse collection vehicle businesses, while such lawsuits in the Company’s defense and fire & emergency businesses have historically been limited. To the extent permitted under applicable law, the Company maintains insurance to reduce or eliminate risk to the Company. Most insurance coverage includes self-insured retentions that vary by business segment and by year. As of September 30, 2009,2012, the Company was generally self-insured for future claims up to $3.0 million per claim.


The Company establishes product liability reserves for its self-insured retention portion of any known outstanding matters based on the likelihood of loss and the Company’s ability to reasonably estimate such loss. There is inherent uncertainty as to the eventual resolution of unsettled matters due to the unpredictable nature of litigation. The Company makes estimates based on available information and the Company’s best judgment after consultation with appropriate experts. The Company periodically revises estimates based upon changes to facts or circumstances. The Company also utilizes actuarial methodologies to calculate reserves required for estimated incurred but not reported claims as well as to estimate the effect of the adverse development of claims over time.



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Warranty:Warranty. Sales of the Company’s products generally carry typical explicit manufacturers’ warranties based on terms that are generally accepted in the Company’s marketplaces. The Company records provisions for estimated warranty and other related costs at the time of sale based on historical warranty loss experience and periodically adjusts these provisions to reflect actual experience. 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 Company’s historical experience. The Company provides for any such warranty issues as they become known and estimable. It is reasonably possible that from time to time additional warranty and other related claims could arise from disputes or other matters beyond the scope of the Company’s historical experience.


The Company’s 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 included in the Company’s end products (such as engines, transmissions, tires, etc.) may include manufacturers’ warranties. These manufacturers’ warranties are generally

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passed on to the end customer of the Company’s products and the customer would generally deal directly with the component manufacturer.


The Company’s policy is to record a liability for the expected cost of warranty-related claims at the time of the sale. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring the Company’s obligations under the warranty plans. The Company believes that the warranty accounting estimate is a “critical accounting estimate” because changes in the warranty provision can materially affect net income; the estimate requires management to forecast estimated product usage levels by customers; in the case of new models, components or technology may be different, resulting in higher levels of warranty claims experience than with existing, mature products; and certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. The estimate for warranty obligations is a critical accounting estimate for each of the Company’s operating segments.


Historically, the cost of fulfilling the Company’s warranty obligations has principally involved replacement parts, labor and sometimes travel for any field retrofit campaigns. Over the past three fiscal years, the Company’s warranty cost as a percentage of sales has ranged from 0.85%0.40% of sales to 0.92%0.89% of sales. Warranty costs tend to be higher shortly after new product introductions, especially those introductions involving new technologies, when field warranty campaigns may be necessary to correct or retrofit certain items. Accordingly, the Company must make assumptions about the number and cost of anticipated field warranty campaigns. The Company’s estimates are based on historical experience, the extent of pre-production testing, the number of units involved and the extent of new features/components included in new product models.


Each quarter, the Company reviews actual warranty claims experience to determine if there are any systemic defects that would require a field campaign. Also, based upon historical experience, warranty provision rates on new product introductions are established at higher than standard rates to reflect increased expected warranty costs associated with any new product introduction.


At times, warranty issues can arise which are beyond the scope of the Company’s historical experience. If the estimate of warranty costs in fiscal 20092012 increased or decreased by 50 basis points, the Company’s accrued warranty costs, costs of sales and operating income would each change by $26.5$40.9 million or 36.4%43.1%, 0.6% and 2.7%11.0%, respectively.


Benefit Plans:Plans. The pension benefit obligation and related pension income are calculated in accordance with FASB ASC Topic 715, Compensation — Retirement Benefits, and are impacted by certain actuarial assumptions, including the discount rate and the expected rate of return on plan assets. The Company’s benefit plan assumptions are determined by using a benchmark approach as well as currently available actuarial data. These rates are evaluated on an annual basis considering such factors as market interest rates and historical asset performance. Actuarial valuations at September 30, 20092012 used a weighted-average discount rate of 5.25%4.24% and an expected return on plan assets of 7.75%6.25%. A 0.5% decrease in the discount rate would increase annual pension expense by $2.3$2.6 million. A 0.5% decrease in the expected return on plan assets would increase the Company’s annual pension expense by $0.8$1.2 million.


The Company’s other postretirement benefits obligation and related expenses are calculated in accordance with FASB ASC Topic 715, Compensation — Retirement Benefits, and are impacted by certain actuarial assumptions, including health care trend rates. An increase of one percentage point in health care costs would increase the accumulated postretirement benefit obligation by $6.6$11.2 million and would increase the annual service and interest cost by $1.2 million.$2.2 million. A corresponding decrease of one percentage point would decrease the accumulated postretirement benefit obligation by $5.5$9.3 million and decrease the annual service and interest cost by $1.0 million.

The Company’s benefit plan assumptions are determined by using a benchmark approach as well as currently available actuarial data.

$1.8 million.



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Income Taxes:Taxes. The Company records deferred income tax assets and liabilities for differences between the book basis and tax basis of the related net assets. The Company records a valuation allowance, when appropriate, to adjust deferred tax asset balances to the amount management expects to realize. Management considers, as applicable, the amount of taxable income available in carryback years, future taxable income and potential tax planning strategies in assessing the need for a valuation allowance.

The Company will require future taxable incomeaccounts for uncertain tax positions in The Netherlands in order to fully realize the net deferred tax asset in that jurisdiction.

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On October 1, 2007, the Company adoptedaccordance with FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109 (ASCASC Topic 740, Income Taxes). ASC Topic 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on derecognition, classification, interest and penalties, disclosure and transition. The evaluation of a tax position in accordance with ASC Topic 740 is a two-step process. The first step is recognition, where the Company evaluates whether an individual tax position has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have a less than 50% likelihood of being sustained, zero tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The actual benefits ultimately realized may differ from the Company’s estimates. In future periods, changes in facts and circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in results of operations and financial position in the period in which such changes occur. As of September 30, 2009,2012, the Company had liabilities for unrecognized tax benefits pertaining to uncertain tax positions totaling $63.8 million.

$32.9 million.


New Accounting Standards


Refer to Note 2 of the Notes to Consolidated Financial Statements for a discussion of the impact of new accounting standards on the Company’s consolidated financial statements.


Customers and Backlog


Sales to the U.S. government comprised approximately 52%45% of the Company’s net sales in fiscal 2009.2012. No other single customer accounted for more than 10% of the Company’s net sales for this period. A substantial majority of the Company’s net sales are derived from customer orders prior to commencing production.


The Company’s backlog as of September 30, 2009 increased 138.6%2012 decreased 37.5% to $5,615.4 million$4.05 billion compared to $2,353.8 million$6.48 billion at September 30, 2008.  Defense segment backlog increased 307.2% to $4,883.8 million at September 30, 2009 compared to $1,199.2 million at September 30, 2008 due largely to the award of the M-ATV contract in June 2009, the renewal of the FHTV contract in October 2008, including a supplemental FHTV award in August 2009, and the award of the FMTV contract in August 2009.  The $266.8 million delivery order under the recently-awarded FMTV contract is under a government issued stop work order until resolution of protests filed with the GAO by the Company’s competitors under that competition.2011. Access equipment segment backlog decreased 70.2%50.5% to $98.3$361.1 million at September 30, 2012 compared to $729.2 million at September 30, 2011. Backlog at September 30, 20092011 included a very large, early cycle order and was also favorably impacted by anticipated capacity constraints in the industry. Defense segment backlog decreased 40.5% to $3.05 billion at September 30, 2012 compared to $330.0 million$5.13 billion at September 30, 20082011 due largely to the global recessionfulfillment of FHTV and related impact on credit markets.  Access equipment backlog asFMTV orders and the delay in finalizing the fiscal 2012 U.S. federal budget, which has delayed receipt of September 30, 2009 included $46.5 million relating to telehandler orders fromfor the DoD.  Backlog figures reported for prior periods did not include amounts relating to telehandler orders from the DoD.  The amount of these DoD orders on hand, but not included in backlog, as of September 30, 2008 was $42.7 million.Company's products. Fire & emergency segment backlog decreased 11.8%0.3% to $558.7$477.6 million at September 30, 20092012 compared to $633.2$479.0 million at September 30, 20082011 due in large part to weakening domestic municipal markets, the fulfillment of domestic fire apparatusCompany no longer taking orders for Medtec ambulances in fiscal 2009 received in advance of price increases and new National Fire Protection Association standards that became effective January 1, 2009.  Fire & emergency segment backlog at September 30, 2009 included $49.7 million relatedconnection with its decision to BAI.  BAI was sold in October 2009.exit the Medtec business. Commercial segment backlog decreased 61.0%increased 11.2% to $74.6$155.8 million at September 30, 20092012 compared to $191.4$140.0 million at September 30, 2008.  Backlog at September 30, 2008 included $70.7 million of backlog for Geesink.  Geesink was sold in July 2009.2011. Unit backlog for domesticconcrete mixers was up 79.7% compared to September 30, 2011. The Company believes that aged fleets and recent increases in housing starts contributed to recent larger, multiple-unit orders. Unit backlog for refuse collection vehicles was down 32.4%29.7% at September 30, 2012 compared to September 30, 2008 partly due2011. Prior year orders and backlog were positively impacted as customers scheduled delivery of units prior to the timingDecember 31, 2011 expiration of orders from several large waste haulers.  Unit backlogs for front-discharge and rear-discharge concrete mixers were down 54.5% and 77.2%, respectively, compared to September 30, 2008 as a result of continued weak construction markets in the U.S as a result of the global recession and related impact on credit markets.

U.S. bonus tax depreciation deduction.


Reported backlog excludes purchase options and announced orders for which definitive contracts have not been executed. Additionally, backlog excludes unfunded portions of the FHTV MTVR, ID/IQ, LVSR 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 Company’s future sales to the DoD versus its sales to other customers. Approximately 10.8%14% of the Company’s September 30, 20092012 backlog is not expected to be filled in fiscal 2010.

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Financial Market Risk


The Company is exposed to market risk from changes in interest rates, certain commodity prices and foreign currency exchange rates. To reduce the risk from changes in foreign currency exchange and interest rates, the Company selectively uses financial instruments. All hedging transactions are authorized and executed pursuant to clearly defined policies and procedures, which strictly prohibit the use of financial instruments for speculative purposes.


Interest Rate RiskRisk.

The Company’s earnings exposure related to adverse movements in interest rates is primarily derived from outstanding floating rate debt instruments that are indexed to short-term market interest rates. The Company, as needed, uses interest rate swaps to modify its exposure to interest rate movements. In January 2007, theThe Company entered into andid not have any outstanding interest rate swap to reduce the riskswaps as of interest rate changes associated with the Company’s variable rate debt issued to finance the acquisition of JLG.  The swap effectively fixes the variable portion of the interest rate on debt in the amount of the notional amount of the swap at 5.105% plus the applicable spread based on the terms of the Credit Agreement.  The notional amount of the swap at September 30, 2009 was $1.25 billion and reduces to $750 million on December 7, 2009 and $250 million on December 6, 2010.  The swap terminates on December 6, 2011.

2012.


The portion of the Company’s interest expense not effectively fixed in the interest rate swap remains sensitive to changes in the interest rates in the U.S. and off-shore markets. In this regard, changes in U.S. and off-shore interest rates affect interest payable on the Company’s borrowings under its Credit Agreement. ABased on debt outstanding at September 30, 2012, a 100 basis point increase or decrease in the average cost of the Company’s variable rate debt including outstanding swaps, would have resulted in a change in fiscal 2009increase or decrease annual pre-tax interest expense ofby approximately $11.9$4.6 million.  These amounts are determined on an annual basis by considering the impact of the hypothetical interest rates on average borrowings during fiscal 2009, after consideration of the interest rate swap.


The table below provides information about the Company’s derivative financial instruments and other financial instruments thatdebt obligations, which are sensitive to changes in interest rates including interest rate swaps and debt obligations (dollars(dollars in millions):

 

 

Expected Maturity Date

 

 

 

Fair

 

 

 

2010

 

2011

 

2012

 

2013

 

2014

 

Thereafter

 

Total

 

Value

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable rate ($US)

 

$

—

 

$

—

 

$

117.7

 

$

—

 

$

1,902.6

 

$

—

 

$

2,020.3

 

$

2,016.7

 

Average interest rate

 

—

 

—

 

7.4283

%

—

 

8.5319

%

—

 

8.4676

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Rate Derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable to fixed ($US)

 

$

36.6

 

$

12.8

 

$

1.5

 

$

—

 

$

—

 

$

—

 

$

50.9

 

$

50.9

 

Average pay rate

 

5.1050

%

5.1050

%

5.1050

%

—

 

—

 

—

 

5.1050

%

 

 

Average receive rate

 

0.5149

%

1.6778

%

2.6190

%

—

 

—

 

—

 

0.9473

%

 

 

For debt obligations, the


 Expected Maturity Date    
 2013 2014 2015 2016 2017 Thereafter Total 
Fair
Value
Liabilities 
  
  
  
  
  
  
  
Long-term debt: 
  
  
  
  
  
  
  
Variable rate ($US)$—
 $65.0
 $48.8
 $341.2
 $—
 $—
 $455.0
 $452.7
Average interest rate2.0844% 2.1416% 2.2413% 2.3943% —% —% 2.3418%  
Fixed rate ($US)$—
 $—
 $—
 $—
 $250.0
 $250.0
 $500.0
 $550.0
Average interest rate8.3750% 8.3750% 8.3750% 8.3750% 8.4479% 8.5000% 8.4740%  
                

The table presents principal cash flows and related weighted-average interest rates by expected maturity dates.  For interest rate swaps, the table presents the notional amounts and weighted-average interest rates by expected (contractual) maturity dates.  Notional amounts are used to calculate the contractual payments to be exchanged under the contract. Weighted-average variable rates are based on implied forward rates in the yield curve at the reporting date.

50



Table of Contents

Commodity Price RiskRisk.

The Company is a purchaser of certain commodities, including steel, aluminum and composites. In addition, the Company is a purchaser of components and parts containing various commodities, including steel, aluminum, rubber and others which are integrated into the Company’s end products. The Company generally buys these commodities and components based upon market prices that are established with the vendor as part of the purchase process. The Company does not use commodity financial instruments to hedge commodity prices.


The Company generally obtains firm quotations from its suppliers for a significant portion of its orders under firm, fixed-price contracts in its defense segment. In the Company’s access equipment, fire & emergency and commercial segments, the Company generally attempts to obtain firm pricing from most of its suppliers, consistent with backlog requirements and/or forecasted annual sales. To the extent that commodity prices increase and the Company does not have firm pricing from its suppliers, or its suppliers are not able to honor such prices, then the Company may experience margin declines to the extent it is not able to increase selling prices of its products.



52
Table of Contents

Foreign Currency RiskRisk.

The Company’s operations consist of manufacturing in the U.S., Belgium, Canada, France, Australia, Romania and RomaniaChina and sales and limited vehicle body mounting activities on six continents. In addition, the Company manufactures products through investments in joint ventures in Mexico and Brazil. International sales werecomprised approximately 15%22% of overall net sales in fiscal 2009, including2012, of which approximately 10% that83% involved export salesexports from the U.S. The majority of export sales in fiscal 20092012 were denominated in U.S. dollars. As a result of the manufacture and sale of the Company’s products in foreign markets, the Company’s earnings are affected by fluctuations in the value of the U.S. dollar, as compared to foreign currencies in which certain of the Company’s transactions in foreign markets are denominated. The Company’s operating results are principally exposed to changes in exchange rates between the U.S. dollar and the European currencies, primarily the Euro and the U.K. pound sterling, changes between the U.S. dollar and the Australian dollar, changes between the U.S. dollar and the Brazilian real and changes between the U.S. dollar and the Brazilian real.Chinese Renminbi. Through the Company’s foreign currency hedging activities, the Company seeks to minimize the risk that cash flows resulting from the sales of the Company’s products will be affected by changes in exchange rates.


The Company enters into certain forward foreign currency exchange contracts to mitigate the Company’s foreign currency exchange risk. These contracts qualify as derivative instruments under FASB ASC Topic 815, Derivatives and Hedging;Hedging; however, the Company has not designated all of these instruments as hedge transactions under ASC Topic 815. Accordingly, the mark-to-market impact of these derivatives is recorded each period to current earnings along with the offsetting foreign currency transaction gain/loss recognized on the related balance sheet exposure. At September 30, 2009,2012, the Company was managing $81.5$142.7 million (notional) of foreign currency contracts, allnone of which were not designated as accounting hedges and all of which settle within 60 days.


The following table quantifies outstanding forward foreign exchange contracts intended to hedge non-U.S. dollar denominated cash, receivables and payables and the corresponding impact on the value of these instruments assuming a 10% appreciation/depreciation of the U.S. dollar relative to all other currencies on September 30, 20092012 (dollars in millions):

 

 

 

 

 

 

 

 

Foreign Exchange

 

 

 

 

 

 

 

 

 

Gain/(Loss) From:

 

 

 

Notional
Amount

 

Average
Contractual
Exchange Rate

 

Fair Value

 

10%
Appreciation of
U.S. Dollar

 

10%
Depreciation of
U.S. Dollar

 

Sell Euro / Buy USD

 

$

69.6

 

1.4614

 

$

(0.1

)

$

6.9

 

$

(6.9

)

Sell AUD / Buy USD

 

3.5

 

0.8633

 

(0.1

)

0.4

 

(0.4

)

Sell GBP / Buy Euro

 

5.4

 

0.9200

 

—

 

—

 

—

 

Sell PLN / Buy Euro

 

3.0

 

4.2086

 

—

 

—

 

—

 


       
Foreign Exchange
Gain/(Loss) From:
 
Notional
Amount
 
Average
Contractual
Exchange Rate
 Fair Value 
10%
Appreciation of
U.S. Dollar
 
10%
Depreciation of
U.S. Dollar
Sell Euro / Buy USD$76.2
 1.2871
 $0.1
 $7.6
 $(7.6)
Sell AUD / Buy USD54.3
 1.0426
 0.3
 5.4
 (5.4)
Sell USD / Buy GBP9.5
 1.6102
 —
 0.9
 (1.0)
Sell GBP / Buy Euro2.7
 0.8012
 —
 —
 —

As previously noted, the Company’s policy prohibits the trading of financial instruments for speculative purposes or the use of leveraged instruments. It is important to note that gains and losses indicated in the sensitivity analysis would be offset by gains and losses on the underlying receivables and payables.

51



Table of Contents

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Market Risk” contained in Item 7 of this Form 10-K is hereby incorporated by reference in answer to this item.

52



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ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Oshkosh Corporation

Oshkosh, Wisconsin


We have audited the accompanying consolidated balance sheets of Oshkosh Corporation and subsidiaries (the “Company”) as of September 30, 20092012 and 2008,2011, and the related consolidated statements of operations, shareholders’income, equity, and cash flows for each of the three years in the period ended September 30, 2009.2012. Our audits also included the consolidated financial statement schedule listed in the Table of Contents at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on the financial statements and financial statement schedule based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, such consolidated financial statements presentspresent fairly, in all material respects, the financial position of the CompanyOshkosh Corporation and subsidiaries at September 30, 20092012 and 2008,2011 and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2009,2012, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presentpresents fairly, in all material respects, the information set forth therein.

As described in Note 2 to the Consolidated Financial Statements, the Company adopted new accounting guidance on the accounting for uncertainty in income taxes, on October 1, 2007.


We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of September 30, 2009,2012, based on the criteria established in Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 18, 2009,19, 2012, expressed an unqualified opinion on the Company’s internal control over financial reporting.


/S/ DELOITTEDeloitte & TOUCHETouche LLP


Milwaukee, Wisconsin

November 18, 2009

53

19, 2012

54
Table of Contents


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Oshkosh Corporation

Oshkosh, Wisconsin


We have audited the internal control over financial reporting of Oshkosh Corporation and subsidiaries (the “Company”) as of September 30, 2009,2012, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying management report (Management’sManagement’s Report on Internal Control over Financial Reporting).Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.


We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.


A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the consolidated financial statements.


Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2009,2012, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.


We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and consolidated financial statement schedule as of and for the year ended September 30, 2009,2012 of the Company and our report dated November 18, 2009, expresses19, 2012 expressed an unqualified opinion on those consolidated financial statements and consolidated financial statement schedule.


/S/ DELOITTEDeloitte & TOUCHETouche LLP


Milwaukee, Wisconsin

November 18, 2009

54

19, 2012

55
Table of Contents


OSHKOSH CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

INCOME

(In millions, except per share amounts)

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Net sales

 

$

5,295.2

 

$

6,936.4

 

$

6,139.3

 

Cost of sales

 

4,589.2

 

5,758.1

 

5,052.8

 

Gross income

 

706.0

 

1,178.3

 

1,086.5

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

435.8

 

493.5

 

411.9

 

Amortization of purchased intangibles

 

62.4

 

68.8

 

65.5

 

Intangible assets impairment charges

 

1,199.8

 

1.0

 

—

 

Total operating expenses

 

1,698.0

 

563.3

 

477.4

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

(992.0

)

615.0

 

609.1

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense

 

(212.8

)

(212.1

)

(200.8

)

Interest income

 

4.8

 

7.1

 

6.2

 

Miscellaneous, net

 

8.5

 

(9.3

)

0.9

 

 

 

(199.5

)

(214.3

)

(193.7

)

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before income taxes, equity in earnings of unconsolidated affiliates and minority interest, net

 

(1,191.5

)

400.7

 

415.4

 

(Benefit from) provision for income taxes

 

(19.7

)

120.8

 

137.7

 

 

 

 

 

 

 

 

 

(Loss) income from continuing operations before equity in earnings of unconsolidated affiliates and minority interest, net

 

(1,171.8

)

279.9

 

277.7

 

 

 

 

 

 

 

 

 

Equity in (losses) earnings of unconsolidated affiliates, net of income taxes of $(0.8), $2.7 and $3.1

 

(1.4

)

6.3

 

7.3

 

Minority interest, net of income taxes of $0.0, $0.1 and $0.1

 

0.9

 

0.7

 

0.3

 

(Loss) income from continuing operations

 

(1,172.3

)

286.9

 

285.3

 

 

 

 

 

 

 

 

 

Discontinued operations (Note 3):

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

19.0

 

(210.3

)

(19.7

)

Income tax benefit

 

(54.5

)

(2.7

)

(2.5

)

Income (loss) from discontinued operations, net of tax

 

73.5

 

(207.6

)

(17.2

)

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(1,098.8

)

$

79.3

 

$

268.1

 

 

 

 

 

 

 

 

 

(Loss) earnings per share-basic:

 

 

 

 

 

 

 

From continuing operations

 

$

(15.33

)

$

3.88

 

$

3.88

 

From discontinued operations

 

0.96

 

(2.81

)

(0.24

)

 

 

$

 (14.37

)

$

1.07

 

$

3.64

 

(Loss) earnings per share-diluted:

 

 

 

 

 

 

 

From continuing operations

 

$

(15.33

)

$

3.83

 

$

3.81

 

From discontinued operations

 

0.96

 

(2.77

)

(0.23

)

 

 

$

 (14.37

)

$

1.06

 

$

3.58

 

 Fiscal Year Ended September 30,
 2012 2011 2010
Net sales$8,180.9
 $7,567.5
 $9,820.6
Cost of sales7,189.9
 6,489.2
 7,850.6
Gross income991.0
 1,078.3
 1,970.0
      
Operating expenses: 
  
  
Selling, general and administrative567.3
 509.0
 483.9
Amortization of purchased intangibles57.7
 59.3
 59.0
Intangible asset impairment charges—
 2.0
 2.3
Total operating expenses625.0
 570.3
 545.2
Operating income366.0
 508.0
 1,424.8
      
Other income (expense): 
  
  
Interest expense(76.0) (90.7) (187.1)
Interest income1.9
 4.7
 3.0
Miscellaneous, net(5.2) 1.6
 1.0
Income from continuing operations before income taxes and equity in earnings (losses) of unconsolidated affiliates286.7
 423.6
 1,241.7
Provision for income taxes57.4
 145.1
 421.4
Income from continuing operations before equity in earnings (losses) of unconsolidated affiliates229.3
 278.5
 820.3
Equity in earnings (losses) of unconsolidated affiliates2.3
 0.5
 (4.3)
Income from continuing operations, net of tax231.6
 279.0
 816.0
Discontinued operations (Note 3): 
  
  
Loss from discontinued operations(5.8) (7.1) (33.1)
Income tax benefit6.1
 1.5
 7.1
Income (loss) from discontinued operations, net of tax0.3
 (5.6) (26.0)
Net income231.9
 273.4
 790.0
Net income attributable to noncontrolling interest(1.1) —
 —
Net income attributable to Oshkosh Corporation$230.8
 $273.4
 $790.0
      
Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-basic: 
  
  
From continuing operations$2.52
 $3.07
 $9.07
From discontinued operations—
 (0.06) (0.29)
 $2.52
 $3.01
 $8.78
      
Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-diluted: 
  
  
From continuing operations$2.51
 $3.05
 $8.97
From discontinued operations—
 (0.06) (0.28)
 $2.51
 $2.99
 $8.69
The accompanying notes are an integral part of these financial statements

55


56
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OSHKOSH CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share amounts)

 

 

September 30,

 

 

 

2009

 

2008

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

530.4

 

$

88.2

 

Receivables, net

 

563.8

 

997.8

 

Inventories, net

 

789.7

 

941.6

 

Deferred income taxes

 

75.5

 

66.6

 

Other current assets

 

183.8

 

58.2

 

Total current assets

 

2,143.2

 

2,152.4

 

Investment in unconsolidated affiliates

 

37.3

 

38.1

 

Property, plant and equipment, net

 

410.2

 

453.3

 

Goodwill

 

1,077.3

 

2,274.1

 

Purchased intangible assets, net

 

967.8

 

1,059.9

 

Other long-term assets

 

132.2

 

103.7

 

Total assets

 

$

4,768.0

 

$

6,081.5

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Revolving credit facility and current maturities of long-term debt

 

$

15.0

 

$

93.5

 

Accounts payable

 

555.8

 

639.9

 

Customer advances

 

731.9

 

296.8

 

Payroll-related obligations

 

74.5

 

104.8

 

Income taxes payable

 

3.1

 

11.1

 

Accrued warranty

 

72.8

 

88.3

 

Other current liabilities

 

205.5

 

228.8

 

Total current liabilities

 

1,658.6

 

1,463.2

 

Long-term debt, less current maturities

 

2,023.2

 

2,680.5

 

Deferred income taxes

 

239.6

 

308.9

 

Other long-term liabilities

 

330.3

 

237.0

 

Commitments and contingencies

 

 

 

 

 

Minority interest

 

2.2

 

3.3

 

Shareholders’ 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; 89,495,337 and 74,545,337 shares issued, respectively)

 

0.9

 

0.7

 

Additional paid-in capital

 

619.5

 

250.7

 

(Accumulated deficit) retained earnings

 

(30.8

)

1,082.9

 

Accumulated other comprehensive (loss) income

 

(74.7

)

55.7

 

Common Stock in treasury, at cost (64,215 and 116,499 shares, respectively)

 

(0.8

)

(1.4

)

Total shareholders’ equity

 

514.1

 

1,388.6

 

Total liabilities and shareholders’ equity

 

$

4,768.0

 

$

6,081.5

 

 September 30,
 2012 2011
Assets 
  
Current assets: 
  
Cash and cash equivalents$540.7
 $428.5
Receivables, net1,018.6
 1,089.1
Inventories, net937.5
 786.8
Deferred income taxes69.9
 72.9
Prepaid income taxes98.0
 49.0
Other current assets29.8
 28.3
Total current assets2,694.5
 2,454.6
Investment in unconsolidated affiliates18.8
 31.8
Property, plant and equipment, net369.9
 388.7
Goodwill1,033.8
 1,041.5
Purchased intangible assets, net775.4
 838.7
Other long-term assets55.4
 71.6
Total assets$4,947.8
 $4,826.9
    
Liabilities and Equity 
  
Current liabilities: 
  
Revolving credit facility and current maturities of long-term debt$—
 $40.1
Accounts payable683.3
 768.9
Customer advances510.4
 468.6
Payroll-related obligations130.1
 110.7
Accrued warranty95.0
 75.0
Deferred revenue113.0
 38.4
Other current liabilities172.7
 190.1
Total current liabilities1,704.5
 1,691.8
Long-term debt, less current maturities955.0
 1,020.0
Deferred income taxes129.6
 171.3
Other long-term liabilities305.2
 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; 92,086,465 and 91,330,019 shares issued, respectively)0.9
 0.9
Additional paid-in capital703.5
 685.6
Retained earnings1,263.5
 1,032.7
Accumulated other comprehensive loss(101.4) (122.6)
Common Stock in treasury, at cost (528,695 and 6,956 shares, respectively)(13.0) (0.1)
Total Oshkosh Corporation shareholders’ equity1,853.5
 1,596.5
Noncontrolling interest—
 0.1
Total equity1,853.5
 1,596.6
Total liabilities and equity$4,947.8
 $4,826.9
The accompanying notes are an integral part of these financial statements

56


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OSHKOSH CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions, except per share amounts)

 

 

 

 

 

 

(Accumulated

 

Accumulated

 

Common

 

Compre-

 

 

 

 

 

Additional

 

Deficit)

 

Other

 

Stock in

 

hensive

 

 

 

Common

 

Paid-In

 

Retained

 

Comprehensive

 

Treasury

 

(Loss)

 

 

 

Stock

 

Capital

 

Earnings

 

(Loss) Income

 

at Cost

 

Income

 

Balance at September 30, 2006

 

$

0.7

 

$

205.2

 

$

797.8

 

$

59.2

 

$

(1.0

)

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

—

 

—

 

268.1

 

—

 

—

 

$

268.1

 

Change in fair value of derivative instruments, net of tax of $7.0

 

—

 

—

 

—

 

(12.0

)

—

 

(12.0

)

Losses reclassified into earnings from other comprehensive income, net of tax of $3.3

 

—

 

—

 

—

 

5.7

 

—

 

5.7

 

Minimum pension liability adjustment, net of tax of $4.9

 

—

 

—

 

—

 

(7.9

)

—

 

(7.9

)

Currency translation adjustments, net

 

—

 

—

 

—

 

110.2

 

—

 

110.2

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

$

364.1

 

Cash dividends ($0.40 per share)

 

—

 

—

 

(29.6

)

—

 

—

 

 

 

Exercise of stock options

 

—

 

5.5

 

—

 

—

 

1.0

 

 

 

Tax benefit related to stock-based compensation

 

—

 

6.8

 

—

 

—

 

—

 

 

 

Repurchase of Common Stock

 

—

 

—

 

—

 

—

 

(1.6

)

 

 

Stock-based compensation and award of nonvested shares

 

—

 

11.7

 

—

 

—

 

—

 

 

 

Adjustment to initially adopt Financial Accounting Standard No. 158

 

—

 

—

 

—

 

(26.2

)

—

 

 

 

Balance at September 30, 2007

 

0.7

 

229.2

 

1,036.3

 

129.0

 

(1.6

)

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

—

 

—

 

79.3

 

—

 

—

 

$

79.3

 

Change in fair value of derivative instruments, net of tax of $19.2

 

—

 

—

 

—

 

(29.9

)

—

 

(29.9

)

Losses reclassified into earnings from other comprehensive income, net of tax of $9.1

 

—

 

—

 

—

 

14.6

 

—

 

14.6

 

Minimum pension liability adjustment, net of tax of $11.1

 

—

 

—

 

—

 

(17.4

)

—

 

(17.4

)

Currency translation adjustments, net

 

—

 

—

 

—

 

(40.6

)

—

 

(40.6

)

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

$

6.0

 

Cash dividends ($0.40 per share)

 

—

 

—

 

(29.8

)

—

 

—

 

 

 

Exercise of stock options

 

—

 

2.9

 

—

 

—

 

1.6

 

 

 

Tax benefit related to stock-based compensation

 

—

 

3.6

 

—

 

—

 

—

 

 

 

Repurchase of Common Stock

 

—

 

—

 

—

 

—

 

(1.4

)

 

 

Stock-based compensation and award of nonvested shares

 

—

 

15.0

 

—

 

—

 

—

 

 

 

Adjustment to initially adopt Financial Accounting Standards Interpretation No. 48 - See Note 19

 

—

 

—

 

(2.9

)

—

 

—

 

 

 

Balance at September 30, 2008

 

0.7

 

250.7

 

1,082.9

 

55.7

 

(1.4

)

 

 

Comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

—

 

—

 

(1,098.8

)

—

 

—

 

$

(1,098.8

)

Change in fair value of derivative instruments, net of tax of $21.3

 

—

 

—

 

—

 

(34.0

)

—

 

(34.0

)

Losses reclassified into earnings from other comprehensive income, net of tax of $18.6

 

—

 

—

 

—

 

29.7

 

—

 

29.7

 

Minimum pension liability adjustment, net of tax of $19.2

 

—

 

—

 

—

 

(31.8

)

—

 

(31.8

)

Currency translation adjustments reclassified into earnings from other comprehensive income, net

 

—

 

—

 

—

 

(92.0

)

—

 

(92.0

)

Currency translation adjustments, net

 

—

 

—

 

—

 

(2.3

)

—

 

(2.3

)

Total comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

$

(1,229.2

)

Issuance of shares for public equity offering - See Note 15

 

0.2

 

357.9

 

—

 

—

 

—

 

 

 

Cash dividends ($0.20 per share)

 

—

 

—

 

(14.9

)

—

 

—

 

 

 

Exercise of stock options

 

—

 

(0.1

)

—

 

—

 

0.7

 

 

 

Stock-based compensation and award of nonvested shares

 

—

 

10.9

 

—

 

—

 

—

 

 

 

Other

 

—

 

0.1

 

—

 

—

 

(0.1

)

 

 

Balance at September 30, 2009

 

$

0.9

 

$

619.5

 

$

(30.8

)

$

(74.7

)

$

(0.8

)

 

 

millions)

 Oshkosh Corporation’s Shareholders    
 
Common
Stock
 
Additional
Paid-In
Capital
 
Retained
Earnings
(Accumulated
Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Common
Stock in
Treasury
at Cost
 
Non-
Controlling
Interest
 
Comprehensive
Income
(Loss)
Balance at September 30, 2009$0.9
 $619.5
 $(30.8) $(74.7) $(0.8) $2.2
  
Sale of discontinued operations (see Note 3)—
 —
 —
 —
 —
 (2.2)  
Comprehensive income (loss):             
Net income—
 —
 790.0
 —
 —
 —
 $790.0
Change in fair value of derivative instruments, net of tax of $1.2—
 —
 —
 (5.6) —
 —
 (5.6)
Losses reclassified into earnings from other comprehensive income, net of tax of $14.9—
 —
 —
 26.6
 —
 —
 26.6
Employee pension and postretirement benefits, net of tax of $3.2—
 —
 —
 (12.6) —
 —
 (12.6)
Currency translation adjustments reclassified into earnings from other comprehensive income, net—
 —
 —
 (0.8) —
 —
 (0.8)
Currency translation adjustments, net—
 —
 —
 (26.1) —
 —
 (26.1)
Total comprehensive income            $771.5
Exercise of stock options—
 18.2
 —
 —
 0.8
 —
  
Stock-based compensation and award of nonvested shares—
 14.7
 —
 —
 —
 —
  
Tax benefit related to stock-based compensation—
 7.0
 —
 —
 —
 —
  
Other—
 0.3
 —
 —
 —
 0.2
  
Balance at September 30, 20100.9
 659.7
 759.2
 (93.2) —
 0.2
  
Comprehensive income (loss):             
Net income—
 —
 273.4
 —
 —
 —
 $273.4
Change in fair value of derivative instruments, net of tax of $0.7—
 —
 —
 (1.4) —
 —
 (1.4)
Losses reclassified into earnings from other comprehensive income, net of tax of $6.0—
 —
 —
 10.6
 —
 —
 10.6
Employee pension and postretirement benefits, net of tax of $19.8—
 —
 —
 (33.8) —
 —
 (33.8)
Currency translation adjustments, net—
 —
 —
 (4.8) —
 —
 (4.8)
Total comprehensive income            $244.0
Exercise of stock options—
 7.8
 —
 —
 0.2
 —
  
Stock-based compensation and award of nonvested shares—
 15.5
 —
 —
 —
 —
  
Tax benefit related to stock-based compensation—
 2.5
 —
 —
 —
 —
  
Other—
 0.1
 0.1
 —
 (0.3) (0.1)  
Balance at September 30, 20110.9
 685.6
 1,032.7
 (122.6) (0.1) 0.1
  
Comprehensive income (loss):             
Net income—
 —
 230.8
 —
 —
 1.1
 $231.9
Derivative losses reclassified into earnings from other comprehensive income, net of tax of $0.8—
 —
 —
 1.4
 —
 —
 1.4
Employee pension and postretirement benefits, net of tax of $17.9—
 —
 —
 31.1
 —
 —
 31.1
Currency translation adjustments, net—
 —
 —
 (11.3) —
 —
 (11.3)
Total comprehensive income            $253.1
Repurchase of common stock—
 —
 —
 —
 (13.3) —
  
Exercise of stock options—
 2.0
 —
 —
 1.6
 —
  
Stock-based compensation and award of nonvested shares—
 18.5
 —
 —
 —
 —
  
Tax benefit related to stock-based compensation—
 (2.7) —
 —
 —
 —
  
Other—
 0.1
 —
 —
 (1.2) (1.2)  
Balance at September 30, 2012$0.9
 $703.5
 $1,263.5
 $(101.4) $(13.0) $—
  

The accompanying notes are an integral part of these financial statements

57


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Table of Contents


OSHKOSH CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Operating activities:

 

 

 

 

 

 

 

Net (loss) income

 

$

(1,098.8

)

$

79.3

 

$

268.1

 

Intangible assets impairment charges

 

1,199.8

 

175.2

 

—

 

Gain on sale of Geesink

 

(33.8

)

—

 

—

 

Depreciation and amortization

 

152.0

 

152.9

 

129.0

 

Stock-based compensation expense

 

10.9

 

15.0

 

11.7

 

Deferred income taxes

 

(51.2

)

(10.4

)

13.6

 

Equity in losses (earnings) of unconsolidated affiliates

 

2.2

 

(4.0

)

(6.7

)

Minority interest

 

(0.9

)

(0.7

)

(0.4

)

Gain on sale of assets

 

(2.5

)

(1.3

)

(1.4

)

Foreign currency transaction losses (gains)

 

1.1

 

5.7

 

(9.4

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Receivables, net

 

377.2

 

65.6

 

(408.9

)

Inventories, net

 

112.6

 

(38.7

)

116.0

 

Other current assets

 

(89.0

)

(8.8

)

42.9

 

Accounts payable

 

(55.8

)

15.6

 

137.8

 

Customer advances

 

435.6

 

(41.3

)

70.5

 

Income taxes

 

(26.4

)

(22.1

)

34.7

 

Other current liabilities

 

(50.3

)

(29.2

)

31.6

 

Other long-term assets and liabilities

 

16.2

 

37.6

 

(23.1

)

Net cash provided by operating activities

 

898.9

 

390.4

 

406.0

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

Acquisitions of businesses, net of cash acquired

 

—

 

—

 

(3,140.5

)

Additions to property, plant and equipment

 

(46.2

)

(75.8

)

(83.0

)

Additions to equipment held for rental

 

(15.4

)

(42.5

)

(19.0

)

Proceeds from sale of property, plant and equipment

 

3.9

 

4.0

 

3.4

 

Proceeds from sale of equipment held for rental

 

6.1

 

13.0

 

11.2

 

Other

 

(4.5

)

1.1

 

1.3

 

Net cash used by investing activities

 

(56.1

)

(100.2

)

(3,226.6

)

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of long-term debt

 

—

 

—

 

3,100.0

 

Debt issuance costs

 

(20.1

)

—

 

(34.9

)

Repayment of long-term debt

 

(682.2

)

(304.7

)

(96.8

)

Net (repayments) borrowings under revolving credit facility

 

(49.4

)

54.7

 

(79.9

)

Proceeds from issuance of Common Stock, net

 

358.1

 

—

 

—

 

Proceeds from exercise of stock options

 

0.6

 

4.5

 

6.5

 

Purchase of Common Stock

 

(0.2

)

(1.4

)

(1.6

)

Excess tax benefits from stock-based compensation

 

—

 

3.1

 

6.0

 

Dividends paid

 

(14.9

)

(29.8

)

(29.6

)

Net cash (used) provided by financing activities

 

(408.1

)

(273.6

)

2,869.7

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

7.5

 

(3.6

)

4.1

 

Increase in cash and cash equivalents

 

442.2

 

13.0

 

53.2

 

Cash and cash equivalents at beginning of year

 

88.2

 

75.2

 

22.0

 

Cash and cash equivalents at end of year

 

$

530.4

 

$

88.2

 

$

75.2

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

Cash paid for interest

 

$

183.8

 

$

211.2

 

$

179.4

 

Cash paid for income taxes

 

5.5

 

138.2

 

82.3

 

 Fiscal Year Ended September 30,
 2012 2011 2010
Operating activities: 
  
  
Net income$231.9
 $273.4
 $790.0
Intangible asset impairment charges—
 4.8
 25.6
Loss on sale of discontinued operations4.4
 —
 2.9
Depreciation and amortization130.9
 144.4
 172.9
Stock-based compensation expense18.5
 15.5
 14.7
Deferred income taxes(60.2) 10.0
 (70.7)
Equity in (earnings) losses of unconsolidated affiliates(3.6) (0.8) 5.1
Dividends from equity method investments6.5
 —
 —
Gain on sale of assets(0.2) (3.8) (1.1)
Foreign currency transaction (gains) losses(1.2) 6.9
 10.9
Changes in operating assets and liabilities: 
  
  
Receivables, net63.2
 (210.0) (339.6)
Inventories, net(161.9) 58.8
 (82.7)
Other current assets(2.4) (6.1) 101.0
Accounts payable(72.2) 54.2
 169.4
Customer advances44.2
 95.4
 (356.4)
Payroll-related obligations20.1
 (16.6) 55.7
Income taxes(72.0) (8.4) 20.8
Deferred revenue74.6
 (38.7) 55.2
Other current liabilities9.0
 (27.2) 69.1
Other long-term assets and liabilities38.7
 35.9
 (23.1)
 (58.7) (62.7) (330.6)
Net cash provided by operating activities268.3
 387.7
 619.7
      
Investing activities: 
  
  
Additions to property, plant and equipment(55.9) (82.3) (83.2)
Additions to equipment held for rental(8.4) (3.9) (6.3)
Proceeds from sale of property, plant and equipment7.6
 1.5
 0.8
Proceeds from sale of equipment held for rental3.7
 20.2
 10.3
Proceeds from sale of equity method investments8.7
 —
 —
Other investing activities2.5
 (3.8) (5.5)
Net cash used by investing activities(41.8) (68.3) (83.9)
      
Financing activities: 
  
  
Repayment of long-term debt(105.1) (91.4) (2,020.9)
Proceeds from issuance of long-term debt—
 —
 1,150.0
Proceeds (repayments) under revolving credit facility—
 (150.0) 150.0
Repurchases of common stock(13.3) —
 —
Debt issuance/amendment costs(3.1) (0.1) (26.3)
Proceeds from exercise of stock options3.6
 8.0
 19.0
Other financing activities0.6
 2.0
 5.7
Net cash used by financing activities(117.3) (231.5) (722.5)
      
Effect of exchange rate changes on cash3.0
 1.6
 (4.7)
Increase (decrease) in cash and cash equivalents112.2
 89.5
 (191.4)
Cash and cash equivalents at beginning of year428.5
 339.0
 530.4
Cash and cash equivalents at end of year$540.7
 $428.5
 $339.0
      
Supplemental disclosures: 
  
  
Cash paid for interest$69.9
 $86.1
 $180.7
Cash paid for income taxes179.1
 128.2
 457.1

The accompanying notes are an integral part of these financial statements

58


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Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.Nature of Operations


Oshkosh Corporation and its subsidiaries (the “Company”), are leading manufacturers of a wide variety of specialty vehicles and vehicle bodies predominately for the North AmericanAmericas and Europeanglobal markets. “Oshkosh” refers to Oshkosh Corporation, not including its subsidiaries. The Company sells its products into four principal vehicle markets — defense, access equipment, defense, fire & emergency and commercial.  The defense business is conducted through the operations of Oshkosh. The access equipment business is conducted through its wholly-owned subsidiary, JLG Industries, Inc. and its wholly-owned subsidiaries (“JLG”) and JerrDan Corporation (“JerrDan”). JLG holds, along with an unaffiliated third-party, a 50% interest in a joint venture in The Netherlands, RiRent Europe, B.V. (“RiRent”). The defense business is conducted through the operations of Oshkosh. The Company’s fire & emergency business is principally conducted through its wholly-owned subsidiaries Pierce Manufacturing Inc. (“Pierce”), the airport products division of Oshkosh JerrDan Corporation (“JerrDan”),and Kewaunee Fabrications, LLC (“Kewaunee”), Medtec Ambulance Corporation (“Medtec”), Oshkosh Specialty Vehicles, Inc., AK Specialty Vehicles B.V. and their wholly-owned subsidiaries (together “OSV”) and the Company’s 75%-owned subsidiary BAI Brescia Antincendi International S.r.l. and its wholly-owned subsidiary (“BAI”).  In October 2009, the Company sold its 75% interest in BAI to the BAI management team. The Company’s commercial business is principally conducted through its wholly-owned subsidiaries, McNeilus Companies, Inc. (“McNeilus”), Concrete Equipment Company, Inc. and its wholly-owned subsidiary (“CON-E-CO”), London Machinery Inc. and its wholly-owned subsidiary (“London”), Iowa Mold Tooling Co,Co., Inc. (“IMT”) and the commercial division of Oshkosh. McNeilus is one of two general partners in Oshkosh/McNeilus Financial Services Partnership (“OMFSP”), which provides lease financing to the Company’s commercial customers.  McNeilus owns a 49% interest in Mezcladores Trailers de Mexico, S.A. de C.V. (“Mezcladores”), which manufactures and markets concrete mixers, concrete batch plants and refuse collection vehicles in Mexico.

On July 1, McNeilus also owns a 45% interest in McNeilus Equipamentos Do Brasil LTDA (“McNeilus Brazil”), which manufactures and distributes McNeilus branded concrete mixers and batch plants in the Mercosur region (Argentina, Brazil, Paraguay and Uruguay).

In April 2012, the Company discontinued production of mobile medical trailers in the United States, which were sold under the Oshkosh Specialty Vehicles brand name. In August 2012, the Company sold its interest in Oshkosh Specialty Vehicles (UK), Limited and AK Specialty Vehicles B.V. and its wholly-owned subsidiary (together "SMIT"), for nominal cash consideration. SMIT, a European mobile medical trailer manufacturer, was previously included in the Company's fire & emergency segment. In October 2009, the Company completedsold its 75% ownership interest in BAI Brescia Antincendi International S.r.l. (“BAI”) to the sale of its ownership in Geesink Group B.V., Geesink Norba Limited and Norba A. B. (collectively, “Geesink”).  Geesink,BAI management team. BAI, a European refuse collection vehiclefire apparatus manufacturer, was previously included in the Company’s commercialfire & emergency segment. The historical operating results of these businesses have been reclassified and are now presented in “Income (loss) from discontinued operations,” net of tax” in the Consolidated Statements of OperationsIncome for all periods.

See Note 3 of the Notes to Consolidated Financial Statements for further information regarding the sales of mobile medical trailers and BAI.


2.Summary of Significant Accounting Policies


Principles of Consolidation and Presentation— The consolidated financial statements include the accounts of Oshkosh and all of its majority-owned or controlled subsidiaries and are prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). All significant intercompany accounts and transactions have been eliminated in consolidation. The 25% historical book value of BAI at the date of acquisition and 25% of subsequent operating results related to that portion of BAI not owned by the Company have been reflected as minority interest on the Company’s consolidated balance sheets and consolidated statements of operations, respectively.  The Company accounts for its 50% voting interest in OMFSP and RiRent, its 49% interest in Mezcladores and its 49%45% interest in MezcladoresMcNeilus Brazil under the equity method.

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition — The Company recognizes revenue on equipment and parts sales when contract terms are met, collectability is reasonably assured and a product is shipped or risk of ownership has been transferred to and accepted by the customer. Revenue from service agreements is recognized as earned when services have been rendered. Appropriate provisions are made for discounts, returns and sales allowances. Sales are recorded net of amounts invoiced for taxes imposed on the customer such as excise or value-added taxes.

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Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sales to the U.S. government of non-commercial productswhole goods manufactured to the government’s specifications are recognized using the units-of-delivery measure under the percentage-of-completion accounting method as units are accepted by the government. The Company invoices the government as the units are formally accepted. Deferred revenue arises from amounts received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met. Due to a shortage in tires at one of the Company's suppliers, the defense segment was unable to complete production of certain vehicles sufficiently to recognize revenue at September 30, 2012 and has deferred revenue on these vehicles. Revenue will be recognized once tires are obtained and added to the defense vehicles such that the earnings process is complete.



60
Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company includes amounts representing contract change orders, claims or other items in sales only when they can be reliably estimated and realization is probable. The Company charges anticipated losses on contracts or programs in progress to earnings when identified. Bid and proposal costs are expensed as incurred.


Shipping and Handling Fees and Costs — Revenue received from shipping and handling fees is reflected in net sales. Shipping and handling fee revenue was not significant for all periods presented. Shipping and handling costs are included in cost of sales.

Warranty— Provisions for estimated warranty and other related costs are recorded in cost of sales at the time of sale and are periodically adjusted to reflect actual experience. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under the warranty plans. Historically, the cost of fulfilling the Company’s warranty obligations has principally involved replacement parts, labor and sometimes travel for any field retrofit campaigns. The Company’s estimates are based on historical experience, the extent of pre-production testing, the number of units involved and the extent of features/components included in product models. Also, each quarter, the Company reviews actual warranty claims experience to determine if there are systemic defects that would require a field campaign.

Research and Development and Similar Costs— Except for customer sponsored research and development costs incurred pursuant to contracts, research and development costs are expensed as incurred and included as part ofin cost of sales. Research and development costs charged to expense amounted to $73.3$109.1 million $90.1, $99.9 million and $73.5$92.4 million during fiscal 2009, 20082012, 2011 and 2007,2010, respectively. Customer sponsored research and development costs incurred pursuant to contracts are accounted for as contract costs.

Advertising — Advertising costs are included in selling, general and administrative expense and are expensed as incurred. These expenses totaled $11.8$13.1 million $21.9, $15.5 million and $16.5$15.4 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively.

Environmental Remediation Costs — The Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably estimable. The liabilities are developed based on currently available information and reflect the participation of other potentially responsible parties, depending on the parties’ financial condition and probable contribution. The accruals are recorded at undiscounted amounts and are reflected as liabilities on the accompanying consolidated balance sheets. Recoveries of environmental remediation costs from other parties are recorded as assets when their receipt is deemed probable. The accruals are adjusted as further information develops or circumstances change.

Stock-Based Compensation — The Company recognizes stock-based compensation using the fair value provisions prescribed by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation — Stock Compensation. Accordingly, compensation costs for stock options, restricted stock and performance shares are calculated based on the fair value of the stock-based instrument at the time of grant and are recognized as expense over the vesting period of the stock-based instrument. See Note 1617 of the Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plan.plans.

Income Taxes — Deferred income taxes are provided to recognize temporary differences between the financial reporting basis and the income tax basis of the Company’s assets and liabilities using currently enacted tax rates and laws. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Effective October 1, 2007, theThe Company adopted a new accounting standard on accounting for uncertainty inevaluates uncertain income taxes.  The new standard prescribed a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be takenpositions in a tax return.  The new standard also provided guidance on derecognition, classification, interest and penalties, disclosure and transition.  The evaluation of a tax position in accordance with the new standard is a two-steptwo-step process. The first step is recognition, where the Company evaluates whether an individual tax position has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have a less than 50% likelihood of being sustained, zero tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The actual benefits ultimately realized may differ from the Company’s estimates. In future periods, changes in facts and circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in results of operations and financial position in the period in which such changes occur.  Upon adoption



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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Approximately 8% of the new standard,Company’s cash and cash equivalents at September 30, 2012 was located outside the Company recognized a $2.9 million charge to retained earnings and the reclassification of $30.0 million in liabilities related to uncertain tax positions in the Company’s Consolidated Balance Sheet from income taxes payable to other long-term assets ($6.2 million) and long-term liabilities ($36.2 million).

United States. Income taxes are provided on financial statement earnings of non-U.S. subsidiaries expected to be repatriated. The Company determines annually the amount of undistributed non-U.S. earnings to invest indefinitely in its non-U.S. operations. As a result of anticipated cash requirements in the foreign subsidiaries, the Company currently believes that all earnings of non-U.S. subsidiaries will be reinvested indefinitely to finance foreign activities. Accordingly, no deferred income taxes have been provided for the repatriation of those earnings.


Fair Value of Financial Instruments — Based on Company estimates, the carrying amounts of cash equivalents, receivables, accounts payable and accrued liabilities approximated fair value as of September 30, 20092012 and 2008.

2011.

Cash and Cash Equivalents — The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents at September 30, 20092012 consisted principally of bank deposits and money market instruments and bank deposits.instruments.

Receivables— Receivables consist of amounts billed and currently due from customers and unbilled costs and accrued profits related to revenues on long-term contracts with the U.S. government that have been recognized for accounting purposes but not yet billed to customers. The Company extends credit to customers in the normal course of business and maintains an allowance for estimated losses resulting from the inability or unwillingness of customers to make required payments. The accrual for estimated losses is based on itsthe Company’s historical experience, existing economic conditions and any specific customer collection issues the Company has identified.

Concentration of Credit Risk — Financial instruments whichthat potentially subject the Company to significant concentrations of credit risk consist principally of cash equivalents, trade accounts receivable OMFSP lease receivables and guarantees of certain customers’ obligations under deferred payment contracts and lease purchase agreements.

The Company maintains cash and cash equivalents, and other financial instruments, with various major financial institutions. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution.

Concentration of credit risk with respect to trade accounts and leases receivable is limited due to the large number of customers and their dispersion across many geographic areas. However, a significant amount of trade and lease receivables are with the U.S. government, with rental companies globally, with companies in the ready-mix concrete industry, with municipalities and with several large waste haulers in the United States. The Company continues to monitor credit risk associated with its trade receivables, especially during thethis period of continued global recession.

economic weakness.

Inventories— Inventories are stated at the lower of cost or market. Cost has been determined using the last-in, first-out (“LIFO”) method for 80.6%78.6% of the Company’s inventories at September 30, 20092012 and 68.9%85.4% at September 30, 2008.2011. For the remaining inventories, cost has been determined using the first-in, first-out (“FIFO”) method.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Performance-Based Payments — The Company’s contracts with the U.S. Department of Defense (“DoD”) to deliver heavy-payload tactical vehicles (Family of Heavy Tactical Vehicles and Logistic Vehicle System Replacement), and medium-payload tactical vehicles (Medium(Family of Medium Tactical Vehicles and Medium Tactical Vehicle Replacement) and MRAP-All Terrain Vehicles (“M-ATVs”), as well as certain other defense-related contracts, include requirements for “performance-based payments.” The performance-based payment provisions in the contracts require the DoD to pay the Company based on the completion of certain pre-determined events in connection with the production under these contracts. Performance-based payments received are first applied to reduce outstanding receivables for units accepted in accordance with contractual terms, with any remaining amount recorded as an offset to inventory to the extent of related inventory on hand. Amounts received in excess of receivables and inventories are included in liabilities as customer advances.

Property, Plant and Equipment — Property, plant and equipment are recorded at cost. Depreciation is provided over the estimated useful lives of the respective assets using accelerated and straight-line methods. The estimated useful lives range from 10 to 5040 years for buildings and improvements, from 4 to 25 years for machinery and equipment and from 3 to 10 years for capitalized software and related costs. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is immaterial for all periods presented. All capitalized interest has been added to the cost of the underlying assets and is amortized over the useful lives of the assets.


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Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Goodwill— Goodwill reflects the cost of an acquisition in excess of the aggregate fair valuesvalue assigned to identifiable net assets acquired. Goodwill is not amortized; however, it is assessed for impairment at least annually and as triggering events or “indicators of potential impairment” occur. The Company performs its annual impairment test in the fourth quarter of its fiscal year. The Company evaluates the recoverability of goodwill by estimating the future discounted cash flowsfair value of the businesses to which the goodwill relates. Estimated cash flows and related goodwill are grouped at the reporting unit level. A reporting unit is an operating segment or, under certain circumstances, a component of an operating segment that constitutes a business. When estimated future discounted cash flows arethe fair value of the reporting unit is less than the carrying value of the net assets and related goodwill, an impairment testreporting unit, a further analysis is performed to measure and recognize the amount of the impairment loss, if any. Impairment losses, limited to the carrying value of goodwill, represent the excess of the carrying amount of a reporting unit’s goodwill over the implied fair value of that goodwill. In fiscal 20092011 and 2008,2010, the Company recorded non-cash impairment charges of $1,169.2$4.3 million and $167.4$16.8 million respectively., respectively, of which $2.3 million and $16.8 million, respectively, related to discontinued operations. See Note 8 of the Notes to Consolidated Financial Statements for a discussion of the fiscal 2009these charges.  The majority of the fiscal 2008 charges related to discontinued operations (see Note 3 of the Notes to Consolidated Financial Statements for further information).

In evaluating the recoverability of goodwill, it is necessary to estimate the fair value of the reporting units. The Company evaluates the recoverability of goodwill primarily utilizing the income approach and the market approach. The Company weighted the income approach more heavily (75%) as the income approach uses long-term estimates that consider the expected operating profit of each reporting unit during periods where residential and non-residential construction and other macroeconomic indicators are nearer historical averages. The Company believes that the use of thisincome approach is appropriate as it provides a fair value estimate based uponmore accurately considers the reporting unit’s expected long-term operating cash flow performance.  This approach also mitigates the impact of cyclical trends that occurrecovery in the reporting unit’s industry.U.S. and European construction markets than the market approach. Under the income approach, the Company determines fair value based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. Estimated future cash flows wereare based on the Company’s internal projection models, industry projections and other assumptions deemed reasonable by management. Rates used to discount estimated cash flows correspond to the Company’s cost of capital, adjusted for risk where appropriate, and are dependent upon interest rates at a point in time. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. Under the market approach, the Company derives the fair value of its reporting units based on revenue and earnings multiples of comparable publicly-traded companies. It is possible that assumptions underlying the impairment analysis will change in such a manner that impairment in value may occur in the future.

Impairment of Long-Lived Assets — Property, plant and equipment and amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Non-amortizable tradenamestrade names are assessed for impairment at least annually and as triggering events or “indicators of potential impairment” occur. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets. Such analyses necessarily involve significant judgment. In fiscal 20092011 and 2008,2010, the Company recorded non-cash impairment charges related to purchased intangible assets of $30.6$0.5 million and $7.8$8.8 million, respectively, of which $0.5 million and $6.5 million, respectively, related to long-lived assets.discontinued operations.

Floor Plan Notes Payable — Floor plan notes payable represent liabilities related to the purchase of commercial vehicle chassis upon which the Company mounts its manufactured vehicle bodies. Floor plan notes payable are non-interest bearing for terms ranging up to 120 days and must be repaid upon the sale of the vehicle to a customer. The Company’s practice is to repay all floor plan notes for which the non-interest bearing period has expired without sale of the vehicle to a customer.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Customer Advances — Customer advances include amounts received in advance of the completion of fire & emergency and commercial vehicles. Most of these advances bear interest at variable rates approximating the prime rate. Advances also include any performance-based payments received from the DoD in excess of the value of related inventory. Advances from the DoD are non-interest bearing. See precedingthe discussion onabove regarding performance-based payments.

Accumulated Other Comprehensive Income (Loss) Income — Comprehensive income (loss) income is a more inclusive financial reporting method that includes disclosure of financial information that historically has not been recognized in the calculation of net income. The Company has chosen to report Comprehensive (Loss) Incomecomprehensive income (loss) and Accumulated Other Comprehensive (Loss) Income,accumulated other comprehensive income (loss), which encompasses net income (loss), cumulative translation adjustments, employee pension and postretirement benefits, and unrealized gains (losses) on derivatives and minimum pension liability adjustments in the Consolidated Statements of Shareholders’ Equity.



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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The components of Accumulated Other Comprehensive (Loss) Income areaccumulated other comprehensive income (loss) were as follows (in millions):

 

 

 

 

Minimum

 

 

 

Accumulated

 

 

 

Cumulative

 

Pension

 

 

 

Other

 

 

 

Translation

 

Liability

 

Gains (Losses)

 

Comprehensive

 

 

 

Adjustments

 

Adjustments

 

on Derivatives

 

Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2006

 

$

65.9

 

$

(1.0

)

$

(5.7

)

$

59.2

 

Fiscal year change

 

110.2

 

(34.1

)

(6.3

)

69.8

 

Balance at September 30, 2007

 

176.1

 

(35.1

)

(12.0

)

129.0

 

Fiscal year change

 

(40.6

)

(17.4

)

(15.3

)

(73.3

)

Balance at September 30, 2008

 

135.5

 

(52.5

)

(27.3

)

55.7

 

Fiscal year change

 

(94.3

)

 

(31.8

)

(4.3

)

(130.4

)

Balance at September 30, 2009

 

$

41.2

 

$

(84.3

)

$

(31.6

)

$

(74.7

)

 
Cumulative
Translation
Adjustments
 
Employee
Pension and
Postretirement
Benefits, Net
of Tax
 
Gains (Losses)
on Derivatives,
Net of Tax
 
Accumulated
Other
Comprehensive
Income (Loss)
Balance at September 30, 2009$41.2
 $(84.3) $(31.6) $(74.7)
Fiscal year change(26.1) (12.6) (5.6) (44.3)
Amounts reclassified to income(0.8) —
 26.6
 25.8
Balance at September 30, 201014.3
 (96.9) (10.6) (93.2)
Fiscal year change(4.8) (33.8) (1.4) (40.0)
Amounts reclassified to income—
 —
 10.6
 10.6
Balance at September 30, 20119.5
 (130.7) (1.4) (122.6)
Fiscal year change(10.6) 31.1
 —
 20.5
Amounts reclassified to income(0.7) —
 1.4
 0.7
Balance at September 30, 2012$(1.8) $(99.6) $—
 $(101.4)
Foreign Currency Translation — All balance sheet accounts have been translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Income statement amounts have been translated using the average exchange rate during the period in which the transactions occurred. Resulting translation adjustments are included in “Accumulated other comprehensive income (loss) income..” Foreign currency transactionstransaction gains or losses are included in “Miscellaneous, net” in the Consolidated Statements of Operations.Income. The Company recorded net foreign currency transaction gains (losses) related to continuing operations of $5.7$(5.1) million $(9.3), $0.3 million and $2.1$1.4 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively.

Derivative Financial Instruments — The Company recognizes all derivative financial instruments, such as foreign exchange contracts, in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in shareholders’ equity as a component of comprehensive income depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or cash flow hedge. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair values of the hedged items that relate to the hedged risks. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive income, net of deferred income taxes. Changes in fair value of derivatives not qualifying as hedges are reported in income. Cash flows from derivatives that are accounted for as cash flow or fair value hedges are included in the Consolidated Statements of Cash Flows in the same category as the item being hedged.

Subsequent Events — The Company evaluated subsequent events after the balance sheet date through November 18, 2009, which is the date the Company filed its Form 10-K, for appropriate accounting and disclosure.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements — In September 2007,June 2011, the FASB issuedamended ASC Topic 220, Comprehensive Income, to require all non-owner changes in shareholders’ equity to be presented in either a new standardsingle 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 is required to present on fair value measurements, which defined fair value, established a frameworkthe face of the financial statements reclassification adjustments for measuring fair value and expanded disclosures about fair value measurements.  The fair value standard clarified the definition of exchange price as the price between market participants in an orderly transactionitems that are reclassified from other comprehensive income to sell an asset or transfer a liabilitynet income in the market in whichstatement(s) where the reportingcomponents of net income and the components of other comprehensive income are presented. An entity would transact business forwill no longer be permitted to present the asset or liability, that is, the principal or most advantageous market for the asset or liability.  Effective October 1, 2008, the Company partially adopted the fair value standard but did not adopt it for non-financial assets and liabilities which are not recognized or disclosed at fair value on a recurring basis.  See Note 14components of other comprehensive income as part of the Notes to Consolidated Financial Statements for additional information regarding fair value measurement disclosures.  The Company will be required to adopt the fair value standard for non-financial assets and liabilities which are not recognized or disclosed at fair value on a recurring basis on October 1, 2009.  The adoptionstatement of the remaining provisions of the fair value standard is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued a new standard on business combinations, which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, at their fair values as of that date.  Acquisition-related transaction and restructuring costs will be expensed rather than treated as acquisition costs and included in the amount recorded for assets acquired.  The new business combination standard will be effective for the Company on a prospective basis for all business combinations for which the acquisition date is on or after October 1, 2009.  The new business combination standard also amends ASC Topic 740, Income Taxes, such that adjustments made to valuation allowances on deferred taxes and acquired tax contingencies associated with acquisitions that closed prior to October 1, 2009 would also apply the provision of the new business combination standard.  At September 30, 2009, the Company had $20.1 million of tax contingencies associated with acquisitions that closed prior to October 1, 2009.  Any adjustments required upon resolution of these contingencies will be reflected in “(Benefit from) provision for income taxes” in the Consolidated Statements of Operations.

In December 2007, the FASB issued a new standard on noncontrolling interests in consolidated financial statements, which clarified that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.equity. The Company will be required to adopt the new noncontrolling interests standardpresentation requirements as of October 1, 2009.2012. The adoption of the new noncontrolling interests standard is not expected to have a material impact on the Company’s financial condition, results of operations and cash flows.

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 167, Amendments to FASB Interpretation No. 46(R), to address the elimination of the concept of a qualifying special purpose entity.  SFAS No. 167 also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity.  Additionally, SFAS No. 167 provides more timely and useful information about an enterprise’s involvement with a variable interest entity.  The Companypresentation will be required to adopt SFAS No. 167 as of October 1, 2010.  The Company is currently evaluating the impact of SFAS No. 167 on the Company’s financial condition, results of operations and cash flows.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162, which establishes the FASB ASC as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with U.S. GAAP.  SFAS No. 168 explicitly recognizes rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under federal securities laws as authoritative U.S. GAAP for SEC registrants.  The Company was required to adopt SFAS No. 168 as of September 30, 2009.  The adoption of SFAS No. 168 did not have a material impact on the Company’s financial condition, results of operations or cash flows.


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




3.Discontinued Operations
In fiscal 2012, the Company settled an income tax audit, which resulted in the release of previously accrued amounts for uncertain tax positions related to worthless stock and bad debt deductions claimed in fiscal 2009 associated with its discontinued operations. Fiscal 2012 results from discontinued operations include a

On July 1,$6.1 million income tax benefit related to this audit settlement.


In April 2012, the Company discontinued production of mobile medical trailers in the United States, which were sold under the Oshkosh Specialty Vehicles brand name. In August 2012, the Company sold its interest in SMIT for nominal cash consideration. SMIT, a European mobile medical trailer manufacturer, was previously included in the Company's fire & emergency segment.

In October 2009, the Company sold Geesinkits 75% ownership interest in BAI to a third partyBAI’s management team for nominal cash consideration. Following reclassification of $92.0$0.8 million of cumulative translation adjustments out of shareholders’ equity, the Company recorded a pretax gainsmall after tax loss on the sale, of $33.8 million, which was recognized in the fourthfirst quarter of fiscal 2009.  As2010. BAI, a result of the sale, the historical results of Geesink, which wereEuropean fire apparatus manufacturer, was previously included in the Company’s commercial segment, have been reclassified and are now included in discontinued operations in the Company’s Consolidated Statements of Operations.

64

fire & emergency segment.

Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Due to rationalization of manufacturing facilities, inefficiencies associated with the relocation and start-up of production of Norba-branded products from Sweden to The Netherlands and increased material costs and product warranties, the Company’s European refuse collection vehicle business, Geesink, sustained a loss related to its operations of $27.5 million in the first nine months of fiscal 2008.  The loss was significantly more than estimated in the Company’s financial projections supporting its fiscal 2007 fourth quarter impairment test.

The Company had taken steps during fiscal 2007 and the first six months of fiscal 2008 to turn around the Geesink business, including selling an unprofitable facility in The Netherlands during the first quarter of fiscal 2008, reaching an agreement with the Works Council in Sweden regarding rationalizing a facility in that country in order to consolidate Norba-branded production in The Netherlands, reducing its work force, installing new executive leadership, integrating operations with JLG, implementing lean manufacturing practices, introducing new products and outsourcing components to lower cost manufacturing sites.  In June 2008, it became evident that synergies related to Geesink’s facility rationalization program would be lower than expected and costs to execute the rationalization would be higher than anticipated.  The resulting slower than expected and more difficult return to profitability of Geesink’s business, further escalation of raw material costs, a softening of economies in Western Europe and a reduction in fabrication volume for the Company’s access equipment segment at Geesink’s Romania facility due to a slowdown in the European access equipment market led the Company to the conclusion that a charge for impairment was required.  During the third quarter of fiscal 2008, the Company took these factors into account in developing its fiscal 2009 and long-term forecast for this business.  With the assistance of a third-party valuation firm, the Company determined that Geesink goodwill and non-amortizable intangible assets were impaired and the Company recorded non-cash, pre-tax impairment charges of $174.2 million in the third quarter of fiscal 2008.  The evaluation was based upon a discounted cash flow analysis of the historical and forecasted operating results of this business.

The following amounts related to Geesink’s operations were derived from historical financial information and have been segregated from continuing operations and reported as discontinued operations in the Consolidated Statements of OperationsIncome (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Net sales

 

$

138.1

 

$

201.9

 

$

168.0

 

Cost of sales

 

130.0

 

196.9

 

151.7

 

Gross income

 

8.1

 

5.0

 

16.3

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

 

22.0

 

39.0

 

34.7

 

Amortization of purchased intangibles

 

0.3

 

0.5

 

0.4

 

Intangible assets impairment charges

 

—

 

174.2

 

—

 

Total operating expenses

 

22.3

 

213.7

 

35.1

 

Operating loss

 

(14.2

)

(208.7

)

(18.8

)

Other expense

 

(0.6

)

(1.6

)

(0.9

)

Loss before income taxes

 

(14.8

)

(210.3

)

(19.7

)

Benefit from income taxes

 

(54.5

)

(2.7

)

(2.5

)

Income (loss) from operations, net of tax

 

39.7

 

(207.6

)

(17.2

)

Gain on sale of Geesink

 

33.8

 

—

 

—

 

Income (loss) from discontinued operations, net of tax

 

$

73.5

 

$

(207.6

)

$

(17.2

)

The Fiscal 2009 benefit from income taxes includes $54.0 million related to a worthless stock/bad debt deduction claimed by the Company related to the Geesink discontinued operations.  See Note 19 of Notes to Consolidated Financial Statements.

65

 
Fiscal Year Ended
September 30,
 2012 2011 2010
Net sales$12.4
 $17.2
 $21.8
Cost of sales10.4
 15.8
 21.8
Gross income2.0
 1.4
 —
Operating expenses:     
Selling, general and administrative2.9
 4.2
 5.9
Amortization of purchased intangibles0.5
 1.5
 1.5
Intangible asset impairment charges—
 2.8
 23.3
Total operating expenses3.4
 8.5
 30.7
Operating loss(1.4) (7.1) (30.7)
Other expense—
 —
 0.5
Loss before income taxes(1.4) (7.1) (30.2)
Benefit from income taxes(6.1) (1.5) (7.1)
Income (loss) from operations, net of tax4.7
 (5.6) (23.1)
Loss on sale of discontinued operations(4.4) —
 (2.9)
Income (loss) from discontinued operations, net of tax$0.3
 $(5.6) $(26.0)

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company has elected not to reclassify Geesink balances in the Consolidated Balance Sheets.  The following is a summary of the assets and liabilities of Geesink’s operations.  The amounts presented below were derived from historical financial information and adjusted to exclude intercompany receivables and payables between Geesink and the Company (in millions):

 

 

July 1,

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Receivables, net

 

$

45.9

 

$

49.2

 

Inventories, net

 

41.8

 

54.0

 

Deferred income taxes

 

3.0

 

3.2

 

Other current assets

 

3.3

 

3.3

 

Total current assets

 

94.0

 

109.7

 

 

 

 

 

 

 

Property, plant and equipment, net

 

17.4

 

18.0

 

Purchased intangible assets, net

 

2.8

 

3.2

 

Other long-term assets

 

1.9

 

0.7

 

Total non-current assets

 

22.1

 

21.9

 

 

 

 

 

 

 

Accounts payable

 

(29.8

)

(36.0

)

Accrued and other current liabilities

 

(31.6

)

(27.7

)

Total current liabilities

 

(61.4

)

(63.7

)

 

 

 

 

 

 

Deferred income taxes

 

(1.4

)

(1.9

)

Other long-term liabilities

 

(0.9

)

(0.2

)

Total non-current liabilities

 

(2.3

)

(2.1

)

Net assets

 

$

52.4

 

$

65.8

 

Accumulated other comprehensive income included $92.0 million and $93.2 million of cumulative currency translation adjustments at July 1, 2009 and September 30, 2008, respectively.  Cumulative currency translation adjustments were reclassified out of shareholders’ equity against the Company’s recorded interest in the book value of the net assets of Geesink upon its sale, giving rise to a $33.8 million gain on sale in the fourth quarter of fiscal 2009.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4.Receivables

Receivables consisted of the following (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

U.S. government:

 

 

 

 

 

Amounts billed

 

$

243.1

 

$

199.4

 

Cost and profits not billed

 

5.9

 

6.1

 

 

 

249.0

 

205.5

 

Other trade receivables

 

289.9

 

738.7

 

Finance receivables

 

46.7

 

26.4

 

Pledged finance receivables

 

—

 

3.9

 

Notes receivables

 

66.5

 

61.8

 

Other receivables

 

26.9

 

43.6

 

 

 

679.0

 

1,079.9

 

Less allowance for doubtful accounts

 

(42.0

)

(24.8

)

 

 

$

 637.0

 

$

1,055.1

 

 

 

 

 

 

 

Current receivables

 

$

563.8

 

$

997.8

 

Long-term receivables

 

73.2

 

57.3

 

 

 

$

 637.0

 

$

1,055.1

 

The Company recorded provisions for credit losses of $50.1 million in fiscal 2009, including a $24.4 million accrual for losses on customer guarantees, which is recorded as a liability in the Consolidated Balance Sheets.  The provisions were concentrated in the access equipment segment due to the effects of the global recession on the financial health of its customers and due to reductions in the underlying collateral value of the equipment.


 September 30,
 2012 2011
U.S. government: 
  
Amounts billed$99.2
 $318.8
Cost and profits not billed251.7
 172.3
 350.9
 491.1
Other trade receivables633.0
 568.8
Finance receivables5.2
 23.6
Notes receivable24.6
 33.7
Other receivables35.6
 27.4
 1,049.3
 1,144.6
Less allowance for doubtful accounts(18.0) (29.5)
 $1,031.3
 $1,115.1
Costs and profits not billed generally will become billable uponresult from undefinitized change orders on existing long-term contracts and “not-to-exceed” undefinitized contracts whereby the Company achieving certaincannot invoice the customer the full price under the contract milestones.

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 Company’s submitted costs and proposed margin related to the contract and concludes with a final change order. 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 September 30, 2012, the Company had recorded $83.4 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. The Company updated its estimated costs under several undefinitized change orders and recorded $7.8 million of revenue related to such updates during fiscal 2012. As all costs associated with these contracts had been previously expensed, the change increased net income by $5.0 million or $0.05 per share, for fiscal 2012. 


Classification of receivables in the Consolidated Balance Sheets consisted of the following (in millions):
 September 30,
 2012 2011
Current receivables$1,018.6
 $1,089.1
Long-term receivables12.7
 26.0
 $1,031.3
 $1,115.1
Finance Receivables:Finance receivables represent sales-type leases resulting from the sale of the Company’s products.Company's 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. AsFinance receivables are written down if management determines that the specific borrower does not have the ability to repay the loan amounts due in full.


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Table of September 30, 2009, approximately 72% of the finance receivables were due from four parties.  Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Finance and pledged finance receivables consisted of the following (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Finance receivables

 

$

52.0

 

$

28.8

 

Pledged finance receivables

 

—

 

3.9

 

 

 

52.0

 

32.7

 

Estimated residual value

 

2.1

 

2.0

 

Less unearned income

 

(7.4

)

(4.4

)

Net finance and pledged finance receivables

 

46.7

 

30.3

 

Less allowance for doubtful accounts

 

(11.8

)

(1.2

)

 

 

$

 34.9

 

$

29.1

 

67


 September 30,
 2012 2011
Finance receivables$6.0
 $27.9
Less unearned income(0.8) (4.3)
Net finance receivables5.2
 23.6
Less allowance for doubtful accounts(1.4) (11.5)
 $3.8
 $12.1

Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The contractualContractual maturities of the Company’s finance receivables at September 30, 20092012 were as follows: 20102013 - $11.1 million; 2011$2.7 million; 2014 - $9.8 million; 2012$0.3 million; 2015 - $9.9 million; 2013$1.3 million; 2016 - $10.6 million; 2014$0.8 million; 2017 - $6.3 million;$0.4 million; and thereafter - $4.3 million.$0.5 million. Historically, obligors have paid off finance receivables have been paid off prior to their contractual due dates, although that may change inactual repayment timing is impacted by a number of factors, including the current economic environment.environment at the time. As a result, contractual maturities are not to be regarded as a forecast of future cash flows.  Provisions

Delinquency is the primary indicator of credit quality of finance receivables. The Company maintains a general allowance for losses on finance receivables considered doubtful of future collection based upon historical experience. Additional allowances are charged to income in amounts sufficient to maintainestablished based upon the allowance at a level considered adequate to cover losses in the existing receivable portfolio.

Notes receivable include refinancing of trade accounts and finance receivables.  As of September 30, 2009, approximately 85%Company’s perception of the notesquality 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 were due from two parties.to the amount reasonably expected to be collected. The terms of the finance agreements generally give the Company routinely evaluates the creditworthinessability to take possession of its customers and establishes reserves if required under the circumstances.  Certain notes receivable are collateralized by a security interest in the underlying assets and/or other assets owned by the debtor.collateral. The Company may incur losses in excess of recorded reservesallowances 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.

Notes Receivable: Notes receivable include amounts related to refinancing of trade accounts and finance receivables. As of September 30, 2012, approximately 96% 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.


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Finance and notes receivable aging and accrual status consisted of the following (in millions):
 September 30,
 Finance Receivables Notes Receivables
 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
 —
 —
Greater than 90 days1.3
 6.5
 —
 0.5
        
Receivables on nonaccrual status3.4
 17.6
 19.0
 0.5
Receivables past due 90 days or more and still accruing—
 —
 —
 —
        
Receivables subject to general reserves1.5
 0.4
 —
 8.6
Allowance for doubtful accounts—
 —
 —
 (0.1)
Receivables subject to specific reserves3.7
 23.2
 24.6
 25.1
Allowance for doubtful accounts(1.4) (11.5) (8.0) (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. At September 30, 2012, restructured finance receivables and notes receivables were $4.1 million and $23.1 million, respectively. Losses on troubled debt restructurings were not significant during fiscal 2012 or 2011. The Company restructured a $19.0 million outstanding note receivable in fiscal 2012 through a combination of extended payment terms, commitment by the customer to purchase an agreed upon quantity of equipment over a specified time horizon and a reduced payment obligation if the customer meets the equipment purchase and repayment schedule.

Changes in the Company’s allowance for doubtful accounts were as follows (in millions):

 Fiscal Year Ended September 30, 2012
 
Finance
Receivables
 
Notes
Receivable
 
Trade and
Other
Receivables
 Total
Allowance for doubtful accounts at beginning of year$11.5
 $8.9
 $9.1
 $29.5
Provision for doubtful accounts, net of recoveries(3.4) (0.4) 1.5
 (2.3)
Charge-off of accounts(6.7) (0.5) (1.9) (9.1)
Disposition of a business—
 —
 (0.1) (0.1)
Foreign currency translation—
 —
 —
 —
Allowance for doubtful accounts at end of year$1.4
 $8.0
 $8.6
 $18.0


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 Fiscal Year Ended September 30, 2011
 
Finance
Receivables
 
Notes
Receivable
 
Trade and
Other
Receivables
 Total
Allowance for doubtful accounts at beginning of year$20.9
 $9.4
 $11.7
 $42.0
Provision for doubtful accounts, net of recoveries(0.5) 1.9
 0.6
 2.0
Charge-off of accounts(8.9) (2.5) (3.1) (14.5)
Disposition of a business—
 —
 —
 —
Foreign currency translation—
 0.1
 (0.1) —
Allowance for doubtful accounts at end of year$11.5
 $8.9
 $9.1
 $29.5


5.Inventories


Inventories consisted of the following (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Raw materials

 

$

513.4

 

$

474.0

 

Partially finished products

 

326.3

 

275.5

 

Finished products

 

325.2

 

419.5

 

Inventories at FIFO cost

 

1,164.9

 

1,169.0

 

Less:    Progress/performance-based payments on U.S. government contracts

 

(317.3

)

(154.3

)

Excess of FIFO cost over LIFO cost

 

(57.9

)

(73.1

)

 

 

$

 789.7

 

$

941.6

 


  September 30,
  2012 2011
Raw materials$558.0
 $587.4
Partially finished products318.3
 377.7
Finished products371.0
 237.8
Inventories at FIFO cost1,247.3
 1,202.9
Less:Progress/performance-based payments on U.S. government contracts(238.0) (341.7)
 Excess of FIFO cost over LIFO cost(71.8) (74.4)
  $937.5
 $786.8

Title to all inventories related to U.S. government contracts, which provide for progress or performance-based payments, vests with the U.S. government to the extent of unliquidated progress or performance-based payments.

Inventory includes costs which are amortized Due to expense as sales are recognized undera shortage in tires at one of the Company's suppliers, the defense segment was unable to complete production of certain contracts.  Atvehicles sufficiently to recognize revenue. These vehicles have been included in finished goods at September 30, 20092012 and 2008, unamortized costs relatedwill be recognized as revenue once tires are obtained and added to long-term contracts of $3.5 million and $3.3 million, respectively, were included in inventory.

the defense vehicle such that the earnings process is complete.


During fiscal 2009,2012, 2011 and 2010, reductions in FIFO inventory levels resulted in liquidations of LIFO inventory layers carried at lower costs prevailing in prior years as compared with the cost of current-year purchases. The effect of the LIFO inventory liquidations on fiscal 20092012, 2011 and 2010 results was to decrease costs of goods sold by $6.0$0.3 million, $1.8 million and $5.6 million, respectively, and increase after-tax earnings from continuing operations by $3.7$0.2 million ($0.05 ($0.00 per share).  The Company recognized pre-tax income from continuing operations of $15.2, $1.1 million ($0.01 per share) and expense of $26.7$3.4 million and $10.6 million as a result of LIFO inventory adjustments in fiscal 2009, 2008 and 2007, ($0.04 per share), respectively.

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Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.Investments in Unconsolidated Affiliates


Investments in unconsolidated affiliates are accounted for under the equity method and consisted of the following (in millions):

 

 

Percent-

 

September 30,

 

 

 

owned

 

2009

 

2008

 

 

 

 

 

 

 

 

 

OMFSP (U.S.)

 

50%

 

$

14.7

 

$

16.0

 

RiRent (The Netherlands)

 

50%

 

15.7

 

15.4

 

Mezcladoras (Mexico)

 

49%

 

6.9

 

6.7

 

 

 

 

 

$

37.3

 

$

38.1

 

The investment


  September 30,
  2012 2011
OMFSP (U.S.) $—
 $13.4
RiRent (The Netherlands) 10.5
 10.9
Other 8.3
 7.5
  $18.8
 $31.8


69
Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Recorded investments generally representsrepresent the Company’s maximum exposure to loss as a result of the Company’s ownership interest. Earnings andor losses net of related income taxes, are reflected in “Equity in earnings (losses) earnings of unconsolidated affiliates.”

In February 1998, concurrent withaffiliates” in the Company’s acquisitionConsolidated Statements of McNeilus, theIncome.

The Company and an unaffiliated third-party, BA Leasing & Capital Corporation, formed OMFSP,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.  Each partner contributed existing lease assets (and, in the caseCompany, of which the Company related notes payable to third-party lenders, which were secured by such leases) to capitalize the partnership.  Leases and related notes payable contributed by the Company were originally acquiredwas a 50% owner. OMFSP historically engaged in connection with the McNeilus acquisition.

OMFSP manages the contributed assets and liabilities and engages in newproviding vendor lease business providing financing to certain customers of the Company. The Company sells vehicles, vehicle bodies and concrete batch plants to OMFSP for lease to user-customers.  The Company’s sales to OMFSP were $14.7 million, $39.7 million and $72.6 million inDuring the third quarter of fiscal 2009, 2008 and 2007, respectively.  Banks and other financial institutions lend to OMFSP a portion of the purchase price, with recourse solely to OMFSP, secured by a pledge of lease payments due from the user-lessees.  Each partner funds one-half of the approximate 4.0% to 8.0% equity portion of the cost of new equipment purchases.  Customers typically provide a 2.0% to 6.0% down payment.  Each partner is allocated its proportionate share of OMFSP’s cash flow and taxable income in accordance with the partnership agreement.  Indebtedness of OMFSP is secured by the underlying leases and assets of, and is with recourse to, OMFSP.  All such OMFSP indebtedness is non-recourse to2012, the Company andsold its partner.  Each of the two general partners has identical voting, participating and protective rights and responsibilities, and each general partner materially participates in the activities of OMFSP.  For these and other reasons, the Company has determined that OMFSP is a voting interest entity.  Accordingly, the Company accounts for its equity interest in OMFSP underfor an immaterial pre-tax loss. Cash distributions and proceeds from the equity method.  The Company received cash distributions from OMFSPsale aggregated $16.5 million of $5.5which $6.5 million and $4.7 million in fiscal 2008 and 2007, respectively.  No cash distributions were received in fiscal 2009.

has been reflected as a return of equity.


The Company and an unaffiliated third-partythird party are joint venture partners in 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 Company’s sales to RiRent were $4.4$5.0 million $49.3, $6.5 million and $31.5$4.2 million in fiscal 2009, 20082012, 2011 and 2007,2010, 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 RiRent’s €55.0€15.0 million bank credit facility, the partners of RiRent have committed to maintain an overall equity to asset ratio of at least 30.0% (40.6% (60.1% as of JuneSeptember 30, 2009)2012).

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Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.Property, Plant and Equipment

Property, plant and equipment consisted of the following (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Land and land improvements

 

$

44.2

 

$

47.3

 

Buildings

 

210.4

 

219.0

 

Machinery and equipment

 

442.3

 

433.1

 

Equipment on operating lease to others

 

56.8

 

57.0

 

Construction in progress

 

9.7

 

—

 

 

 

763.4

 

756.4

 

Less accumulated depreciation

 

(353.2

)

(303.1

)

 

 

$

 410.2

 

$

453.3

 

 September 30,
 2012 2011
Land and land improvements$45.8
 $46.2
Buildings236.3
 243.8
Machinery and equipment550.6
 521.5
Equipment on operating lease to others23.8
 23.0
 856.5
 834.5
Less accumulated depreciation(486.6) (445.8)
 $369.9
 $388.7

Depreciation expense recorded in continuing operations was $75.7$65.6 million $73.4, $78.2 million and $54.7$80.5 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively. Included in depreciation expense from continuing operations in fiscal 2012, 2011 and 2010 were charges of $0.9 million, $3.4 million and $5.8 million, respectively, related to the impairment of long-lived assets. To better align the Company’s cost structure with global market conditions, the Company has announced several plant closures during the past three fiscal years. Impairment of long-lived assets associated with the plant closures was determined using fair value based on a discounted cash flow analysis or appraisals.

Capitalized interest was insignificant in fiscal 2009, 2008 and 2007.for all reported periods. Equipment on operating lease to others represents the cost of equipment soldshipped to customers for whom the Company has guaranteed the residual value and equipment on short-term leases. 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 September 30, 20092012 and 20082011 was $38.7$9.4 million and $41.1$6.5 million, respectively.


8.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. 

During the fourth quarter of fiscal 2008,2012, the Company performed its annual impairment review relative to goodwill and indefinite-lived intangible assets (principally tradenames) and concluded that no impairment was required.

At February 28, 2009, givennon-amortizable trade names). The Company performed the valuation analysis with the assistance of a sustained decline in the price of the Company’s Common Stock subsequent to the Company’s fiscal 2008 year end when its share price approximated book value, depressed order rates during the second fiscal quarter which historically has been a strong period for orders in advance of the North American construction season, as well as further deterioration in credit markets and the macro-economic environment, the Company determined that the appropriate triggers had been reached to perform additional impairment testing on goodwill and its long-lived intangible assets.

third-party valuation adviser. To derive the fair value of its reporting units, the Company performed extensive valuation analyses withutilized both the assistance of a third-party valuation advisor, utilizing both income and market approaches. Under the income approach, the Company determined fair value based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn.  Estimated future cash flows were based on the Company’s internal projection models, industry projections and other assumptions deemed reasonable by management.  The sum of the fair values of the reporting units was reconciled to the Company’s market capitalization as of February 28, 2009 plus an estimated control premium.  For the secondannual impairment testing in the fourth quarter of fiscal 2009 impairment analysis,2012, the Company used a weighted-average cost of capital, depending on the reporting unit, of 14.5%13.0% to 15.0% and a terminal growth rate of 3%. This resulted in a control premiumUnder


70
Table of 67%, based upon the relatively low price of the Company’s Common Stock on February 28, 2009 of $6.26 per share.  Under Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


the market approach, the Company derived the fair value of its reporting units based on revenue and earnings multiples of comparable publicly-traded companies. The final valuation was more heavily weighted towards the income approach asAs a corroborative source of information, the Company believedreconciles its estimated fair value to within a reasonable range of its market capitalization, which includes an assumed control premium (an adjustment reflecting an estimated fair value on a control basis), to verify the data available to apply the market approach at the timereasonableness of the testing was not reliable as a resultfair value of its reporting units obtained through the aforementioned methods. The control premium is estimated based upon control premiums observed in comparable market transactions. To derive the fair value of its trade names, the Company utilized the “relief from royalty” approach.
At July 1, 2012, approximately 88% of the extreme volatility in stock prices due to the global recession and credit crisis.  Changes in estimates or the application of alternative assumptions could have produced significantly different results.

70


Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of this analysis, $1,167.8 million ofCompany’s recorded goodwill and $25.8 million of other long-lived intangible assetsindefinite-lived purchased intangibles were considered impaired and were written off duringconcentrated within the second quarter of fiscal 2009.  These impairment charges were driven by projections and valuation assumptions that reflected the Company’s belief that the current recession would be deeper and longer than previously expected, that credit markets would remain tight and that costs of capital had risen significantly since the Company last performed its annual impairment testing.

Throughout the third quarter of fiscal 2009, access equipment order rates remained very weak and did not reflect a normal seasonal uptick.  Further, during the quarter it became apparent to the Company that federal stimulus actions would not contribute to access equipment orders in the near term, that credit availability to the Company’s access equipment customers would continue to be constrained, that U.S. residential and nonresidential spending could remain at very low levels for an extended period beyond the Company’s previous estimates and that the global economic recovery would occur at a slower pace than previously expected.  These factors all contributed to the Company’s belief that this business would experience lower orders in fiscal 2010 and beyond than previously estimated.  As a result, the Company initiated actions to further reduce its costs in its access equipment segment, including reductions in workforce and plant closings.  The Company considered these factors together to be an indicator of potential impairment of goodwillJLG reporting unit in the access equipment reporting unit which comprisessegment. The impairment model assumes that the entireU.S. economy and construction spending (and hence access equipment segment.  The Company therefore performed a detailed Step 1 analysis of the access equipment segment utilizing a discounted cash flow model that employed a 14.5% discount rate and a terminal growth rate of 3%.  As a result of the Company’s award of a large delivery order for M-ATVs from the DoD in June 2009 anddemand) will continue its decision to assemble many M-ATVs in access equipment segment facilities, this model included expected cash flows related to this contract.  The resulting estimated fair value calculated in the impairment analysis was in excess of the net book value of the access equipment segment. Based on this analysis, the Company concluded that no additional impairment charge was required in the third fiscal quarter.slow improvement. Assumptions utilized in the impairment analysis are highly judgmental, especially given the severity and global scale of the current recession.most recent recession and the subjective assumptions regarding a recovery. Changes in estimates or the application of alternative assumptions could have produced significantly different results.

During the fourth quarter of fiscal 2009, While the Company performed its annualcurrently believes that an impairment review relativeof intangible assets at JLG is unlikely, events and conditions that could result in the impairment of intangibles at JLG include a sharp decline in economic conditions, pricing pressure on JLG's margins or other factors leading to reductions in expected long-term sales or profitability at JLG.


At July 1, 2012, approximately 7% of the Company’s recorded goodwill and indefinite-lived intangible assets (principally tradenames) utilizing a discounted cash flow model that employed a 14.5% discount rate and a terminal growth rate of 3%.  This resultedpurchased intangibles were concentrated within the Pierce reporting unit in a control premium of 59%, based on the price of the Company’s Common Stock on July 1, 2009 of $18.43 per share.  As a result of this testing, the Company recorded impairment charges of $1.4 million and $0.6 million for goodwill and tradenames, respectively, within the fire & emergency segment. In addition, based on this analysis,This reporting unit has been severely impacted by the decrease in municipal revenue during the past two years. The Company concludedbelieves that municipal demand is stabilizing as its municipal orders increased in fiscal 2012. The Company expects Pierce sales to decline in fiscal 2013 as federal demand is expected to bottom and that Pierce sales will begin a slow recovery starting in fiscal 2014 as municipal demand continues to rebound. The impairment charges were not required for any other reporting units.model assumes that the U.S. economy will continue its slow improvement, reversing the recent trend of decreasing municipal tax revenues. Assumptions utilized in the impairment analysis are highly judgmental, especially given the severity and global scale of the current recession.most recent recession and the subjective assumptions regarding a recovery. Changes in estimates or the application of alternative assumptions could have produced significantly different results. For example,While the Company currently believes that an impairment of intangible assets at Pierce is unlikely, events and conditions that could result in the impairment of intangibles at Pierce include a discount ratefurther decline in economic conditions or other factors leading to reductions in expected long-term sales or profitability at Pierce.

Based on the Company’s annual impairment review, the Company concluded that the risk that goodwill or indefinite-lived intangible assets would require an impairment charge was unlikely. Assumptions utilized in the impairment analysis are highly judgmental, especially given the current period of approximately 15% wouldeconomic uncertainty. Changes in estimates or the application of alternative assumptions could have likely resulted in further impairment charges at JLG, OSV and IMT.

produced significantly different results.


The following two tables present thetable presents changes in goodwill during fiscal 20092012 and 20082011 (in millions):

 
Access
Equipment
 
Fire &
Emergency
 Commercial Total
Net goodwill at September 30, 2010$916.0
 $112.2
 $21.4
 $1,049.6
Impairment—
 (4.3) —
 (4.3)
Foreign currency translation(3.8) 0.1
 —
 (3.7)
Other—
 (0.1) —
 (0.1)
Net goodwill at September 30, 2011912.2
 107.9
 21.4
 1,041.5
Foreign currency translation(6.1) —
 0.2
 (5.9)
Deconsolidation of variable interest entity—
 (1.8) —
 (1.8)
Net goodwill at September 30, 2012$906.1
 $106.1
 $21.6
 $1,033.8


71
Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The following table presents details of the Company’s goodwill allocated to the reportable segments (in millions):

 

 

September 30,

 

 

 

 

 

 

 

September 30,

 

 

 

2008

 

Acquisition

 

Impairment

 

Translation

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Access equipment

 

$

1,845.9

 

$

(11.3

)

$

(892.5

)

$

(13.1

)

$

929.0

 

Fire & emergency

 

231.0

 

—

 

(100.8

)

(3.2

)

127.0

 

Commercial

 

197.2

 

—

 

(175.9

)

—

 

21.3

 

Total

 

$

2,274.1

 

$

(11.3

)

$

(1,169.2

)

$

(16.3

)

$

1,077.3

 

In fiscal 2009, the settlement of pre-acquisition tax contingencies and other items resulted in a decrease in the goodwill of the access equipment segment.

71


 September 30, 2012 September 30, 2011
 Gross 
Accumulated
Impairment
 Net Gross 
Accumulated
Impairment
 Net
Access Equipment$1,838.2
 $(932.1) $906.1
 $1,844.3
 $(932.1) $912.2
Fire & Emergency114.3
 (8.2) 106.1
 182.1
 (74.2) 107.9
Commercial197.5
 (175.9) 21.6
 197.3
 (175.9) 21.4
 $2,150.0
 $(1,116.2) $1,033.8
 $2,223.7
 $(1,182.2) $1,041.5

Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

September 30,

 

 

 

 

 

 

 

September 30,

 

 

 

2007

 

Acquisition

 

Impairment

 

Translation

 

2008

 

 

 

 

 

 

 

 

 

 

 

 

 

Access equipment

 

$

1,853.7

 

$

14.0

 

$

—

 

$

(21.8

)

$

1,845.9

 

Fire & emergency

 

230.8

 

—

 

—

 

0.2

 

231.0

 

Commercial

 

350.9

 

—

 

(167.4

)

13.7

 

197.2

 

Total

 

$

2,435.4

 

$

14.0

 

$

(167.4

)

$

(7.9

)

$

2,274.1

 

Adjustments made in the first quarter of fiscal 2008 upon finalization of certain appraisals for JLG resulted in an increase in the goodwill of the access equipment segment in fiscal 2008.

The following table presentstwo tables present the changes in gross purchased intangible assets during fiscal 20092012 and 2011 (in millions):

 

 

September 30,

 

 

 

 

 

 

 

September 30,

 

 

 

2008

 

Disposition

 

Impairment

 

Translation

 

2009

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

 

 

 

Distribution network

 

$

55.4

 

$

—

 

$

—

 

$

—

 

$

55.4

 

Non-compete

 

57.2

 

(0.2

)

—

 

—

 

57.0

 

Technology-related

 

113.1

 

(6.2

)

(2.4

)

(0.1

)

104.4

 

Customer relationships

 

595.3

 

—

 

(8.8

)

1.7

 

588.2

 

Other

 

16.7

 

—

 

(2.7

)

—

 

14.0

 

 

 

837.7

 

(6.4

)

(13.9

)

1.6

 

819.0

 

Non-amortizable tradenames

 

413.4

 

—

 

(12.5

)

(0.3

)

400.6

 

Total

 

$

1,251.1

 

$

(6.4

)

$

(26.4

)

$

1.3

 

$

1,219.6

 


 September 30,
2011		 Disposition Impairment Translation Other September 30,
2012
Amortizable intangible assets: 
  
  
  
  
  
Distribution network$55.4
 $—
 $—
 $—
 $—
 $55.4
Non-compete56.9
 —
 —
 —
 —
 56.9
Technology-related104.8
 (3.8) —
 (0.1) —
 100.9
Customer relationships576.7
 (8.9) —
 (3.4) (0.6) 563.8
Other16.5
 —
 —
 0.1
 —
 16.6
 810.3
 (12.7) —
 (3.4) (0.6) 793.6
Non-amortizable trade names397.6
 (1.3) —
 (0.1) —
 396.2
 $1,207.9
 $(14.0) $—
 $(3.5) $(0.6) $1,189.8

 September 30,
2010		 Disposition Impairment Translation Other September 30,
2011
Amortizable intangible assets: 
  
  
  
  
  
Distribution network$55.4
 $—
 $—
 $—
 $—
 $55.4
Non-compete56.3
 —
 —
 —
 0.6
 56.9
Technology-related104.0
 —
 —
 —
 0.8
 104.8
Customer relationships577.2
 —
 —
 (1.9) 1.4
 576.7
Other15.7
 —
 —
 0.1
 0.7
 16.5
 808.6
 —
 —
 (1.8) 3.5
 810.3
Non-amortizable trade names397.3
 —
 (0.5) —
 0.8
 397.6
 $1,205.9
 $—
 $(0.5) $(1.8) $4.3
 $1,207.9


72
Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Details of the Company’s total purchased intangible assets were as follows (in millions):

 

 

September 30, 2009

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

Average

 

 

 

Accumulated

 

 

 

 

 

Life

 

Gross

 

Amortization

 

Net

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

 

Distribution network

 

39.1

 

$

55.4

 

$

(17.9

)

$

37.5

 

Non-compete

 

10.5

 

57.0

 

(49.0

)

8.0

 

Technology-related

 

11.8

 

104.4

 

(35.9

)

68.5

 

Customer relationships

 

12.6

 

588.2

 

(138.9

)

449.3

 

Other

 

12.4

 

14.0

 

(10.1

)

3.9

 

 

 

14.2

 

819.0

 

(251.8

)

567.2

 

Non-amortizable tradenames

 

 

 

400.6

 

—

 

400.6

 

Total

 

 

 

$

1,219.6

 

$

(251.8

)

$

967.8

 

72


 September 30, 2012
 
Weighted-
Average
Life
 Gross 
Accumulated
Amortization
 Net
Amortizable intangible assets:   
  
  
Distribution network39.1 $55.4
 $(22.2) $33.2
Non-compete10.5 56.9
 (55.5) 1.4
Technology-related12.0 100.9
 (58.4) 42.5
Customer relationships12.7 563.8
 (265.5) 298.3
Other16.5 16.6
 (12.8) 3.8
 14.4 793.6
 (414.4) 379.2
Non-amortizable trade names  396.2
 —
 396.2
   $1,189.8
 $(414.4) $775.4
 September 30, 2011
 
Weighted-
Average
Life
 Gross 
Accumulated
Amortization
 Net
Amortizable intangible assets:   
  
  
Distribution network39.1 $55.4
 $(20.8) $34.6
Non-compete10.5 56.9
 (53.0) 3.9
Technology-related11.7 104.8
 (53.3) 51.5
Customer relationships12.7 576.7
 (229.9) 346.8
Other16.5 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

Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

September 30, 2008

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

Average

 

 

 

Accumulated

 

 

 

 

 

Life

 

Gross

 

Amortization

 

Net

 

Amortizable intangible assets:

 

 

 

 

 

 

 

 

 

Distribution network

 

39.1

 

$

55.4

 

$

(16.5

)

$

38.9

 

Non-compete

 

10.4

 

57.2

 

(45.9

)

11.3

 

Technology-related

 

11.9

 

113.1

 

(29.6

)

83.5

 

Customer relationships

 

12.6

 

595.3

 

(90.4

)

504.9

 

Other

 

12.0

 

16.7

 

(8.8

)

7.9

 

 

 

14.1

 

837.7

 

(191.2

)

646.5

 

Non-amortizable tradenames

 

 

 

413.4

 

—

 

413.4

 

Total

 

 

 

$

1,251.1

 

$

(191.2

)

$

1,059.9

 

When determining the value of customer relationships for purposes of allocating the purchase price of an acquisition, the Company looks at existing customer contracts of the acquired business to determine if they represent a reliable future source of income and hence, a valuable intangible asset for the Company. The Company determines the fair value of the customer relationships based on the estimated future benefits the Company expects from the acquired customer contracts. In performing its evaluation and estimation of the useful lives of customer relationships, the Company looks to the historical growth rate of revenue of the acquired company’s existing customers as well as the historical attrition rates.

In connection with the valuation of intangible assets, a 40-year40-year life was assigned to the value of the Pierce distribution network ($53.0 million)(net book value of $31.8 million at September 30, 2012). The Company believes Pierce maintains the largest North American fire apparatus distribution network. Pierce has exclusive contracts with each distributor related to the fire apparatus product offerings manufactured by Pierce. The useful life of the Pierce distribution network was based on a historical turnover analysis. Non-compete intangible asset lives are based on the terms of the applicable agreements.

Total amortization expense recorded in continuing operations was $62.4$57.7 million $68.8, $59.3 million and $65.5$59.0 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively. The estimated future amortization expense of purchased intangible assets for the five years succeeding September 30, 20092012 are as follows: 20102013 - $61.0 million; 2011$55.9 million; 2014 - $60.4 million; 2012$54.7 million; 2015 - $60.1 million; 2013$53.9 million; 2016 - $58.3$53.3 million and 20142017 - $56.6 million.

$45.4 million.


73
Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




9.Other Long-Term Assets


Other long-term assets consisted of the following (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Customer notes receivable and other investments

 

$

48.9

 

$

38.6

 

Deferred finance costs

 

29.5

 

22.4

 

Long-term finance receivables, less current portion

 

31.2

 

20.3

 

Other

 

29.5

 

24.0

 

 

 

139.1

 

105.3

 

Less allowance for doubtful notes receivable

 

(6.9

)

(1.6

)

 

 

$

132.2

 

$

103.7

 


 September 30,
 2012 2011
Customer notes receivable$18.8
 $24.1
Deferred finance costs17.8
 21.8
Long-term finance receivables, less current portion1.4
 9.4
Other24.8
 23.9
 62.8
 79.2
Less allowance for doubtful notes receivable(7.4) (7.6)
 $55.4
 $71.6

Deferred financingfinance costs are amortized using the interest method over the term of the debt. Amortization expense was $13.4$7.0 million (including $5.0$2.3 million of amortization related to early debt retirement), $7.2$5.1 million (including $0.9$0.1 million of amortization related to early debt retirement) and $5.5$28.6 million (including $20.4 million of amortization related to early debt retirement) in fiscal 2009, 20082012, 2011 and 2007,2010, respectively.

73


10.    Leases

Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.Leases

Certain administrative and production facilities and equipment are leased under long-term agreements. Most leases contain renewal options for varying periods, and certain leases include options to purchase the leased property during or at the end of the lease term. Leases generally require the Company to pay for insurance, taxes and maintenance of the property. Leased capital assets included in net property, plant and equipment which consist primarily of buildings and improvements, were $2.8 million and $3.8 millionimmaterial at September 30, 20092012 and 2008, respectively.

2011.


Other facilities and equipment are leased under arrangements that are accounted for as noncancelable operating leases. Total rental expense for property, plant and equipment charged to continuing operations under noncancelable operating leases was $34.8$44.5 million $34.2, $41.8 million and $25.2$40.0 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively.


Future minimum operating and capital lease payments due under operating leases and the related present value of minimum capital lease payments at September 30, 20092012 were as follows (in millions):

 

 

Capital

 

Operating

 

 

 

 

 

Leases

 

Leases

 

Total

 

 

 

 

 

 

 

 

 

2010

 

$

0.6

 

$

24.4

 

$

25.0

 

2011

 

0.4

 

21.7

 

22.1

 

2012

 

0.4

 

13.9

 

14.3

 

2013

 

0.7

 

8.2

 

8.9

 

2014

 

0.3

 

6.3

 

6.6

 

Thereafter

 

—

 

18.1

 

18.1

 

Total minimum lease payments

 

2.4

 

$

92.6

 

$

95.0

 

Interest

 

(0.3

)

 

 

 

 

Present value of net minimum lease payments

 

$

2.1

 

 

 

 

 

follows: 2013 - $22.4 million; 2014 - $14.0 million; 2015 - $10.8 million; 2016 - $9.7 million; 2017 - $5.2 million; and thereafter - $5.6 million. Minimum rental payments include $1.2$0.4 million due annually under variable rate leases.

variable-rate leases through January 2013.


74
Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




11.Credit Agreements


The Company was obligated under the following debt instruments (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Senior secured facility:

 

 

 

 

 

Revolving line of credit

 

$

—

 

$

47.3

 

Term loan A

 

117.7

 

387.5

 

Term loan B

 

1,902.6

 

2,314.0

 

Limited recourse debt from finance receivables monetizations

 

—

 

3.9

 

Other long-term facilities

 

4.0

 

5.0

 

 

 

2,024.3

 

2,757.7

 

Less current portion

 

(1.1

)

(77.2

)

 

 

$

2,023.2

 

$

2,680.5

 

74


 September 30,
 2012 2011
Senior Secured Term Loan$455.0
 $560.0
8¼% Senior notes due March 2017250.0
 250.0
8½% Senior notes due March 2020250.0
 250.0
Other long-term facilities—
 0.1
 955.0
 1,060.1
Less current maturities—
 (40.1)
 $955.0
 $1,020.0
    
Revolving Credit Facility$—
 $—
Current maturities of long-term debt—
 40.1
 $—
 $40.1

Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

1.1

 

$

77.2

 

Other short-term facilities

 

13.9

 

16.3

 

 

 

$

15.0

 

$

93.5

 

In December 2006,The Company maintains a senior secured credit agreement with various lenders and on July 13, 2012, the Company entered into a syndicatedAmendment No. 1 to the senior secured credit agreement (“(as amended, the “Credit Agreement”). The Credit Agreement”) with various financial institutions, which consisted ofAgreement provides for (i) a five-year $550.0 million revolving credit facility (“Revolving Credit Facility”) that matures in October 2015 with an initial maximum aggregate amount of availability of $525 millionand two(ii) a $455 million term loan facilities (“Term Loan A” and “Term Loan B,” and collectively, the “Term Loan Facility”).  In March 2009, the Company entered into a second amendment (the “Amendment”Loan”) to the Credit Agreement to provide relief under its Leverage Ratio (as definedfacility due in the Credit Agreement) financial covenant.  The Company believed that the Amendment was required to avoid a potential financial covenant violation at the endquarterly principal installments of its second quarter of fiscal 2009 as a result of lower demand for certain of the Company’s products due to continued weakening in the global economy and tight credit.  The Amendment also included an increase in the margin on LIBOR loans to 600 basis points, compared with 150 basis points immediately prior to the Amendment, and a requirement that the Company prepay $14.5$16.25 million and $86.0 million of debt related to Term Loan A and Term Loan B, respectively.  The Amendment also involved other changes to the Credit Agreement, including placing limitations on capital expenditures, dividends, investments and acquisitions, an increase in the frequency of mandatory prepayments, adding a Senior Secured Leverage Ratio (as defined in the Credit Agreement), and requiring the grant of mortgage liens on certain real estate owned by the Company and certain of its subsidiaries.

The Amendment also added a usage fee equal to an annualized rate of 50 basis points on the aggregate principal amount of all outstanding loans under the Credit Agreement for any day on which the Company has a corporate family rating from Moody’s Investors Service of B3 with “negative” watch or lower or a corporate credit rating from Standard & Poor’s Rating Services of B- with “negative” watch or lower.  The Company’s credit ratings are reviewed regularly by these major debt rating agencies.  In January 2009, Standard & Poor’s Rating Services lowered the Company’s long-term debt rating from BB- to B and credit watch “negative” citing weaker-than-expected operating results and the Company’s need to seek an amendment of the financial covenants contained in the Credit Agreement.  Likewise, in January 2009, Moody’s Investors Service lowered the Company’s long-term debt rating from Ba3 to B2 with ratings under review for possible downgrade pending resolution of the negotiations with its banks, citing expectations of further erosion in the Company’s credit metrics due to the deterioration in several of the Company’s businesses, particularly the access equipment segment.  In March 2009, following the Amendment, both Standard & Poor’s Rating Services and Moody’s Investors Service lowered the Company’s long-term debt ratings to “negative” outlook.  In August 2009, following the Company’s Common Stock offering and award of the M-ATV contract, Standard & Poor’s Rating Services upgraded the Company’s long-term debt rating to B+ commencing December 31, 2013 with a “stable” outlook citing improved covenant headroom and good near-term prospects for the Company’s defense segment.

The Company accounted for the Amendment in accordance with ASC Topic 470-50, Debt Modifications and Extinguishments.  As the terms of the Credit Agreement both prior to and after the Amendment allowed for the prepayment of the amounts due without a penalty, the Company determined that the debt was callable on the date of the Amendment.  As such, the present value of the cash flows both prior to and after the Amendment was not determined to be substantially different.  Accordingly, fees of $20.1 million paid by the Company to the parties to the Credit Agreement were capitalized in connection with the Amendment, along with the existing unamortized debt fees, and will be amortized as an adjustment of interest expense over the remaining term of the Credit Agreement using the interest method.  Furthermore, in accordance with ASC Topic 470-50, costs incurred with third parties of $0.5 million were expensed as incurred.

Term Loan A required principal payments of $12.5 million, plus interest, due quarterly from December 2009 through September 2011, with a final principalballoon payment of $248.0$341.25 million due December 6, 2011.  As a result of excess available cash, through at maturity in October 2015. At September 30, 2009, the Company prepaid all of the quarterly principal payments related to Term Loan A as well as $130.3 million of the final principal payment under Term Loan A.  The remaining outstanding balance under Term Loan A of $117.7 million at September 30, 2009 was prepaid in full in October 2009.  The outstanding balance under Term Loan B at September 30, 2009 of $1,902.6 million is due December 6, 2013.  At September 30, 2009, the Company had no borrowings outstanding under the Revolving Credit Facility, and2012, outstanding letters of credit of $34.1$179.8 million reduced available capacity under the Revolving Credit Facility to $515.9 million.

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$345.2 million.


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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Interest rates on borrowingsThe Company’s obligations under the Revolving Credit FacilityAgreement are guaranteed by certain of its domestic subsidiaries, and Term Loan Facility arethe 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, 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 and arerate 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”base rate (which is equal to the higherhighest of a bank’s reference(a) the administrative agent’s prime rate, and(b) the federal funds rate plus 0.5%, a bank’s “Prime Rate”0.50% or (c) the sum of 1.0%1% plus the “Off-Shore” rate that would be applicable for an interest period of one month beginning on such day) or the “Off-Shore” or “LIBOR Rate” (which is a bank’s inter-bank offered rate for U.S. dollars in off-shore markets)one-month LIBOR) plus a specified margin.  The margins on the Revolving Credit Facility and Term Loan A are subject to adjustment, upmargin, which may be adjusted upward or down, baseddownward depending on whether certain financial criteria are met.satisfied. At September 30, 2009,2012, the interest rate spread on the Revolving Credit Facility and Term Loan Facility was 600175 basis points. The weighted-average interest rate on borrowings outstanding under the Term Loan at September 30, 20092012 was 6.60%1.97%.


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The Credit Agreement contains various restrictions and 6.42%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 Company’s 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 Company’s consolidated EBITDA to the Company’s 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 Company’s consolidated secured indebtedness to the Company’s consolidated EBITDA) of the following:
Fiscal Quarter Ending
September 30, 20123.00 to 1.0
Thereafter2.75 to 1.0

The Company was in compliance with the financial covenants contained in the Credit Agreement as of September 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. 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 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.

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 Term Loans Aa premium after March 1, 2014 and B,March 1, 2015, respectively.

Certain of the Company’s subsidiaries fully, unconditionally, jointly and severally guarantee the Company’s obligations under the Senior Notes. See Note 24 of the Notes to 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 Company’s debt. At September 30, 2009, the fair values of Term Loans A and B were estimated to be $117.1 million and $1,899.6 million, respectively.

To manage a portion of the Company’s exposure to changes in LIBOR-based interest rates on its variable-rate debt, the Company entered into an amortizing interest rate swap agreement on January 11, 2007 that effectively fixes the interest payments on a portion of the Company’s variable-rate debt.  The swap, which has a termination date of December 6, 2011, effectively fixes the LIBOR-based interest rate on the debt in the amount of the notional amount of the swap at 5.105% plus the applicable spread based on the terms of the Credit Agreement, as amended (11.105% at September 30, 2009).  The notional amount of the swap at September 30, 2009 was $1.25 billion and reduces to $750 million on December 7, 2009 and $250 million on December 6, 2010.

The swap has been designated as a cash flow hedge of 3-month LIBOR-based interest payments.  The effective portion of the change in fair value of the derivative will be recorded in “Accumulated other comprehensive (loss) income,” while any ineffective portion is recorded as an adjustment to interest expense.  At September 30, 2009, a loss of $50.9 million ($31.3 million net of tax)2012, representing the fair value of the interest rate swap,Senior Notes was recorded in “Accumulated other comprehensive (loss) income.”  The differential paid or received on the interest rate swap willestimated to be recognized as an adjustment to interest expense when the hedged, forecasted interest is recorded.  Net gains or losses related to hedge ineffectiveness on the interest rate swap were insignificant for all periods presented.

Under this swap agreement, the Company will pay the counterparty interest on the notional amount at a fixed rate of 5.105%$550 million and the counterparty will pay the Company interest on the notional amount at a variable rate equal to 3-month LIBOR.  The 3-month LIBOR rate applicable to this agreement was 0.29% at September 30, 2009.  The notional amounts do not represent amounts exchanged by the parties, and thus are not a measure of exposurefair value of the Company.  The amounts exchanged are normally based on the notional amounts and other terms of the swaps.  The variable rates are subject to change over time as 3-month LIBOR fluctuates.  Neither the Company nor the counterparty is required to collateralize its obligations under these swaps.  The Company is exposed to loss if the counterparty defaults.  However, as of the date of this filing, the counterparty is a large Aa1 rated global financial institution, and the Company believes that the risk of default is remote.

The Company’s obligations under the Credit Agreement, as amended, are guaranteed by certain of its domestic subsidiaries, and the Company guarantees the obligations of certain of its subsidiaries under the Credit Agreement, as amended, to the extent such subsidiaries borrow directly under the Credit Agreement, as amended.  The Credit Agreement, as amended, is also secured by a first-priority, perfected lien and security interests in all of the equity interests of the Company’s active domestic subsidiaries, 65% of the equity interests of certain foreign subsidiaries of the Company and certain real property; subject to customary permitted lien exceptions, substantially all other personal property of the Company and certain subsidiaries; and all proceeds thereof.

The Credit Agreement, as amended, contains various restrictions and covenants, including restrictions on the ability of the Company and certain of its subsidiaries to, among other things, consolidate or merge, create liens, incur additional indebtedness and dispose of assets.  The Credit Agreement, as amended, also requires the Company to maintain the following financial ratios:

76

Term Loan approximated book value.

12.    Warranties

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

·Leverage Ratio: The ratio of Consolidated Indebtedness outstanding at quarter-end to Consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) for the most recently ended four fiscal quarters, as such terms are defined in the Credit Agreement, as amended.  The Leverage Ratio is not permitted to be greater than the following:

Fiscal Quarters Ending

September 30, 2009

7.25 to 1.0

December 31, 2009

7.00 to 1.0

March 31, 2010

6.75 to 1.0

June 30, 2010 through June 30, 2011

6.50 to 1.0

September 30, 2011 through June 30, 2012

5.50 to 1.0

September 30, 2012 through June 30, 2013

4.25 to 1.0

Thereafter

3.75 to 1.0

As of September 30, 2009, the Company was in compliance with the Leverage Ratio with a ratio of 4.68 to 1.0.

·Interest Coverage Ratio: The ratio of Consolidated EBITDA for the most recently ended four fiscal quarters to Cash Interest Expense for the most recently ended four fiscal quarters, as such terms are defined in the Credit Agreement, as amended.  The Interest Coverage Ratio is not permitted to be less than the following:

Fiscal Quarters Ending

September 30, 2009

1.58 to 1.0

December 31, 2009

1.49 to 1.0

March 31, 2010

1.52 to 1.0

June 30, 2010 through December 31, 2010

1.56 to 1.0

March 31, 2011 and June 30, 2011

1.70 to 1.0

September 30, 2011 through June 30, 2012

1.88 to 1.0

September 30, 2012 through June 30, 2013

2.48 to 1.0

Thereafter

2.47 to 1.0

As of September 30, 2009, the Company was in compliance with the Interest Coverage Ratio with a ratio of 2.43 to 1.0.

·Senior Secured Leverage Ratio: The ratio of outstanding Loans under the Credit Agreement, as amended, at quarter-end to Consolidated EBITDA for the most recently ended four fiscal quarters, as such terms are defined in the Credit Agreement, as amended.  The Senior Secured Leverage Ratio is not permitted to be greater than the following:

Fiscal Quarters Ending

June 30, 2011

5.00 to 1.0

September 30, 2011 through June 30, 2012

4.50 to 1.0

September 30, 2012 through June 30, 2013

3.25 to 1.0

September 30, 2013

3.00 to 1.0

The Senior Secured Leverage Ratio limitation is not applicable until June 30, 2011.

The Credit Agreement, as amended, limits the amount of dividends, stock repurchases and other types of distributions during any fiscal year in excess of certain limits based upon the Leverage Ratio as of the end of the fiscal quarter preceding the proposed distribution.  When the Leverage Ratio as of the end of a fiscal quarter is greater than 4.0 to 1.0, then no such distribution may be made if, after giving effect to such distribution, the aggregate amount of all such payments made in such fiscal quarter would exceed the sum of $0.01 per outstanding share of the Company’s Common Stock plus $250,000 or the aggregate amount of all such payments made in the applicable fiscal year would exceed $3.85 million.  The Company suspended payment of dividends effective April 2009.

The Company is charged a 0.50% annual commitment fee with respect to any unused commitment under its Revolving Credit Facility and a 5.00% to 6.00% annual fee with respect to commercial letters of credit issued under the Revolving

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Credit Facility based on the Company’s Leverage Ratio.  For performance letters of credit, the annual fee is 50% of the annual fee applicable to commercial letters of credit.

12.Warranty and Guarantee Arrangements

The Company’s 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 Company’s end products may include manufacturers’ warranties. These manufacturers’ warranties are generally passed on to the end customer of the Company’s products, and the customer would generally deal directly with the component manufacturer. Warranty costs recorded in continuing operations were $48.5$72.5 million $59.9, $30.2 million and $52.3$87.8 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively.


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Changes in the Company’s warranty liability during fiscal 2009 and fiscal 2008 were as follows (in millions):

 

 

Fiscal Year Ended
September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Balance at beginning of year

 

$

 88.3

 

$

 88.2

 

Warranty provisions

 

48.3

 

71.1

 

Settlements made

 

(55.4

)

(67.7

)

Changes in liability for pre-existing warranties, net

 

0.1

 

(3.2

)

Disposition of Geesink

 

(8.5

)

—

 

Foreign currency translation adjustment

 

—

 

(0.1

)

Balance at end of year

 

$

 72.8

 

$

 88.3

 

 
Fiscal Year Ended
September 30,
 2012 2011
Balance at beginning of year$75.0
 $90.5
Warranty provisions58.8
 42.6
Settlements made(52.8) (46.8)
Changes in liability for pre-existing warranties, net13.7
 (11.5)
Disposition of business(0.1) —
Foreign currency translation0.4
 0.2
Balance at end of year$95.0
 $75.0
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 fiscal 2012 primarily related to increased warranty costs in the fire & emergency segment. Actual Mine Resistant Ambush Protected All-Terrain Vehicle (“M-ATV”) 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 in fiscal 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 Company’sCompany's 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 beyond the scopein excess of the Company’s historical experience.

In the fire & emergency segment,amounts accrued; however, the Company provides guarantees of certain customers’ obligations under deferred payment contracts and lease payment agreements to third parties.  Guarantees provided prior to February 1, 2008 are limited to $1.0 million per year in total.  In January 2008, the Company entered intodoes not expect that any such amounts, while not determinable, would have a new guarantee arrangement.  Under this arrangement, guarantees are limited to $3.0 million per year for contracts signed after February 1, 2008.  These guarantees are mutually exclusive and, until the portfolio under the $1.0 million guarantee is repaid, the Company has exposure of up to $4.0 million per year.  Both guarantees are supported by the residual value of the underlying equipment.  The Company’s actual losses under these guarantees over the last ten years have been negligible.  In accordance with ASC Topic 460, Guarantees, the Company has recorded the fair value of all such guarantees issued after January 1, 2003 as a liability and a reduction of the initial revenue recognizedmaterial adverse effect on the saleCompany's consolidated financial condition, result of equipment.  Liabilities accrued since January 1, 2003 for such guarantees were not significant.

In the access equipment segment, theoperations or cash flows.


13.    Guarantee Arrangements

The Company is party to multiple agreements whereby it guarantees an aggregate of $290.8$363.8 million in indebtedness of others, including $135.3$132.2 million under loss pool agreements. The Company estimated that its maximum loss exposure under loss pool agreements.these contracts at September 30, 2012 was $94.6 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, to take possession of the underlying collateral.  At September 30, 2009 and 2008, the Company had recorded liabilities related to these agreements of $26.7 million and $4.7 million, respectively. 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 customers’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

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

equipment, and are generally subject to the finance company’scompany's ability to provide the Company clear title to foreclosed equipment and other conditions. During anperiods of economic downturn,weakness, collateral values generally decline and can contribute to higher exposure to losses.



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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Changes in the Company’s credit guarantee liability were as follows (in millions):

 
Fiscal Year Ended
September 30,
 2012 2011
Balance at beginning of year$6.5
 $23.1
Provision for new credit guarantees1.9
 0.5
Settlements made(0.9) (3.0)
Changes for pre-existing guarantees, net(1.4) (12.7)
Amortization of previous guarantees(1.0) (1.3)
Foreign currency translation(0.1) (0.1)
Balance at end of year$5.0
 $6.5

13.In the first quarter of fiscal 2011, the Company reached a settlement with a customer that resulted in the customer’s 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.

14.    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 times, the Company has designated these hedges as either cash flow hedges or fair value hedges under FASB ASC Topic 815,Derivatives and Hedging,, as follows:


Fair Value Hedging Strategy — The Company enters into forward foreign exchange contracts to hedge certain firm commitments denominated in foreign currencies, primarily the Euro. The purpose of the Company’s foreign currency hedging activities is to protect the Company from risk that the eventual U.S. dollar-equivalent cash flows from the sale of products to international customers will be adversely affected by changes in the exchange rates.

Cash Flow Hedging Strategy — To protect against an increase in the cost of forecasted purchases of foreign-sourced component parts payable in Euro, the Company has a foreign currency cash flow hedging program. The Company hedges portions of its forecasted purchases denominated in Euro with forward contracts. When the U.S. dollar weakens against the Euro, increased foreign currency payments are offset by gains in the value of the forward contracts. Conversely, when the U.S. dollar strengthens against the Euro, reduced foreign currency payments are offset by losses in the value of the forward contracts.

At September 30, 2009,2012 and 2011, the Company had no forward foreign exchange contracts designated as hedges were insignificant.

hedges.


To manage a portion of the Company’sCompany's exposure to changes in LIBOR-based interest rates on its variable-rate debt, the Company entered into an amortizing interest rate swap agreement that effectively fixesfixed the interest payments on a portion of the Company’sCompany's variable-rate debt. The swap, has beenwhich had a termination date of December 6, 2011, was designated as a cash flow hedge of 3-month LIBOR-based interest payments and, accordingly, derivative gains or losses arewere reflected as a component of accumulated other comprehensive income (loss) income and arewere amortized to interest expense over the respective lives of the borrowings. During the years ended September 30, 2009fiscal 2012, 2011 and 2008, $48.32010, $2.2 million of expense, $16.6 million and $23.3$41.6 million of expense, respectively, was recorded in the Consolidated Statements of OperationsIncome as amortization of interest rate derivative gains and losses.  At September 30, 2009, $50.9 million of net unrealized losses remained deferred in “Accumulated other comprehensive (loss) income.”  See Note 11 of the Notes to Consolidated Financial Statements for information regarding the interest rate swap.

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, 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 Consolidated Balance Sheets in “Other current assets” and “Other current liabilities.” At September 30, 2009,2012, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts totaled $81.5$142.7 million in notional amounts, including $69.6$76.2 million in contracts to sell Euro, $54.3 million in contracts to sell Australian dollars, $2.7 million in contracts to sell U.K. pounds sterling and buy Euro with the remaining contracts covering a variety of foreign currencies.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Fair Market Value of Financial Instruments — The fair values of all open derivative instruments in the Consolidated Balance Sheets were as follows (in millions):

 

 

September 30, 2009

 

September 30, 2008

 

 

 

Other

 

Other

 

Other

 

Other

 

Other

 

Other

 

 

 

Current

 

Current

 

Long-term

 

Current

 

Current

 

Long-term

 

 

 

Assets

 

Liabilities

 

Liabilities

 

Assets

 

Liabilities

 

Liabilities

 

Designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate contracts

 

$

 —

 

$

 36.6

 

$

 14.3

 

$

 —

 

$

 26.7

 

$

 17.7

 

Foreign exchange contracts

 

—

 

—

 

—

 

—

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Not designated as hedging instruments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange contracts

 

0.1

 

0.3

 

—

 

3.5

 

3.4

 

—

 

Total derivatives

 

$

 0.1

 

$

 36.9

 

$

 14.3

 

$

 3.5

 

$

 30.1

 

$

 17.7

 

 September 30, 2012 September 30, 2011
 
Other
Current
Assets
 
Other
Current
Liabilities
 
Other
Current
Assets
 
Other
Current
Liabilities
Designated as hedging instruments:     
 ��
Interest rate contracts$—
 $—
 $—
 $2.1
        
Not designated as hedging instruments:     
  
Foreign exchange contracts0.4
 —
 0.8
 0.2
 $0.4
 $—
 $0.8
 $2.3

The pre-tax effects of derivative instruments on the Consolidated Statements of OperationsIncome consisted of the following (in millions):

Fiscal Year

Ended

Classification of

September 30,

Gains (Losses)

2009

Cash flow hedges:

Reclassified from other comprehensive income (effective portion):

Interest rate contracts

Interest expense

$

 (48.3

)

Reclassified from other comprehensive income (effective portion):

Foreign exchange contracts

Cost of sales

(0.5

)

Recognized directly in income (ineffective portion):

Foreign exchange contracts

Miscellaneous, net

(0.7

)

Not designated as hedges:

Foreign exchange contracts

Miscellaneous, net

16.9

Total

$

 (32.6

)

14.


 
Classification of
Gains (Losses)
 
Fiscal Year Ended
September 30,
  2012 2011
Cash flow hedges:   
  
Reclassified from other comprehensive income (effective portion):   
  
Interest rate contractsInterest expense $(2.2) $(16.6)
      
Not designated as hedges:   
  
Foreign exchange contractsMiscellaneous, net (5.3) 2.0
   $(7.5) $(14.6)

15.    Fair Value Measurement


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.

80


Level 1:Unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2:Observable inputs other than quoted prices in active markets for identical assets or liabilities, 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 management's own assumptions about the inputs used in pricing the asset or liability.


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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Level 3:Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

There were no transfers of assets between levels during fiscal 2012. As of September 30, 2009,2012, the fair values of the Company’s financial assets and liabilities were as follows (in millions):

 

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

Foreign currency exchange derivatives (a)

 

$

 —

 

$

 0.1

 

$

 —

 

$

 0.1

 

Total assets at fair value

 

$

 —

 

$

 0.1

 

$

 —

 

$

 0.1

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

Foreign currency exchange derivatives (a)

 

$

 —

 

$

 0.3

 

$

 —

 

$

 0.3

 

Interest rate swaps (b)

 

—

 

50.9

 

—

 

50.9

 

Total liabilities at fair value

 

$

 —

 

$

 51.2

 

$

 —

 

$

 51.2

 

(a)  

 Level 1 Level 2 Level 3 Total
Assets: 
  
  
  
Foreign currency exchange derivatives (a)$—
 $0.4
 $—
 $0.4
_________________________

(a)
Based on observable market transactions of forward currency prices.

Items Measured at Fair Value on observable market transactions of forward currency prices.

(b)  Baseda Nonrecurring Basis

In addition to items that are measured at fair value on observable market transactions of forward LIBOR rates.

15.Shareholders’ Equity

On August 12, 2009,a recurring basis, the Company completedalso has assets and liabilities in its balance sheet that are measured at fair value on a public equity offering of 14,950,000 shares of Common Stock, whichnonrecurring basis. As these assets and liabilities are not measured at fair value on a recurring basis, they are not included in the exercisetables above. Assets and liabilities that are measured at fair value on a nonrecurring basis include long-lived assets and investments in affiliates, (see Note 7 of the underwriters’ over-allotment optionNotes to Consolidated Financial Statements for 1,950,000 sharesimpairments of Common Stock, at a pricelong-lived assets and Note 8 of $25.00 per share.the Notes to Consolidated Financial Statements for impairments of intangible assets). The Company paid $15.1 million in underwriting discountshas determined that the fair value measurements related to each of these assets rely primarily on Company-specific inputs and commissions and approximately $0.6 million of offering expenses.  The Company used the net proceeds fromCompany’s assumptions about the offering of approximately $358.1 million to repay debt under the Credit Agreement.

On February 1, 1999, the Board of Directorsuse of the assets, as observable inputs are not available. As such, the Company adopted a shareholder rights plan and declared a rights dividendhas determined that each of one-sixth of one Preferred Share Purchase Right (“Right”) for each share of Common Stock outstanding on February 8, 1999, and provided that one-sixth of one Right would be issued with each share of Common Stock, thereafter issued.  The Rights are exercisable only if a person or group acquires 15% or morethese fair value measurements reside within Level 3 of the Common Stock or announces a tender offer for 15% or more of the Common Stock.  Each Right entitles the holder thereof to purchase from the Company one one-hundredth share of the Company’s Series A Junior Participating Preferred Stock at an initial exercise price of $145 per one one-hundredth of a share (subject to adjustment), or upon the occurrence of certain events, Common Stock or common stock of an acquiring company having a marketfair value equivalent to two times the exercise price.  Subject to certain conditions, the Rights are redeemable by the Board of Directors for $.01 per Right and are exchangeable for shares of Common Stock.  The Board of Directors is also authorized to reduce the 15% thresholds referred to above to not less than 10%.  The Rights have no voting power and expired on February 1, 2009.

hierarchy.


16.    Oshkosh Corporation Shareholders’ Equity

In July 1995, the Company authorized the buybackrepurchase of up to 6,000,000 shares of the Company’s Common Stock. In July 2012, the Company's Board of Directors increased the repurchase authorization by 4,000,000 shares of Common Stock. During fiscal 2012, the Company repurchased 546,965 shares under this authorization at a cost of $13.3 million. As of September 30, 2009 and 2008,2012, the Company had purchased 2,769,2103,316,175 shares of its Common Stock at an aggregate cost of $6.6 million.$19.9 million leaving 6,683,825 shares of Common Stock remaining under this repurchase authorization. See Note 26 of the Notes to Consolidated Financial Statements for information regarding an additional increase in this authorization. The Company is restricted by its Credit Agreement from buying backrepurchasing shares in certain situations. See Note 11 of the Notes to Consolidated Financial Statements for information regarding these restrictions.  The Company does not expect to buy back any shares under this authorization in fiscal 2010.


17.    Stock-Based Compensation
16.Stock Options, Nonvested Stock, Performance Shares and Common Stock Reserved

In February 2009, the Company’s shareholders approved the 2009 Incentive Stock and Awards Plan. In January 2012, the Company's shareholders approved amendments to the 2009 Incentive Stock and Awards Plan (the(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.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the 2009 Stock Plan, officers, directors, including non-employee directors, and employees of the Company may be granted stock options, stock appreciation rights (“SAR”), performance shares, performance units, shares of Common Stock, restricted stock, restricted stock units (“RSU”) or other stock-based awards. The 2009 Stock Plan provides for the granting of options to purchase shares of the Company’s 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 generally become exercisable in equal installments over a three-yearthree-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 September 30, 2012, the Company and generally vest upon retirement.  The maximum number ofhad reserved 10,639,774 shares of stock reservedCommon Stock available for all awardsissuance under the 2009 Stock Plan is 4,000,000.  At September 30, 2009, the Company had reserved 8,483,576 shares of Common Stock 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.


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company recognizes compensation expense for stock option, nonvested stock and performance share awards over the requisite service period for vesting of thean award, or to an employee’semployee's eligible retirement date, if earlier and applicable. Total stock-based compensation expense included in the Company’s Consolidated Statements of OperationsIncome for fiscal 2009, 20082012, 2011 and 20072010 was $10.9$27.1 million ($6.9 ($17.2 million net of tax), $15.0$15.2 million ($9.7 ($9.6 million net of tax) and $11.7$14.3 million ($8.4 ($9.0 million net of tax), respectively.


Information related to the Company’s equity-based compensation plans in effect as of September 30, 2009 is2012 was as follows:

 

 

Number of Securities

 

 

 

Number of

 

 

 

to be Issued Upon

 

Weighted-Average

 

Securities Remaining

 

 

 

Exercise of Outstanding

 

Exercise Price of

 

Available for Future

 

 

 

Options or Vesting of

 

Outstanding

 

Issuance Under Equity

 

Plan Category

 

Performance Share Awards

 

Options

 

Compensation Plans

 

 

 

 

 

 

 

 

 

Equity compensation plans approved by security holders

 

5,795,109

 

$

 28.03

 

2,688,467

 

Equity compensation plans not approved by security holders

 

—

 

n/a

 

—

 

Total

 

5,795,109

 

$

 28.03

 

2,688,467

 


Plan Category  
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options or Vesting of
Performance Share
Awards
 
Weighted-Average
Exercise Price of
Outstanding
Options
 
Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
Equity compensation plans approved by security holders 5,364,834
 $31.26
 5,274,940
Equity compensation plans not approved by security holders —
 n/a
 —
  5,364,834
 $31.26
 5,274,940
Stock Options — For fiscal 2009, 20082012, 2011 and 2007,2010, the Company recorded $10.0$6.3 million $11.8, $11.4 million and $7.1$12.4 million, respectively, of stock-based compensation expense in selling, general and administrative expense in the accompanying Consolidated Statements of OperationsIncome associated with outstanding stock options.

A summary of the Company’s stock option activity for the fiscal years ended September 30, 2009, 20082012, 2011 and 2007 is2010 was as follows:

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

 

 

Average

 

 

 

Average

 

 

 

Average

 

 

 

 

 

Exercise

 

 

 

Exercise

 

 

 

Exercise

 

 

 

Options

 

Price

 

Options

 

Price

 

Options

 

Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding, beginning of the year

 

4,324,372

 

$

 26.90

 

3,141,994

 

$

 32.71

 

2,937,594

 

$

 25.30

 

Options granted

 

1,200,000

 

30.82

 

1,565,450

 

12.75

 

640,750

 

54.60

 

Options forfeited

 

(138,934

)

23.59

 

(37,734

)

52.06

 

(3,000

)

19.75

 

Options exercised

 

(55,329

)

11.25

 

(345,338

)

12.88

 

(433,350

)

14.92

 

Options outstanding, end of the year

 

5,330,109

 

$

 28.03

 

4,324,372

 

$

 26.90

 

3,141,994

 

$

 32.71

 

Options exercisable, end of the year

 

2,930,946

 

$

 30.46

 

2,234,658

 

$

 30.56

 

2,094,472

 

$

 23.27

 

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 Fiscal Year Ended September 30,
 2012 2011 2010
 Options 
Weighted-
Average
Exercise
Price
 Options 
Weighted-
Average
Exercise
Price
 Options 
Weighted-
Average
Exercise
Price
Options outstanding, beginning of year4,774,714
 $30.72
 5,158,370
 $30.32
 5,330,109
 $28.03
Options granted576,400
 28.55
 411,575
 20.90
 954,350
 28.96
Options forfeited(151,092) 26.76
 (173,009) 27.22
 (39,836) 27.46
Options expired(235,081) 39.26
 (118,199) 47.46
 (9,499) 54.12
Options exercised(286,107) 12.56
 (504,023) 15.94
 (1,076,754) 17.66
Options outstanding, end of year4,678,834
 $31.26
 4,774,714
 $30.72
 5,158,370
 $30.32
Options exercisable, end of year3,620,565
 $32.53
 3,478,310
 $32.13
 2,955,909
 $33.49

The Company uses the Black-Scholes valuation model to value stock options utilizing the following weighted-average assumptions:

 

 

Fiscal Year Ended September 30,

 

Options Granted During

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Assumptions:

 

 

 

 

 

 

 

Risk-free interest rate

 

2.34%

 

2.64%

 

4.23%

 

Expected volatility

 

61.19%

 

43.85%

 

32.02%

 

Expected dividend yield

 

0.02%

 

1.77%

 

0.75%

 

Expected term (in years)

 

5.23%

 

5.46%

 

5.44%

 

  Fiscal Year Ended September 30,
Options Granted During 2012 2011 2010
Assumptions:      
Risk-free interest rate 0.74% 0.95% 1.45%
Expected volatility 66.03% 63.88% 61.98%
Expected dividend yield 0.00% 0.00% 0.00%
Expected term (in years) 5.23 5.23 5.28

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company used the Company’sits historical stock prices as the basis for the Company’s volatility assumption. The assumed risk-free interest rates were based on U.S. Treasury rates in effect at the time of grant. The expected option term represents the period of time that the options granted are expected to be outstanding and was based on historical experience. The weighted-average per share fair values for stock option grants during fiscal 2009, 20082012, 2011 and 20072010 were $16.67, $4.64$15.95, $11.42 and $18.78,$15.69, respectively.

As of September 30, 2009,2012, the Company had $16.7$10.2 million of unrecognized compensation expense related to outstanding stock options, which will be recognized over a weighted-average period of 2.82.6 years.


Stock options outstanding as of September 30, 20092012 were as follows (in millions, except share and per share amounts):

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

 

Aggregate

 

 

 

 

 

 

 

Number

 

Contractual

 

Weighted-Average

 

Intrinsic

 

Price Range

 

Outstanding

 

Life (in years)

 

Exercise Price

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 5.19

 

-

 

$

7.95

 

94,400

 

5.9

 

$

7.06

 

$

2.3

 

$

 11.00

 

-

 

$

19.75

 

2,349,171

 

6.9

 

14.11

 

39.5

 

$

 28.27

 

-

 

$

36.95

 

1,496,267

 

6.5

 

31.37

 

0.8

 

$

 39.91

 

-

 

$

59.58

 

1,390,271

 

7.1

 

49.38

 

—

 

 

 

 

 

 

 

5,330,109

 

6.8

 

28.03

 

$

42.6

 

Price Range 
Number
Outstanding
 
Weighted-Average
Remaining
Contractual
Life (in years)
 
Weighted-Average
Exercise Price
 
Aggregate
Intrinsic
Value
$7.95
-$19.75
 1,129,808
 5.4 $14.86
 $14.2
$28.27
-$38.46
 2,378,376
 4.8 30.23
 —
$39.91
-$54.63
 1,170,650
 4.1 49.18
 —
    4,678,834
 4.8 $31.26
 $14.2
Stock options exercisable as of September 30, 20092012 were as follows (in millions, except share and per share amounts):

 

 

 

 

 

 

 

 

Weighted-Average

 

 

 

 

 

 

 

 

 

 

 

 

 

Remaining

 

 

 

Aggregate

 

 

 

 

 

 

 

Number

 

Contractual

 

Weighted-Average

 

Intrinsic

 

Price Range

 

Exercisable

 

Life (in years)

 

Exercise Price

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

 5.19

 

-

 

$

7.95

 

36,000

 

0.3

 

$

7.25

 

$

0.9

 

$

 11.00

 

-

 

$

19.75

 

1,358,798

 

5.4

 

15.62

 

20.8

 

$

 28.27

 

-

 

$

36.95

 

357,267

 

4.8

 

29.07

 

0.8

 

$

 39.91

 

-

 

$

59.58

 

1,178,881

 

7.0

 

48.69

 

—

 

 

 

 

 

 

 

2,930,946

 

5.9

 

30.46

 

$

22.5

 

Price Range 
Number
Exercisable
 
Weighted-Average
Remaining
Contractual
Life (in years)
 
Weighted-Average
Exercise Price
 
Aggregate
Intrinsic
Value
$7.95
-$19.75
 894,802
 5.2 $13.76
 $12.2
$28.27
-$38.46
 1,555,113
 4.1 30.81
 —
$39.91
-$54.63
 1,170,650
 4.1 49.18
 —
    3,620,565
 4.4 $32.53
 $12.2
The aggregate intrinsic values in the tables above represent the total pre-tax intrinsic value (difference between the Company’s closing stock price on the last trading day of fiscal 20092012 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on September 30, 2009.2012. This amount changes based on the fair market value of the Company’s Common Stock. TotalThe total intrinsic value of options exercised for fiscal 2009, 20082012, 2011 and 20072010 was $0.7$3.3 million $9.0, $9.6 million and $17.3$22.8 million, respectively.

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Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net cash proceeds from the exercise of stock options were $0.3$3.6 million $3.5, $8.0 million and $6.5$19.0 million for fiscal 2009, 20082012, 2011 and 2007,2010, respectively. The actual income tax benefit realized totaled $0.3$1.2 million $3.5, $3.5 million and $6.7$8.4 million for those same periods.

Nonvested Stock Awards — Compensation expense related to nonvested stock awards of $0.3$4.1 million $2.6, $3.0 million and $4.6$0.9 million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively, was recorded in selling, general and administrative expense in the accompanying Consolidated Statements of Operations.Income. As of

September 30, 2012, the Company had $13.3 million of unrecognized compensation expense related to nonvested stock awards, which will be recognized over a weighted-average period of 2.8 years.



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Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A summary of the Company’s nonvested stock activity for the three years ended September 30, 20092012 is as follows:

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

Weighted-

 

 

 

Number

 

Average

 

Number

 

Average

 

Number

 

Average

 

 

 

of

 

Grant Date

 

of

 

Grant Date

 

of

 

Grant Date

 

 

 

Shares

 

Fair Value

 

Shares

 

Fair Value

 

Shares

 

Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonvested, beginning of the year

 

63,816

 

$

51.91

 

407,210

 

$

25.78

 

438,796

 

$

24.43

 

Granted

 

11,000

 

7.95

 

11,825

 

41.47

 

55,825

 

54.14

 

Forfeited

 

(542

)

54.85

 

(16,035

)

54.30

 

—

 

—

 

Vested

 

(71,339

)

45.04

 

(339,184

)

20.06

 

(87,411

)

37.13

 

Nonvested, end of the year

 

2,935

 

$

53.40

 

63,816

 

$

51.91

 

407,210

 

$

25.78

 

 Fiscal Year Ended September 30,
 2012 2011 2010
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
Nonvested, beginning of year228,615
 $23.75
 128,907
 $30.22
 2,935
 $53.40
Granted514,800
 27.37
 166,412
 21.99
 141,682
 30.93
Forfeited(37,502) 23.04
 (5,000) 28.73
 —
 —
Vested(136,631) 24.70
 (61,704) 32.12
 (15,710) 40.91
Nonvested, end of year569,282
 $26.84
 228,615
 $23.75
 128,907
 $30.22
The total fair value of shares vested during fiscal 2009, 20082012, 2011 and 20072010 was $1.0$3.5 million $4.7, $1.5 million and $4.9$0.6 million, respectively.

The actual income tax benefit realized totaled $0.5 million, $0.2 million and $0.1 million for those same periods.

Performance Share Awards— In fiscal 2009, 20082012, 2011 and 2007,2010, the Company granted certain executives performance share awards for an aggregate of 134,500, 50,100aggregating 142,000, 153,500 and 50,500 performance75,000 shares at target, respectively, that vest at the end of the third fiscal year following the grant date. Executives earn performance shares only if the Company’s total shareholder return over the three years-year term of the awards compares favorably to that of a comparator group of companies. As of September 30, 2012, 343,000 performance shares remained outstanding at target. Potential payouts range from zero to 200 percent of the target awards. Performance share awards were paid out at 0%, 195% and 0% of target amounts in fiscal 2012, 2011 and 2010, respectively. The Company realized an actual income tax benefit of $0.7 million in fiscal 2011 related to the vesting of performance shares.
The grant date fair values of the 2009 performance share awards were estimated using a Monte Carlo simulation model utilizing the following weighted-average assumptions:

 

 

Fiscal Year Ended September 30,

 

Performance Shares Granted During

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Assumptions:

 

 

 

 

 

 

 

Risk-free interest rate

 

1.48

%

2.08

%

4.95

%

Expected volatility

 

77.70

%

35.53

%

27.97

%

Expected term (in years)

 

3.00

 

3.00

 

3.00

 

  Fiscal Year Ended September 30,
Performance Shares Granted During 2012 2011 2010
Assumptions:      
Risk-free interest rate 0.37% 0.29% 0.73%
Expected volatility 44.90% 76.98% 79.86%
Expected term (in years) 3.00 3.00 3.00
The Company used the Company’sits historical stock prices as the basis for the Company’s volatility assumption. The assumed risk-free rates were based on U.S. Treasury rates in effect at the time of grant. The expected term iswas based on the vesting period. The weighted-average fair value used to record compensation expense for performance share awards granted during fiscal 2009, 20082012, 2011 and 20072010 was $17.26, $7.04$35.84, $9.75 and $35.12$13.88 per award, respectively. Compensation expense of $0.6$8.1 million $0.6, $1.1 million and $0.1$1.4 million related to performance share awards was recorded in fiscal 2009, 20082012, 2011 and 2007,2010, respectively, in selling, general and administrative expense in the accompanying Consolidated Statements of Operations.

84

Income. Performance shares are valued by a global third-party actuarial firm utilizing a complex Monte Carlo simulation model. In October 2012, the Company, in conjunction with the third party, determined that the performance share valuation calculations performed for fiscal 2007 through 2011 were incorrect. The correct weighted-average fair values for performance share awards granted during fiscal 2011 and 2010 were $27.93 and $41.10 per award, respectively. To correct cumulative compensation expense, the Company recorded compensation expense of $4.9 million in fiscal 2012 as an out-of-period adjustment. Correcting this error, which was not material to any of the affected periods, resulted in a $3.1 million after-tax decrease to net income for the year ended September 30, 2012.


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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Stock Appreciation Rights

17. — In fiscal (Loss) Earnings Per Share2012

The following table sets forth and 2011, the computation of basicCompany granted employees 36,400 and diluted weighted-average shares used in441,000 cash-settled SARs, respectively. Each SAR award represents the denominatorright to receive cash equal to the excess of the per share calculations:

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

76,473,930

 

74,007,989

 

73,562,307

 

Effect of dilutive stock options and incentive compensation awards

 

—

 

828,207

 

1,268,524

 

Diluted weighted average shares outstanding

 

76,473,930

 

74,836,196

 

74,830,831

 

Options to purchase 4,327,116 shares of Common Stock and 190,175 nonvested shares were outstanding during fiscal 2009, but were excluded from the computation of diluted (loss) earnings per share because the net loss for the period caused all potentially dilutive shares to be anti-dilutive.  Options to purchase 1,446,598 and 749,750 shares of Common Stock were outstanding in fiscal 2008 and 2007, respectively, but were not included in the computation of diluted (loss) earnings per share because the exercise price of the options was greater thanCompany’s Common Stock on the average market date that a participant exercises such right over the grant date price of the sharesCompany’s Common Stock. Compensation cost for SARs is remeasured at each reporting period based on the estimated fair value on the date of grant using the Black Scholes option-pricing model, utilizing assumptions similar to stock option awards and is recognized as an expense over the requisite service period. SARs are subsequently remeasured at each interim reporting period based on a revised Black Scholes value. Upon vesting, the fair value of outstanding SARs will be equal to its intrinsic value.


Compensation expense (income) related to SAR awards of $4.4 million, $(0.4) million and $(0.4) million was recorded in fiscal 2012, 2011 and 2010, respectively, in selling, general and administrative expense in the accompanying Consolidated Statements of Income. As of September 30, 2012, the Company had $2.7 million of unrecognized compensation expense related to SAR awards, which will be recognized over a weighted-average period of 2.1 years.

Cash-Settled Restricted Stock Units — In fiscal 2012 and 2011, the Company granted employees 105,600 and 269,000 cash-settled RSUs, respectively. Each RSU award provides recipients the right to receive cash equal to the value of a share of the Company’s Common Stock at predetermined vesting dates. Compensation cost for RSUs is remeasured at each reporting period and thereforeis recognized as an expense over the requisite service period. Compensation expense related to RSUs of $4.2 million and $0.1 million was recorded in fiscal 2012 and 2011, respectively, in selling, general and administrative expense in the accompanying Consolidated Statements of Income. As of September 30, 2012, the Company had $5.1 million of unrecognized compensation expense related to RSUs, which will be recognized over a weighted-average period of 2.0 years.

18.    Restructuring and Other Charges

As part of the Company’s 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 fourth quarter of fiscal 2010 and the first quarter of fiscal 2011. As a result of the Company's decision to put a previously closed JerrDan facility back into use, the previously accrued liability for lease termination costs of $2.8 million was reversed to income in the second quarter of fiscal 2011.

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. During the second quarter of fiscal 2011, the Company reached an agreement with the works councils on certain details of the plan, including the number of employees that would have been anti-dilutive.ultimately receive severance. As a result of employees voluntarily leaving the Company, the accrual was reduced throughout the remainder of fiscal 2011. The Company largely completed these actions in the first quarter of fiscal 2012.

In June 2011, the Company announced that its defense segment was closing its Oakes, North Dakota fabrication facility and consolidating operations into other existing Oshkosh facilities. Operations at Oakes concluded in the fourth quarter of fiscal 2011.

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

18.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, the Company made a decision to exit the business. The Company expects to discontinue production of ambulances in the second quarter of fiscal 2013 following the completion of units in backlog. In addition to restructuring charges of $3.9 million incurred in connection with the wind down of the Medtec product line, the Company experienced production inefficiencies of $11.3 million and recorded a charge of $3.3 million to write-down inventory to net realizable value during fiscal 2012.



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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Pre-tax restructuring charges included in continuing operations for fiscal years ended September 30 were as follows (in millions): 
 
Cost of
Sales
 
Selling,
General and
Administrative
 Total
Fiscal 2012:   
  
Access equipment$(0.2) $(0.1) $(0.3)
Defense—
 —
 —
Fire & emergency0.2
 4.3
 4.5
Commercial0.1
 —
 0.1
 $0.1
 $4.2
 $4.3
      
Fiscal 2011: 
  
  
Access equipment$1.0
 $0.7
 $1.7
Defense3.7
 —
 3.7
Fire & emergency0.1
 1.0
 1.1
Commercial0.1
 0.3
 0.4
 $4.9
 $2.0
 $6.9

Changes in the Company’s restructuring reserves, included within “Other current liabilities” in the Consolidated Balance Sheets, were as follows (in millions): 
 
Employee
Severance and
Termination
Benefits
 
Property,
Plant and
Equipment
Impairment
 Other Total
Balance at September 30, 2010$1.6
 $—
 $3.2
 $4.8
Restructuring provisions6.0
 3.4
 (2.5) 6.9
Utilized - cash(4.6) —
 (0.7) (5.3)
Utilized - noncash—
 (3.4) —
 (3.4)
Currency0.6
 —
 —
 0.6
Balance at September 30, 20113.6
 —
 —
 3.6
Restructuring provisions0.7
 0.9
 2.7
 4.3
Utilized - cash(1.1) —
 (0.5) (1.6)
Utilized - noncash—
 (0.9) (0.1) (1.0)
Currency(0.4) —
 —
 (0.4)
Balance at September 30, 2012$2.8
 $—
 $2.1
 $4.9
19.    Employee Benefit Plans
Defined Benefit Plans

Pension Plans - The Company — Oshkosh and certain of its subsidiaries sponsor multiple defined benefit pension plans covering certain Oshkosh JLG and Pierce employees. The benefits provided are based primarily on average compensation, years of service and date of birth. Hourly plans are generally based uponon years of service and a benefit dollar multiplier. The Company periodically amends the hourly plans, including changing the benefit dollar multipliers.multipliers and other revisions. In September 2012, the Company amended its Oshkosh and Pierce defined benefit plans, freezing benefit accruals for Oshkosh and Pierce salaried employees effective December 31, 2012. The amendment provides that salaried participants in the Oshkosh and Pierce pension plans will not receive credit, other than for vesting purposes, for eligible earnings paid for any month of service worked after the effective date. All accrued benefits under the plans as of the effective date will remain intact, and service credits for vesting and retirement eligibility will continue in accordance with the terms of the plans. As a result of the formal decision to freeze the plans benefit accruals, the Company recognized a reduction of its projected benefit obligation of

$31.4 million and recorded a curtailment loss of $2.5 million. The pension benefit is expected to be offset by additional employer contributions to the Company's defined contribution plan beginning in January 2013.


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Supplemental Executive Retirement Plans — The Company maintains unfunded defined benefit supplemental executive retirement plans ("SERPs") for certain executive officers of the Company and its subsidiaries. Benefits are based upon the employees' earnings. The Oshkosh SERP was amended to freeze benefits under the plan effective December 31, 2012. The amendment resulted in a net reduction to the benefit obligation under this plan of $2.3 million and a curtailment loss of $0.9 million in fiscal 2012. The pension benefit is expected to be partially offset by a new, non-qualified, defined contribution SERP effective January 1, 2013.

Postretirement Medical Plans - The Company — Oshkosh and certain of its subsidiaries sponsor multiple postretirement benefit plans covering Oshkosh, JLG and Kewaunee hourly and salaried active employees, retirees and their spouses. The plans generally provide health benefits based on years of service and date of birth. These plans are unfunded.

In September 2012, the Oshkosh plan was amended to eliminate postretirement benefits coverage for salaried employees retiring at age 55 or older effective December 31, 2012, except for existing eligible employees who are at least age 55 with at least five years of service by December 31, 2012 who elect to retire on or before December 31, 2013. The changeeffect of the amendment was a reduction in the benefit obligation of $9.2 million as of September 30, 2012. This reduction is being amortized over the expected average remaining years of service of 17 years for participants expected to receive benefits under this plan.


The changes in benefit obligations and plan assets, as well as the funded status of the Company’s defined benefit pension plans and postretirement benefit plans, were as follows (in millions):

 

 

Pension Benefits

 

Postretirement

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

Health and Other

 

 

 

2009

 

2008

 

2009

 

2008

 

2009

 

2008

 

Change in benefit obligation

 

 

 

 

 

 

 

 

 

 

 

 

 

Benefit obligation at October 1

 

$

189.4

 

$

169.5

 

$

20.3

 

$

25.1

 

$

36.7

 

$

31.6

 

Disposition

 

—

 

—

 

(9.6

)

—

 

(0.4

)

—

 

Service cost

 

10.3

 

11.1

 

0.7

 

1.5

 

2.0

 

1.9

 

Interest cost

 

11.1

 

10.1

 

1.0

 

1.4

 

2.2

 

1.8

 

Actuarial loss (gain)

 

21.8

 

0.2

 

2.9

 

(4.4

)

15.9

 

3.5

 

Participant contributions

 

—

 

—

 

0.1

 

0.4

 

—

 

—

 

Plan amendments

 

3.3

 

0.9

 

—

 

—

 

—

 

—

 

Curtailments

 

0.9

 

4.0

 

—

 

—

 

—

 

—

 

Benefits paid

 

(9.5

)

(6.4

)

(0.2

)

(0.9

)

(1.4

)

(2.1

)

Currency translation adjustments

 

—

 

—

 

(3.5

)

(2.8

)

—

 

—

 

Benefit obligation at September 30

 

$

227.3

 

$

189.4

 

$

11.7

 

$

20.3

 

$

55.0

 

$

36.7

 

85

   Postretirement
 Pension Benefits Health and Other
 2012 2011 2012 2011
        
Accumulated benefit obligation$377.7
 $321.7
 $80.4
 $77.7
        
Change in benefit obligation       
Benefit obligation at October 1$352.6
 $283.6
 $77.7
 $64.8
Service cost20.6
 16.6
 7.2
 4.5
Interest cost16.3
 13.9
 3.4
 3.0
Actuarial loss32.6
 33.2
 2.6
 6.5
Participant contributions0.1
 0.1
 —
 —
Plan amendments—
 10.9
 (9.2) —
Curtailments(33.7) —
 —
 —
Benefits paid(11.1) (5.6) (1.3) (1.1)
Currency translation adjustments0.5
 (0.1) —
 —
Benefit obligation at September 30$377.9
 $352.6
 $80.4
 $77.7
        
Change in plan assets       
Fair value of plan assets at October 1$213.9
 $192.1
 $—
 $—
Actual return on plan assets42.8
 3.3
 —
 —
Company contributions35.8
 25.9
 1.3
 1.1
Participant contributions0.1
 0.1
 —
 —
Expenses paid(1.8) (1.8) —
 —
Benefits paid(11.1) (5.6) (1.3) (1.1)
Currency translation adjustments0.7
 (0.1) —
 —
Fair value of plan assets at September 30$280.4
 $213.9
 $—
 $—
Funded status of plan - under funded$(97.5) $(138.7) $(80.4) $(77.7)
        
Recognized in consolidated balance sheet at September 30       
Prepaid benefit cost (long-term asset)$4.0
 $2.6
 $—
 $—
Accrued benefit liability (current liability)(1.4) (5.2) (2.5) (2.8)
Accrued benefit liability (long-term liability)(100.1) (136.1) (77.9) (74.9)
 $(97.5) $(138.7) $(80.4) $(77.7)

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

Pension Benefits

 

Postretirement

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

Health and Other

 

 

 

2009

 

2008

 

2009

 

2008

 

2009

 

2008

 

Change in plan assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value of plan assets at October 1

 

$

129.5

 

$

153.7

 

$

20.4

 

$

23.0

 

$

—

 

$

—

 

Disposition

 

—

 

—

 

(9.0

)

—

 

—

 

—

 

Actual return on plan assets

 

1.7

 

(20.9

)

0.9

 

(2.5

)

—

 

—

 

Company contributions

 

15.8

 

3.1

 

1.6

 

3.1

 

1.4

 

2.1

 

Participant contributions

 

—

 

—

 

0.1

 

0.4

 

—

 

—

 

Benefits paid

 

(9.5

)

(6.4

)

(0.2

)

(0.9

)

(1.4

)

(2.1

)

Currency translation adjustments

 

—

 

—

 

(3.5

)

(2.7

)

—

 

—

 

Fair value of plan assets at September 30

 

$

137.5

 

$

129.5

 

$

10.3

 

$

20.4

 

$

—

 

$

—

 

Funded status of plan - (under) over funded

 

$

(89.8

)

$

(59.9

)

$

(1.4

)

$

0.1

 

$

(55.0

)

$

(36.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognized in consolidated balance sheet at September 30

 

 

 

 

 

 

 

 

 

 

 

 

 

Prepaid benefit cost (long-term asset)

 

$

—

 

$

—

 

$

—

 

$

0.7

 

$

—

 

$

—

 

Accrued benefit liability (current liability)

 

(0.5

)

(6.0

)

—

 

—

 

(2.0

)

(2.5

)

Accrued benefit liability (long-term liability)

 

(89.3

)

(53.9

)

(1.4

)

(0.6

)

(53.0

)

(34.2

)

 

 

$

(89.8

)

$

(59.9

)

$

(1.4

)

$

0.1

 

$

(55.0

)

$

(36.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognized in accumulated other comprehensive (loss) income as of September 30 (net of taxes)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss (gain)

 

$

62.7

 

$

44.9

 

$

(0.4

)

$

(3.4

)

$

12.8

 

$

3.0

 

Prior service cost

 

9.2

 

8.0

 

—

 

—

 

—

 

—

 

 

 

$

71.9

 

$

52.9

 

$

(0.4

)

$

(3.4

)

$

12.8

 

$

3.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average assumptions as of September 30

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

5.25

%

6.00

%

5.50

%

7.00

%

5.25

%

6.00

%

Expected return on plan assets

 

7.75

%

7.75

%

6.50

%

6.00

%

n/a

 

n/a

 

Rate of compensation increase

 

4.12

%

4.20

%

4.30

%

4.40

%

n/a

 

n/a

 

The accumulated benefit obligation for all defined benefit pension plans was $271.2 million and $228.1 million at September 30, 2009 and 2008, respectively.

As a result of a dramatic decrease in the equity markets in the fourth quarter of fiscal 2008, the number of the Company’s pension benefit plans with accumulated benefit obligations greater than plan assets increased. 





   Postretirement
 Pension Benefits Health and Other
 2012 2011 2012 2011
Recognized in accumulated other comprehensive income (loss) as of September 30 (net of taxes) 
  
  
  
Net actuarial loss$(72.9) $(96.0) $(19.3) $(18.5)
Prior service cost(13.1) (16.2) 5.8
 —
 $(86.0) $(112.2) $(13.5) $(18.5)
Weighted-average assumptions as of September 30

 

 

 

Discount rate4.24% 4.72% 3.95% 4.45%
Expected return on plan assets6.25% 7.00% n/a
 n/a
Rate of compensation increase3.69% 3.73% n/a
 n/a

Pension benefit plans with accumulated benefit obligations in excess of plan assets consisted of the following as of September 30 (in millions):

 

 

September 30,

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

 

 

Projected benefit obligation

 

$

227.3

 

$

189.4

 

$

11.7

 

$

8.8

 

Accumulated benefit obligation

 

204.5

 

171.3

 

11.7

 

8.7

 

Fair value of plan assets

 

137.5

 

129.5

 

10.3

 

8.3

 

86


Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 2012 2011
Projected benefit obligation$361.8
 $338.9
Accumulated benefit obligation361.2
 308.1
Fair value of plan assets260.2
 197.6

The components of net periodic benefit cost for fiscal years ended September 30 were as follows (in millions):

 

 

Pension Benefits

 

Postretirement

 

 

 

U.S. Plans

 

Non-U.S. Plans

 

Health and Other

 

 

 

2009

 

2008

 

2007

 

2009

 

2008

 

2007

 

2009

 

2008

 

2007

 

Components of net periodic benefit cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

10.3

 

$

11.1

 

$

9.9

 

$

0.4

 

$

0.9

 

$

0.6

 

$

2.0

 

$

1.9

 

$

1.7

 

Interest cost

 

11.1

 

10.1

 

9.1

 

0.5

 

0.7

 

0.5

 

2.2

 

1.8

 

1.8

 

Expected return on plan assets

 

(11.2

)

(12.0

)

(11.5

)

(0.5

)

(0.6

)

(0.4

)

—

 

—

 

—

 

Amortization of prior service cost

 

1.3

 

1.3

 

1.2

 

—

 

—

 

—

 

—

 

—

 

—

 

Curtailment

 

0.9

 

4.0

 

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Amortization of net actuarial loss (gain)

 

2.5

 

2.0

 

2.7

 

(0.1

)

(0.1

)

—

 

—

 

3.8

 

0.4

 

Net periodic benefit cost

 

$

14.9

 

$

16.5

 

$

11.4

 

$

0.3

 

$

0.9

 

$

0.7

 

$

4.2

 

$

7.5

 

$

3.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other changes in plan assets and benefit obligation recognized in other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net actuarial loss (gain)

 

$

32.3

 

$

20.0

 

$

26.8

 

$

2.1

 

$

(0.3

)

$

(3.3

)

$

15.9

 

$

—

 

$

3.3

 

Prior service costs

 

3.3

 

1.1

 

8.3

 

—

 

—

 

—

 

—

 

—

 

—

 

Amortization of prior service cost

 

(1.3

)

(1.3

)

—

 

—

 

—

 

—

 

—

 

—

 

—

 

Amortization of net actuarial (gain) loss

 

(2.5

)

(2.0

)

—

 

0.1

 

0.2

 

—

 

(0.1

)

(0.3

)

—

 

 

 

$

 31.8

 

$

17.8

 

$

35.1

 

$

2.2

 

$

(0.1

)

$

(3.3

)

$

15.8

 

$

(0.3

)

$

3.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average assumptions as of September 30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount rate

 

6.00

%

6.00

%

5.76

%

7.00

%

5.90

%

5.00

%

6.00

%

6.00

%

5.75

%

Expected return on plan assets

 

7.75

%

8.00

%

8.25

%

6.00

%

6.20

%

6.00

%

n/a

 

n/a

 

n/a

 

Rate of compensation increase

 

4.20

%

4.39

%

4.57

%

4.40

%

4.20

%

4.20

%

n/a

 

n/a

 

n/a

 


  Postretirement
 Pension BenefitsHealth and Other
 2012 2011 2010 2012 2011 2010
Components of net periodic benefit cost 
  
  
  
  
  
Service cost$20.6
 $16.6
 $13.5
 $7.2
 $4.5
 $4.1
Interest cost16.3
 13.9
 12.4
 3.4
 3.0
 2.8
Expected return on plan assets(15.6) (15.9) (13.0) —
 —
 —
Amortization of prior service cost2.3
 1.9
 2.1
 —
 —
 —
Curtailment3.4
 1.5
 0.6
 —
 —
 —
Amortization of net actuarial loss7.1
 5.6
 4.1
 1.3
 1.1
 0.9
Expenses paid1.8
 1.4
 2.5
 —
 —
 —
Net periodic benefit cost$35.9
 $25.0
 $22.2
 $11.9
 $8.6
 $7.8
            
Other changes in plan assets and benefit obligation recognized in other comprehensive income 
  
  
  
  
  
Net actuarial loss (gain)$(26.0) $46.2
 $16.6
 $2.6
 $6.5
 $3.9
Prior service cost(0.9) 10.9
 3.0
 —
 —
 —
Amortization of prior service cost(4.8) (1.9) (2.0) —
 —
 —
Curtailment(2.3) —
 —
 (9.2) —
 —
Amortization of net actuarial gain(7.1) (7.1) (4.7) (1.3) (1.1) (0.9)
 $(41.1) $48.1
 $12.9
 $(7.9) $5.4
 $3.0
            
Weighted-average assumptions 
  
  
  
  
  
Discount rate4.72% 4.75% 5.25% 4.45% 4.75% 5.25%
Expected return on plan assets7.00% 7.75% 7.75% n/a
 n/a
 n/a
Rate of compensation increase3.78% 3.94% 4.29% n/a
 n/a
 n/a

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Included in accumulated other comprehensive income (loss) incomein the Consolidated Balance Sheet at September 30, 20092012 are prior service costs of $1.5$1.8 million ($0.9 ($1.1 million net of tax) and unrecognized net actuarial losses of $4.2$4.4 million ($2.6 ($2.8 million net of tax) expected to be recognized in pension and Supplemental Employee Retirement Plan (“SERP”)supplemental employee retirement plan net periodic benefit costs during the fiscal year ended September 30, 2010.

2013.

The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the Company was 9.0%8.5% in fiscal 2009,2012, declining to 5.5% in fiscal 2016.2018. If the health care cost trend rate was increased by 1%,100 basis points, the accumulated postretirement benefit obligation at September 30, 20092012 would increase by $6.6$11.2 million and the net periodic postretirement benefit cost for fiscal 20092012 would increase by $1.2 million.$2.2 million. A corresponding decrease of 1%100 basis points would decrease the accumulated postretirement benefit obligation at September 30, 20092012 by $5.5$9.3 million and the net periodic postretirement benefit cost for fiscal 20092012 would decrease by $1.0 million.

$1.8 million.

The Company’s Board of Directors has appointed an Investment Committee (“Committee”), which consists of members of management, to manage the investment of the Company’s pension plan assets. The Committee has established and operates under an Investment Policy. The Committee determines the asset allocation and target ranges based upon periodic asset/liability studies and capital market projections. The Committee retains external investment managers to invest the assets and an advisoradviser to monitor the performance of the investment managers. The Investment Policy prohibits certain investment transactions, such as commodity contracts, margin transactions, short selling and investments in Company securities, unless the Committee gives prior approval.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The weighted-average of the Company’s and its subsidiaries’ pension plan asset allocations and target allocations at September 30, 2009 and 2008, by asset category, were as follows:

U.S. Plans

 

 

Target %

 

2009

 

2008

 

Asset Category

 

 

 

 

 

 

 

Fixed income

 

30% - 40%

 

47

%

45

%

Large-cap growth

 

25% - 35%

 

25

%

24

%

Large-cap value

 

5% - 15%

 

8

%

9

%

Mid-cap value

 

5% - 15%

 

10

%

11

%

Small-cap value

 

5% - 15%

 

10

%

11

%

Venture capital

 

0% - 5%

 

0

%

0

%

 

 

 

 

100

%

100

%

Non-U.S. Plans

 

 

Target %

 

2009

 

2008

 

Asset Category

 

 

 

 

 

 

 

UK equities

 

25%

 

39

%

29

%

Non-UK equities

 

25%

 

42

%

29

%

Government bonds

 

35%

 

10

%

27

%

Corporate bonds

 

15%

 

9

%

15

%

 

 

 

 

100

%

100

%


 Target % 2012 2011
Asset Category     
Fixed income30% - 40% 39% 43%
Large-cap growth25% - 35% 30% 30%
Large-cap value5% - 15% 10% 9%
Mid-cap value5% - 15% 10% 8%
Small-cap value5% - 15% 11% 10%
Venture capital0% - 5% —% —%
   100% 100%

The plans’ investment strategy is based on an expectation that, over time, equity securities will provide higher total returns than debt securities. The plans primarily minimize the risk of large losses through diversification of investments by asset class, by investing in different styles of investment management within the classes and by using a number of different investment managers. The Committee monitors the asset allocation and investment performance monthly, with a more comprehensive quarterly review with its advisoradviser and annual reviews with each investment manager.

The plans’ expected return on assets is based on management’s and the Committee’s expectations of long-term average rates of return to be achieved by the plans’ investments. These expectations are based on the plans’ historical returns and expected returns for the asset classes in which the plans are invested.


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Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The fair value of plan assets by major category and level within the fair value hierarchy was as follows (in millions):

 
Quoted Prices
for Identical
Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
 Total
September 30, 2012: 
  
  
  
Common stocks 
  
  
  
U.S. companies (a)
$146.8
 $3.7
 $—
 $150.5
International companies (b)
—
 17.7
 —
 17.7
Government and agency bonds (c)
7.1
 39.2
 —
 46.3
Corporate bonds and notes (e)
—
 51.5
 —
 51.5
Money market funds (f)
14.4
 —
 —
 14.4
 $168.3
 $112.1
 $—
 $280.4
        
September 30, 2011: 
  
  
  
Common stocks 
  
  
  
U.S. companies (a)
$104.2
 $—
 $—
 $104.2
International companies (b)
—
 14.6
 —
 14.6
Government and agency bonds (c)
3.8
 35.6
 —
 39.4
Municipal bonds (d)
—
 0.1
 —
 0.1
Corporate bonds and notes (e)
—
 43.8
 —
 43.8
Money market funds (f)
11.7
 —
 —
 11.7
Venture capital closely held limited partnership (g)
—
 —
 0.1
 0.1
 $119.7
 $94.1
 $0.1
 $213.9
_________________________
(a)Primarily valued using a market approach based on the quoted market prices of identical instruments that are actively traded on public exchanges.
(b)Valuation model looks at underlying security "best" price, exchange rate for underlying security's currency against the U.S. Dollar and ratio of underlying security to American depository receipt.
(c)These investments consist of debt securities issued by the U.S. Treasury, U.S. government agencies and U.S. government-sponsored enterprises and have a variety of structures, coupon rates and maturities. These investments are considered to have low default risk as they are guaranteed by the U.S. government. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
(d)These investments consist of debts issued by municipalities. Most provide a fixed amount of interest income while some investments are zero coupon bonds which receive one payment at maturity. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
(e)These investments consist of debt obligations issued by a variety of private and public corporations. These are investment grade securities which historically have provided a steady stream of income. Fixed income securities are primarily valued using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.
(f)These investments largely consist of short-term investment funds and are valued using a market approach based on the quoted market prices of identical instruments.
(g)These investments finance new and rapidly growing companies and do not have readily determinable market values given the specific investment structures involved and the nature of the underlying investments. Valuation is determined by various sources such as issuer, investment manager, etc.

The change in the fair value of the Master Pension Trust’s Level 3 investment assets during fiscal 2012 and 2011 was not significant.

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Company’s policy is to fund the pension plans in amounts that comply with contribution limits imposed by law. The Company expects to contribute approximately $10.0between $10.0 million to $20.0 and $15.0 million to its pension plans and an additional $2.5$2.5 million to its postretirement benefit plans in fiscal 2010.2013. However, based on returns on the plans’ investments and the Company’s cash flows, the Company may contribute more than these ranges in fiscal 20102013 to reduce the underfunded status of certain plans.


The Company’s estimated future benefit payments under Company sponsored plans were as follows (in millions):

 

 

 

 

 

 

 

 

Other

 

Fiscal Year Ending

 

Pension Benefits

 

Postretirement

 

September 30,

 

U.S. Plans

 

Non-U.S. Plans

 

Non-Qualified

 

Benefits

 

 

 

 

 

 

 

 

 

 

 

2010

 

$

5.0

 

$

0.1

 

$

0.5

 

$

2.0

 

2011

 

5.7

 

0.1

 

0.4

 

2.4

 

2012

 

6.4

 

0.2

 

0.4

 

2.7

 

2013

 

7.1

 

0.2

 

1.2

 

2.7

 

2014

 

7.9

 

0.2

 

1.5

 

2.9

 

2015-2019

 

55.4

 

2.0

 

9.8

 

20.5

 

       Other
Fiscal Year Ending Pension Benefits Postretirement
September 30, U.S. Plans  Non-Qualified Benefits
2013 $7.0
  $1.4
 $2.5
2014 7.7
  1.4
 2.7
2015 8.5
  1.4
 2.8
2016 9.5
  1.4
 3.1
2017 10.6
  1.4
 3.7
2018-2022 73.3
  8.7
 23.4

Multi-Employer Pension Plans - The Company participates in the Boilermaker-Blacksmith National Pension Trust (Employer Identification Number 48-6168020), a multi-employer defined benefit pension plan related to collective bargaining employees at the Company's Kewaunee facility. The Company's contributions and pension benefits payable under the plan and the administration of the plan are determined by the terms of the related collective-bargaining agreement, which expires on May 1, 2017. The multi-employer plan poses different risks to the Company than single-employer plans in the following respects:

1.The Company's contributions to the multi-employer plan may be used to provide benefits to all participating employees of the program, including employees of other employers.
2.In the event that another participating employer ceases contributions to the multi-employer plan, the Company may be responsible for any unfunded obligations along with the remaining participating employers.
3.If the Company chooses to withdraw from the multi-employer plan, then the Company may be required to pay a withdrawal liability, based on the underfunded status of the plan at that time.

As of December 31, 2011, the plan-certified zone status as defined by the Pension Protection Act of 2006 was Yellow and accordingly it has implemented a financial improvement plan or a rehabilitation plan. The Company's contributions to the multi-employer plan did not exceed 5% of the total plan contributions for the fiscal years 2012, 2011 or 2010. The Company made contributions to the plan of $1.0 million, $0.7 million and $0.6 million in fiscal 2012, 2011 and 2010, respectively.

401(k) Plans - The Company has defined contribution 401(k) plans covering substantially all domestic employees. The plans allow employees to defer 2% to 19%100% of their income on a pre-tax basis. Each employee who elects to participate is eligible to receive Company matching contributions, which are based on employee contributions to the plans, subject to certain limitations. Amounts expensed for Company matching and discretionary contributions were $18.8$11.3 million, $10.5 million and $13.7$5.1 million in 2008 and 2007, respectively.  The Company recognized income of $1.0 million in fiscal 2009 as actual payments under the discretionary portion of the plan were less than amounts accrued in the previous year2012, 2011 and as a result of the Company’s discontinuation of matching contributions in March 2009 for most employees.

88

2010, respectively.



Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19.20.    Income Taxes


Pre-tax income (loss) income from continuing operations was taxed in the following jurisdictions (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

Domestic

 

$

(925.3

)

$

274.0

 

$

354.2

 

Foreign

 

(266.2

)

126.7

 

61.2

 

 

 

$

 (1,191.5

)

$

400.7

 

$

415.4

 


 Fiscal Year Ended September 30,
 2012 2011 2010
Domestic$246.6
 $420.8
 $1,273.2
Foreign40.1
 2.8
 (31.5)
 $286.7
 $423.6
 $1,241.7

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Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Significant components of the (benefit from) provision for income taxes were as follows (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Allocated to (Loss) Income From Continuing Operations Before Equity in Earnings of Unconsolidated Affiliates and Minority Interest

 

 

 

 

 

 

 

Current:

 

 

 

 

 

 

 

Federal

 

$

31.1

 

$

104.3

 

$

99.1

 

Foreign

 

1.9

 

18.1

 

12.3

 

State

 

1.4

 

6.1

 

11.0

 

Total current

 

34.4

 

128.5

 

122.4

 

Deferred:

 

 

 

 

 

 

 

Federal

 

(40.0

)

(1.7

)

16.0

 

Foreign

 

(12.3

)

(5.9

)

(2.5

)

State

 

(1.8

)

(0.1

)

1.8

 

Total deferred

 

(54.1

)

(7.7

)

15.3

 

 

 

$

 (19.7

)

$

120.8

 

$

137.7

 

 

 

 

 

 

 

 

 

Allocated to Other Comprehensive (Loss) Income

 

 

 

 

 

 

 

Deferred federal, state and foreign

 

$

(21.9

)

$

(21.2

)

$

(25.3

)


 Fiscal Year Ended September 30,
 2012 2011 2010
Allocated to Income From Continuing Operations Before Equity in Earnings (Losses) of Unconsolidated Affiliates 
  
  
Current: 
  
  
Federal$110.1
 $150.5
 $468.3
Foreign3.2
 0.7
 7.4
State4.2
 3.7
 14.0
Total current117.5
 154.9
 489.7
Deferred: 
  
  
Federal(59.9) (14.2) (57.6)
Foreign2.0
 4.8
 (9.0)
State(2.2) (0.4) (1.7)
Total deferred(60.1) (9.8) (68.3)
 $57.4
 $145.1
 $421.4
      
Allocated to Other Comprehensive Income (Loss) 
  
  
Deferred federal, state and foreign$18.7
 $(14.5) $10.5

The reconciliation of income tax computed at the U.S. federal statutory tax rates to income tax expense was:

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Effective Rate Reconciliation

 

 

 

 

 

 

 

U.S. federal tax / benefit rate

 

35.0

%

35.0

%

35.0

%

Non-deductible intangible assets impairment charges

 

(33.3

)

—

 

—

 

State income taxes, net

 

(0.3

)

1.5

 

1.4

 

Foreign taxes

 

(0.1

)

(1.1

)

(1.2

)

European tax incentive

 

(1.5

)

(5.2

)

(1.8

)

Worthless stock deduction

 

1.5

 

—

 

—

 

Valuation allowance

 

(0.3

)

0.5

 

0.7

 

Tax credits

 

0.3

 

(0.1

)

(1.7

)

Manufacturing deduction

 

0.2

 

(1.3

)

(0.8

)

Other, net

 

0.2

 

0.8

 

1.5

 

 

 

1.7

%

30.1

%

33.1

%

89


 Fiscal Year Ended September 30,
 2012 2011 2010
Effective Rate Reconciliation 
  
  
U.S. federal tax rate35.0 % 35.0 % 35.0 %
Non-deductible intangible asset impairment charges—
 0.1
 —
State income taxes, net(0.6) 0.8
 1.0
Foreign taxes2.4
 (0.6) (0.1)
Tax audit settlements(4.1) —
 (1.2)
European tax incentive(1.7) (0.9) 0.6
Valuation allowance(2.5) 1.3
 0.3
Domestic tax credits(0.3) (1.5) (0.1)
Manufacturing deduction(3.6) (1.1) (1.9)
Other, net(4.6) 1.2
 0.3
 20.0 % 34.3 % 33.9 %

During fiscal 2012, the Company recorded discrete tax benefits of $44.8 million which included settlement of audits, changes in filing positions taken in prior periods, expiration of statute of limitations and utilization of losses previously unbenefitted. Other, net for fiscal 2012 included $13.1 million for adjustments related to deferred taxes and changes to filing positions taken in prior periods. In fiscal 2011, the Company recorded a $2.7 million benefit due to the reinstatement of the U.S. research & development tax credit for periods prior to fiscal 2011. The fiscal 2010 research & development tax credit included only one-fourth of the annual benefit because of the timing of the credit reinstatement. During fiscal 2010, the Company settled a number of income tax audits.


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Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The Company is party to a tax incentive agreement (“incentive”) covering certain of its European operations. The incentive provides for a reduction in the Company’s effective income tax rate through allowable deductions that are subject to recapture to the extent that certain conditions are not met, including a requirement to have minimum cumulative operating income over a multiple-year period ending in fiscal 2013. The Company recorded tax deductions (income)(income recapture) under thisthe incentive agreement of €(38.7)€11.5 million €40.2, €7.8 million and €16.5€(15.9) million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively, which resulted in additional (tax) benefit (expense) of $(17.3)$5.0 million $20.9, $3.7 million and $7.5$(7.3) million in fiscal 2009, 20082012, 2011 and 2007,2010, respectively. Life-to-date, the Company has recorded €18.0€21.5 million of cumulative net deductions which are subject to recapture provisions should certain minimum income and other requirements not be met. Should the Company reach the maximum level of cumulative operating income under thisthe incentive, aggregate additional unbenefitted deductions of €95.5€92.0 million would be available to offset the Company’s future taxable income, although the amount of deductions allowed in any particular tax year are limited by the incentive.


In fiscal 2009, 2010 and 2012, the Company sold several European companies whose operations were subsequently classified as discontinued operations. The Company had made an election with the U.S. Internal Revenue Service to treat Windmill Ventures, the Company’s European holding Companycompany parent of Geesink,these disposed companies, as a disregarded entity for U.S. federal income tax purposes. As a result of this election, the Company recorded a $71.5 million worthless stock/bad debt income tax benefit of which $17.5 million related to Windmill Ventures continuingthe discontinued operations and $54.0of the sold companies. In fiscal 2012, the Company settled an income tax audit, which resulted in a tax benefit of $6.1 million related to Geesink and has beenthe release of previously accrued amounts for uncertain tax positions for worthless stock/bad debt deductions, which was included in discontinued operations.


Deferred income tax assets and liabilities were comprised of the following (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

Deferred Tax Assets and Liabilities

 

 

 

 

 

Deferred tax assets:

 

 

 

 

 

Other long-term liabilities

 

$

78.6

 

$

77.2

 

Net operating losses

 

57.3

 

40.7

 

Accrued warranty

 

21.8

 

26.6

 

Other current liabilities

 

34.7

 

25.3

 

Other long-term assets

 

10.6

 

—

 

Payroll-related obligations

 

12.1

 

10.5

 

Receivables

 

12.0

 

6.1

 

Other

 

0.5

 

0.6

 

Gross deferred tax assets

 

227.6

 

187.0

 

Less valuation allowance

 

(37.7

)

(27.6

)

Deferred tax assets

 

189.9

 

159.4

 

Deferred tax liabilities:

 

 

 

 

 

Intangible assets

 

294.8

 

332.2

 

Investment in unconsolidated partnership

 

14.3

 

18.7

 

Property, plant and equipment

 

40.4

 

45.8

 

Other

 

4.5

 

5.0

 

Deferred tax liabilities

 

354.0

 

401.7

 

Net deferred tax liability

 

$

(164.1

)

$

(242.3

)

 September 30,
 2012 2011
Deferred Tax Assets and Liabilities 
  
Deferred tax assets: 
  
Other long-term liabilities$105.1
 $112.6
Losses and credits78.2
 57.4
Accrued warranty30.4
 23.8
Other current liabilities32.4
 20.8
Payroll-related obligations20.1
 15.7
Receivables7.2
 15.2
Other0.1
 0.4
Gross deferred tax assets273.5
 245.9
Less valuation allowance(55.0) (39.5)
Deferred tax assets218.5
 206.4
Deferred tax liabilities: 
  
Intangible assets223.8
 241.2
Investment in unconsolidated partnership—
 5.3
Property, plant and equipment34.2
 48.8
Inventories16.4
 2.7
Other3.8
 6.8
Deferred tax liabilities278.2
 304.8
Net deferred tax liability$(59.7) $(98.4)


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Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The net deferred tax liability is classified in the Consolidated Balance Sheets as follows (in millions):

 

 

September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Current net deferred tax asset

 

$

75.5

 

$

66.6

 

Non-current net deferred tax liability

 

(239.6

)

(308.9

)

 

 

$

 (164.1

)

$

(242.3

)

 September 30,
 2012 2011
Current net deferred tax asset$69.9
 $72.9
Non-current net deferred tax liability(129.6) (171.3)
 $(59.7) $(98.4)

As of September 30, 2009,2012, the Company had $172.5$191.1 million of net operating loss carryforwards available to reduce future taxable income of certain foreign subsidiaries that are primarily from countries with carryforward periods ranging from eightfive years to an unlimited period. In addition, the Company had $222.0$157.0 million of state net operating loss carryforwards, which are subject to expiration from 20102014 to 2029.2032. The Company also had capital loss carryforwards of $32.4 million, which are subject to expiration from 2014 to 2017, and state credit carryforwards of $8.3 million, which are subject to expiration from 2022 to 2027. The deferred tax assets for foreign andnet operating loss carryforwards, state net operating loss carryforwards, capital loss carryforwards and state credit carryforwards were $44.8$54.0 million, $8.2 million, $11.9 million and $12.5$4.1 million, respectively, and are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax-planning strategies and projections of future

90


Table of Contents

OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

taxable income. As a result of this analysis, the Company carriescarried a valuation allowance as of September 30, 20092012 against the foreign anddeferred tax assets, state deferred tax assets and capital loss carryforwards of $33.6$40.6 million, $2.5 million and $4.1$11.9 million, respectively.


The Company does not provide for U.S. income taxes on undistributed earnings of its foreign operations that are intended to be permanently reinvested. At September 30, 2009,2012, these earnings amounted to $157.9 million.$50.6 million. If these earnings were repatriated to the United States, the Company would be required to accrue and pay U.S. Federalfederal income taxes and foreign withholding taxes, as adjusted for foreign tax credits. Determination of the amount of any unrecognized deferred income tax liability on these earnings is not practicable.

The Company adopted the provisions of ASC Topic 740 on October 1, 2007.  The adoption of ASC Topic 740 resulted in a $2.9 million charge to retained earnings as of October 1, 2007 and the reclassification of $30.0 million in liabilities related to uncertain tax positions in the Company’s Consolidated Balance Sheet from income taxes payable to other long-term assets and long-term liabilities of $6.2 million and $36.2 million, respectively. 


As of September 30, 2009,2012, the Company’s liability for gross uncertainunrecognized tax positions,benefits, excluding related interest and penalties, was $33.9 million. As of September 30, 2012, net unrecognized tax benefits, excluding interest and penalties, was $72.8 million.  Excluding interest and penalties, net unrecognized tax benefits of $36.8$23.8 million would affect the Company’s net income if recognized, $21.6including $23.1 million which would impact net income from continuing operations. As of September 30, 2011, net unrecognized tax benefits, excluding interest and penalties, of $43.4 million would have affected the Company’s net income if recognized, $23.3 million of which would impact the effective tax rate onhave impacted net income from continuing operations. A reconciliation of the beginning and ending amount of unrecognized tax benefits during fiscal 20092012 and fiscal 20082011 were as follows (in millions):

 

 

Fiscal Year Ended
September 30,

 

 

 

2009

 

2008

 

 

 

 

 

 

 

Balance at beginning of year

 

$

48.8

 

$

48.0

 

Additions for tax positions related to current year

 

20.3

 

7.3

 

Additions for tax positions related to prior years

 

2.7

 

8.9

 

Reductions for tax positions of prior years

 

(3.2

)

(7.3

)

Settlements

 

(2.4

)

(7.1

)

Lapse of statute of limitations

 

(2.4

)

(1.0

)

Balance at end of year

 

$

63.8

 

$

48.8

 


 
Fiscal Year Ended
September 30,
 2012 2011
Balance at beginning of year$53.3
 $52.1
Additions for tax positions related to current year3.8
 4.0
Additions for tax positions related to prior years8.7
 4.0
Reductions for tax positions of prior years(0.2) (0.3)
Settlements(28.3) (2.0)
Lapse of statute of limitations(4.4) (4.5)
Balance at end of year$32.9
 $53.3

The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the provision“Provision for income taxestaxes” in the Company’s Consolidated Statements of Operations.Income. During the fiscal years ended September 30, 2009, 20082012, 2011 and 2007,2010, the Company recognized $2.4tax benefits of $0.8 million $2.7, $1.7 million and $0.8$0.9 million in related to interest and penalties, respectively. At September 30, 20092012 and 2008,2011, the Company had accruals for the payment of interest and penalties of $12.9$13.3 million and $12.2$14.1 million, respectively. The amount ofDuring the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce unrecognized tax benefits is expected to change by approximately $3.6$4.0 million in, either because the next twelve months.

Company’s tax positions are sustained on audit, because the Company agrees to their disallowance or the statute of limitations closes.



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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. The Company’sDuring fiscal 2012, the U.S. Internal Revenue Service completed its audit of the Company for the taxable years ended September 30, 20062008 and 2007 are currently2009. As of September 30, 2012, tax years open for examination under auditapplicable statutes were as follows:

Tax JurisdictionOpen Tax Years
Australia2007 - 2012
Belgium2010 - 2012
Brazil2006 - 2012
Canada2009 - 2012
Romania2010 - 2012
The Netherlands2007 - 2012
United States (federal)2010 - 2012
United States (state and local)2002 - 2012

21.    Earnings (Loss) Per Share

Basic earnings per share is computed by dividing net earnings available to common shareholders, which has been modified to include the effects of all participating securities (unvested share-based payment awards with a right to receive nonforfeitable dividends) as prescribed by the Internal Revenue Service.

Prior to its acquisitiontwo-class method under FASB ASC Topic 260, Earnings Per Share, during the period by the Company, JLG had received noticesweighted average shares outstanding. Diluted earnings per share is computed similarly but reflects the potential dilution that would occur if dilutive options were exercised and restricted stock and performance share awards vested. Options to purchase 3,549,026, 2,294,124 and 1,425,155 shares of audit adjustments totaling $7.1 million fromCommon Stock were outstanding in fiscal 2012, 2011 and 2010, respectively, but were not included in the Pennsylvania Departmentcomputation of Revenue (“PA”) in connection with audits of income tax returns filed by JLG for fiscal years 1999 through 2003. The adjustments proposed by PA consist primarilydiluted earnings per share attributable to Oshkosh Corporation common shareholders because the exercise price of the disallowance of a royalty deduction taken on JLG’s income tax returns. The Company made a $2.3 million payment on May 27, 2008 to PA in complete satisfactionoptions was greater than the average market price of the audit, inclusiveshares of interest.

20.Common Stock and therefore would have been anti-dilutive.


Net income (loss) attributable to Oshkosh Corporation common shareholders was as follows (in millions): 
 Fiscal Year Ended September 30,
 2012 2011 2010
Net income from continuing operations$230.5
 $279.0
 $816.0
Less: net earnings allocated to participating securities(0.6) (0.4) (0.2)
Net income available to Oshkosh Corporation common shareholders$229.9
 $278.6
 $815.8
      
Net income (loss) from discontinued operations$0.3
 $(5.6) $(26.0)

Basic and diluted weighted-average shares used in the denominator of the per share calculations was as follows:
 Fiscal Year Ended September 30,
 2012 2011 2010
Basic weighted-average shares outstanding91,330,635
 90,888,253
 89,947,873
Effect of dilutive stock options and equity-based compensation awards562,508
 685,107
 1,006,868
Diluted weighted-average shares outstanding91,893,143
 91,573,360
 90,954,741

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



22.    Contingencies, Significant Estimates and Concentrations

Securities Class Action - - On September 19, 2008, a purported shareholder of the Company filed a complaint seeking certification of a class action lawsuit in the United States District Court for the Eastern District of Wisconsin docketed as Iron Workers Local No. 25 Pension Fund on behalf of itself and all others similarly situated v. Oshkosh Corporation and Robert G. Bohn.  The lawsuit alleges, among other things, that the Company violated the Securities Exchange Act of 1934 by making materially inadequate disclosures and material omissions leading to the Company’s issuance of revised earnings guidance and announcement of an impairment charge on June 26, 2008.  Since the initial lawsuit, other suits containing

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substantially similar allegations were filed.  These lawsuits have been consolidated and an amended complaint has been filed.  The amended complaint substantially expands the class period in which securities law violations are alleged to have occurred and names Charles L. Szews, David M. Sagehorn and the Company’s independent auditor as additional defendants.  On July 24, 2009, the defendants filed their motions to dismiss the lawsuit, and the motions have been fully briefed.  The motions are currently pending before the court.  The Company believes the lawsuit to be entirely without merit and plans to continue to vigorously defend against the lawsuit.

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.


The Company has been named a PRP with regard to three multiple-party sites.  Based on current estimates, the Company believes its liability at these sites will not be material and any responsibility of the Company is adequately covered through established reserves.

The Company has been addressing a regional trichloroethylene (“TCE”) groundwater plume on the south side of Oshkosh, Wisconsin.  The Company believes there may be multiple sources of TCE in the area.  TCE was detected at the Company’s North Plant facility with testing showing the highest concentrations in a monitoring well located on the upgradient property line.  In July 2009, upon completion of additional testing with favorable results at the Company’s North Plant facility, the State of Wisconsin Department of Natural Resources (“WDNR”) agreed to close its investigation of the North Plant facility and not to require any remediation at the North Plant facility at this time provided that the Company and any subsequent owner of the North Plant facility comply with certain conditions.  The WDNR may reopen its investigation of the matter if additional evidence of contamination at the North Plant facility is discovered.  Also, as part of the regional TCE groundwater investigation, the Company conducted a groundwater investigation of a former landfill located on Company property.  The landfill, acquired by the Company in 1972, is approximately 2.0 acres in size and is believed to have been used for the disposal of household waste.  Based on the investigation, the Company believes, and the WDNR has concurred, that the landfill is not one of the sources of the TCE contamination.  As such, in March 2009, the WDNR agreed to close its investigation of the landfill as a possible source of the TCE and not to require any remediation at the landfill at this time, provided that the Company and any subsequent owner of the landfill comply with certain conditions.  The landfill will remain on the State of Wisconsin’s registry of former landfills.  The WDNR may reopen its investigation of the matter if additional evidence of contamination at the landfill is discovered.  Based upon current knowledge, the Company believes its liability associated with the TCE issue will not be material and is adequately covered through reserves established by the Company.  However, this may change as investigations by unrelated property owners and the government proceed.

At September 30, 2009 and 2008, the Company had reserves of $2.1$2.0 million and $3.9$2.1 million respectively, for losses related to environmental matters that were probable and estimable.estimable at September 30, 2012 and 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 to be 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 materiallymaterial adverse effect on the Company’s financial position, results of operations or cash flows.


Personal Injury Actions and Other - Product and general liability claims ariseare 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$3.0 million per claim. Accordingly, a reserve is maintained for the estimated costs of such claims. At September 30, 20092012 and 2008, the reserve2011, reserves for product and general liability claims was $46.8$45.6 million and $47.3$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 Company’s financial condition, results of operations or cash flows.

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Market Risks - The Company iswas contingently liable under bid, performance and specialty bonds totaling $217.8$221.9 million and open standby letters of credit issued by the Company’s banks in favor of third parties totaling $34.1$179.8 million at September 30, 2009.

2012.


Purchase Obligations - The Company utilizes blanket purchase orders to communicate expected annual requirements to many of its suppliers or contractors. Requirements under blanket purchase orders generally do not become “firm” until four weeks prior to the Company’s scheduled unit production. As of September 30, 2012 and September 30, 2011, the Company had purchase obligation commitments considered firm, plus the value of all outstanding subcontracts, totaling $1.8 billion and $2.8 billion, respectively.

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 Company’s financial condition, results of operations or cash flows. Actual results could vary, among other things, due to the uncertainties involved in litigation.


At September 30, 2009,2012, approximately 28%25% of the Company’s workforce was covered under collective bargaining agreements.


The Company derived a significant portion of its revenue from the DoD, as follows (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

 

 

 

 

 

 

DoD

 

$

2,738.9

 

$

2,051.3

 

$

1,435.4

 

Foreign military sales

 

26.8

 

17.5

 

22.1

 

Total DoD sales

 

$

2,765.7

 

$

2,068.8

 

$

1,457.5

 

 Fiscal Year Ended September 30,
 2012 2011 2010
DoD$3,452.5
 $4,136.8
 $7,054.7
Foreign military sales221.2
 74.3
 28.3
Total DoD sales$3,673.7
 $4,211.1
 $7,083.0

No other customer represented more than 10% of sales for fiscal 2009, 2008 and 2007.

2012, 2011 or 2010.


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Certain risks are inherent in doing business with the DoD, including technological changes and changes in levels of defense spending. All DoD contracts contain a provision that they may be terminated at any time at the convenience of the U.S. government. In such an event, the Company is entitled to recover allowable costs plus a reasonable profit earned to the date of termination.


Major contracts for military systems are performed over extended periods of time and are subject to changes in scope of work and delivery schedules. Pricing negotiations on changes and settlement of claims often extend over prolonged periods of time. The Company’s ultimate profitability on such contracts may depend on the eventual outcome of an equitable settlement of contractual issues with the Company’s customers.


Because the Company is a relatively large defense contractor, the Company’s U.S. government contract operations are subject to extensive annual audit processes and to U.S. government investigations of business practices and cost classifications from which legal or administrative proceedings can result. Based on U.S. government procurement regulations, under certain circumstances the Company could be fined, as well as suspended or debarred from U.S. government contracting. In that event,During a suspension or debarment, the Company would also be prohibited from selling equipment or services to customers that depend on loans or financial commitments from the Export Import Bank, Overseas Private Investment Corporation and similar U.S. government agencies during a suspension or debarment.

21.agencies.


23.    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. The Company’s segments are as follows:


DefenseAccess Equipment: This segment consists of a division of Oshkosh that manufactures heavy-JLG and medium-payload tactical trucks and supply parts and services for the U.S. military and for other militaries around the world.  Sales to the DoD accounted for 96.9%, 96.0% and 92.0% of the segment’s sales for the years ended September 30, 2009, 2008 and 2007, respectively.

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Access Equipment:  This segment consists of JLG.JerrDan. JLG manufactures 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 for sale worldwide. Access equipment customers include equipment rental companies, construction contractors, manufacturing companies, home improvement centers and the U.S. military. JerrDan manufactures and markets towing and recovery equipment in the U.S. and abroad.


Defense: This segment consists of a division of Oshkosh that manufactures tactical wheeled vehicles and supply parts and services for the U.S. military and for other militaries around the world. Sales to one customerthe DoD accounted for 14.8%90.8%, 93.5% and 96.9% of the segment’s sales for the yearyears ended September 30, 2007.2012

, 2011 and 2010, respectively.


Fire & Emergency: This segment includes Pierce, the aircraft rescue and firefighting and snow removal divisions of Oshkosh JerrDan, Medtec, Kewaunee, BAI and OSV.Kewaunee. These units manufacture and market commercial and custom fire vehicles, broadcast vehiclessimulators and emergency vehicles primarily for fire departments, airports, other governmental units, hospitals and other care providers, broadcast stationsvehicles for broadcasters and towing companiesTV stations in the U.S. and abroad.


Commercial: This segment includes McNeilus, CON-E-CO, London, IMT and the commercial division of Oshkosh. McNeilus, CON-E-CO, London and Oshkosh manufacture, market and distribute concrete mixers, portable concrete batch plants and vehicle and vehicle body components. McNeilus manufactures, markets and distributesLondon manufacture, market and distribute refuse collection vehicles and components. IMT is a manufacturer of field service vehicles and truck-mounted cranes for niche markets. Sales are made primarily to commercial and municipal customers in the Americas and Europe.Americas.


In accordance with FASB ASC Topic 280, Segment Reporting, 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 and other”“Corporate” includes corporate office expenses, including share-based compensation, costs of certain business initiatives and shared services benefiting multiple segments and results of insignificant operations, intersegment eliminations and income and expense not allocated to reportable segments.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. The accounting policies of the reportable segments are the same as those described in Note 2 of the Notes to Consolidated Financial Statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Selected financial information concerning the Company’s product lines and reportable segments is as follows (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

 

 

External

 

Inter-

 

Net

 

External

 

Inter-

 

Net

 

External

 

Inter-

 

Net

 

 

 

Customers

 

segment

 

Sales

 

Customers

 

segment

 

Sales

 

Customers

 

segment

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defense

 

$

2,585.9

 

$

8.9

 

$

2,594.8

 

$

1,882.2

 

$

9.7

 

$

1,891.9

 

$

1,412.1

 

$

4.4

 

$

1,416.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Access equipment(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerial work platforms

 

470.2

 

—

 

470.2

 

1,997.9

 

—

 

1,997.9

 

1,493.7

 

—

 

1,493.7

 

Telehandlers

 

289.8

 

—

 

289.8

 

747.0

 

—

 

747.0

 

796.8

 

—

 

796.8

 

Other(b)

 

292.7

 

86.7

 

379.4

 

341.0

 

—

 

341.0

 

249.0

 

—

 

249.0

 

Total access equipment

 

1,052.7

 

86.7

 

1,139.4

 

3,085.9

 

—

 

3,085.9

 

2,539.5

 

—

 

2,539.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fire & emergency

 

1,138.0

 

31.0

 

1,169.0

 

1,146.5

 

46.3

 

1,192.8

 

1,107.4

 

34.8

 

1,142.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Concrete placement

 

144.9

 

1.1

 

146.0

 

367.2

 

1.4

 

368.6

 

619.3

 

—

 

619.3

 

Refuse collection

 

317.6

 

9.0

 

326.6

 

374.3

 

10.1

 

384.4

 

359.4

 

—

 

359.4

 

Other

 

56.1

 

61.3

 

117.4

 

80.3

 

1.8

 

82.1

 

101.6

 

—

 

101.6

 

Total commercial

 

518.6

 

71.4

 

590.0

 

821.8

 

13.3

 

835.1

 

1,080.3

 

—

 

1,080.3

 

Intersegment eliminations

 

—

 

(198.0

)

(198.0

)

—

 

(69.3

)

(69.3

)

—

 

(39.2

)

(39.2

)

Consolidated

 

$

5,295.2

 

$

—

 

$

5,295.2

 

$

6,936.4

 

$

—

 

$

6,936.4

 

$

6,139.3

 

$

—

 

$

6,139.3

 

(a)          Fiscal 2007 access equipment disclosures include the results of JLG subsequent to December 6, 2006, the date of acquisition.

(b)         Fiscal 2009 JLG intersegment sales are comprised of assembly of MRAP All Terrain Vehicle crew capsules and complete vehicles for the defense segment.  JLG invoices defense for work under this contract which was initiated in the fourth quarter of fiscal 2009.  These sales are eliminated in consolidation.

94

 Fiscal Year Ended September 30,
 2012 2011 2010
 
External
Customers
 
Inter-
segment
 
Net
Sales
 
External
Customers
 
Inter-
segment
 
Net
Sales
 
External
Customers
 
Inter-
segment
 
Net
Sales
Access equipment (a)
 
  
  
  
  
  
  
  
  
Aerial work platforms$1,390.2
 $—
 $1,390.2
 $961.6
 $—
 $961.6
 $558.6
 $—
 $558.6
Telehandlers892.3
 —
 892.3
 527.9
 —
 527.9
 342.8
 —
 342.8
Other (b)
511.9
 125.1
 637.0
 454.6
 108.0
 562.6
 365.4
 1,745.1
 2,110.5
Total access equipment2,794.4
 125.1
 2,919.5
 1,944.1
 108.0
 2,052.1
 1,266.8
 1,745.1
 3,011.9
                  
Defense3,947.5
 3.0
 3,950.5
 4,359.9
 5.3
 4,365.2
 7,151.3
 10.4
 7,161.7
                  
Fire & emergency769.4
 39.0
 808.4
 765.1
 18.0
 783.1
 871.1
 23.1
 894.2
                  
Commercial 
  
  
  
  
  
  
  
  
Concrete placement231.9
 —
 231.9
 169.6
 —
 169.6
 174.1
 —
 174.1
Refuse collection336.8
 —
 336.8
 249.6
 —
 249.6
 305.7
 —
 305.7
Other100.9
 27.4
 128.3
 79.2
 66.5
 145.7
 51.6
 90.7
 142.3
Total commercial669.6
 27.4
 697.0
 498.4
 66.5
 564.9
 531.4
 90.7
 622.1
Intersegment eliminations—
 (194.5) (194.5) —
 (197.8) (197.8) —
 (1,869.3) (1,869.3)
Consolidated$8,180.9
 $—
 $8,180.9
 $7,567.5
 $—
 $7,567.5
 $9,820.6
 $—

$9,820.6
_________________________
(a)Fiscal 2011 and 2010 amounts have been reclassified to conform with the fiscal 2012 presentation.
(b)Access equipment intersegment sales are comprised of assembly of M-ATV crew capsules and complete vehicles for the defense segment. The access equipment segment invoices the defense segment for work under this contract. These sales are eliminated in consolidation.

 Fiscal Year Ended September 30,
 2012 2011 2010
Operating income (loss) from continuing operations: 
  
  
Access equipment$229.2
 $65.3
 $97.3
Defense236.5
 543.0
 1,320.7
Fire & emergency (a)
(12.9) (1.1) 88.3
Commercial (b)
32.1
 3.9
 19.4
Corporate(119.1) (107.1) (99.0)
Intersegment eliminations0.2
 4.0
 (1.9)
Consolidated366.0
 508.0
 1,424.8
Interest expense net of interest income(74.1) (86.0) (184.1)
Miscellaneous other income (expense)(5.2) 1.6
 1.0
Income from continuing operations before income taxes and equity in earnings (losses) of unconsolidated affiliates$286.7
 $423.6
 $1,241.7
_________________________
(a)
Fiscal 2011 results include non-cash goodwill and long-lived asset impairment charges of $2.0 million.
(b)
Fiscal 2010 results include non-cash goodwill and long-lived asset impairment charges of $2.3 million.


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Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Operating income (expense) from continuing operations:

 

 

 

 

 

 

 

Defense

 

$

403.3

 

$

265.2

 

$

245.0

 

Access equipment (a)

 

(1,105.6

)

360.1

 

268.4

 

Fire & emergency (b)

 

(14.7

)

93.9

 

107.5

 

Commercial (c)

 

(183.7

)

4.7

 

76.5

 

Corporate and other

 

(91.3

)

(108.9

)

(88.3

)

Consolidated

 

(992.0

)

615.0

 

609.1

 

Interest expense net of interest income

 

(208.0

)

(205.0

)

(194.6

)

Miscellaneous other income (expense)

 

8.5

 

(9.3

)

0.9

 

 

 

 

 

 

 

 

 

(Loss) income before income taxes, equity in earnings of unconsolidated affiliates and minority interest

 

$

(1,191.5

)

$

400.7

 

$

415.4

 

(a)          Fiscal 2009 results include non-cash goodwill and long-lived asset impairment charges of $892.5 million.

(b)         Fiscal 2009 results include non-cash goodwill and long-lived asset impairment charges of $123.0 million.

(c)          Fiscal 2009 and fiscal 2008 results include non-cash goodwill and long-lived asset impairment charges of $184.3 million and $1.0 million, respectively.

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Depreciation and amortization:

 

 

 

 

 

 

 

Defense

 

$

12.5

 

$

10.2

 

$

7.1

 

Access equipment

 

89.3

 

91.4

 

76.1

 

Fire & emergency

 

16.8

 

18.6

 

17.2

 

Commercial (a)

 

19.9

 

25.3

 

22.1

 

Corporate and other

 

13.5

 

7.4

 

6.5

 

Consolidated

 

$

152.0

 

$

152.9

 

$

129.0

 

 

 

 

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

 

Defense

 

$

13.0

 

$

18.9

 

$

17.6

 

Access equipment (b)

 

36.6

 

63.9

 

46.1

 

Fire & emergency

 

6.6

 

9.3

 

16.1

 

Commercial

 

5.4

 

26.2

 

22.2

 

 

 

 

 

 

 

 

 

Consolidated

 

$

61.6

 

$

118.3

 

$

102.0

 

(a)          Includes $0.5 million, $3.5 million and $2.5 million in fiscal 2009, 2008 and 2007, respectively, related to Geesink which is included in discontinued operations.

(b)   Capital expenditures include both the purchase of property, plant and equipment and equipment held for rental.

95



 Fiscal Year Ended September 30,
 2012 2011 2010
Depreciation and amortization: (a)
 
  
  
Access equipment$71.5
 $84.1
 $95.4
Defense19.3
 26.7
 17.6
Fire & emergency13.5
 13.0
 16.2
Commercial15.0
 15.4
 15.1
Corporate (b)
11.6
 5.2
 28.6
Consolidated$130.9
 $144.4
 $172.9
      
Capital expenditures: 
  
  
Access equipment (c)
$28.3
 $26.0
 $24.7
Defense16.0
 36.4
 48.0
Fire & emergency7.3
 17.7
 10.0
Commercial4.8
 5.9
 6.8
Corporate7.9
 0.2
 —
Consolidated$64.3
 $86.2
 $89.5
_________________________
(a)
Includes $0.6 million, $1.8 million and $4.8 million in fiscal 2012, 2011 and 2010, respectively, related to discontinued operations.
(b)
Includes $2.3 million, $0.1 million and $20.4 million in fiscal 2012, 2011 and 2010, respectively, related to the write-off of deferred financing fees due to the early extinguishment of the related debt.
(c)Capital expenditures include both the purchase of property, plant and equipment and equipment held for rental.

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

September 30,

 

 

 

2009 (d)

 

2008

 

2007

 

Identifiable assets:

 

 

 

 

 

 

 

Defense - U.S.

 

$

527.5

 

$

299.0

 

$

251.5

 

Access equipment:

 

 

 

 

 

 

 

U.S.

 

1,972.2

 

2,757.4

 

2,845.0

 

Europe (a)

 

764.9

 

1,108.4

 

1,032.1

 

Rest of the world

 

131.9

 

123.0

 

282.5

 

Total access equipment

 

2,869.0

 

3,988.8

 

4,159.6

 

Fire & emergency:

 

 

 

 

 

 

 

U.S.

 

604.4

 

756.2

 

761.3

 

Europe

 

82.4

 

123.8

 

119.0

 

Total fire & emergency

 

686.8

 

880.0

 

880.3

 

Commercial:

 

 

 

 

 

 

 

U.S.

 

334.5

 

631.2

 

670.3

 

Other North America (a)

 

34.0

 

32.5

 

34.5

 

Europe (b)

 

—

 

170.0

 

306.8

 

Total Commercial

 

368.5

 

833.7

 

1,011.6

 

Corporate and other - U.S. (c)

 

316.2

 

80.0

 

96.8

 

Consolidated

 

$

4,768.0

 

$

6,081.5

 

$

6,399.8

 


(a)          Includes investment in unconsolidated affiliates.

(b)         September 30, 2009 balances reflect the sale of Geesink.  September 30, 2008 assets reflect the June 2008 goodwill impairment charge of $167.4 million and long-lived asset impairment charges of $7.8 million.  See Note 3 of the Notes to Consolidated Financial Statements for a discussion of the charges.

(c)          Primarily includes cash and short-term investments.

(d)         September 30, 2009 assets reflect the 2009 goodwill impairment charges of $1,169.2 million and long-lived asset impairment charges of $30.6 million.  See Note 8 of the Notes to Consolidated Financial Statements for a discussion of the charges.


 September 30,
 2012
2011
2010
Identifiable assets: 
  
  
Access equipment: 
  
  
U.S.$1,754.6
 $1,779.8
 $1,766.5
Europe (a)
684.2
 694.0
 794.0
Rest of the world283.1
 248.9
 186.7
Total access equipment2,721.9
 2,722.7
 2,747.2
Defense - U.S. (a)
684.5
 762.3
 876.4
Fire & emergency: 
  
  
U.S.534.0
 518.9
 529.9
Europe—
 12.9
 15.6
Total fire & emergency534.0
 531.8
 545.5
Commercial: 
  
  
U.S.304.5
 321.4
 316.4
Rest of the world (a)
37.0
 41.5
 38.7
Total commercial341.5
 362.9
 355.1
Corporate: 
  
  
U.S. (b)
658.1
 441.2
 183.1
Rest of the world7.8
 6.0
 1.3
Total corporate665.9
 447.2
 184.4
Consolidated$4,947.8
 $4,826.9
 $4,708.6
_________________________
(a)Includes investments in unconsolidated affiliates.
(b)Primarily includes cash and short-term investments.

The following table presents net sales by geographic region based on product shipment destination (in millions):

 

 

Fiscal Year Ended September 30,

 

 

 

2009

 

2008

 

2007

 

Net sales:

 

 

 

 

 

 

 

United States

 

$

4,487.1

 

$

4,997.2

 

$

4,745.5

 

Other North America

 

89.7

 

180.6

 

212.8

 

Europe, Africa and Middle East

 

510.7

 

1,342.2

 

915.7

 

Rest of the world

 

207.7

 

416.4

 

265.3

 

Consolidated

 

$

5,295.2

 

$

6,936.4

 

$

6,139.3

 

96


 Fiscal Year Ended September 30,
 2012 2011 2010
Net sales: 
  
  
United States$6,397.0
 $6,275.4
 $8,873.1
Other North America248.3
 179.7
 110.3
Europe, Africa and Middle East974.9
 695.1
 497.0
Rest of the world560.7
 417.3
 340.2
Consolidated$8,180.9
 $7,567.5
 $9,820.6

24.    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 the Company’s existing and future subsidiaries that from time to time guarantee obligations under the Company’s senior credit facility, with certain exceptions (the “Guarantors”). The following condensed supplemental consolidating financial information reflects the summarized financial information of Oshkosh, the Guarantors on a combined basis and Oshkosh’s non-guarantor subsidiaries on a combined basis (in millions):

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OSHKOSH CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Statement of Income
For the Year Ended

22.  September 30, 2012

 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Net sales$4,100.8
 $3,419.0
 $921.3
 $(260.2) $8,180.9
Cost of sales3,743.7
 2,923.2
 783.4
 (260.4) 7,189.9
Gross income357.1
 495.8
 137.9
 0.2
 991.0
Selling, general and administrative expenses238.4
 295.8
 33.1
 —
 567.3
Amortization of purchased intangibles0.3
 39.8
 17.6
 —
 57.7
Intangible asset impairment charges—
 —
 —
 —
 —
Operating income118.4
 160.2
 87.2
 0.2
 366.0
Interest expense(197.4) (75.5) (3.9) 200.8
 (76.0)
Interest income2.3
 28.1
 172.3
 (200.8) 1.9
Miscellaneous, net18.2
 (101.7) 78.3
 —
 (5.2)
Income (loss) from continuing operations before income taxes(58.5) 11.1
 333.9
 0.2
 286.7
Provision for (benefit from) income taxes(11.1) 1.3
 67.2
 —
 57.4
Income (loss) from continuing operations before equity in earnings (losses) of affiliates(47.4) 9.8
 266.7
 0.2
 229.3
Equity in earnings (losses) of consolidated subsidiaries272.5
 110.0
 32.1
 (414.6) —
Equity in earnings (losses) of unconsolidated affiliates(0.4) —
 2.7
 —
 2.3
Income (loss) from continuing operations224.7
 119.8
 301.5
 (414.4) 231.6
Discontinued operations, net of tax6.1
 (9.9) 4.1
 —
 0.3
Net income (loss)230.8
 109.9
 305.6
 (414.4) 231.9
Net income attributable to the noncontrolling interest—
 —
 (1.1) —
 (1.1)
Net income (loss) attributable to Oshkosh Corporation$230.8
 $109.9
 $304.5
 $(414.4) $230.8

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Statement of Income
For the Year Ended September 30, 2011
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Net sales$4,540.2
 $2,409.4
 $875.9
 $(258.0) $7,567.5
Cost of sales3,873.3
 2,106.5
 771.6
 (262.2) 6,489.2
Gross income666.9
 302.9
 104.3
 4.2
 1,078.3
Selling, general and administrative expenses212.0
 181.8
 115.2
 —
 509.0
Amortization of purchased intangibles0.1
 39.8
 19.4
 —
 59.3
Intangible asset impairment charges—
 —
 2.0
 —
 2.0
Operating income (loss)454.8
 81.3
 (32.3) 4.2
 508.0
Interest expense(200.2) (82.2) (3.9) 195.6
 (90.7)
Interest income2.9
 26.4
 171.0
 (195.6) 4.7
Miscellaneous, net10.7
 (120.5) 111.4
 —
 1.6
Income (loss) from continuing operations before income taxes268.2
 (95.0) 246.2
 4.2
 423.6
Provision for (benefit from) income taxes93.9
 (30.0) 79.8
 1.4
 145.1
Income (loss) from continuing operations before equity in earnings (losses) of affiliates174.3
 (65.0) 166.4
 2.8
 278.5
Equity in earnings (losses) of consolidated subsidiaries99.2
 56.0
 (52.5) (102.7) —
Equity in earnings (losses) of unconsolidated affiliates(0.1) —
 0.6
 —
 0.5
Income (loss) from continuing operations273.4
 (9.0) 114.5
 (99.9) 279.0
Discontinued operations, net of tax—
 —
 (5.6) —
 (5.6)
Net income (loss)273.4
 (9.0) 108.9
 (99.9) 273.4
Net income attributable to the noncontrolling interest—
 —
 —
 —
 —
Net income (loss) attributable to Oshkosh Corporation$273.4
 $(9.0) $108.9
 $(99.9) $273.4

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Statement of Income
For the Year Ended September 30, 2010
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Net sales$7,341.9
 $3,559.1
 $813.6
 $(1,894.0) $9,820.6
Cost of sales5,892.1
 3,119.5
 731.0
 (1,892.0) 7,850.6
Gross income1,449.8
 439.6
 82.6
 (2.0) 1,970.0
Selling, general and administrative expenses196.9
 164.4
 122.6
 —
 483.9
Amortization of purchased intangibles—
 40.2
 18.8
 —
 59.0
Intangible asset impairment charges—
 —
 2.3
 —
 2.3
Operating income (loss)1,252.9
 235.0
 (61.1) (2.0) 1,424.8
Interest expense(276.4) (170.6) (2.5) 262.4
 (187.1)
Interest income2.4
 18.6
 244.4
 (262.4) 3.0
Miscellaneous, net12.7
 (94.9) 83.2
 —
 1.0
Income (loss) from continuing operations before income taxes991.6
 (11.9) 264.0
 (2.0) 1,241.7
Provision for (benefit from) income taxes328.4
 (1.5) 95.2
 (0.7) 421.4
Income (loss) from continuing operations before equity in earnings (losses) of affiliates663.2
 (10.4) 168.8
 (1.3) 820.3
Equity in earnings (losses) of consolidated subsidiaries125.4
 (2.4) (37.9) (85.1) —
Equity in earnings (losses) of unconsolidated affiliates—
 —
 (4.3) —
 (4.3)
Income (loss) from continuing operations788.6
 (12.8) 126.6
 (86.4) 816.0
Discontinued operations, net of tax1.4
 —
 (27.4) —
 (26.0)
Net income (loss)790.0
 (12.8) 99.2
 (86.4) 790.0
Net income attributable to the noncontrolling interest—
 —
 —
 —
 —
Net income (loss) attributable to Oshkosh Corporation$790.0
 $(12.8) $99.2
 $(86.4) $790.0

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Balance Sheet
As of September 30, 2012
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Assets 
  
  
  
  
Current assets: 
  
  
  
  
Cash and cash equivalents$500.0
 $5.5
 $35.2
 $—
 $540.7
Receivables, net388.0
 487.5
 177.3
 (34.2) 1,018.6
Inventories, net284.3
 415.7
 239.3
 (1.8) 937.5
Other current assets129.2
 47.9
 20.6
 —
 197.7
Total current assets1,301.5
 956.6
 472.4
 (36.0) 2,694.5
Investment in and advances to consolidated subsidiaries2,358.1
 (1,182.9) 3,235.8
 (4,411.0) —
Intangible assets, net2.5
 1,110.4
 696.3
 —
 1,809.2
Other long-term assets154.7
 156.8
 132.6
 —
 444.1
Total assets$3,816.8
 $1,040.9
 $4,537.1
 $(4,447.0) $4,947.8
          
Liabilities and Equity 
  
  
  
  
Current liabilities: 
  
  
  
  
Accounts payable$326.2
 $288.9
 $96.7
 $(28.5) $683.3
Customer advances315.4
 190.5
 4.5
 —
 510.4
Other current liabilities213.6
 220.2
 84.5
 (7.5) 510.8
Total current liabilities855.2
 699.6
 185.7
 (36.0) 1,704.5
Long-term debt, less current maturities955.0
 —
 —
 —
 955.0
Other long-term liabilities153.1
 137.3
 144.4
 —
 434.8
Equity: 
  
  
  
 

Oshkosh Corporation shareholders’ equity1,853.5
 204.0
 4,207.0
 (4,411.0) 1,853.5
Noncontrolling interest—
 —
 —
 —
 —
Total equity1,853.5
 204.0
 4,207.0
 (4,411.0) 1,853.5
Total liabilities and equity$3,816.8
 $1,040.9
 $4,537.1
 $(4,447.0) $4,947.8


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Balance Sheet
As of September 30, 2011
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Assets 
  
  
  
  
Current assets: 
  
  
  
  
Cash and cash equivalents$376.3
 $13.5
 $38.7
 $—
 $428.5
Receivables, net525.8
 521.4
 135.8
 (93.9) 1,089.1
Inventories, net194.0
 336.8
 257.9
 (1.9) 786.8
Other current assets86.0
 34.8
 29.4
 —
 150.2
Total current assets1,182.1
 906.5
 461.8
 (95.8) 2,454.6
Investment in and advances to consolidated subsidiaries2,506.5
 (1,402.6) 2,902.4
 (4,006.3) —
Intangible assets, net2.7
 1,131.4
 746.1
 —
 1,880.2
Other long-term assets167.4
 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 advances334.8
 120.2
 13.6
 —
 468.6
Other current liabilities208.3
 167.1
 85.0
 (6.1) 454.3
Total current liabilities1,041.7
 586.0
 159.9
 (95.8) 1,691.8
Long-term debt, less current maturities1,020.0
 —
 —
 —
 1,020.0
Other long-term liabilities200.4
 172.4
 145.7
 —
 518.5
Equity: 
  
  
  
 

Oshkosh Corporation shareholders’ equity1,596.5
 33.5
 3,972.7
 (4,006.2) 1,596.5
Noncontrolling interest0.1
 —
 0.1
 (0.1) 0.1
Total equity1,596.6
 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

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Statement of Cash Flows
For the Year Ended September 30, 2012
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Net cash provided (used) by operating activities$(143.4) $122.2
 $289.5
 $—
 $268.3
          
Investing activities: 
  
  
  
  
Additions to property, plant and equipment(24.5) (22.7) (8.7) —
 (55.9)
Additions to equipment held for rental—
 —
 (8.4) —
 (8.4)
Proceeds from sale of equity method investments—
 —
 8.7
 —
 8.7
Intercompany investing405.3
 (90.6) (288.3) (26.4) —
Other investing activities5.0
 8.6
 0.2
 —
 13.8
Net cash provided (used) by investing activities385.8
 (104.7) (296.5) (26.4) (41.8)
          
Financing activities: 
  
  
  
  
Repayment of long-term debt(105.0) (0.1) —
 —
 (105.1)
Repurchase of Common Stock(13.3) —
 —
 —
 (13.3)
Debt issuance/amendment costs(3.1) —
 —
 —
 (3.1)
Intercompany financing(1.3) (26.0) 0.9
 26.4
 —
Other financing activities4.0
 —
 0.2
 —
 4.2
Net cash provided (used) by financing activities(118.7) (26.1) 1.1
 26.4
 (117.3)
          
Effect of exchange rate changes on cash—
 0.6
 2.4
 —
 3.0
Increase (decrease) in cash and cash equivalents123.7
 (8.0) (3.5) —
 112.2
Cash and cash equivalents at beginning of year376.3
 13.5
 38.7
 —
 428.5
Cash and cash equivalents at end of year$500.0
 $5.5
 $35.2
 $—
 $540.7

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Statement of Cash Flows
For the Year Ended September 30, 2011
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Net cash provided (used) by operating activities$259.9
 $(35.5) $163.3
 $—
 $387.7
          
Investing activities: 
  
  
  
  
Additions to property, plant and equipment(42.2) (27.4) (12.7) —
 (82.3)
Additions to equipment held for rental—
 —
 (3.9) —
 (3.9)
Intercompany investing191.9
 100.4
 (283.5) (8.8) —
Other investing activities(3.0) 0.8
 20.1
 —
 17.9
Net cash provided (used) by investing activities146.7
 73.8
 (280.0) (8.8) (68.3)
          
Financing activities: 
  
  
  
  
Repayment of long-term debt(91.1) (0.3) —
 —
 (91.4)
Net borrowings under revolving credit facilities(150.0) —
 —
 —
 (150.0)
Debt issuance/amendment costs(0.1) —
 —
 —
 (0.1)
Intercompany financing(1.3) (26.0) 18.5
 8.8
 —
Other financing activities10.0
 —
 —
 —
 10.0
Net cash provided (used) by financing activities(232.5) (26.3) 18.5
 8.8
 (231.5)
          
Effect of exchange rate changes on cash—
 (1.0) 2.6
 —
 1.6
Increase (decrease) in cash and cash equivalents174.1
 11.0
 (95.6) —
 89.5
Cash and cash equivalents at beginning of year202.2
 2.5
 134.3
 —
 339.0
Cash and cash equivalents at end of year$376.3
 $13.5
 $38.7
 $—
 $428.5

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Condensed Consolidating Statement of Cash Flows
For the Year Ended September 30, 2010
 
Oshkosh
Corporation
 
Guarantor
Subsidiaries
 
Non-Guarantor
Subsidiaries
 Eliminations Total
Net cash provided (used) by operating activities$379.2
 $17.9
 $222.6
 $—
 $619.7
          
Investing activities: 
  
  
  
  
Additions to property, plant and equipment(56.5) (6.7) (20.0) —
 (83.2)
Additions to equipment held for rental—
 —
 (6.3) —
 (6.3)
Intercompany investing262.2
 39.8
 (253.9) (48.1) —
Other investing activities—
 (7.8) 13.4
 —
 5.6
Net cash provided (used) by investing activities205.7
 25.3
 (266.8) (48.1) (83.9)
          
Financing activities: 
  
  
  
  
Repayment of long-term debt(2,020.4) (0.3) (0.2) —
 (2,020.9)
Net borrowings under revolving credit facilities150.0
 —
 —
 —
 150.0
Proceeds from issuance of long term debt1,150.0
 —
 —
 —
 1,150.0
Debt issuance/amendment costs(26.3) —
 —
 —
 (26.3)
Intercompany financing(1.3) (46.0) (0.8) 48.1
 —
Other financing activities24.7
 —
 —
 —
 24.7
Net cash provided (used) by financing activities(723.3) (46.3) (1.0) 48.1
 (722.5)
          
Effect of exchange rate changes on cash—
 —
 (4.7) —
 (4.7)
Increase (decrease) in cash and cash equivalents(138.4) (3.1) (49.9) —
 (191.4)
Cash and cash equivalents at beginning of year340.6
 5.6
 184.2
 —
 530.4
Cash and cash equivalents at end of year$202.2
 $2.5
 $134.3
 $—
 $339.0


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Table of Contents
OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


25.Unaudited Quarterly Results

The unaudited quarterly results below have been revised to exclude from continuing operations the results of the Company's mobile medical trailer business, which was reclassified to discontinued operations in fiscal 2012 for all periods presented (in millions, except per share amounts)

 

 

Fiscal Year Ended September 30, 2009

 

Fiscal Year Ended September 30, 2008

 

 

 

4th Quarter(a)

 

3rd Quarter

 

2nd Quarter (b)

 

1st Quarter

 

4th Quarter

 

3rd Quarter(c)

 

2nd Quarter

 

1st Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

1,486.9

 

$

1,226.2

 

$

1,247.8

 

$

1,334.3

 

$

1,854.1

 

$

1,920.1

 

$

1,719.9

 

$

1,442.3

 

Gross income

 

242.3

 

176.2

 

137.2

 

150.3

 

279.0

 

328.0

 

322.8

 

248.5

 

Operating income (loss)

 

118.1

 

38.3

 

(1,172.9

)

24.5

 

132.4

 

193.0

 

175.9

 

113.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

52.4

 

$

(22.0

)

$

(1,190.3

)

$

(12.4

)

$

62.4

 

$

102.0

 

$

81.0

 

$

41.5

 

Income (loss) from discontinued operations

 

87.9

 

(4.6

)

(1.6

)

(8.2

)

(8.7

)

(186.3

)

(8.4

)

(4.2

)

Net income (loss)

 

$

140.3

 

$

(26.6

)

$

(1,191.9

)

$

(20.6

)

$

53.7

 

$

(84.3

)

$

72.6

 

$

37.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share-basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

$

0.64

 

$

(0.30

)

$

(16.00

)

$

(0.17

)

$

0.84

 

$

1.38

 

$

1.10

 

$

0.56

 

From discontinued operations

 

1.06

 

(0.06

)

(0.02

)

(0.11

)

(0.12

)

(2.52

)

(0.12

)

(0.05

)

 

 

$

 1.70

 

$

(0.36

)

$

(16.02

)

$

(0.28

)

$

0.72

 

$

(1.14

)

$

0.98

 

$

0.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share-diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From continuing operations

 

$

0.63

 

$

(0.30

)

$

(16.00

)

$

(0.17

)

$

0.84

 

$

1.36

 

$

1.08

 

$

0.55

 

From discontinued operations

 

1.05

 

(0.06

)

(0.02

)

(0.11

)

(0.12

)

(2.48

)

(0.11

)

(0.05

)

 

 

$

 1.68

 

$

(0.36

)

$

(16.02

)

$

(0.28

)

$

0.72

 

$

(1.12

)

$

0.97

 

$

0.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock per share dividends

 

$

—

 

$

—

 

$

0.10

 

$

0.10

 

$

0.10

 

$

0.10

 

$

0.10

 

$

0.10

 

:
 Fiscal Year Ended September 30, 2012
 
4th Quarter (a)
 3rd Quarter 2nd Quarter 1st Quarter
Net sales$2,061.8
 $2,171.2
 $2,072.2
 $1,875.7
Gross income258.0
 270.9
 240.6
 221.5
Operating income89.2
 122.9
 78.5
 75.4
Net income78.9
 75.7
 38.0
 39.3
        
Net income from continuing operations$77.6
 $74.7
 $39.2
 $39.0
Less: net earnings allocated to participating securities(0.2) (0.2) (0.1) (0.1)
Net income available to Oshkosh Corporation common shareholders$77.4
 $74.5
 $39.1
 $38.9
        
Net income (loss) from discontinued operations$1.3
 $1.0
 $(1.9) $(0.1)
        
Earnings (loss) per share attributable to Oshkosh 
  
  
  
Corporation common shareholders-basic: 
  
  
  
From continuing operations$0.85
 $0.82
 $0.43
 $0.43
From discontinued operations0.01
 0.01
 (0.02) (0.01)
 $0.86
 $0.83
 $0.41
 $0.42
        
Earnings (loss) per share attributable to Oshkosh 
  
  
  
Corporation common shareholders-diluted: 
  
  
  
From continuing operations$0.85
 $0.81
 $0.43
 $0.43
From discontinued operations0.01
 0.01
 (0.02) (0.01)
 $0.86
 $0.82
 $0.41
 $0.42
        
Common Stock per share dividends$—
 $—
 $—
 $—

(a)
The fourth quarter of 2012 was impacted by: (1) a $7.8 million change in estimate to increase revenue ($5.0 million, after-tax) resulting from the definitization of contracts in the defense segment (See Note 4 of the Notes to Consolidated Financial Statements), (2) a $7.0 million increase to selling, general and administrative expenses ($4.5 million, after-tax) resulting from the correction of a prior period error in the valuation of performance shares (See Note 17 of the Notes to Consolidated Financial Statements), (3) a $3.4 million increase to selling, general and administrative expenses ($2.2 million, after-tax) resulting from the curtailment of pension and other postretirement benefit plans (See Note 19 of the Notes to Consolidated Financial Statements), and (4) a decrease in income tax expense of $5.7 million related to the correction of deferred tax assets (See Note 20 of the Notes to Consolidated Financial Statements). Correction adjustments were not material to any individual prior period or the current period and, accordingly, the prior period results have not been adjusted.


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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


 Fiscal Year Ended September 30, 2011
 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Net sales$2,110.0
 $2,017.6
 $1,743.0
 $1,696.9
Gross income217.4
 273.1
 280.2
 307.6
Operating income77.1
 128.5
 132.9
 169.5
Net income38.0
 68.6
 67.7
 99.0
        
Net income from continuing operations$40.3
 $70.2
 $68.3
 $100.2
Less: net earnings allocated to participating securities(0.1) (0.1) (0.1) (0.1)
Net income available to Oshkosh Corporation common shareholders$40.2
 $70.1
 $68.2
 $100.1
        
Net loss from discontinued operations$(2.8) $(1.8) $(0.4) $(0.6)
        
Earnings (loss) per share attributable to Oshkosh 
  
  
  
Corporation common shareholders-basic: 
  
  
  
From continuing operations$0.44
 $0.77
 $0.76
 $1.11
From discontinued operations(0.03) (0.02) (0.01) (0.01)
 $0.41
 $0.75
 $0.75
 $1.10
        
Earnings (loss) per share attributable to Oshkosh 
  
  
  
Corporation common shareholders-diluted: 
  
  
  
From continuing operations$0.44
 $0.77
 $0.75
 $1.10
From discontinued operations(0.03) (0.02) (0.01) (0.01)
 $0.41
 $0.75
 $0.74
 $1.09
        
Common Stock per share dividends$—
 $—
 $—
 $—

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OSHKOSH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(a)26.    Included within discontinued operationsSubsequent Events

On October 17, 2012, Mr. Carl Icahn and related entities (the “Icahn Entities”) commenced an unsolicited tender offer for the fourth quarter of fiscal 2009 was a non cash pre-tax gain of $33.8 million on the sale of Geesink.  See Note 3“any and all” issued and outstanding shares of the NotesCompany's Common Stock for $32.50 per share in cash (the “Offer”). On October 26, 2012, the Icahn Entities also submitted to the Consolidated Financial Statements for additional details.

(b)         Results forCompany a notice to nominate a slate of candidates to replace the second quarter of fiscal 2009 include goodwill impairment charges of $1,167.8 million and long-lived asset impairment charges of $30.0 million.  See Note 8 of the Notes to Consolidated Financial Statements for a discussion of the charges.

(c)          Results for the third quarter of fiscal 2008 include a goodwill impairment charge of $167.4 million and a long-lived asset impairment charge of $6.8 million within discontinued operations.  See Note 3 of the Notes to Consolidated Financial Statements for a discussion of the charges.

23.  Subsequent Events

In October 2009, the Company completed the sale of its 75% interest in BAI, the Company’s European fire apparatus and equipment business, to BAI’s management team for nominal cash consideration.  BAI, which was included in the Company’s fire & emergency segment, had sales of $42.2 million, $58.7 million and $49.9 million in fiscal 2009, 2008 and 2007, respectively.  This business did not meet criteria to be recorded as assets held for sale as of September 30, 2009 as the Company did not receiveentire Board of Directors approval forof the sale until October 2009.Company at the Company's 2013 annual meeting of shareholders. The Company's Board of Directors carefully reviewed the Offer, in consultation with the Company's financial and legal advisors, and unanimously determined that the Offer is inadequate, undervalues the Company and is not in the best interests of the Company and its shareholders and recommended that the Company's shareholders reject the Offer and not tender their shares into the Offer. The Company expects to record a small loss onincur costs, which could be significant, in connection with the saleOffer and threatened proxy contest.


Upon the occurrence of BAI"change of control" events specified in the indentures for our Senior Notes, the Company is required to make an offer to purchase the outstanding notes under such indentures at 101% of the principal amount tendered, together with accrued and unpaid interest within 60 days following a change of control. "Change of control" under the indenture is generally defined to include, among other things: (1) the acquisition by a person or group of a least 50% of the Company's Common Stock, (b) the Company sells all or substantially all of its assets to a person other than a restricted subsidiary of the Company (as defined in the indenture), or (c) replacement of a majority of the members of the Company's Board of Directors by persons who were not nominated by its current directors during any two consecutive years.

Under the Company's Credit Agreement, a change of control would result in an event of default, which would allow the Company's lenders to accelerate the debt owed to them. Under the Credit Agreement, a "change of control" is generally defined to include, among other things: (a) the acquisition by a person or group of at least 30% of the Company's Common Stock, (b) the Company sells all or substantially all of its assets to any person, or (c) replacement of a majority of the members of the Company's Board of Directors by persons who were not nominated by its current directors during the previous 12 consecutive months.

On October 25, 2012, the Company's Board of Directors adopted a shareholder rights plan (the "Rights Plan") and declared a dividend of one preferred stock purchase right (a “right”) on each outstanding share of the Company's Common Stock to shareholders of record at the close of business on November 5, 2012. Pursuant to the Rights Plan, each share of Common Stock of the Company has associated with it one right. Each right entitles the holder to purchase from the Company a unit consisting of one one-thousandth of a share of a new series of preferred stock of the Company for $75.00. The rights generally will become exercisable only if a person or group acquires beneficial ownership of 10% (15% in the case of a “13G Institutional Investor” as defined in the Rights Plan) or more of the Company's Common Stock. In that situation, each holder of a right (other than the acquiror) will be entitled to purchase, upon payment of the exercise price of $75.00, Common Stock of the Company having a market value of twice the exercise price of the right. The rights are redeemable for $0.001 per right at any time until the tenth business day following the first quarterpublic announcement of fiscal 2010.

97

the acquisition of beneficial ownership of 10% (15% in the case of a “13G Institutional Investor”) or more of the Company's Common Stock. The Rights Plan will expire on October 25, 2013, unless such date is extended or the rights are earlier redeemed, exchanged or terminated.

On November 15, 2012, the Company's Board of Directors increased the Company's stock repurchase authorization from the remaining 6,683,825 shares of Common Stock to 11,000,000 shares of Common Stock.

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Table of Contents


ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


None.

ITEM 9A.

CONTROLS AND PROCEDURES


ITEM 9A.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and ProceduresProcedures.. In accordance with Rule 13a-15(b) of the Exchange Act, the Company’s management evaluated, with the participation of the Company’s Chairman of the Board and Chief Executive Officer and Executive Vice President and Chief Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of September 30, 2009.2012. Based upon their evaluation of these disclosure controls and procedures, the Chairman of the Board and Chief Executive Officer and the Executive Vice President and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of September 30, 20092012 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 Securities and Exchange Commission 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 Company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.


Management’s Report on Internal Control Over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles.


The Company’s management, with the participation of the Company’s Chairman and Chief Executive Officer and Executive Vice President and Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, the Company’s management has concluded that, as of September 30, 2009,2012, the Company’s internal controls over financial reporting were effective based on that framework.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Deloitte & Touche LLP, the Company’s independent registered public accounting firm, issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of September 30, 2009,2012, which is included herein.


Attestation Report of Independent Registered Public Accounting Firm. The attestation report required under this Item 9A is contained in Item 8 of Part II of this Annual Report on Form 10-K under the heading “Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting.Firm.”


Changes in Internal Control over Financial ReportingReporting.. There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 20092012 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION


ITEM 9B.    OTHER INFORMATION
The Company has no information to report pursuant to Item 9B.

98



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Table of Contents


PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

ITEM 10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information to be included under the captions “Governance of the Company — The Board of Directors,” “Governance of the Company — Committees of the Board of Directors — Audit Committee” and “Stock Ownership — Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s definitive proxy statement for the 2013 annual meeting of shareholders, on February 4, 2010, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item. Reference is also made to the information under the heading “Executive Officers of the Registrant” included under Part I of this report.

The Company has adopted the Oshkosh Corporation Code of Ethics Applicable to Directors and Senior Executives, that applies toincluding, the Company’s Directors, the Company’s Chairman of the Board and Chief Executive Officer, the Company’sCompany's President and Chief Operating Officer, the Company’s Executive Vice President and Chief Financial Officer, the Company’s Executive Vice President, General Counsel and Secretary, the Company’s Senior Vice President Finance and Controller and the Presidents, Vice Presidents of Finance and Controllers of the Company’s business units, or persons holding positions with similar responsibilities at business units, and other persons performing similar functions.officers elected by the Company’s Board of Directors at the vice president level or higher. The Company has posted a copy of the Oshkosh Corporation Code of Ethics Applicable to Directors and Senior Executives on the Company’s website at www.oshkoshcorporation.com, and any such Code of Ethics is available in print to any shareholder who requests it from the Company’s Secretary. The Company intends to satisfy the disclosure requirements under Item 10 of Form 8-K regarding amendments to, or waivers from, the Oshkosh Corporation Code of Ethics Applicable to Directors and Senior Executives by posting such information on its website at www.oshkoshcorporation.com.

www.oshkoshcorporation.com.

The Company is not including the information contained on its website as part of, or incorporating it by reference into, this report.

ITEM 11.

EXECUTIVE COMPENSATION


ITEM 11.    EXECUTIVE COMPENSATION
The information to be included under the captions “Report of the Human Resources Committee,” “Executive Compensation” and “Director Compensation” contained in the Company’s definitive proxy statement for the 2013 annual meeting of shareholders, on February 4, 2010, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.


ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


The information to be included under the caption “Stock Ownership — Stock Ownership of Directors, Executive Officers and Other Large Shareholders” in the Company’s definitive proxy statement for the 2013 annual meeting of shareholders, on February 4, 2010, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.

99



Table of Contents

Equity Compensation Plan Information

The following table provides information about the Company’s equity compensation plans as of September 30, 2009.

Plan category

 

Number of securities to
be issued upon the
exercise of outstanding
options, warrants, rights
and performance share
awards (1)

 

Weighted-average
exercise price of
outstanding options,
warrants and rights

 

Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in the first
column) (2)

 

Equity compensation plans approved by security holders

 

5,795,109

 

$

28.03

 

2,688,467

 

 

 

 

 

 

 

 

 

Equity compensation plans not approved by security holders

 

—

 

n/a

 

—

 

 

 

 

 

 

 

 

 

Total

 

5,795,109

 

$

28.03

 

2,688,467

 

2012.
Plan Category 
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options or Vesting of
Performance Share 
Awards(1)
 
Weighted-Average
Exercise Price of
Outstanding
Options
 
Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
Equity compensation plans approved by security holders 5,364,834
 $31.26
 5,274,940
Equity compensation plans not approved by security holders —
 n/a
 —
  5,364,834
 $31.26
 5,274,940
 _________________________
(1)Represents options to purchase shares of the Company’s Common Stock granted under the Company’s 1990 Incentive Stock Plan, as amended, 2004 Incentive Stock and Awards Plan, and 2009 Incentive Stock and Awards Plan, as amended and restated, all of which were approved by the Company’s shareholders.

112

(1)          Represents options to purchase the Company’s Common Stock granted under the Company’s 1990 Incentive Stock Plan, as amended, 2004 Incentive Stock and Awards Plan, and 2009 Incentive Stock and Awards Plan, all

Table of which were approved by the Company’s shareholders.

(2)          Excludes 2,935 shares of nonvested Common Stock subject to a three-year vesting period, previously issued under the Company’s 2004 Incentive Stock and Awards Plan.

Contents


ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information to be included under the caption “Governance of the Company — The Board of Directors,” “Executive Compensation — Pension Benefits,” “Executive Compensation — Potential Payments Upon Termination or Change in Control”Directors” and “Governance of the Company — Policies and Procedures Regarding Related Person Transactions” in the Company’s definitive proxy statement for the 2013 annual meeting of shareholders, on February 4, 2010, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


ITEM 14.    PRINCIPAL ACCOUNTING FEES AND SERVICES

The information to be included under the caption “Report“Ratification of the Appointment of the Independent Registered Public Accounting Firm — Report of the Audit Committee” in the Company’s definitive proxy statement for the 2013 annual meeting of shareholders, on February 4, 2010, to be filed with the Securities and Exchange Commission, is hereby incorporated by reference in answer to this item.

100



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Table of Contents


PART IV

ITEM 15.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a)   1.     Financial Statements:  The following consolidated financial statements of the Company and the report of the Independent Registered Public Accounting Firm included in the Annual Report to Shareholders for the fiscal year ended September 30, 2009, are contained in Item 8:

(a) 1.
Financial Statements: The following consolidated financial statements of the Company and the report of the Independent Registered Public Accounting Firm included in the Annual Report to Shareholders for the fiscal year ended September 30, 2012, are contained in Item 8:

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm

Consolidated Statements of OperationsIncome for the years ended September 30, 2009, 20082012, 2011 and 20072010

Consolidated Balance Sheets at September 30, 20092012 and 20082011

Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2009, 20082012, 2011 and 20072010

Consolidated Statements of Cash Flows for the years ended September 30, 2009, 20082012, 2011 and 20072010

Notes to Consolidated Financial Statements

2.    Financial Statement Schedule:


Schedule II — Valuation & Qualifying Accounts


All other schedules are omitted because they are not applicable, or the required information is included in the consolidated financial statements or notes thereto.


3.    Exhibits:

Refer to the Exhibit Index incorporated herein by reference. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this report is identified in the Exhibit Index by an asterisk following the Exhibit Number.

101



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Table of Contents


SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


OSHKOSH CORPORATION

November 18, 2009

By

/S/ Robert G. Bohn

OSHKOSH CORPORATION

Robert G. Bohn, Chairman and

November 19, 2012By/S/ Charles L. Szews
Charles L. Szews, Chief Executive Officer


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Table of Contents

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities on the dates indicated.


November 18, 2009

By

/S/ Robert G. Bohn

Robert G. Bohn, Chairman and

November 19, 2012By/S/ Charles L. Szews
Charles L. Szews, Chief Executive Officer
and Director
(Principal Executive Officer)

November 18, 2009

19, 2012

By

/S/ David M. Sagehorn

David M. Sagehorn, Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

November 18, 2009

19, 2012

By

/S/ Thomas J. Polnaszek

Thomas J. Polnaszek, Senior Vice President Finance and Controller
(Principal Accounting Officer)

November 18, 2009

19, 2012

By

/S/ J. William Andersen

J. William Andersen, Director

November 18, 2009

By

/S/ Richard M. Donnelly

Richard M. Donnelly, Director

Chairman of the Board

November 18, 2009

19, 2012

By

/S/ Frederick M. Franks, Jr.

Frederick M. Franks, Jr., Director

November 18, 2009

By

/S/ Michael W. Grebe

Michael W. Grebe, Director

November 18, 2009

19, 2012

By:

By

/S/ John J. Hamre

Peter B. Hamilton

John J. Hamre,Peter B. Hamilton, Director

November 18, 2009

19, 2012

By

/S/ Kathleen J. Hempel

Kathleen J. Hempel, Director

November 18, 2009

19, 2012

By

/S/ Leslie F. Kenne

Leslie F. Kenne, Director
November 19, 2012By/S/ Harvey N. Medvin

Harvey N. Medvin, Director

November 18, 2009

19, 2012

By

/S/ J. Peter Mosling, Jr.

J. Peter Mosling, Jr., Director

November 18, 2009

19, 2012

By

/S/ Craig P. Omtvedt

Craig P. Omtvedt, Director

November 18, 2009

19, 2012

By

/S/ Duncan J. Palmer

Duncan J. Palmer, Director
November 19, 2012By/S/ John S. Shiely
John S. Shiely, Director
November 19, 2012By/S/ Richard G. Sim

Richard G. Sim, Director

November 18, 2009

19, 2012

By

/S/ Charles L. Szews

William S. Wallace

Charles L. Szews,William S. Wallace, Director President and Chief Operating Officer

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SCHEDULE II


OSHKOSH CORPORATION

VALUATION AND QUALIFYING ACCOUNTS


Allowance for Doubtful Accounts

Years Ended September 30, 2009, 20082012, 2011 and 2007

2010

(In millions)

Fiscal
Year

 

Balance at
Beginning of
Year

 

Acquisitions
of
Businesses

 

Additions
Charged to
Expense

 

Reductions*

 

Balance at
End of Year

 

 

 

 

 

 

 

 

 

 

 

 

 

2007

 

$

7.0

 

$

14.8

 

$

9.9

 

$

(0.7

)

$

31.0

 

 

 

 

 

 

 

 

 

 

 

 

 

2008

 

$

31.0

 

$

(4.0

)

$

2.3

 

$

(4.5

)

$

24.8

 

 

 

 

 

 

 

 

 

 

 

 

 

2009

 

$

24.8

 

$

—

 

$

25.7

 

$

(8.5

)

$

42.0

 

*      Represents amounts written off to the reserve, net of recoveries and foreign currency translation adjustments.  Fiscal 2009 also includes a $3.2 million reduction related to the disposition of Geesink.

103

Fiscal
Year
 
Balance at
Beginning of
Year
 
Additions
Charged to
Expense
 Reductions* 
Balance at
End of Year
2010 $42.0
 $16.6
 $(16.6) $42.0
         
2011 $42.0
 $2.0
 $(14.5) $29.5
         
2012 $29.5
 $(2.3) $(9.2) $18.0
_________________________
*
Represents amounts written off to the reserve, net of recoveries and foreign currency translation adjustments. Fiscal 2010 includes a $1.9 million reduction related to the disposition of BAI and fiscal 2012 includes a $0.1 million reduction related to the disposition of Oshkosh Specialty Vehicles.

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OSHKOSH CORPORATION

EXHIBIT INDEX

2009

2012 ANNUAL REPORT ON FORM 10-K

3.1           Amended and Restated Articles of Incorporation of Oshkosh Corporation (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 1-31371)).

3.2           By-Laws of Oshkosh Corporation, as amended effective February 3, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, dated February 6, 2009 (File No. 1-31371)).

4.1           Credit Agreement, dated December 6, 2006, among Oshkosh Corporation, the financial institutions party thereto and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, dated December 6, 2006 (File No. 1-31371)).

4.2           Second Amendment, dated as of March 6, 2009, entered into by Oshkosh Corporation, Bank of America, N.A., as administrative agent and the lenders party thereto (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, dated March 9, 2009 (File No. 1-31371)).

10.1         Oshkosh Corporation 1990 Incentive Stock Plan, as amended through September 15, 2008 (incorporated by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.2         Form of Oshkosh Corporation 1990 Incentive Stock Plan Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (Reg. No. 33-62687)).*

10.3         Form of Oshkosh Corporation 1990 Incentive Stock Plan Nonqualified Director Stock Option Agreement (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-8 (Reg. No. 33-62687)).*

10.4         First Amended and Restated Employment Agreement, effective as of January 1, 2008, between Oshkosh Corporation and Robert G. Bohn (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (File No. 1-31371)).*

10.5         Amendment, effective February 1, 2009, to Amended and Restated Employment Agreement between Oshkosh Corporation and Robert G. Bohn (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (File No. 1-31371)).*

10.6         Oshkosh Corporation Executive Retirement Plan, amended and restated effective December 31, 2008 (incorporated by reference to Exhibit 10.7 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.7         Form of Key Executive Employment and Severance Agreement between Oshkosh Corporation and each of Robert G. Bohn and Charles L. Szews (each of the persons identified have signed this form or a form substantially similar) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (File No. 1-31371)).*

10.8         Form of Key Executive Employment and Severance Agreement between Oshkosh Corporation and each of Bryan J. Blankfield, R. Andy Hove, Joseph H. Kimmitt, Craig E. Paylor, David M. Sagehorn, Donald H. Verhoff, Michael J. Wuest and Matthew J. Zolnowski (each of the persons identified have signed this form or a form substantially similar) (incorporated by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

104

3.1Composite of Restated Articles of Incorporation of Oshkosh Corporation, as amended.
3.2By-Laws of Oshkosh Corporation, as amended effective July 16, 2012 (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 (File No. 1-31371)).
4.1Credit Agreement, dated September 27, 2010, among Oshkosh Corporation, various subsidiaries of Oshkosh Corporation party thereto as borrowers and various lenders and agents party thereto (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, dated September 29, 2010 (File No. 1-31371)).
4.2First Amendment to Credit Agreement, dated July 13, 2012, among Oshkosh Corporation and various lenders and agents party thereto (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, dated July 13, 2012 (File No. 1-31371)).
4.3Indenture, dated March 3, 2010, among the Company, the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, dated March 3, 2010 (File No. 1-31371)).
4.4First Supplemental Indenture, dated September 27, 2010, among the Company, the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Company's Annual Report on Form 10-K for the year ended September 30, 2010 (File No. 1-31371)).
4.5Rights Agreement, dated October 25, 2012, between Oshkosh Corporation and Computershare Trust Company, N.A., as Rights Agent, including Terms of the Series 2A Junior Participating Preferred Stock as Exhibit A thereto, the form of Rights Certificate as Exhibit B thereto and the form of Summary of Rights as Exhibit C thereto (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K, dated October 26, 2012) (File No. 1-31371)).
10.1Oshkosh Corporation 1990 Incentive Stock Plan, as amended through September 15, 2008 (incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*
10.2Form of Oshkosh Corporation 1990 Incentive Stock Plan Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (Reg. No. 33-62687)).*
10.3Form of Oshkosh Corporation 1990 Incentive Stock Plan Nonqualified Director Stock Option Agreement (incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-8 (Reg. No. 33-62687)).*
10.4Oshkosh Corporation Executive Retirement Plan, amended and restated effective December 31, 2008 (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*
10.5Form of Key Executive Employment and Severance Agreement between Oshkosh Corporation and each of Bryan J. Blankfield, Joseph H. Kimmitt, David M. Sagehorn and Charles L. Szews (each of the persons identified has signed this form or a form substantially similar) (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 1-31371)).*
10.6Form of Key Executive Employment and Severance Agreement between Oshkosh Corporation and each of Gregory L. Fredericksen, James W. Johnson, Wilson R. Jones, Frank R. Nerenhausen, Michael K. Rohrkaste, Gary W. Schmiedel and John M. Urias (each of the persons identified has signed this form or a form substantially similar) (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 1-31371)).*

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10.9         Form of Key Executive Employment and Severance Agreement between Oshkosh Corporation and each of Thomas D. Fenner and Wilson R. Jones (each of the persons indentified has signed this form or a form substantially similar) (incorporated by reference to Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.10       Oshkosh Corporation 2004 Incentive Stock and Awards Plan, as amended through September 15, 2008 (incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.11       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Stock Option Agreement for awards prior to September 19, 2005 (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (Reg. No. 333-114939)).*

10.12       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Stock Option Agreement for awards on and after September 19, 2005 (incorporated by reference to Exhibit 10.13 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005 (File No. 1-31371)).*

10.13       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Non-Employee Director Stock Option Award Agreement, for awards prior to September 19, 2005 (incorporated by reference to Exhibit 4.3 of the Company’s Registration Statement on Form S-8 (Reg. No. 333-114939)).*

10.14       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Non-Employee Director Stock Option Award Agreement, for awards on and after September 19, 2005 (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005 (File No. 1-31371)).*

10.15       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated September 14, 2004 (File No. 1-31371)).*

10.16       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Non-Employee Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated February 1, 2005 (File No. 1-31371)).*

10.17       Summary of Cash Compensation for Non-Employee Directors (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005 (File No. 1-31371)).*

10.18       Confidentiality and Loyalty Agreement, dated as of March 20, 2007, between Oshkosh Corporation and Charles L. Szews (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated March 20, 2007 (File No. 1-31371)).*

10.19       First Amended and Restated Employment Agreement, effective as of January 1, 2008, between Oshkosh Corporation and Charles L. Szews (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (File No. 1-31371)).*

10.20       Amendment, effective February 1, 2009, to Amended and Restated Employment Agreement between Oshkosh Corporation and Charles L. Szews (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (File No. 1-31371)).*

10.21       Resolutions of the Human Resources Committee of the Board of Directors of Oshkosh Corporation, adopted September 17, 2007, approving terms of performance share awards under the Oshkosh  Corporation 2004 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2007 (File No. 1-31371)).*

10.22       Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Stock Appreciation Rights Award Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 1-31371)).*

105


10.7Form of Key Executive Employment and Severance Agreement between Oshkosh Corporation and each of Todd S. Fierro, Scott R. Grennier, Thomas J. Polnaszek and Mark M. Radue (each of the persons identified has signed this form or a form substantially similar) (incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended September 30, 2011 (File No. 1-31371)).*
10.8Oshkosh Corporation 2004 Incentive Stock and Awards Plan, as amended through September 15, 2008 (incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*
10.9Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Stock Option Agreement for awards granted prior to September 19, 2005 (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 (Reg. No. 333-114939)).*
10.10Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Stock Option Agreement for awards granted on and after September 19, 2005 (incorporated by reference to Exhibit 10.13 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2005 (File No. 1-31371)).*
10.11Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Non-Employee Director Stock Option Award Agreement, for awards granted prior to September 19, 2005 (incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form S-8 (Reg. No. 333-114939)).*
10.12Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Non-Employee Director Stock Option Award Agreement, for awards granted on and after September 19, 2005 (incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2005 (File No. 1-31371)).*
10.13Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated September 14, 2004 (File No. 1-31371)).*
10.14Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Non-Employee Director Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated February 1, 2005 (File No. 1-31371)).*
10.15Summary of Cash Compensation for Non-Employee Directors.*
10.16Confidentiality and Loyalty Agreement, dated March 20, 2007, between Oshkosh Corporation and Charles L. Szews (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated March 20, 2007 (File No. 1-31371)).*
10.17Second Amended and Restated Employment Agreement, effective as of April 26, 2011, between Oshkosh Corporation and Charles L. Szews (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (File No. 1-31371)).*
10.18Resolutions of the Human Resources Committee of the Board of Directors of Oshkosh Corporation, adopted September 17, 2007, approving terms of performance share awards under the Oshkosh Corporation 2004 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended September 30, 2007 (File No. 1-31371)).*
10.19Form of Oshkosh Corporation 2004 Incentive Stock and Awards Plan Stock Appreciation Rights Award Agreement (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 1-31371)).*
10.20Oshkosh Corporation Deferred Compensation Plan for Directors and Executive Officers (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 1-31371)).*

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10.23       Oshkosh Corporation Deferred Compensation Plan for Directors and Executive Officers (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 (File No. 1-31371)).*

10.24       Oshkosh Corporation 2009 Incentive Stock and Awards Plan (incorporated by reference to Attachment A to the Company’s definitive proxy statement on Schedule 14A for the Oshkosh Corporation Annual Meeting


10.21Oshkosh Corporation 2009 Incentive Stock and Awards Plan as Amended and Restated, as amended January 18, 2012 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012 (File No. 1-31371)).*
10.22Framework for Awards of Performance Shares under the Oshkosh Corporation 2009 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, dated September 18, 2009 (File No. 1-31371)).*
10.23Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, dated September 18, 2009 (File No. 1-31371)).*
10.24Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Stock Appreciation Rights Award Agreement for awards granted prior to September 19, 2011 (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, dated September 18, 2009 (File No. 1-31371)).*
10.25Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Stock Appreciation Rights Award Agreement for awards granted on or after September 19, 2011 (incorporated by reference to Exhibit 10.27 to the Company's Annual Report on Form 10-K for the year ended September 30, 2011 (File No. 1-31371)).*
10.26Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Restricted Stock Award for awards granted prior to September 19, 2011 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 (File No. 1-31371)).*
10.27Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Restricted Stock Award for awards granted on or after September 19, 2011 (incorporated by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K for the year ended September 30, 2011 (File No. 1-31371)).*
10.28Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Non-Employee Director Stock Option Award (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 2009 (File No. 1-31371)).*
10.29Letter Agreement, dated October 24, 2012, between Oshkosh Corporation and Colleen R. Moynihan (incorporated by reference to Exhibit (e)(29) to the Company's Solicitation/Recommendation Statement on Schedule 14D-9, dated October 26, 2012) (File No. 1-31371)).*
11Computation of per share earnings (contained in Note 21 of “Notes to Consolidated Financial Statements” of the Company's Annual Report on Form 10-K for the year ended September 30, 2012).
21Subsidiaries of Registrant.
23Consent of Deloitte & Touche LLP.
31.1Certification by the Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated November 19, 2012.
31.2Certification by the Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated November 19, 2012.
32.1Written Statement of the Chief Executive Officer, pursuant to 18 U.S.C. ss. 1350, dated November 19, 2012.
32.2Written Statement of the Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. ss. 1350, dated November 19, 2012.

120
Table of Shareholders held on February 3, 2009).Contents

101The following materials from Oshkosh Corporation's Annual Report on Form 10-K for the year ended September 30, 2012 are filed herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.
_________________________
*

10.25       Framework for Awards of Performance Shares under the Oshkosh Corporation 2009 Incentive Stock and Awards Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated September 18, 2009 (File No. 1-31371)).*

10.26       Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Stock Option Award Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated September 18, 2009 (File No. 1-31371)).*

10.27       Form of Oshkosh Corporation 2009 Incentive Stock and Awards Plan Stock Appreciation Rights Award Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, dated September 18, 2009 (File No. 1-31371)).*

10.28       JLG Industries, Inc. Supplemental Executive Retirement Plan, as amended effective December 31, 2008 (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.29       JLG Industries, Inc. Executive Deferred Compensation Plan, as amended effective December 31, 2008 (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.30       JLG Industries, Inc. Executive Severance Plan, as amended and restated effective October 15, 2006 (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

10.31       JLG Industries, Inc. Executive Severance Plan Participation Agreement, dated as of October 14, 2006, between JLG Industries, Inc. and Craig E. Paylor (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended September 30, 2008 (File No. 1-31371)).*

11            Computation of per share earnings (contained in Note 17 of “Notes to Consolidated Financial Statements” of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2009).

21            Subsidiaries of Registrant.

23            Consent of Deloitte & Touche LLP.

31.1         Certification by the Chairman and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated November 18, 2009.

31.2         Certification by the Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act, dated November 18, 2009.

32.1         Written Statement of the Chairman and Chief Executive Officer, pursuant to 18 U.S.C. ss. 1350, dated November 18, 2009.

32.2         Written Statement of the Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. ss. 1350, dated November 18, 2009.

*Denotes a management contract or compensatory plan or arrangement.

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