Edgar Filing: OSHKOSH CORP

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2010

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

Commission File Number: 1-31371

Oshkosh Corporation

(Exact name of registrant as specified in its charter)

Wisconsin		39-0520270
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

P.O. Box 2566 Oshkosh, Wisconsin		54903-2566
(Address of principal executive offices)		(Zip Code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months. x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes x No

As of January 24, 2011, 90,743,941 shares of the registrant’s Common Stock were outstanding.

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OSHKOSH CORPORATION

FORM 10-Q INDEX

FOR THE QUARTER ENDED DECEMBER 31, 2010

		Page

PART I — FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)

	Condensed Consolidated Statements of Income for the Three Months Ended December 31, 2010 and 2009	3

	Condensed Consolidated Balance Sheets at December 31, 2010 and September 30, 2010	4

	Condensed Consolidated Statements of Equity for the Three Months Ended December 31, 2010 and 2009	5

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2010 and 2009	6

	Notes to Condensed Consolidated Financial Statements	7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	28

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	39

ITEM 4.	CONTROLS AND PROCEDURES	39

PART II — OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	40

ITEM 1A.	RISK FACTORS	40

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	42

ITEM 5.	OTHER INFORMATION	42

ITEM 6.	EXHIBITS	42

SIGNATURES		43

EXHIBIT INDEX		44

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

OSHKOSH CORPORATION

Condensed Consolidated Statements of Income

(In millions, except per share amounts; unaudited)

	Three Months Ended
	December 31,
	2010			2009

Net sales	$	1,700.8		$	2,434.1
Cost of sales	1,391.8			1,954.9
Gross income	309.0			479.2

Operating expenses:
Selling, general and administrative	125.0			114.8
Amortization of purchased intangibles	15.3			15.4
Intangible assets impairment charges	—			23.3
Total operating expenses	140.3			153.5
Operating income	168.7			325.7

Other income (expense):
Interest expense	(26.5		)	(50.8		)
Interest income	0.7			0.9
Miscellaneous, net	(0.3		)	0.2
	(26.1		)	(49.7		)
Income from continuing operations before income taxes and equity in earnings (losses) of unconsolidated affiliates	142.6			276.0
Provision for income taxes	44.0			103.2
Income from continuing operations before equity in earnings (losses) of unconsolidated affiliates	98.6			172.8

Equity in earnings (losses) of unconsolidated affiliates	0.4			(0.3		)
Income from continuing operations, net of tax	99.0			172.5
Loss on discontinued operations, net of tax	—			(2.9		)
Net income	99.0			169.6
Net loss attributable to the noncontrolling interest	0.6			—
Net income attributable to Oshkosh Corporation	$	99.6		$	169.6

Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-basic:
Continuing operations	$	1.10		$	1.93
Discontinued operations	—			(0.03		)
	$	1.10		$	1.90
Earnings (loss) per share attributable to Oshkosh Corporation common shareholders-diluted:
Continuing operations	$	1.09		$	1.90
Discontinued operations	—			(0.03		)
	$	1.09		$	1.87

The accompanying notes are an integral part of these financial statements.

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OSHKOSH CORPORATION

Condensed Consolidated Balance Sheets

(In millions, except share and per share amounts; unaudited)

	December 31,			September 30,
	2010			2010
Assets
Current assets:
Cash and cash equivalents	$	398.8		$	339.0
Receivables, net	700.6			889.5
Inventories, net	787.6			848.6
Deferred income taxes	75.7			86.7
Other current assets	56.7			52.1
Total current assets	2,019.4			2,215.9
Investment in unconsolidated affiliates	31.7			30.4
Property, plant and equipment, net	391.4			403.6
Goodwill	1,047.1			1,049.6
Purchased intangible assets, net	881.2			896.3
Other long-term assets	89.4			112.8
Total assets	$	4,460.2		$	4,708.6

Liabilities and Equity
Current liabilities:
Revolving credit facility and current maturities of long-term debt	$	116.9		$	215.9
Accounts payable	507.7			717.7
Customer advances	329.9			373.2
Payroll-related obligations	73.9			127.5
Income taxes payable	14.6			1.3
Accrued warranty	79.8			90.5
Deferred revenue	80.9			76.9
Other current liabilities	266.3			209.0
Total current liabilities	1,470.0			1,812.0
Long-term debt, less current maturities	1,070.1			1,086.4
Deferred income taxes	188.2			189.6
Other long-term liabilities	299.5			293.8
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; 90,742,290 and 90,662,377 shares issued, respectively)	0.9			0.9
Additional paid-in capital	665.4			659.7
Retained earnings	858.8			759.2
Accumulated other comprehensive loss	(92.3		)	(93.2		)
Total Oshkosh Corporation shareholders’ equity	1,432.8			1,326.6
Noncontrolling interest	(0.4		)	0.2
Total equity	1,432.4			1,326.8
Total liabilities and equity	$	4,460.2		$	4,708.6

The accompanying notes are an integral part of these financial statements.

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OSHKOSH CORPORATION

Condensed Consolidated Statements of Equity

(In millions; unaudited)

	Oshkosh Corporation’s Shareholders
					Retained			Accumulated			Common
			Additional		Earnings			Other			Stock in			Non-
	Common		Paid-In		(Accumulated			Comprehensive			Treasury			Controlling			Comprehensive
	Stock		Capital		Deficit)			Income (Loss)			at Cost			Interest			Income (Loss)

Balance at September 30, 2009	$	0.9	$	619.5	$	(30.8	)	$	(74.7	)	$	(0.8	)	$	2.2
Sale of discontinued operations	—		—		—			—			—			(2.2		)
Comprehensive income (loss):
Net income	—		—		169.6			—			—			—			$	169.6
Change in fair value of derivative instruments, net of tax of $5.2	—		—		—			6.5			—			—			6.5
Employee pension and postretirement benefits, net of tax of $0.5	—		—		—			0.9			—			—			0.9
Currency translation adjustments	—		—		—			(9.0		)	—			—			(9.0		)
Total comprehensive income																	$	168.0
Exercise of stock options	—		0.1		—			—			0.8			—
Stock-based compensation and award of nonvested shares	—		3.2		—			—			—			—
Other	—		0.2		—			—			—			—
Balance at December 31, 2009	$	0.9	$	623.0	$	138.8		$	(76.3	)	$	—		$	—

Balance at September 30, 2010	$	0.9	$	659.7	$	759.2		$	(93.2	)	$	—		$	0.2
Comprehensive income (loss):
Net income	—		—		99.6			—			—			(0.6		)	$	99.0
Change in fair value of derivative instruments, net of tax of $2.1	—		—		—			3.6			—			—			3.6
Employee pension and postretirement benefits, net of tax of $0.8	—		—		—			1.5			—			—			1.5
Currency translation adjustments	—		—		—			(4.2		)	—			—			(4.2		)
Total comprehensive income																	$	99.9
Exercise of stock options	—		0.9		—			—			—			—
Stock-based compensation and award of nonvested shares	—		4.2		—			—			—			—
Tax benefit related to stock-based compensation	—		0.5		—			—			—			—
Other	—		0.1		—			—			—			—
Balance at December 31, 2010	$	0.9	$	665.4	$	858.8		$	(92.3	)	$	—		$	(0.4	)

The accompanying notes are an integral part of these financial statements.

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OSHKOSH CORPORATION

Condensed Consolidated Statements of Cash Flows

(In millions; unaudited)

	Three Months Ended
	December 31,
	2010			2009
Operating activities:
Net income	$	99.0		$	169.6
Non-cash asset impairment charges	—			23.3
Loss on sale of discontinued operations, net of tax	—			2.9
Depreciation and amortization	35.0			37.4
Deferred income taxes	6.7			(18.3		)
Other non-cash adjustments	5.4			4.7
Changes in operating assets and liabilities	47.3			286.4
Net cash provided by operating activities	193.4			506.0

Investing activities:
Additions to property, plant and equipment	(16.8		)	(11.9		)
Additions to equipment held for rental	(2.8		)	(1.0		)
Proceeds from sale of property, plant and equipment	—			0.4
Proceeds from sale of equipment held for rental	2.6			3.4
Other investing activities	(2.1		)	(0.1		)
Net cash used by investing activities	(19.1		)	(9.2		)

Financing activities:
Repayment of long-term debt	(65.1		)	(167.9		)
Repayments under revolving credit facility, net	(50.0		)	—
Proceeds from exercise of stock options	0.9			0.9
Other financing activities	0.2			—
Net cash used by financing activities	(114.0		)	(167.0		)

Effect of exchange rate changes on cash	(0.5		)	(2.1		)
Increase in cash and cash equivalents	59.8			327.7
Cash and cash equivalents at beginning of period	339.0			530.4
Cash and cash equivalents at end of period	$	398.8		$	858.1

Supplemental disclosures:
Cash paid for interest	$	14.6		$	64.8
Cash paid for income taxes	15.0			129.7

The accompanying notes are an integral part of these financial statements.

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and notes thereto included in Oshkosh Corporation’s (the “Company”) Annual Report on Form 10-K for the year ended September 30, 2010. The interim results are not necessarily indicative of results for the full year.

During fiscal 2010, in conjunction with the appointment of a new segment president, the Company transferred operational responsibility of its subsidiary, JerrDan Corporation (“JerrDan”), from the fire & emergency segment to the access equipment segment. As a result, JerrDan has been included within the access equipment segment for financial reporting purposes. Historical information has been reclassified to include JerrDan in the access equipment segment for all periods presented.

2. New Accounting Standards

In June 2009, the Financial Accounting Standards Board (“FASB”) issued a new standard to address the elimination of the concept of a qualifying special purpose entity. The new variable interest standard 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, the new variable interest standard provides more timely and useful information about an enterprise’s involvement with a variable interest entity. The Company adopted the new variable interest standard as of October 1, 2010. The adoption of the new variable interest standard did not have a material impact on the Company’s financial condition, results of operations or cash flows.

In July 2010, the FASB amended Accounting Standards Codification (“ASC”) Topic 310, Receivables, to require more robust and disaggregated disclosures about the credit quality of an entity’s financing receivables and its allowances for credit losses. The new disclosures require additional information for nonaccrual and past due accounts, the allowance for credit losses, impaired loans, credit quality and account modifications. The Company adopted the new disclosure requirements as of October 1, 2010. See Note 3 of the Notes to Condensed Consolidated Financial Statements for additional information.

3. Receivables

Receivables consisted of the following (in millions):

	December 31,			September 30,
	2010			2010
U.S. government
Amounts billed	$	285.1		$	380.1
Cost and profits not billed	64.1			75.2
	349.2			455.3
Other trade receivables	311.8			401.8
Finance receivables	31.1			65.6
Notes receivable	53.7			52.1
Other receivables	33.9			19.5
	779.7			994.3
Less allowance for doubtful accounts	(38.2		)	(42.0		)
	$	741.5		$	952.3

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company recorded provisions for credit losses of $1.7 million and $5.5 million for the three months ended December 31, 2010 and 2009, respectively.

Costs and profits not billed primarily result from undefinitized change orders on existing long-term contracts and “not-to-exceed” undefinitized contracts whereby the Company cannot fully invoice the customer until the change order or contracts are definitized even though the products have been delivered. The definitization process commences upon receipt of a change order or the award of a sole source contract, whereby the U.S. government customer undertakes a detailed review of the Company’s costs related to the contract, with the change order or contract price subject to negotiation. The Company recognizes revenue on undefinitized contracts only when it can reliably estimate the final contract price and collectability is reasonably assured. The Company’s experience has been that historically negotiated price differentials have been immaterial, and accordingly, it does not anticipate any significant adjustments to revenue.

Classification of receivables in the Condensed Consolidated Balance Sheets consisted of the following (in millions):

	December 31,		September 30,
	2010		2010

Current receivables	$	700.6	$	889.5
Long-term receivables	40.9		62.8
	$	741.5	$	952.3

Finance Receivables: Finance receivables represent sales-type leases resulting from the sale of the Company’s products and the purchase of finance receivables from funders pursuant to defaults under program agreements with finance companies. Finance receivables originated by the Company generally include a residual value component. Residual values are determined based on the expectation that the underlying equipment will have a minimum fair market value at the end of the lease term. This residual value accrues to the Company at the end of the lease. The Company uses its experience and knowledge as an original equipment manufacturer and participant in end markets for the related products along with third-party studies to estimate residual values. The Company monitors these values for impairment on a periodic basis and reflects any resulting reductions in value in current earnings. Finance receivables consisted of the following (in millions):

	December 31,			September 30,
	2010			2010

Finance receivables	$	33.8		$	74.7
Estimated residual value	2.1			2.1
Less unearned income	(4.8		)	(11.2		)
Net finance receivables	31.1			65.6
Less allowance for doubtful accounts	(14.8		)	(20.9		)
	$	16.3		$	44.7

The contractual maturities of the Company’s finance receivables at December 31, 2010 were as follows: 2011 (remaining nine months) - $18.4 million; 2012 - $6.8 million; 2013 - $4.3 million; 2014 - $3.2 million; 2015 - $0.6 million; 2016 - $0.2 million; and thereafter - $0.3 million. Historically, finance receivables have been paid off prior to their contractual due dates, although that may change in the current economic environment. As a result, contractual maturities are not to be regarded as a forecast of future cash flows.

Delinquency is the primary indicator of credit quality for finance receivables. The Company maintains a general allowance for finance receivables considered doubtful of future collection based upon historical experience. Additional allowances are established based upon the Company’s perception of the quality of the finance receivables, including the length of time the receivables are past due, past experience of collectability and underlying economic conditions. In circumstances where the Company believes collectability is no longer reasonably assured, a specific allowance is recorded to reduce the net recognized receivable to the amount reasonably expected to be collected. Under the terms of these

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

agreements, the Company generally has the ability to take possession of the underlying collateral. The Company many 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. As of December 31, 2010, approximately 54% of the finance receivables were due from two parties.

Notes Receivable: Notes receivable include refinancing of trade accounts and finance receivables. As of December 31, 2010, approximately 74% of the notes receivable balance outstanding were due from two parties. The Company routinely evaluates the creditworthiness of its customers and establishes reserves where the Company believes collectability is no longer reasonably assured. 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 receivables in circumstances where the Company believes collectability is no longer reasonably assured. Any cash payments received on nonaccrual finance receivables are applied first to principal balances. The Company does not resume accrual of interest income until the customer has shown that it is capable of meeting its financial obligations by making timely payments over a sustained period of time. The Company determines past due or delinquency status based upon the due date of the receivable. Finance and notes receivable aging and accrual status consisted of the following:

	Finance Receivables						Notes Receivable
	December 31,			September 30,			December 31,			September 30,
	2010			2010			2010			2010

Aging of receivables that are past due
Greater than 30 days and less than 60 days	$	3.0		$	3.3		$	—		$	—
Greater than 60 days and less than 90 days	—			—			—			—
Greater than 90 days	22.0			20.7			2.5			2.6

Receivables on nonaccrual status	25.7			57.7			2.5			2.6
Receivables past due 90 days or more and still accruing	—			—			—			—

Receivables subject to general reserves	5.4			3.9			3.8			21.5
Allowance for doubtful accounts	—			(0.1		)	(0.4		)	(0.4		)
Receivables subject to specific reserves	25.7			61.7			49.9			30.6
Allowance for doubtful accounts	(14.8		)	(20.8		)	(12.3		)	(9.0		)

4. Inventories

Inventories consisted of the following (in millions):

		December 31,			September 30,
		2010			2010

Raw materials		$	589.4		$	658.6
Partially finished products		418.0			332.2
Finished products		191.0			227.3
Inventories at FIFO cost		1,198.4			1,218.1
Less:	Progress/performance-based payments on U.S. government contracts	(348.4		)	(308.7		)
	Excess of FIFO cost over LIFO cost	(62.4		)	(60.8		)
		$	787.6		$	848.6

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

Inventory includes costs which are amortized to expense as sales are recognized under certain contracts. At December 31, 2010 and September 30, 2010, unamortized costs related to long-term contracts of $0.6 million and $4.1 million, respectively, were included in inventory.

5. Investment in Unconsolidated Affiliates

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

	Percent-	December 31,		September 30,
	owned	2010		2010

OMFSP (U.S.)	50%	$	13.2	$	12.9
RiRent (The Netherlands)	50%	10.9		11.1
Other		7.6		6.4
		$	31.7	$	30.4

The investment generally represents the Company’s maximum exposure to loss as a result of the Company’s ownership interest. Earnings or losses are reflected in “Equity in earnings (losses) of unconsolidated affiliates” in the Condensed Consolidated Statements of Income.

The Company and an unaffiliated third-party are partners in Oshkosh/McNeilus Financial Services Partnership (“OMFSP”), a general partnership, formed for the purpose of offering lease financing to certain customers of the Company. OMFSP engages in 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 $0.2 million and $0.6 million for the three months ended December 31, 2010 and 2009, 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 solely to, OMFSP. All such OMFSP indebtedness is non-recourse to the Company and 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 under the equity method.

The Company and an unaffiliated third-party are joint venture partners in RiRent Europe, B.V. (“RiRent”). RiRent maintains a fleet of access equipment for short-term lease to rental companies throughout most of Europe. The re-rental fleet provides rental companies with equipment to support requirements on short notice. RiRent does not provide services directly to end users. The Company’s sales to RiRent were $1.0 million and $1.3 million for the three months ended December 31, 2010 and 2009, 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 €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% (47.5% as of December 31, 2010).

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

6. Property, Plant and Equipment

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

	December 31,			September 30,
	2010			2010

Land and land improvements	$	46.4		$	46.7
Buildings	234.4			237.2
Machinery and equipment	488.9			490.2
Equipment on operating lease to others	44.1			46.0
Construction in progress	—			0.9
	813.8			821.0
Less accumulated depreciation	(422.4		)	(417.4		)
	$	391.4		$	403.6

Depreciation expense was $18.3 million and $18.4 million for the three months ended December 31, 2010 and 2009, respectively. Equipment on operating lease to others represents the cost of equipment sold 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 December 31, 2010 and September 30, 2010 was $22.8 million and $25.2 million, respectively.

7. Goodwill and Purchased Intangible Assets

In accordance with the provisions of FASB 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.

The following table presents the changes in goodwill during the three months ended December 31, 2010 (in millions):

	Access			Fire &
	Equipment			Emergency			Commercial			Total
Balance at September 30, 2010:
Goodwill	$	1,848.1		$	182.1		$	197.3		$	2,227.5
Accumulated impairment losses	(932.1		)	(69.9		)	(175.9		)	(1,177.9		)
	916.0			112.2			21.4			1,049.6
Fiscal 2011 Activity:
Translation	(2.5		)	(0.1		)	0.1			(2.5		)
Balance at December 31, 2010	$	913.5		$	112.1		$	21.5		$	1,047.1

Balance at December 31, 2010:
Goodwill	$	1,845.6		$	182.0		$	197.4		$	2,225.0
Accumulated impairment losses	(932.1		)	(69.9		)	(175.9		)	(1,177.9		)
	$	913.5		$	112.1		$	21.5		$	1,047.1

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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

	December 31, 2010
	Weighted-
	Average			Accumulated
	Life	Gross		Amortization			Net
Amortizable intangible assets:
Distribution network	39.1	$	55.4	$	(19.7	)	$	35.7
Non-compete	10.5	56.3		(51.2		)	5.1
Technology-related	11.8	103.9		(46.7		)	57.2
Customer relationships	12.7	576.8		(195.1		)	381.7
Other	16.6	15.8		(11.6		)	4.2
	14.3	808.2		(324.3		)	483.9
Non-amortizable tradenames		397.3		—			397.3
Total		$	1,205.5	$	(324.3	)	$	881.2

	September 30, 2010
	Weighted-
	Average			Accumulated
	Life	Gross		Amortization			Net
Amortizable intangible assets:
Distribution network	39.1	$	55.4	$	(19.3	)	$	36.1
Non-compete	10.5	56.3		(50.6		)	5.7
Technology-related	11.8	104.0		(44.6		)	59.4
Customer relationships	12.7	577.2		(183.8		)	393.4
Other	16.6	15.7		(11.3		)	4.4
	14.3	808.6		(309.6		)	499.0
Non-amortizable tradenames		397.3		—			397.3
Total		$	1,205.9	$	(309.6	)	$	896.3

Amortization expense was $15.3 million and $15.4 million for the three months ended December 31, 2010 and 2009, respectively. The estimated future amortization expense of purchased intangible assets for the remainder of fiscal 2011 and the five fiscal years succeeding September 30, 2011 are as follows: 2011 (remaining nine months) - $45.0 million; 2012 - $58.7 million; 2013 - $56.2 million; 2014 - $54.8 million; 2015 - $54.0 million and 2016 - $53.5 million.

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

8. Credit Agreements

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

	December 31,			September 30,
	2010			2010

Senior Secured Term Loan	$	585.0		$	650.0
8 1/4% Senior notes due March 2017	250.0			250.0
8 1/2% Senior notes due March 2020	250.0			250.0
Other long-term facilities	2.0			2.1
	1,087.0			1,152.1
Less current portion	(16.9		)	(65.7		)
	$	1,070.1		$	1,086.4

Revolving line of credit	$	100.0		$	150.0
Current portion of long-term debt	16.9			65.7
Other short-term facilities	—			0.2
	$	116.9		$	215.9

On September 27, 2010, the Company replaced its existing credit agreement with a new senior secured credit agreement with various lenders (the “Credit Agreement”). The Credit Agreement provides for (i) a revolving credit facility (“Revolving Credit Facility”) that matures in October 2015 with an initial maximum aggregate amount of availability of $550 million and (ii) a $650 million term loan (“Term Loan”) facility due in quarterly principal installments of $16.25 million commencing December 31, 2010 with a balloon payment of $341.25 million due at maturity in October 2015. During the first quarter of fiscal 2011, the Company prepaid the principal installments which were originally due March 31, 2011 through September 30, 2011. At December 31, 2010, borrowings of $100.0 million and outstanding letters of credit of $37.1 million reduced available capacity under the Revolving Credit Facility to $412.9 million.

The Company’s obligations under the Credit Agreement are guaranteed by certain of its domestic subsidiaries, and the Company will guarantee the obligations of certain of its subsidiaries under the Credit Agreement to the extent such subsidiaries borrow directly under the Credit Agreement. Subject to certain exceptions, the Credit Agreement is secured by (i) a first-priority perfected lien and security interests in substantially all of the personal property of the Company, each material subsidiary of the Company and each subsidiary guarantor, (ii) mortgages upon certain real property of the Company and certain of its domestic subsidiaries and (iii) a pledge of the equity of each material subsidiary and each subsidiary guarantor.

The Company must pay (1) an unused commitment fee ranging from 0.40% to 0.50% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (2) a fee ranging from 1.125% to 3.50% per annum of the maximum amount available to be drawn for each letter of credit issued and outstanding under the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied, or (ii) for dollar-denominated loans only, the base rate (which is the highest of (a) the administrative agent’s prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied. At December 31, 2010, the interest spread on the Revolving Credit Facility and Term Loan was 300 basis points. The weighted-average interest rate on borrowings outstanding at December 31, 2010, prior to consideration of the interest rate swap, was 3.27% for the Revolving Credit Facility and 3.31% for the Term Loan.

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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 in 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 (8.105% at December 31, 2010). The notional amount of the swap at December 31, 2010 was $250.0 million.

A portion of 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 has been recorded in “Accumulated other comprehensive income (loss),” with any ineffective portion recorded as an adjustment to miscellaneous expense. At December 31, 2010, a loss of $11.0 million ($7.0 million net of tax) was recorded in “Accumulated other comprehensive income (loss).” The differential paid or received on the designated portion of the interest rate swap will 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% 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 0.30% at December 31, 2010. The notional amounts do not represent amounts exchanged by the parties, and thus are not a measure of exposure 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, the counterparty is a large Aa1 rated global financial institution as of the date of this filing, and the Company believes that the risk of default is remote.

The Credit Agreement contains various restrictions and covenants, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions and make investments in joint ventures and foreign subsidiaries. The Credit Agreement contains the following financial covenants:

· Leverage Ratio: A maximum leverage ratio (defined as, with certain adjustments, the ratio of the 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
December 31, 2010 through September 30, 2011		3.25 to 1.0
December 31, 2011 through September 30, 2012		3.00 to 1.0
Thereafter		2.75 to 1.0

The Company was in compliance with the financial covenants contained in the Credit Agreement as of December 31, 2010 and expects to be able to meet the financial covenants contained in the Credit Agreement over the next twelve months.

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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) $50 million during any fiscal year; plus

(ii) the excess of (a) 25% of the cumulative net income of the Company and its consolidated subsidiaries for all fiscal quarters ending after September 27, 2010, over (b) the cumulative amount of all such dividends and other distributions made in any fiscal year ending after such date that exceed $50 million; plus

(iii) for each of the first four fiscal quarters ending after September 27, 2010, $25 million per fiscal quarter, in each case provided that the leverage ratio (as defined) as of the last day of the most recently ended fiscal quarter was less than 2.0 to 1.0; plus

(iv) for the period of four fiscal quarters ending September 30, 2011 and for each period of four fiscal quarters ending thereafter, $100 million during such period, in each case provided that the leverage ratio (as defined) as of the last day of the most recently ended fiscal quarter was less than 2.0 to 1.0.

In March 2010, the Company issued $250.0 million of 8¼% unsecured senior notes due March 1, 2017 and $250.0 million of 8½% unsecured senior notes due March 1, 2020 (collectively, the “Senior Notes”). The Senior Notes were issued pursuant to an indenture (the “Indenture”) among the Company, the subsidiary guarantors named therein and a trustee. The Indenture contains customary affirmative and negative covenants. The Company may 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 19 of the Notes to Condensed Consolidated Financial Statements for separate financial information of the subsidiary guarantors.

The fair value of the long-term debt is estimated based upon the market rate of the Company’s debt. At December 31, 2010, the fair value of the Senior Notes was estimated to be $543.5 million and the fair value of the Term Loan approximated book value.

9. 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.

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

	Three Months Ended
	December 31,
	2010			2009

Balance at beginning of period	$	90.5		$	72.8
Warranty provisions	8.0			19.5
Settlements made	(13.2		)	(12.8		)
Changes in liability for pre-existing warranties, net	(5.4		)	(2.6		)
Disposition of business	—			(1.6		)
Foreign currency translation adjustment	(0.1		)	(0.3		)
Balance at end of period	$	79.8		$	75.0

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Provisions for estimated warranty and other related costs are recorded at the time of sale and are periodically adjusted 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. For example, accelerated programs to design, test, manufacture and deploy products such as the MRAP All Terrain Vehicle (“M-ATV”) in war-time conditions carry with them an increased level of inherent risk of product or component failure. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters in excess of amounts accrued; however, any such amounts, while not determinable, would not be expected to have a material adverse effect on the Company’s financial condition, result of operations or cash flows.

In the fire & emergency segment, 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 into 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 FASB 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 recognized on the sale of equipment. Liabilities accrued for guarantees for all periods presented were insignificant.

In the access equipment segment, the Company is party to multiple agreements whereby it guarantees an aggregate of $224.9 million in indebtedness of others, including $209.7 million under loss pool agreements. The Company estimated that its maximum loss exposure under these contracts was $74.4 million at December 31, 2010. Under the terms of these and various related agreements and upon the occurrence of certain events, the Company generally has the ability, among other things, to take possession of the underlying collateral. The Company recorded a credit of $6.4 million and a provision for losses on customer guarantees of $0.1 million for the three months ended December 31, 2010 and 2009, respectively. In the first quarter of fiscal 2011, the Company reached a settlement with a customer that resulted in the repayment of $28.3 million of loans supported by Company guarantees for which the Company had established credit loss reserves. Upon release of the guarantees, the Company reversed previously estimated reserves of $8.1 million. At December 31, 2010 and September 30, 2010, the Company had recorded liabilities related to these agreements of $14.1 million and $22.8 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’ inability to meet their obligations. In the event that occurs, the Company cannot guarantee that the collateral underlying the agreements will be sufficient to avoid losses materially in excess of the amounts reserved. Any losses under these guarantees would generally be mitigated by the value of any underlying collateral, including financed equipment, and are generally subject to the finance company’s ability to provide the Company clear title to foreclosed equipment and other conditions. During periods of economic weakness, collateral values generally decline and can contribute to higher exposure to losses.

10. 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

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

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 December 31, 2010, the Company had no forward foreign exchange contracts designated as hedges.

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 that effectively fixes the interest payments on a portion of the Company’s variable-rate debt. A portion of the swap has been designated as a cash flow hedge of 3-month LIBOR-based interest payments and, accordingly, derivative gains or losses are reflected as a component of accumulated other comprehensive income (loss) and are amortized to interest expense over the respective lives of the borrowings. At December 31, 2010, $11.0 million of net unrealized losses remained deferred in “Accumulated other comprehensive income (loss).” See Note 8 of the Notes to Condensed 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 Condensed Consolidated Balance Sheets in “Other current assets” and “Other current liabilities.” At December 31, 2010, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts totaled $91.9 million in notional amounts, including $53.0 million in contracts to sell Euro, $22.4 million in contracts to sell Australian dollars, $9.9 million in contracts to sell U.K. pounds sterling and buy Euro with the remaining contracts covering a variety of foreign currencies.

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

	December 31, 2010						September 30, 2010
	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	$	—	$	11.0	$	—	$	—	$	15.6	$	2.8

Not designated as hedging instruments:
Foreign exchange contracts	0.1		1.6		—		0.3		0.8		—
Total derivatives	$	0.1	$	12.6	$	—	$	0.3	$	16.4	$	2.8

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

		Three Months Ended
	Classification of	December 31,
	Gains (Losses)	2010			2009
Cash flow hedges:
Reclassified from other comprehensive income (effective portion):
Interest rate contracts	Interest expense	$	(7.5	)	$	(13.7	)

Reclassified from other comprehensive income (effective portion):
Foreign exchange contracts	Cost of sales	(0.1		)	(0.1		)

Not designated as hedges:
Foreign exchange contracts	Miscellaneous, net	(0.6		)	1.3
Total		$	(8.2	)	$	(12.5	)

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

11. Fair Value Measurements

FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment. The three levels are defined as follows:

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

Level 2:		Observable inputs other than quoted prices other than those included in Level 1, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

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

As of December 31, 2010, 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

Liabilities:
Foreign currency exchange derivatives (a)	$	—	$	1.6	$	—	$	1.6
Interest rate swaps (b)	—		11.0		—		11.0
Total liabilities at fair value	$	—	$	12.6	$	—	$	12.6

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

(b) Based on observable market transactions of forward LIBOR rates.

12. Stock-Based Compensation

Under the Company’s 2009 Incentive Stock and Awards Plan (the “2009 Stock Plan”), officers, directors, including non-employee directors, and employees of the Company may be granted stock options, stock appreciation rights, performance shares, performance units, shares of Common Stock, restricted stock, restricted stock units or other stock-based awards. The 2009 Stock Plan provides for the granting of options to purchase shares of the 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 become exercisable in equal installments over a three-year period, beginning with the first anniversary of the date of grant of the option, unless a shorter or longer duration is established by the Human Resources Committee of the Board of Directors at the time of the option grant. Stock options terminate not more than seven years from the date of grant. Except for performance shares and performance units, vesting is based solely on continued service as an employee of the Company and generally vest upon retirement. The maximum number of shares of stock reserved for all awards under the 2009 Stock Plan is 4,000,000. At December 31, 2010, the Company had reserved 7,180,996 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.

The Company recognizes compensation expense for stock option, nonvested stock and performance share awards over the requisite service period for vesting of the award, or to an employee’s eligible retirement date, if earlier and applicable. Total stock-based compensation expense included in the Company’s Condensed Consolidated Statements of Income for the three months ended December 31, 2010 and 2009, was $4.2 million ($2.7 million net of tax) and $3.2 million ($2.0 million net of tax), respectively.

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

13. 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.

In October 2010, the Company announced that its fire & emergency segment would be closing its Oshkosh Specialty Vehicles manufacturing facilities and integrating those operations into existing operations in Florida. In the first quarter of fiscal 2011, the Company accrued severance payments of $0.7 million in connection with this consolidation. The Company largely completed this action in the first 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. Although the plan is subject to discussions with employees or their representatives in several countries, the Company intends to consolidate its facilities and implement other cost reduction initiatives that would result in reductions in its workforce in Europe. In connection with this plan, the Company recorded statutorily or contractually required termination benefit costs of $11.3 million in the three month period ending December 31, 2010. The Company expects to incur $2 million to $7 million of additional charges in connection with this plan in fiscal 2011. Also in January 2011, the Company announced that its fire & emergency segment would be closing its Medtec Ambulance Corporation manufacturing facilities and integrating those operations into existing operations in Florida. The Company expects to incur approximately $5 million of additional charges in connection with these facility consolidations and workforce reductions in fiscal 2011.

Pre-tax restructuring charges for the three months ended December 31, 2010 were as follows (in millions):

	Cost of		Selling, General
	Sales		and Administrative		Total
Access equipment	$	8.8	$	2.5	$	11.3
Fire & emergency	—		0.7		0.7
	$	8.8	$	3.2	$	12.0

Changes in the Company’s reserves, included within “Other current liabilities” in the Condensed Consolidated Balance Sheets, were as follows (in millions):

	Employee
	Severance and
	Termination			Fixed Asset						Currency
	Benefits			Impairment			Other			Translation		Total

Original reserve	$	0.4		$	6.9		$	3.2		$	—	$	10.5
Utilized - cash	(0.3		)	—			—			—		(0.3		)
Utilized - noncash	—			(6.9		)	—			—		(6.9		)
Balance at September 30, 2010	0.1			—			3.2			—		3.3
Fiscal 2011 provisions	12.0			—			—			—		12.0
Utilized - cash	(0.1		)	—			(0.1		)	—		(0.2		)
Balance at December 31, 2010	$	12.0		$	—		$	3.1		$	—	$	15.1

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

14. Employee Benefit Plans

Components of net periodic pension benefit cost were as follows (in millions):

	U.S. Plans						Non-U.S. Plans
	Three Months Ended						Three Months Ended
	December 31,						December 31,
	2010			2009			2010			2009

Service cost	$	3.9		$	3.6		$	0.2		$	0.1
Interest cost	3.1			2.8			0.2			0.2
Expected return on plan assets	(3.6		)	(3.0		)	(0.3		)	(0.2		)
Amortization of prior service cost	0.4			0.3			—			—
Amortization of net actuarial loss	1.3			1.0			—			—
Net periodic benefit cost	$	5.1		$	4.7		$	0.1		$	0.1

The Company expects to contribute approximately $25.0 million to its pension plans in fiscal 2011 compared to $34.7 million in fiscal 2010.

Components of net periodic other post-employment benefit costs were as follows (in millions):

	Three Months Ended
	December 31,
	2010		2009

Service cost	$	1.1	$	1.0
Interest cost	0.8		0.7
Amortization of net actuarial loss	0.3		0.2
Net periodic benefit cost	$	2.2	$	1.9

The Company made contributions to fund benefit payments of $0.3 million and $0.3 million for the three months ended December 31, 2010 and 2009, respectively, under its other post-employment benefit plans. The Company estimates additional contributions of approximately $1.0 million will be made under these other post-employment benefit plans prior to the end of fiscal 2011.

15. Income Taxes

The Company’s effective income tax rate was 30.8% and 37.4% for the three months ended December 31, 2010 and 2009, respectively. The effective income tax rate for the three months ended December 31, 2010 was favorably impacted by discrete tax benefits, including the impact of benefits associated with foreign tax credits related to a decision to repatriate earnings previously fully reinvested (390 basis points), reductions of tax reserves related to the expiration of the statute of limitations (90 basis points) and the December 2010 reinstatement of the U.S. research and development tax credit (150 basis points). The effective income tax rate for the three months ended December 31, 2009 was unfavorably impacted by non-deductible intangible asset impairment charges (140 basis points).

The Company’s liability for gross unrecognized tax benefits, excluding related interest and penalties, was $53.9 million and $53.4 million as of December 31, 2010 and September 30, 2010, respectively. Excluding interest and penalties, net unrecognized tax benefits of $43.9 million would affect the Company’s net income if recognized, $23.8 million of which would impact net income from continuing operations.

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OSHKOSH CORPORATION

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits in the “Provision for income taxes” in the Company’s Condensed Consolidated Statements of Income. During the three months ended December 31, 2010 and 2009, the Company recognized $0.2 million and $0.7 million in interest and penalties, respectively. At December 31, 2010, the Company had accruals for the payment of interest and penalties of $12.4 million. During the next twelve months, it is reasonably possible that federal, state and foreign tax audit resolutions could reduce unrecognized tax benefits by approximately $6.2 million, either because the Company’s tax positions are sustained on audit, because the Company agrees to their disallowance or the statute of limitations expires.

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 is currently under audit by the Internal Revenue Service for the taxable years ended September 30, 2008 and 2009.

16. Earnings (Loss) Per Share

The following table sets forth the computation of basic and diluted weighted-average shares used in the denominator of the per share calculations:

	Three Months Ended
	December 31,
	2010	2009

Basic weighted-average shares outstanding	90,595,181	89,477,892
Effect of dilutive stock options and other equity-based compensation awards	844,170	1,335,306
Diluted weighted-average shares outstanding	91,439,351	90,813,198

Options to purchase 2,513,488 shares of Common Stock were outstanding during the three months ended December 31, 2010, but were not included in the computation of diluted earnings (loss) per share attributable to Oshkosh Corporation common shareholders because the exercise price of the options was greater than the average market price of the shares of Common Stock and therefore would have been anti-dilutive. Options to purchase 1,414,989 shares of Common Stock were outstanding during the three months ended December 31, 2009, but were excluded from the computation of diluted earnings (loss) per share attributable to Oshkosh Corporation common shareholders because the exercise price of the options was greater than the average market price of the shares of Common Stock and therefore would have been anti-dilutive.

Income attributable to Oshkosh Corporation common shareholders was as follows (in millions):

	Three Months Ended
	December 31,
	2010		2009
Amounts attributable to Oshkosh Corporation common shareholders:
Continuing operations, net of tax	$	99.6	$	172.5
Discontinued operations, net of tax	—		(2.9		)
Net income	$	99.6	$	169.6

17. Contingencies, Significant Estimates and Concentrations

Environmental - As part of its routine business operations, the Company disposes of and recycles or reclaims certain industrial waste materials, chemicals and solvents at third-party disposal and recycling facilities, which are licensed by appropriate governmental agencies. In some instances, these facilities have been and may be designated by the United States Environmental Protection Agency (“EPA”) or a state environmental agency for remediation. Under the Comprehensive Environmental Response, Compensation, and Liability Act and similar state laws, each potentially responsible party (“PRP”)

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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 had reserves of $2.0 million and $1.9 million for losses related to environmental matters that were probable and estimable at December 31, 2010 and September 30, 2010, 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 materially adverse effect on the Company’s financial position, results of operations or cash flows.

Personal Injury Actions and Other - Product and general liability claims arise against the Company from time to time in the ordinary course of business. The Company is generally self-insured for future claims up to $3.0 million per claim. Accordingly, a reserve is maintained for the estimated costs of such claims. At December 31, 2010 and September 30, 2010, reserves for product and general liability claims were $42.8 million and $44.4 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.

Market Risks - The Company was contingently liable under bid, performance and specialty bonds totaling $200.3 million and open standby letters of credit issued by the Company’s banks in favor of third parties totaling $37.1 million at December 31, 2010.

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.

18. 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. During fiscal 2010, in conjunction with the appointment of a new segment president, the Company transferred operational responsibility of JerrDan from the fire & emergency segment to the access equipment segment. As a result, JerrDan is currently included with the access equipment segment for financial reporting purposes. Historical information has been reclassified to include JerrDan in the access equipment segment for all periods presented.

For purposes of business segment performance measurement, the Company does not allocate to individual business segments costs or items that are of a non-operating nature or organizational or functional expenses of a corporate nature. The caption “Corporate” includes corporate office expenses, including share-based compensation and results of insignificant operations. Identifiable assets of the business segments exclude general corporate assets, which principally consist of cash and cash equivalents, certain property, plant and equipment and certain other assets pertaining to corporate activities. Intersegment sales generally include amounts invoiced by a segment for work performed for another segment. Amounts are based on actual work performed and agreed-upon pricing which is intended to be reflective of the contribution made by the supplying business segment.

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Summarized financial information concerning the Company’s product lines and reportable segments was as follows (in millions):

	Three Months Ended December 31, 2010						Three Months Ended December 31, 2009
	External		Inter-		Net		External		Inter-		Net
	Customers		segment		Sales		Customers		segment		Sales
Net sales:

Defense	$	1,111.8	$	1.9	$	1,113.7	$	1,857.5	$	2.2	$	1,859.7

Access equipment
Aerial work platforms	119.9		—		119.9		87.9		—		87.9
Telehandlers	85.3		—		85.3		38.8		—		38.8
Other (a)	85.4		36.7		122.1		96.2		530.8		627.0
Total access equipment	290.6		36.7		327.3		222.9		530.8		753.7

Fire & emergency	197.1		4.4		201.5		220.4		4.8		225.2

Commercial
Concrete placement	34.5		—		34.5		41.6		—		41.6
Refuse collection	50.2		—		50.2		80.7		—		80.7
Other	16.6		18.2		34.8		11.0		21.8		32.8
Total commercial	101.3		18.2		119.5		133.3