SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest
event reported): September 18, 1996
OSHKOSH TRUCK CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 0-13886 39-0520270
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
2307 Oregon Street, P. O. Box 2566, Oshkosh, Wisconsin 54903
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 235-9151
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Oshkosh Truck Corporation ("Oshkosh") hereby amends Item 7 of
Oshkosh's Form 8-K Current Report dated September 18, 1996 reporting
Oshkosh's acquisition of all of the issued and outstanding stock of Pierce
Manufacturing Inc. ("Pierce") to include the requisite pro forma financial
statements. The complete text of Item 7 as amended is as follows:
Item 7 - Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The financial statements of Pierce Manufacturing Inc. are included as
follows:
- As of October 31, 1995 and 1994 and for the years ended October
31, 1995, 1994 and 1993.
- Report of Independent Public Accountants
- Consolidated Statements of Income
- Consolidated Balance Sheets
- Consolidated Statements of Shareholders' Equity
- Consolidated Statements of Cash Flows
- Notes to Consolidated Financial Statements
- As of July 31, 1996 and 1995 and for the nine month periods
ended July 31, 1996 and 1995.
- Consolidated Statements of Income
- Consolidated Balance Sheets
- Consolidated Statements of Cash Flow
- Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
Pro forma financial statements of Oshkosh Truck Corporation are
included as follows:
- Pro Forma Condensed Consolidated Financial Statements
- Pro Forma Condensed Consolidated Statements of Income
(Loss) for the year ended September 30, 1995 and nine
months ended June 30, 1996 and related notes
- Pro Forma Consolidated Balance Sheet as of June 30, 1996
and related notes
(c) Exhibits
Reference number per
item 601 of Regulation
S-K
2.1 Stock Purchase Agreement by and among Pierce Manufacturing
Inc., the shareholders of Pierce Manufacturing Inc., and
Oshkosh Truck Corporation dated August 7, 1996.*
2.2 First Amendment to Stock Purchase Agreement by and among
Pierce Manufacturing Inc., the shareholders of Pierce
Manufacturing Inc., and Oshkosh Truck Corporation dated
September 18, 1996.*
4 Credit Agreement dated as of September 18, 1996 among
Oshkosh Truck Corporation, and certain lenders with Firstar
Bank Milwaukee, N.A., as Agent.*
23 Consent of Arthur Andersen LLP*
__________________
* Previously filed.
PIERCE MANUFACTURING INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF OCTOBER 31, 1995, 1994 AND 1993
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Pierce Manufacturing Inc.:
We have audited the accompanying consolidated balance sheets of Pierce
Manufacturing Inc. (a Wisconsin corporation) and subsidiaries as of
October 31, 1995 and 1994, and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three years in
the period ended October 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Pierce
Manufacturing Inc. and subsidiaries as of October 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the three
years in the period ended October 31, 1995, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
December 8, 1995.
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
1995 1994 1993
SALES $179,998,000 $168,521,000 $172,212,000
COST OF SALES 152,343,000 146,032,000 144,796,000
----------- ----------- -----------
Gross profit 27,655,000 22,489,000 27,416,000
SELLING AND ADMINISTRATIVE
EXPENSES 15,356,000 14,764,000 14,288,000
----------- ----------- -----------
Income from operations 12,299,000 7,725,000 13,128,000
OTHER (INCOME) EXPENSE:
Interest expense 1,753,000 2,666,000 3,018,000
Interest income (336,000) (150,000) (417,000)
Other income, net (7,000) (2,000) (3,000)
----------- ----------- -----------
Other expense, net 1,410,000 2,514,000 2,598,000
----------- ----------- -----------
Income before taxes and
extraordinary item 10,889,000 5,211,000 10,530,000
PROVISION FOR INCOME TAXES 4,201,000 2,075,000 4,189,000
----------- ----------- ------------
Income before
extraordinary item 6,688,000 3,136,000 6,341,000
EXTRAORDINARY ITEM:
Early extinguishment of
debt (less related income
tax benefit of $241,000) 377,000 - -
---------- ----------- -----------
Net income $6,311,000 $3,136,000 $6,341,000
========= ========= =========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
PIERCE MANUFACTURING INC.
CONSOLIDATED BALANCE SHEETS
AS OF OCTOBER 31, 1995 AND 1994
1995 1994
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,987,000 $1,669,000
Accounts receivable, less allowance for
doubtful accounts of $363,000 and
$324,000, respectively 7,747,000 14,064,000
Inventories 27,966,000 27,758,000
Prepaid expenses and advances 969,000 646,000
Income taxes receivable 201,000 -
Future tax benefits 493,000 878,000
---------- ----------
Total current assets 39,363,000 45,015,000
PROPERTY, PLANT AND EQUIPMENT:
Land 1,674,000 1,674,000
Buildings 13,660,000 13,584,000
Machinery and equipment 23,001,000 21,634,000
---------- ----------
38,335,000 36,892,000
Less- Accumulated depreciation (17,757,000) (14,969,000)
----------- -----------
Net property, plant and equipment 20,578,000 21,923,000
GOODWILL 4,467,000 4,731,000
OTHER ASSETS 1,305,000 1,078,000
---------- ----------
$65,713,000 $72,747,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $8,957,000 $8,090,000
Advances from customers 25,294,000 21,456,000
Payroll-related obligations 5,137,000 4,494,000
Accrued warranty expense 1,936,000 3,453,000
Accrued liabilities 1,424,000 1,558,000
Income taxes payable - 40,000
---------- ----------
Total current liabilities 42,748,000 39,091,000
LONG-TERM DEBT - 16,902,000
DEFERRED INCOME TAXES 2,021,000 1,938,000
SHAREHOLDERS' EQUITY:
Common stock ($.05 par value, 442,000
shares authorized, 408,852 and 410,806
shares issued and outstanding,
respectively) 21,000 21,000
Additional paid-in capital 9,564,000 9,620,000
Retained earnings 11,359,000 5,175,000
----------- -----------
Total shareholders' equity 20,944,000 14,816,000
---------- ----------
$65,713,000 $72,747,000
========== ==========
The accompanying notes to consolidated financial statements are
an integral part of these balance sheets.
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
Additional Paid-
in Capital Total
Common Stock Common Retained Shareholders'
Shares Amount Stock Warrants Earnings Equity
BALANCE, October 31, 1992 258,181 $13,000 $4,238,000 $1,522,000 $18,481,000 $24,254,000
Issuance of common stock 3,908 - 150,000 - - 150,000
Exercise of warrants 150,671 8,000 5,281,000 (1,522,000) - 3,767,000
Net income - - - - 6,341,000 6,341,000
Dividends declared - - - - (22,650,000) (22,650,000)
-------- -------- --------- --------- ---------- ----------
BALANCE, October 31, 1993 412,760 21,000 9,669,000 - 2,172,000 11,862,000
Repurchase of common stock (1,954) - (49,000) - (133,000) (182,000)
Net income - - - - 3,136,000 3,136,000
-------- --------- ---------- --------- --------- -----------
BALANCE, October 31, 1994 410,806 21,000 9,620,000 - 5,175,000 14,816,000
Repurchase of common stock (1,954) - (56,000) - (127,000) (183,000)
Net income - - - - 6,311,000 6,311,000
--------- ---------- ----------- --------- ---------- ----------
BALANCE, October 31, 1995 408,852 $21,000 $9,564,000 $ - $11,359,000 $20,944,000
========= ========= ========== ========= ========== ==========
The accompanying notes to consolidated financial statements are an
integral part of these statements.
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $6,311,000 $3,136,000 $6,341,000
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation and amortization-
Property, plant and equipment 2,866,000 3,409,000 2,847,000
Goodwill and other 682,000 492,000 473,000
Loss on disposal of property, plant
and equipment - 35,000 -
Deferred income taxes 467,000 (773,000) (347,000)
Changes in assets and liabilities-
Accounts receivable 6,317,000 (6,844,000) 982,000
Inventories (208,000) (855,000) 3,965,000
Prepaid expenses and advances (323,000) (199,000) (153,000)
Accounts payable 867,000 (197,000) 2,410,000
Advances from customers 3,838,000 4,868,000 (9,365,000)
Accrued liabilities (962,000) 2,385,000 -
Other (530,000) (1,439,000) (45,000)
----------- ----------- -----------
Net cash provided by operating
activities 19,325,000 4,018,000 7,108,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,524,000) (2,104,000) (7,484,000)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (17,300,000) (4,400,000) (8,800,000)
Borrowings of long-term debt - 2,700,000 8,800,000
Repurchase of common stock (183,000) (182,000) -
Proceeds from exercise of warrants - - 3,767,000
Proceeds from issuance of common stock - - 150,000
Payment of dividend - - (22,650,000)
----------- ---------- ------------
Net cash used by financing
activities (17,483,000) (1,882,000) (18,733,000)
----------- ----------- ------------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 318,000 32,000 (19,109,000)
CASH AND CASH EQUIVALENTS, beginning of
year 1,669,000 1,637,000 20,746,000
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end
of year $1,987,000 $1,669,000 $1,637,000
========= ========= =========
SUPPLEMENTAL DISCLOSURES:
Cash payments for-
Interest $745,000 $1,922,000 $2,179,000
Income taxes 3,775,000 4,023,000 4,227,000
The accompanying notes to consolidated financial statements
are an integral part of these statements.
PIERCE MANUFACTURING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED OCTOBER 31, 1995, 1994 AND 1993
(1) Nature of Business-
Pierce Manufacturing Inc. (the "Company") designs and manufactures
fire and emergency vehicles for sale primarily to municipalities
throughout the United States.
(2) Summary of Significant Accounting Policies-
(a) Principles of consolidation-
The consolidated financial statements as of October 31, 1995,
1994 and 1993, include the accounts of the Company, Dover
Technologies, Inc. (an inactive marketing corporation) and Pierce
Manufacturing International Inc. (a foreign sales corporation).
All intercompany transactions have been eliminated in
consolidation.
(b) Cash and cash equivalents-
The Company considers cash and cash equivalents to be all cash
and short-term investments with original maturities of 90 days or
less.
(c) Property, plant and equipment-
Property, plant and equipment are stated at cost. Additions and
improvements which extend the useful life of property and
equipment since the date of acquisition are capitalized at their
cost while repair and maintenance costs are expensed. When items
of property or equipment are sold or retired, the related cost
and accumulated depreciation are removed from the accounts and
any gain or loss is included in results of operations.
Depreciation for financial reporting purposes is made on a
straight-line basis over the following estimated useful lives:
Buildings 30 years
Machinery and equipment 7 years
Depreciation expense included in the consolidated statements of
income was $2,866,000, $3,409,000 and $2,847,000 for the years
ended October 31, 1995, 1994 and 1993, respectively.
(d) Goodwill-
Goodwill is amortized using the straight-line method over 25
years.
(e) Product warranty-
The Company provides for the estimated cost of warranty work
related to specific shipments. Amounts expensed related to
continuing operations in 1995, 1994 and 1993 were $1,508,000,
$3,702,000 and $1,878,000, respectively.
(f) Customer advances-
Customer advances represent amounts received from customers in
advance of the completion of the truck. Certain of these
advances bear interest to the customer. Interest rates on the
advances are variable based on current lending rates. Interest
expense included in the consolidated statements of income was
$737,000, $518,000 and $409,000 for the years ended October 31,
1995, 1994 and 1993, respectively.
(g) Postretirement benefits other than pensions-
The Company does not provide health, life insurance or any
related benefits to its retirees.
(h) Advertising costs-
All advertising costs are generally expensed when incurred.
Advertising expense included in the consolidated statements of
income was $357,000, $318,000 and $418,000 for the years ended
October 31, 1995, 1994 and 1993, respectively.
(i) Income taxes-
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under this method, deferred income taxes are provided
for temporary differences in the financial reporting and income
tax bases of certain assets and liabilities at the tax rate
expected to be in effect when the temporary differences reverse.
(j) Use of estimates-
The preparation of financial statements in conformity with
generally accepted accounting principles 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 reported
period. Actual results could differ from those estimates.
(k) Reclassifications-
Certain reclassifications of prior year amounts have been made in
order to conform to the current year presentation.
(3) Inventories-
Inventories are carried at the lower of cost or market. Cost is
determined principally on the last-in, first-out (LIFO) method.
Inventories consisted of the following:
October 31,
1995 1994
Current cost-
Raw materials $6,057,000 $6,615,000
Fabricated parts 769,000 1,101,000
Work-in-process and finished goods 24,730,000 23,317,000
---------- ----------
31,556,000 31,033,000
Excess of current cost over LIFO cost (3,590,000) (3,275,000)
---------- ----------
Net inventories $27,966,000 $27,758,000
========== ==========
(4) Long-Term Debt-
Long-term debt consists of the following:
October 31,
1995 1994
Revolving Credit Agreement, interest
at prime plus .25% $ - $2,700,000
Unsecured Senior Note payable to a
bank, interest at 6.47%, paid August
30, 1995 - 4,400,000
Unsecured Senior Subordinated Note,
interest at 12%, less unamortized
original discount of $398,000 at
October 31, 1994, paid March 20,
1995 - 9,802,000
---------- ----------
Total $ - $16,902,000
========== ==========
On March 20, 1995, the Company paid the outstanding balance of the
Unsecured Senior Subordinated Note which was due in equal amounts of
$5,100,000 on August 31, 1996 and 1997. In connection with the early
retirement of this debt, the Company recognized an extraordinary
charge of $377,000 (net of tax) which included accelerated
amortization of original issue discount and a premium paid to the
lender for the early payment of principal.
The Company has a $15,000,000 Revolving Credit Agreement (the
"Agreement") with a bank, which expires on January 31, 1998.
Borrowings under the Agreement bear interest at the prime rate plus
.25% (9.0% at October 31, 1995). As shown above, there were no
borrowings under the Agreement at October 31, 1995. There are no
compensating balance requirements.
The terms of the Agreement require the Company, among other things,
to maintain certain financial ratios and balances, primarily net
worth and current ratio. In addition, this Agreement includes
covenants restricting further indebtedness, capital expenditures and
the payment of dividends. The Company has met all of the
requirements of the Agreement, as of October 31, 1995.
(5) Employee Benefit Plans-
The Company sponsors a defined benefit pension plan covering
substantially all employees. Employee benefits are based upon years
of credited service. Pension expense for 1995, 1994 and 1993 is
comprised of the following:
1995 1994 1993
Service cost $163,000 $163,000 $165,000
Interest cost 186,000 161,000 133,000
Actual return on plan assets (362,000) (77,000) (132,000)
Net amortization and deferral 160,000 (105,000) (19,000)
-------- -------- --------
Net pension expense $147,000 $142,000 $147,000
======== ======== ========
The following table sets forth the funded status of the Company's
pension plan and the amount recognized in the Company's consolidated
balance sheets as of October 31:
1995 1994
Projected benefit obligation:
Vested benefits $(2,702,000) $(2,351,000)
Nonvested benefits (25,000) (57,000)
---------- ----------
Projected benefit obligation (2,727,000) (2,408,000)
Plan assets at fair value 3,120,000 2,531,000
--------- ---------
Plan assets in excess of projected
benefit obligation 393,000 123,000
Unrecognized prior service cost 210,000 223,000
Unrecognized net losses 705,000 811,000
Unrecognized transition asset (377,000) (414,000)
-------- --------
Prepaid pension asset $931,000 $743,000
======= =======
Assumptions used in determining the funded status of the pension plan
for the 1995, 1994 and 1993 plan years were:
1995 1994 1993
Discount rate 7.75% 7.75% 7.75%
Long-term rate of return 7.75% 7.75% 8.00%
The Company makes a contribution to the qualified plan each year, at
least equal to the minimum required contribution as defined by the
Employee Retirement Income Security Act of 1974. The unrecognized
net asset arising from the transition to Financial Accounting
Standards Board Statement No. 87, is being amortized through 2003.
Plan assets consist primarily of common trust funds.
The Company makes a discretionary profit sharing payment to
substantially all employees each year. The Company recorded a
provision of $458,000, $350,000 and $615,000 in 1995, 1994 and 1993,
respectively.
The Company also sponsors a retirement savings plan in which all
employees may voluntarily elect to participate. Under this plan, the
Company matches a portion of the amounts contributed by employees.
The Company recorded expense related to this plan of $325,000,
$315,000 and $298,000 in 1995, 1994 and 1993, respectively.
(6) Income Taxes-
The provision for income taxes consisted of the following for the
years ended October 31, 1995, 1994 and 1993:
1995 1994 1993
Current:
Federal $3,003,000 $2,265,000 $3,596,000
State 731,000 583,000 940,000
--------- ---------
3,734,000 2,848,000 4,536,000
Deferred 467,000 (773,000) (347,000)
--------- --------- ---------
Total income tax
provision $4,201,000 $2,075,000 $4,189,000
========= ========= =========
The reasons for the differences between the income tax provision and
the amount computed by applying the Federal statutory income tax rate
to the book net income before taxes are as follows:
1995 1994 1993
Tax provision at Federal $3,702,000 $1,772,000 $3,580,000
statutory rate
State income taxes net of 462,000 381,000 620,000
Federal taxes
Other 37,000 (78,000) (11,000)
--------- --------- ---------
$4,201,000 $2,075,000 $4,189,000
========= ========= =========
Net current future tax benefits arise primarily from accrued
liabilities which are not currently deductible for income tax
purposes. The net current future tax benefits at October 31, 1995
and 1994, are comprised of the following:
1995 1994
Current deferred taxes-
Inventory valuation $(804,000) $(967,000)
Warranty claims 755,000 1,347,000
Accrued vacation 660,000 764,000
Pension adjustment (363,000) (290,000)
Accrued health claims (171,000) (92,000)
Other 416,000 116,000
------- -------
Net future tax benefits $493,000 $878,000
======= =======
Net noncurrent deferred income tax liabilities arise primarily from
differences in the bases of property, plant and equipment. The net
deferred tax liabilities at October 31, 1995 and 1994, are comprised
of the following:
1995 1994
Noncurrent deferred taxes-
Depreciation $(2,071,000) $(2,006,000)
Other 50,000 68,000
---------- ----------
Net noncurrent deferred tax
liabilities $(2,021,000) $(1,938,000)
========== ==========
The Company did not record any valuation allowances against deferred
tax assets at October 31, 1995 or 1994.
(7) Commitments and Contingencies-
The Company has guaranteed certain customers' debt obligations under
deferred payment contracts and lease purchase agreements. The
Company is contingently liable for $6,155,000 and $6,617,000 as of
October 31, 1995 and 1994, respectively, under these guarantees.
Under the terms of a Shareholders' agreement, after the expiration of
the ten-year period commencing on September 16, 1987, each management
shareholder has the right from time to time, solely at his option, to
require the Company to purchase all or any portion of his shares,
subject to specific terms in the agreement. The purchase price will
be equal to the value per share as determined pursuant to an
appraisal conducted in accordance with the appraisal procedures set
forth in the agreement on April 30 of the fiscal year in which such
notice was delivered. Under the same agreement, management and
nonmanagement shareholders have the right to transfer all or a
portion of their stock in accordance with specific terms of the
agreement.
(8) Stock Appreciation Rights Plan-
The Company sponsors the Pierce Manufacturing Inc. Stock Appreciation
Rights Plan. Key executives of the Company, as determined by the
Compensation Committee of the Board, are eligible to receive
appreciation rights at the beginning of each performance cycle. At
the end of the performance cycle, participants will receive an award
for each right granted in the form of cash equal to the difference in
the formula value of one share of common stock at the end of the
performance cycle and the formula value of one share of common stock
at the beginning of the performance cycle. Each performance cycle is
five years.
At October 31, 1995, the following rights were outstanding:
Number of
Award Date Rights Award Price
November 1, 1993 1,344 $27.50
November 1, 1994 1,638 $50.39
The formula value of one share of common stock at October 31, 1995 is
$121.33. At October 31, 1995, the Company had $119,000 reserved
related to the outstanding rights.
(9) Related Party Transactions-
On December 4, 1992, the holder of the original Unsecured Senior Note
and the Unsecured Subordinated Note (the "Holder") exercised the
detachable warrants related to the issuance of the Unsecured Senior
Subordinated Note. The warrants were exercised on 150,671 shares at
$25 per share. As of October 31, 1995, 1994 and 1993, respectively,
the Holder and its subsidiary together own 210,671 shares, or
approximately 51% of the common stock of the Company. In fiscal
1993, subsequent to the exercise of the warrants, a dividend totaling
$22,650,000 was declared and paid to all common shareholders. No
dividends were paid during fiscal 1995 or 1994. During fiscal 1995,
1994 and 1993, the Company incurred $473,000, $1,224,000 and
$1,224,000 of interest expense related to the Unsecured Senior
Subordinated Note payable to the Holder.
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(Unaudited)
Nine Months Ended July 31,
1996 1995
SALES $144,276,000 $129,303,000
COST OF SALES 121,102,000 110,379,000
----------- -----------
Gross profit 23,174,000 18,924,000
SELLING AND ADMINISTRATIVE
EXPENSES 17,343,000 11,640,000
----------- -----------
Income from operations 5,831,000 7,284,000
OTHER (INCOME) EXPENSE:
Interest expense 865,000 1,352,000
Interest income (549,000) (189,000)
Other expense 289,000 11,000
----------- -----------
Other expense, net 605,000 1,174,000
----------- -----------
Income before taxes and extraordinary
item 5,226,000 6,110,000
PROVISION FOR INCOME TAXES 2,091,000 2,548,000
----------- -----------
Income before extraordinary item 3,135,000 3,562,000
EXTRAORDINARY ITEM:
Early extinguishment of debt (less
related income tax benefit of $241,000) - 377,000
Net income $ 3,135,000 $ 3,185,000
=========== ===========
The accompanying notes are an integral part of these statements.
PIERCE MANUFACTURING INC.
CONSOLIDATED BALANCE SHEETS
AS OF JULY 31, 1996 AND OCTOBER 31, 1995
ASSETS (Unaudited)
JULY 31, OCTOBER 31,
CURRENT ASSETS: 1996 1995
Cash and cash equivalents $ 8,657,000 $ 1,987,000
Accounts receivable, net 8,708,000 7,747,000
Inventories 31,253,000 27,966,000
Other current assets 4,248,000 1,663,000
---------- ----------
Total current assets 52,866,000 39,363,000
PROPERTY, PLANT AND EQUIPMENT,
NET 19,754,000 20,578,000
GOODWILL 4,269,000 4,467,000
OTHER ASSETS 1,063,000 1,305,000
---------- ----------
$77,952,000 $65,713,000
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,367,000 $ 8,957,000
Advances from customers 28,130,000 25,294,000
Payroll-related obligations 10,464,000 5,137,000
Accrued liabilities 3,744,000 3,360,000
---------- ----------
Total current liabilities 51,705,000 42,748,000
DEFERRED INCOME TAXES 2,021,000 2,021,000
SHAREHOLDERS' EQUITY
Common stock issued at $.05
par value 21,000 21,000
Additional paid in capital 9,711,000 9,564,000
Retained earnings 14,494,000 11,359,000
---------- ----------
Total shareholders' equity 24,226,000 20,944,000
---------- ----------
$77,952,000 $65,713,000
========== ==========
The accompanying notes are an integral part of these balance sheets.
PIERCE MANUFACTURING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(Unaudited)
Nine Months Ended July 31,
1996 1995
NET CASH PROVIDED BY OPERATING ACTIVITIES $7,954,000 $12,189,000
NET CASH FLOWS USED IN INVESTING
ACTIVITIES:
Capital expenditures (1,431,000) (1,407,000)
NET CASH FLOWS PROVIDED BY (USED IN)
FINANCING ACTIVITIES:
Principal payments of long term debt - (11,229,000)
Repurchase of common stock - (183,000)
Proceeds from issuance of common stock 147,000 -
----------- -----------
Net cash provided by (used in) financing
activities 147,000 (11,412,000)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 6,670,000 (630,000)
CASH AND CASH EQUIVALENTS at beginning
of period 1,987,000 1,669,000
--------- ----------
CASH AND CASH EQUIVALENTS at end of
period $8,657,000 $ 1,039,000
========= ==========
The accompanying notes are an integral part of these statements.
PIERCE MANUFACTURING INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTH PERIODS ENDED JULY 31, 1996 AND 1995
(1) General-
The condensed financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission, and reflect all adjustments necessary
to present a fair statement of the results for the periods reported,
subject to normal year-end audit adjustments, none of which is material.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction
with the audited financial statements as of October 31, 1995, 1994 and
1993, and the notes thereto included elsewhere in this Filing.
(2) Inventories-
The components of inventories at as of July 31, 1996, are as follows:
Current cost-
Raw materials $6,463,000
Fabricated parts 847,000
Work-in-process and finished goods 27,687,000
-----------
34,997,000
Excess current cost over LIFO cost (3,744,000)
----------
Net inventories $31,253,000
==========
(3) Selling and Administrative Expenses-
Selling and Administrative Expenses for the nine month period ended July
31, 1996 include provisions for retention bonuses of $4,014,000 and stock
appreciation rights of $1,038,000 recorded in anticipation of the sale to
Oshkosh Truck Corporation discussed in Note (4) below.
(4) Subsequent Event-
On September 18, 1996, all of the Company's outstanding common stock was
acquired by Oshkosh Truck Corporation for $158 million in cash.
OSHKOSH TRUCK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated statements
of income (loss) and condensed consolidated balance sheet (collectively,
the "Pro Forma Statements") were prepared to illustrate the estimated
effects of the acquisition (the "Acquisition") of Pierce Manufacturing
Inc. ("Pierce") by Oshkosh Truck Corporation ("the Company"), as if the
acquisition had occurred for balance sheet presentation purposes as of
June 30, 1996, and for statement of income (loss) purposes as of the
beginning of the respective periods presented.
The Pro Forma Statements do not purport to represent what the
Company's financial position or results of operations would actually have
been if the Acquisition in fact had occurred at the beginning of the
periods indicated or on such date or to project the Company's financial
position or results of operations for any future date or period.
Anticipated efficiences from the consolidation of Pierce's manufacturing
facilities and from the synergies related to the consolidation of certain
purchasing functions among Pierce and the Company are not fully
determinable and therefore have been excluded from the Pro Forma
Statements.
The pro forma adjustments are based upon available information and
upon certain assumptions that the Company believes are reasonable. The
Pro Forma Statements and accompanying notes should be read in conjunction
with the historical consolidated financial statements of the Company,
including the notes thereto.
The Acquisition will be accounted for using the purchase method of
accounting. The total purchase cost of approximately $160 million will be
allocated to the assets and liabilities of Pierce based upon their
respective fair values, with the remainder allocated to goodwill. Such
allocations have been made based upon valuations and other studies, which
may be subject to adjustment. Accordingly, the allocation of the purchase
cost included in the accompanying Pro Forma Statements is preliminary.
The final values may differ from those set forth in the historical
consolidated financial statements of the Company and from those set forth
herein.
OSHKOSH TRUCK CORPORATION
Pro Forma Condensed Consolidated Statement of Income (Loss)
Year Ended September 30,1995
(Unaudited, in thousands except per share amounts)
The Company Pierce Pro Forma The Company
Historical Historical Adjustments Pro Forma
Net Sales $438,557 $179,998 $618,555
Cost of Sales 384,167 152,343 $(833) (a) 535,677
-------- -------- -------- -------
Gross Income 54,390 27,655 833 (a) 82,878
Operating Expenses 35,097 15,356 3,968 (a) 54,421
-------- -------- -------- -------
Income From Operations 19,293 12,299 (3,135) (a) 28,457
Other Expense 371 1,410 13,025 (b) 14,806
-------- -------- -------- -------
Income From Continuing
Operations Before Income 18,922 10,889 (16,160) 13,651
Provision For Income Taxes 7,285 4,201 (5,534) (c) 5,952
-------- -------- -------- -------
Income From Continuing
Operations 11,637 6,688 (10,626) 7,699
Discontinued Operations:
Loss From Discontinued
Net of Income Tax Benefit (3,137) -- 3,137 (d) --
Gain on Disposal of
Including Income Tax 716 -- (716) (d) --
-------- -------- -------- -------
(2,421) -- 2,421 --
Extraordinary Item:
Early Extinguishment of Debt,
Net of Income Tax Benefit -- (377) 377 (d) --
-------- -------- -------- -------
Net Income $ 9,216 $ 6,311 $ (7,828) $ 7,699
======== ======== ========= ==========
Earnings Per Common Share:
Continuing Operations $ 1.32 $ 0.87
Discontinued Operations (0.28) --
Extraordinary Item -- --
--------- ---------
Net Income $ 1.04 $ 0.87
======== =========
Weighted Average Shares
Outstanding 8,824 8,824
OSHKOSH TRUCK CORPORATION
Pro Forma Condensed Consolidated Statement of Income (Loss)
Nine Months Ended June 30,1996
The Company Pierce Pro Forma The Company
Historical Historical Adjustments Pro Forma
Net Sales $295,472 $144,276 $439,748
Cost of Sales 264,320 121,102 $(627) (a) 384,795
-------- -------- ------- -------
Gross Income 31,152 23,174 627 (a) 54,953
Operating Expenses 29,542 17,343 (1,985) (a) 44,900
-------- -------- --------- --------
Income from Operations 1,610 5,831 2,612 (a) 10,053
Other (Income) Expense (692) 605 9,769 (b) 9,682
--------- --------- --------- ---------
Income from Continuing
Operations Before Income
Taxes 2,302 5,226 (7,157) 371
Provision for Income Taxes 898 2,091 (2,173) (c) 816
-------- -------- --------- --------
Income (Loss) from Continuing
Operations 1,404 3,135 (4,984) (445)
Discontinued Operations:
Loss from Discontinued
Operations,
Net of Income Tax Benefit of
$1,413 (2,211) -- 2,211 (d) --
------- -------- -------- ---------
Net Income (Loss) $ (807) $3,135 $ 2,773 $ (445)
======== ======== ======== =========
Earnings (Loss) per Common
Share:
Continuing Operations $ 0.16 $ (0.05)
Discontinued Operations (0.25) --
------- --------
Net Income (Loss) $ (0.09) $ (0.05)
======== ========
Weighted Average Shares
Outstanding 8,882 8,882
OSHKOSH TRUCK CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (LOSS)
(a) The pro forma adjustments to cost of sales and operating expenses
are comprised of the following (in thousands):
Nine Months Year Ended
Ended September 30,
June 30, 1996 1995
Depreciation of property, plant
and equipment(1)
Cost of sales $(627) $(833)
Operating expenses (23) (33)
Amortization of identified
intangible assets(2) 1,366 1,821
Amortization of goodwill 1,922 2,563
Elimination of certain non-
recurring expenses incurred by
Pierce prior to the Acquisition (5,052) (119)
Elimination of historical
amortization of goodwill (198) (264)
-------- --------
$(2,612) $3,135
======== ========
(1) The valuation of property, plant, and equipment is based on
preliminary estimates of the fair values of such assets and is
subject to change. Depreciation is computed over the
remaining estimated useful lives. The useful lives of assets
acquired have been conformed to the useful lives applied by the
Company.
(2) Approximately $62,000 of the purchase price has been allocated
to the distribution network and other intangible assets.
Amortization of such intangible assets is based on lives
ranging from 12-40 years.
(3) The amortization of the preliminary goodwill is based on an
assumed life of 40 years. The allocation of costs in excess of
net assets acquired will differ from that set forth herein upon
finalization of detailed valuations and other studies. The
amount of the goodwill amortization is an estimate and is subject
to change upon finalization of the allocation of such excess. It
is not expected that the final allocation of the purchase cost
will differ materially from that presented herein.
(b) Increased interest expense is based upon the pro forma consolidated
debt of the company following the Acquisition, at the interest
rates set forth in the following table, as if the Acquisition had
been consummated as of the beginning of the periods presented (in
thousands):
Nine Months Year Ended
Ended September 30,
June 30, 1996 1995
Term loan ($150,000 at 8.000%)(1) $9,000 $12,000
Revolving credit facility ($10,355
at 8.125%)(1) 631 841
Amortization of deferred financing
costs 138 184
------ -------
$9,769 $13,025
====== ======
(1) Interest on the term loan and the revolving credit facility is
payable at prime or at the applicable Eurodollar rate plus
2.5% and 2.125%, respectively, subject to downward adjustment
if certain financial criteria are met.
(2) Debt issuance costs are amortized over the seven year life of
the related term loan.
(c) Reflects the elimination of federal, state, and local income tax
expense as a result of the pro forma adjustments described in the
notes.
(d) Reflects the elimination of the loss from discontinued operations and
the extraordinary charge related to early extinguishment of debt, as
applicable.
OSHKOSH TRUCK CORPORATION
Pro Forma Condensed Consolidated Balance Sheet
June 30,1996
(Unaudited, in thousands)
Pro Forma Adjustments
The The
Company (a) (b) Company
Historical The Acquisition Valuation Pro Forma
ASSETS
Current assets:
Cash and cash equivalents $ 18,439 $ 8,657 $ -- $ 27,096
Receivables 52,489 8,708 (1,201) 59,996
Inventories 70,977 31,253 4,543 106,773
Prepaid expenses 2,859 2,602 (799) 4,662
Deferred and
refundable income taxes 7,972 2,050 1,186 11,208
-------- ------- -------- --------
Total current assets 152,736 53,270 3,729 209,735
Deferred charges 2,542 -- -- 2,542
Deferred income taxes 2,674 493 -- 3,167
Other long-term assets 7,568 575 (67) 8,076
Costs in excess of net assets acquired -- 164,619 (164,619) --
Goodwill and other intangible assets, net 2,138 -- 168,272 170,410
Property, plant and equipment, at cost 105,004 39,766 (18,426) 126,344
Less accumulated depreciation (67,126) (20,012) 20,012 (67,126)
--------- -------- --------- ---------
Net property, plant and equipment 37,878 19,754 1,586 59,218
--------- -------- --------- ---------
Total assets $205,536 $238,711 $ 8,901 $453,148
======= ======== ======== ========
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 37,324 $ 9,367 $ 75 $ 46,766
Payroll-related obligations 6,478 10,464 -- 16,942
Accrued warranty 3,474 2,020 1,820 7,314
Other current liabilities 12,233 2,128 6,400 20,761
Advances from customers 2,896 28,130 -- 31,026
-------- -------- -------- ---------
Total current liabilities 62,405 52,109 8,295 122,809
Long-term debt -- 160,355 -- 160,355
Postretirement benefit obligations 9,490 -- -- 9,490
Other long-term liabilities 4,958 -- -- 4,958
Net long-term liabilities of discontinued
operations 2,803 -- -- 2,803
Deferred income taxes -- 2,021 24,832 26,853
Shareholders' equity:
Common stock:
Class A 4 -- -- 4
Class B 89 21 (21) 89
Paid-in capital 16,396 9,711 (9,711) 16,396
Retained earnings 117,603 14,494 (14,494) 117,603
------- --------- --------- ---------
134,092 24,226 (24,226) 134,092
Treasury stock (6,705) -- -- (6,705)
Pension liability adjustment (1,507) -- -- (1,507)
-------- --------- --------- ---------
Total shareholders' equity 125,880 24,226 (24,226) 125,880
-------- --------- --------- ---------
Total liabilities and shareholders' equity $205,536 $238,711 $ 8,901 $453,148
======== ======== ======= ========
OSHKOSH TRUCK CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) The Acquisition
On September 18, 1996, the Company acquired all the outstanding common
stock of Pierce, thereby acquiring all Pierce's assets and liabilities.
The financing for the acquisition was provided by a new bank credit
agreement (the "Bank Credit Agreement"). The Bank Credit Agreement
consists of a $150 million term loan which requires annual principal
payments of $15 million and a final payment of $60 million on September 25,
2003, and a $50 million revolving credit facility for working capital
purposes which expires on September 25, 1999. It is assumed that the
total purchase price of approximately $160 million is financed under the
Bank Credit Agreement.
Interest on the term loan and the revolving credit facility is payable at
prime or at the applicable Eurodollar rate plus 2.5% and 2.125%,
respectively, subject to downward adjustment if certain financial criteria
are met. Substantially all the tangible and intangible assets of the
Company and its subsidiaries are pledged as collateral under the terms of
the Bank Credit Agreement. Among other restrictions, the Bank Credit
Agreement: (1) limits payments of dividends, purchases of the Company's
stock, and capital expenditures; (2) requires that certain financial
ratios be maintained at prescribed levels; (3) restricts the ability of
the Company to make additional borrowings, or to consolidate, merge or
otherwise fundamentally change the ownership of the Company; and (4)
limits investments, dispositions of assets and guarantees of indebtedness.
(b) The Acquisition will be accounted for by the Company using the
purchase method of accounting. The total purchase cost will be
allocated to assets acquired and liabilities assumed of Pierce based
upon their respective fair values, with the remainder allocated to
goodwill. The historical shareholders' equity of Pierce will be
eliminated on the Company's balance sheet. The aggregate purchase
cost and its preliminary allocation to the assets and liabilities of
Pierce are as follows (in thousands):
Purchase cost, including related fees:
Acquisition of all issued and
outstanding shares of Pierce common
stock $158,324
Fees and expenses incurred in connection
with the Acquisition 2,031
--------
Total purchase cost $160,355
========
Preliminary allocation of purchase cost(1):
Net assets acquired at historical cost $18,406
Elimination of historical goodwill of
Pierce (4,269)
Revaluation of Pierce property, plant,
and equipment to estimated fair values 1,586
Intangible assets identified 61,948
Deferred income tax provision associated
with the revaluation of Pierce's assets
and liabilities (23,645)
Goodwill 106,329
---------
Total cost allocated $160,355
========
_______________
(1) The allocation of the purchase cost reflects the revaluation of
Pierce assets and liabilities to their estimated fair values based on
preliminary estimates. Accordingly, the allocation is likely to
differ from the final allocation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: November 27, 1996
OSHKOSH TRUCK CORPORATION
By: R. Eugene Goodson
R. Eugene Goodson
Chairman and Chief Executive Officer
By: Charles L. Szews
Charles L. Szews
Vice President and Chief Financial
Officer
Exhibit Index
Exhibit No. Description
2.1 Stock Purchase Agreement by and among Pierce Manufacturing Inc.,
the shareholders of Pierce Manufacturing Inc., and Oshkosh Truck
Corporation dated August 7, 1996.*
2.2 First Amendment to Stock Purchase Agreement by and among Pierce
Manufacturing Inc., the shareholders of Pierce Manufacturing
Inc., and Oshkosh Truck Corporation dated September 18, 1996.*
4 Credit Agreement dated as of September 18, 1996 among Oshkosh
Truck Corporation, and certain lenders with Firstar Bank
Milwaukee, N.A., as Agent.*
23 Consent of Arthur Andersen LLP*
_____________________
* Previously filed.