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Oshkosh Posts 4Q Results, Adopts Poison Pill Plan

Oshkosh fourth-quarter sales were down 2.3 percent to $2.06 billion from a year ago, mostly as a result of declining defense business.

October 29, 2012

Oshkosh fourth-quarter sales were down 2.3 percent to $2.06 billion from a year ago, mostly as a result of declining defense business. Nondefense segments rose in the double-digits, the company said. “Concrete mixer orders accelerated in the fourth quarter,” said CEO Charles L. Szews. “We believe this is a strong sign that a housing recovery has commenced, which further supports our long-term outlook for our non-defense segments.

Consolidated net sales for the fiscal year ended September 30, 2012 were $8.18 billion and income from continuing operations was $230.5 million. This compares with net sales of $7.57 billion and income from continuing operations of $279.0 million for fiscal 2011.

The board of directors also approved a poison pill plan designed to rebuff Carl Icahn’s takeover proposal. The plan would restrict a shareholder from owning more than 10 percent of its shares. Icahn owns slightly less than that. The plan would allow the company to release additional shares into the market, decreasing the stock’s value and making it expensive for an investor to acquire a controlling stake.

Factors affecting fourth quarter results:

Commercial - Commercial segment sales increased 34.2 percent to $181.5 million in the fourth quarter of fiscal 2012 compared to the prior year quarter. The increase in sales was attributable to increased volume for both concrete placement and refuse collection vehicles.

The commercial segment reported operating income of $9.2 million, or 5.1 percent of sales, for the fourth quarter of fiscal 2012 compared to $2.6 million, or 1.9 percent of sales, in the prior year quarter. The increase in operating income was primarily a result of higher sales levels and improved manufacturing efficiencies, offset in part by investments in MOVE initiatives.

Access Equipment- Access equipment segment sales to external customers increased 15.6 percent to $716.0 million for the fourth quarter of fiscal 2012 compared to the prior year fourth quarter. The increase was principally the result of higher unit volumes in North America and the realization of previously announced price increases. Including sales to the defense segment, access equipment segment sales increased 6.4 percent for the fourth quarter of fiscal 2012 compared with the prior year quarter as intersegment sales declined in the fourth quarter of fiscal 2012.

In the fourth quarter of fiscal 2012, access equipment segment operating income increased 70.9 percent to $59.5 million, or 8.3 percent of sales, compared to prior year fourth quarter operating income of $34.8 million, or 5.2 percent of sales. The increase in operating results was primarily the result of higher volume and the realization of previously announced price increases. Results in the fourth quarter of fiscal 2012 included a high mix of telehandler sales.

Defense - Defense segment sales decreased 18.6 percent to $953.7 million for the fourth quarter of fiscal 2012 compared with the prior year fourth quarter. The decrease was primarily due to expected lower shipments under the Family of Heavy Tactical Vehicles and MRAP All-Terrain Vehicle programs, as well as lower aftermarket parts sales, offset in part by higher Family of Medium Tactical Vehicles (FMTV) unit sales.

In the fourth quarter of fiscal 2012, defense segment operating income decreased 12.6 percent to $62.0 million, or 6.5 percent of sales, compared to prior year fourth quarter operating income of $71.0 million, or 6.1 percent of sales. The decrease in operating income was largely due to lower sales volumes offset in part by a favorable year-end LIFO reserve adjustment and improved margins under the FMTV contract. The defense segment also benefitted in the fourth quarter of fiscal 2012 from favorable cost estimate changes upon the definitization of contracts.

Fire & Emergency - Fire & emergency segment sales for the fourth quarter of fiscal 2012 increased 14.3 percent from the prior year quarter to $228.9 million. The increase in sales primarily reflected the concentration of large international sales of fire apparatus in the fourth quarter of fiscal 2012.

The fire & emergency segment reported operating income of $0.9 million, or 0.4 percent of sales, for the fourth quarter of fiscal 2012 compared to an operating loss of $5.3 million, or 2.7 percent of sales, in the prior year quarter. Results for the fourth quarter of fiscal 2012 included pre-tax restructuring related charges of $10.1 million and charges associated with the curtailment of pension and other postretirement benefit plans of $2.0 million. Results for the fourth quarter of fiscal 2011 included pre-tax restructuring related charges of $6.1 million and impairment charges of $2.0 million. Excluding these items, fire & emergency segment operating income was $13.0 million, or 5.7 percent of sales, in the fourth quarter of fiscal 2012, compared to operating income of $2.8 million, or 1.4 percent of sales, in the prior year quarter. Operating income benefitted from production efficiencies and favorable absorption in the fourth quarter of fiscal 2012.

Commercial - Commercial segment sales increased 34.2 percent to $181.5 million in the fourth quarter of fiscal 2012 compared to the prior year quarter. The increase in sales was attributable to increased volume for both concrete placement and refuse collection vehicles.

The commercial segment reported operating income of $9.2 million, or 5.1 percent of sales, for the fourth quarter of fiscal 2012 compared to $2.6 million, or 1.9 percent of sales, in the prior year quarter. The increase in operating income was primarily a result of higher sales levels and improved manufacturing efficiencies, offset in part by investments in MOVE initiatives.

Oshkosh 2013 Expectations

At this time, the Company is reaffirming the outlook for fiscal 2013 earnings from continuing operations of $2.35 - $2.60 per diluted share that it announced at the September 14 analyst day. Additional expected costs associated with the exit of the ambulance business and costs, which may be substantial, related to a tender offer initiated, and a proxy contest threatened, by Mr. Carl Icahn are not reflected in the Company’s earnings estimates for fiscal 2013.

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