[Yvette Elfman] – Marble Bar Asset Management

Welcome to the Oshkosh Corporation fiscal year 2009 fourth quarter financial results conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Mr. Pat Davidson, Vice President of Investor Relations for Oshkosh Corporation.

Earlier today we published our fourth quarter and full year fiscal results for 2009. A copy of the release is available on our website at www.OshkoshCorporation.com. Today’s call is being webcast and is accompanied by a slide presentation which is also available on our website. The audio replay and slide presentation will be available on the website for approximately 12 months. Please refer now to Slide Two of that presentation. Our remarks that follow including answers to your questions include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others matters that we have described in our Form 8K filed with the SEC this morning and other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements which may not be updated until our next quarterly conference call, if at all. On July 1st, we completed the sale of our European refuse collection vehicle or RCV business. Results for this business are reported as discontinued operations in the accompanying slides. All sales and income figures that we discuss today refer to continuing operations unless otherwise stated. Presenting today for Oshkosh Corporation will be Bob Bohn, Chairman and Chief Executive Officer; Charlie Szews, President and Chief Operating Officer; and Dave Sagehorn, Executive Vice President and Chief Financial Officer. Let’s begin by turning to Slide Three and I’ll turn it over to you Bob.

As I reflect on the quarter and the fiscal year, it goes without saying that we’ve all been through a lot as a result of the great recession and the global credit crisis. I have to extend my sincere thanks and appreciation to the employees of Oshkosh Corporation and our supply chain partners for going the extra mile during these difficult times and working extremely hard to ensure that Oshkosh enters fiscal 2010 with a strong foundation and solid outlook. I’m proud that we moved decisively to shed costs and repay debt while still maintaining a sharp focusing on delighting our customers and capturing new businesses that we believe will lead us in to the eventual economic recovery. After several quarters of losses, we’re happy to report positive EPS of $0.63 for our fourth fiscal quarter and net sales of $1.49 billion. We benefitted this quarter from significantly higher defense sales as well as another solid quarter from our Pierce fire truck business in addition to favorable LIFO inventory and tax benefits. Charlie will talk about this more in a few moments but we are ahead of schedule on our MRAP-All Terrain Vehicle M-ATV deliveries. We are proud of our delivery record on this program which is a result of an incredible effort by our employees, our suppliers and our customer to put our war fighters’ needs above our own. Of course, the family of medium tactical vehicles the FMTV contract award to Oshkosh was a great win for us and for the Army. As many of you know, the Army decision is being protested by two losing bidders. The decision to award Oshkosh the FMTV contract was evaluated by an objective and independent government source selection team in accordance with established DOD procedures. We put our best foot forward…

Please turn with me to Slide Six. We experienced another strong performance from our defense segment in the fourth quarter. To meet the urgent need in Afghanistan to protect our men and women we set high delivery targets for our M-ATV program. Going from a target of 45 of these outstanding vehicles in July, the first month of deliveries to 1,000 per month by December 2009. Since then we’ve exceeded planned deliveries in every month including October. We have already sold about 25% of required M-ATV deliveries for November. So, we expect to maintain that record going forward. Today, we’ll produce about 40 MATVs in our moving assembly line. With about 20 production days in each month you can see that we are already running at a production rate of about 800 per month and we expect to be at 50 per day by mid November so we are well on our way to that 1,000 per month target. Our operations teams have fully deployed lean concepts and robotics to meet these high production quantities. Our sourcing team and our suppliers have stepped up to the challenge. Our quality metrics on these vehicles have been outstanding. Extensive planning both with our customer and our supply base, constant communication and a heroic effort by our employees and a history of building vehicles for the military for over 80 years are all contributing to the success we’re experiencing on this program. We view this as our mission to deliver these vehicles quickly to our men and women in Afghanistan. We’re also delivering on just more than our M-ATV commitments. From our facilities in Oshkosh Wisconsin we continue to deliver quality vehicles on time for our existing programs for the US Army and Marine Corp. further evidencing our ability to ramp up production…

Please turn to Slide 10. Consolidated net sales of $1.49 billion for the fourth fiscal quarter were down 19.8% compared to the fourth fiscal quarter last year as significantly higher sales in our defense segment were not enough to overcome much lower sales in our access equipment and commercial sales. Operating income decreased 10.8% to $118.1 million or 7.9% of sales. Operating income margins were negatively impacted by lower consolidated sales volume partially offset by a shift in sales mix to higher margin defense segment sales and LIFO inventory benefits of approximately $24 million or $0.18 per share. Earnings per share from continuing operations for the quarter was $0.63, a decrease of 25% compared to the fourth quarter of fiscal 2008. Fully diluted shares for the quarter were 83.5 million reflecting the impact of the equity offering we concluded in August. Earnings per share for the quarter was favorably impacted by $0.18 due to execution of tax strategies related to investments in our foreign subsidiaries. The tax rate for the quarter was 13% including the benefit related to the tax strategies I just mentioned. We do not expect similar tax benefits related to these investments in future periods. The reversal of a portion of the European tax incentive and unbenefitted foreign net operating losses in the quarter partially offset the benefit of our tax planning strategies. Fourth fiscal quarter corporate operating expenses and intersegment profit elimination were above prior year levels due primarily to higher intersegment profit elimination related to the M-ATV contract, higher stock-based compensation expense and the reinstatement of previous compensation levels. In light of our improved financial outlook and in recognition of the outstanding contributions by employees throughout all the company, we did make the decision to discontinue most of the salary reductions that were implemented in…

At Oshkosh we have significant momentum in our defense segment that we expect will compel us to significantly stronger results in fiscal 2010. Our balance sheet is now strong and it’s our intention to build on our experience and great reputation as the manufacturer of the world’s best tactical wheeled military vehicles, aerial work platforms, customer fire trucks and refuse collection vehicles to name just a few of our leading products. We have plans to continue to pay down debt and improve processes and efficiencies in our factories as we continually strive to improve our operating performance. During difficult times we believe that experience counts and we have that depth and experience in our leaders at Oshkosh Corporation. You can count on us to succeed during challenging times and we will be ready to capitalize when the global economy improves. Thank you for your continued interest and support and at this time we’ll turn it over to you Pat.

I’d like to remind everyone to limit their questions to one plus a follow up please and avoid questions with multiple subparts as it makes it very difficult for us to ensure that everybody participates. After a follow up we ask that you get back in queue to ask additional questions. We appreciate your interest.

(Operator Instructions) Your first question comes from Jerry Revich – Goldman Sachs. Jerry Revich – Goldman Sachs: Dave, I’m wondering if you can talk about the $87 million of access equipment intercompany sales this quarter? Does that imply that you barely ran any volumes through your defense facilities or is that the impact of the telehandler business flowing through the same way as M-ATV? Also, can you discuss what were the product rationalization costs in JLG this quarter?

The $87 million of intercompany M-ATV sales from JLG to defense, that represents the value of the crew capsules as well as completed assembled vehicles that JLG sold to our defense segment. They’re treated as another supplier to defense, obviously a very valued supplier. They deliver crew capsules specifically as well as completed vehicles in advance of defense selling those ultimately to the government customer.

In other words they also would have sold more crew capsules in the quarter than necessarily we sold full vehicles to the government. That’s why it looks like they have a high percentage of the overall sales. A lot of that sales in intercompany profit would have been eliminated in our final results. Jerry Revich – Goldman Sachs: The product rationalization costs, were they meaningful to JLG in the quarter? I guess I would have expected more absorption benefits from the military business in JLG this quarter unless that product rationalization line was pretty significant?

Overall product rationalization and related impact on inventory Jerry was a little bit north of $4 million in the quarter. Jerry Revich – Goldman Sachs: Can you step us through the accounting impact of the M-ATV production in JLG? You mentioned the mid singled digit margin but I’m assuming you got some very nice benefits from the absorption side, where does that get impacted or does the impact of that iteration kick in as you ramp up production in coming quarters?

I think you’ll see more of the benefit in the coming quarters. Again, JLG was just ramping up in the fourth fiscal quarter of 2009.

Your next question comes from Charles Brady – BMO Capital Markets. Charles Brady – BMO Capital Markets: On the commercial segment and your comment in your prepared remarks on the backlog maybe being a little lower than it might have otherwise been because of your refuse customers delaying orders, did I hear that correct? And, should we expect a tick up in the backlog in the next quarter or two and was there any single reason why those orders got delayed? As a follow up to that, just on the margins in that business, looking out to fiscal 2010 do you expect that business to be profitable? It obviously was not profitable ex the LIFO benefit in the quarter?

In terms of the RCV backlog Charlie, last year in the fourth fiscal quarter we had a big order quarter so I think – big order and shipping course. I think what you’re seeing is a little bit of timing of the customers when they’re ordering business so we did exit [inaudible] and it was really because last year we had a big concentration of business in that fourth fiscal quarter. Going forward we do think that orders are going to be pretty good at least in the near term for RCVs in part because as you know we had a couple of large customers that merged in the past year. As is typical, they spend a period of time rationalizing their fleets and those sorts of things and then they start to order again. I think that’s kind of the period we’re in right now is that we’re seeing some orders from that merged customer and that should help us in the next few months.

In terms of the outlook in fiscal 2010 we’re certainly striving for that segment to be profitable. Regarding the fourth quarter, in addition to the LIFO which obviously was a benefit, they did have some inventory reserves and a couple of other miscellaneous reserves that they recorded in the quarter that absent those they would have been right around the breakeven level for the quarter.

Your next question comes from Alexander Blanton – Ingalls & Synder, LLC. Alexander Blanton – Ingalls & Synder, LLC.: My calculations show that on a 20% decline in sales you achieved – your gross margin was only down 37 basis points after adjusting for the LIFO so that’s about a 17% detrimental margin. That is awfully good. That detrimental margin is almost as low as your overall margin so how did you achieve that? What were the key ingredients of that?

Alex, are you talking overall for the company? Alexander Blanton – Ingalls & Synder, LLC.: Yes, overall.

Obviously we had some mix issues going on, defense sales were a much larger percentage of the total consolidated sales in the quarter and we had very strong performance in our defense segment in the quarter. Obviously, I think we’re seeing some of the benefits of the cost reduction initiatives that we implemented earlier in the year as well as everybody remains focused on cost reductions throughout the company. Those are probably the largest drivers we saw. Alexander Blanton – Ingalls & Synder, LLC.: There’s a story on Reuters that you said that you don’t see the margins in defense being sustained. It was 18 something in the quarter but if you adjust for LIFO it was 17.5 which was still way above normal but, I didn’t see that comment in your release. I’m not sure where that came from?

I think we did comment in the prepared remarks Alex that we don’t expect to be able to sustain those margins in fiscal 2010. Alexander Blanton – Ingalls & Synder, LLC.: But this ran at 8am, 8:30.

We posted our prepared remarks out earlier this morning. Alexander Blanton – Ingalls & Synder, LLC.: Finally, 1,400 additional vehicles, JROC said might be ordered, the M-ATV vehicles, can you update us on when that might be expected?

We saw the comments yesterday from Under Secretary Carter at the Pentagon about the potential additional orders. We certainly know that the joint requirements oversight council has approved an additional 1,400 vehicles. We’re hopeful that they will order those but really until the government acts, we really don’t have much more to say. It’s kind of an interesting time obviously, we’re grappling as a country in terms of what our strategy is in Afghanistan and I’m sure there are a lot of closed door discussions about what they might order from us and what they might do in a lot of different areas so we don’t have anything to tell you. We do know that every month around the 10th of the month the customer has a decision point to make if they want to continue production without a break in production, we need an order. Certainly by the 10th or so of November there’s a possibility we could get an order or there’s a break in production or the customer could just decide to have a break in production and accept that. Really, it’s in their hands right now.

Your next question comes from Walter Liptak – Barrington Research. Walter Liptak – Barrington Research: My questions are for Dave Sagehorn about the accounting in access and the question I have is you’re ramping production of M-ATVs, there’s got to be extra administrative costs and equipment costs that are going in there. How are those being accounted for? Are those going through access profits or through defense profits?

Those are going through access. As we put together the program we stepped back and looked at what costs we believed JLG would incur on the program and as we developed the pricing to charge defense for the services and activities that JLG is providing we looked at it and included those costs. Walter Liptak – Barrington Research: Is there a way of looking at the loss in access equipment excluding the cost to ramp production?

You’re trying to get just to the base JLG business? Walter Liptak – Barrington Research: Yes.

I think the easiest way would probably be you understand the sales dollars, intercompany sales on the program, and then we talked about margins on those sales so I think if you just back those off that should get you to a traditional JLG business. Walter Liptak – Barrington Research: If I could ask just one more, you gave some kind of forward-looking guidance on access for 2010 and presumably with the losses of $213 million in ’09, can you give us some idea of what the loss might look like in 2010? Could it be half, where do you think the losses will turn out in JLG?

We haven’t quantified that but I guess what I would say is if you look at some of the things that we had going on in our fiscal 2009 between higher material costs, restructuring charges and bad debt levels, combined those were all north of $100 million. We expect to see significantly less from each of those in fiscal 2009 and obviously we continue to look at the cost structure and focus on cost reductions as well. Without quantifying I would expect to see a significantly improved bottom line on a market that we believe will remain weak through much of fiscal 2010. Walter Liptak – Barrington Research: The 2010 tax rate?

Probably in the 37% to 38% range.

Your next question comes from Jim McIlree – Collins Stewart. Jim McIlree – Collins Stewart: In terms of units, how many orders for the TAK-4 do you have booked to date that are going to go on MRAPs of all vendors?

Of all MRAP OEMs, we have about 2,400 units on order as of today out of a fleet of just over 16,000. Jim McIlree – Collins Stewart: The follow up is could you just summarize where you are in terms of competitions for international, RFPs on blast protected vehicles?

We don’t have anything I guess I would say as eminent. Certainly, we are looking at those opportunities. We’ve had a number of countries globally talk to us and express interest to our defense customer, the US Department of Defense to buy potentially M-ATVs. We’re certainly going to be pursuing those opportunities over the next 12 months and where the specs would I guess favor our M-ATV and maybe our SandCat, you will see us bidding around the world for those kinds of competitions. These competitions are kind of far between and they take a while to develop so there’s nothing probably real eminent to talk about.

Your next question comes from Jamie Cook – Credit Suisse. Jamie Cook – Credit Suisse: First question, on the inventory side we saw sequential declines in inventory I think of about $75 million so can you walk me through? I’m assuming that you had some inventory build in defense, can you just walk me through how much you built there and what you sort of took down specifically in JLG, how much you reduced inventory at your levels and how much you reduced at I guess the dealer level as well?

Jamie, you’re right we did have an inventory build sequentially in the defense segment. Excluding that the majority of the inventory reduction we saw in the segment was at JLG and that was somewhere north of $75 million in the quarter so we made excellent progress in the quarter at JLG. We also were able to reduce inventories but to a lesser extent in both fire and emergency and the commercial segment. Jamie Cook – Credit Suisse: How much more do we have left at JLG to reduce inventory and at what point do you think you’ll be producing more in line with retail demand?

We are only producing today in line with pretty close to demand I’d say because we’re building to order and we’ve been doing that for months. Jamie Cook – Credit Suisse: How do you feel about your inventory at JLG in the channel and is there any more to go?

I think we have opportunities to reduce our inventories but it’s a modest amount. It’s not going to move the needle for you overall in terms of our inventory value. [Inaudible] from making comments for us about our inventories, we have perhaps a little extra inventory in Europe. In the United States we’re well balanced in terms of inventory and the rest of the world. Jamie Cook – Credit Suisse: So the worst is behind us on that front?

Absolutely. Our inventories at JLG are down two thirds from peak, before the recession.

Your next question comes from Analyst for Steve Barger – Keybanc Capital Markets. Analyst for Steve Barger – Keybanc Capital Markets: My first question is on the defense margins, if my math is right here I’m showing that the annual defense margin was about 15.5%. I think you had noted during your prepared remarks that M-ATV was modestly below the average for the year. If you’re still on your ramp up phase which would presumably be lower margin where do you think the margins can actually go on this M-ATV contract?

I think there are a lot of moving pieces to the M-ATV program. We are, as you correctly point out, still in the ramp up phase. The team is doing just an outstanding job in producing these vehicles and we had very good performance in our fourth fiscal quarter. I think as time goes on here through the quarter we’ll just have to see where the margins come out. At this point we aren’t providing point estimates to where we think the margins are going to be. Analyst for Steve Barger – Keybanc Capital Markets: Directionally speaking would you expect them to remain flat at this level, to get better, to get worse?

I don’t think I would expect them to get any worse but that’s all I will say on that at this time. Analyst for Steve Barger – Keybanc Capital Markets: My second question is on the guidance, arguably you had pretty solid visibility in to your defense business which is going to be your EPS driver in FY ’10. Given that why actually not put out at least a wide range for earnings guidance? Are you waiting for some clarity on FMTV?

FMTV won’t have any impact in fiscal 2010. Under the current schedule, assuming no changes to that schedule from the FMTV protest, we’re only going to be delivering a handful of test vehicles in our fiscal 2010, really the production starts in fiscal 2011 so FMTV doesn’t impact anything. I guess what we’d say is we’re at an interesting point in the overall global economy and we’re still sort of teetering at a point here and if it gets better, great. If it stays where it is, we don’t really know, we’re not economic forecasters and until we have better insight in to where the overall global economy is we really don’t want to be giving estimates that significantly cause us to significantly estimate access equipment, commercial segment, the kind of sales and earnings. It’s too volatile right now.

Your next question comes from [Chris Webster] – Robert W. Baird. [Chris Webster] – Robert W. Baird: I was wondering if you could somehow frame the magnitude of either how much temporary cost reductions like furloughs saved you in 2009 or what you expect the headwind to be in fiscal year ’10 from eliminating some of those programs?

Chris what we said previously is that $200 million of annualized cost reductions. I think we were actually very close to that for the fiscal year in terms of dialing back on some of the compensation reductions that we took earlier in the year. I think you’re going to see somewhere the impact of that on a consolidated basis through fiscal 2010 of $20 to $30 million worth. [Chris Webster] – Robert W. Baird: Maybe if I could ask the question on JLG margins in a little bit different way, once M-ATV production winds down in March or April given the cost reduction efforts you’ve undertaken, higher cost inventory is now through the channel, you’ve got a much better cost structure, how should we think about a breakeven revenue level for that business?

We haven’t provided a breakeven revenue level for that. I think what we have said in the past and I think it’s still consistent is we need to have sales above the current run rate levels for this business to be profitable going forward even with the restructuring actions that we have taken to date. Obviously, we’re striving to continue to lower the breakeven point of this business but we do need to see higher sales levels. [Chris Webster] – Robert W. Baird: Just two real quick follow ups, how big was the working capital boost from the military cash payments and how many M-ATVs did you actually ship in the fourth quarter?

The majority of the cash that we have on the balance sheet would be related to the performance based payment for the M-ATV program. M-ATV’s in the quarter Charlie?

I’ve forgot the exact number but it’s in the neighborhood of 200 units plus or minus. Our requirement was about 195 units, we’ve exceeded that number so something over 200.

Your next question comes from Analyst for Paul Bodner – Longbow Research. Analyst for Paul Bodner – Longbow Research: I have a question about your fiscal 2010 outlook, you talk about continuing focus on cost reduction and debt repayment. Can you give a little bit more detail on both of those items?

We aren’t going to quantify the debt reduction target that we have for the year. Obviously, we talked about $117 million of term loan A pay down that we did make in October of this year. We expect to generate additional cash flow throughout the year and that will remain very much a focus for the company going forward. Cost reduction, we should see absent the salary restoration that we talked about, some incremental benefits in fiscal 2010 for those items that were not in place for a full year in fiscal 2009 but I don’t know that that would be a significant increase year-over-year. Analyst for Paul Bodner – Longbow Research: Then in terms of the defense segment and I know a lot of people have been asking about the margins and whether they can go forward or not or stay flat, in terms of the mix of aftermarket and original equipment how do you see that just in terms of directionally going over the next two years?

Over the next two years? Analyst for Paul Bodner – Longbow Research: Yes please.

Historically as a company we’ve been on a consolidated basis say approximately 15% of our sales were aftermarket parts and service, defense historically has been above that. We were quite a bit above that in our fourth fiscal quarter. I think you’re probably going to see that come back in more historical range as we go through 2010 and our fiscal 2011. We have somewhat limited visibility on 2011 but I think you’ll see it more in to the traditional range that we saw for the defense segment.

Your next question comes from [Yvette Elfman] – Marble Bar Asset Management. [Yvette Elfman] – Marble Bar Asset Management: Just again on the defense margins, you said in the statements about $100 million of revenues from the M-ATVs, if I look at that $100 million, strip that out from your reported $855 giving you obviously $755 and apply your typical let’s say the last 12 months worth of margins at 14% for your kind of non M-ATV defense business, you are obviously getting about $100 to $105 million of EBTIDA from the non MRAPs business. Then, you adjust for kind of the LIFO impacts, you’re still getting about $30 to $35 million or so on $100 million of revenues which is like obviously a 35% EBIT margin for this quarter on your M-ATVs. Is this some kind of ramp that is skewing the margin to a higher level or what am I missing there?

The 35% seems very, very high. Some of the things we did have in the quarter, we had a higher percentage of parts, aftermarket parts and service than we traditionally have experienced in this business and that generally is at a higher margin than our traditional truck business. We did mention that we saw some improved efficiencies in this segment in the quarter as we’ve continued to ramp up the volumes there and also drive some continued lean improvements in the business and then we also talked about material cost reductions that we saw come through. I think you have a combination of things that are all coming together to provide the increased margins that we saw in this segment in the fourth quarter. [Yvette Elfman] – Marble Bar Asset Management: The follow up to that is you’ve averaged roughly 13.5% to 14% for the last 12 months in that defense business. You now are at 17.5% ex the LIFO impact, so that kind of obviously 250 to 300 basis points of margin expansion, how much of that do you think is actually part to do with kind of the M-ATV and how much of it is just kind of what you just talked about in terms of lower material costs, cost cutting and higher proportion of aftermarket? I’m just trying to get a flavor for what’s sustainable in that EBIT margin and what’s not?

Again, we gave pretty specific comments that our M-ATV margins were modestly lower than our annual defense segment margins so I think you should go back to that comment and that’s generally speaking what the M-ATV profitability was. There are a lot of impacts in the current quarter, like Dave said. We had very significant mix for parts business, we had very high volume generally which provide us with a lot of absorption benefits, efficiency benefits, things that aren’t sustainable over a long period if you’re sales aren’t at that level. Going forward I think we had some prepared comments about what our margin outlook was going forward and I think you should go back to those. I’d like to thank our shareholders, our employees and our customers. Thank you for [inaudible]. We’ll be at the Goldman conference this week. We’ll be at the R. W. Baird conference next week and we look forward to spending more time with you. Have a great day.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.