Sep. 27--Oshkosh Corp. said Friday its upcoming quarterly results would not be as bad as expected, and that it could end the fiscal year with less debt.

The company's shares, which were down about 80% for the year, rebounded 15% following the news.

In a news release, the specialty truck-maker said earnings for the fourth quarter ending Sept. 30 should come in at or above the high end of its target of 50 cents to 65 cents per share, as cost-cutting measures have paid off.

The company also said it would end its fiscal year with $2.8 billion to $2.85 billion in debt, lower than its prior forecast of $2.85 billion to $2.9 billion.

"I think Oshkosh wanted to let the world know that it's not coming apart at the seams, and there really isn't a liquidity problem at the company," said analyst Charles Brady with BMO Capital Markets.

The latest earnings outlook still represents a substantial downturn from last year when the company had a fourth-quarter profit of $1.14 per share.

In August, Oshkosh posted a quarterly loss and warned investors that a weak U.S. economy was hurting its construction-equipment business and sales of fire and emergency vehicles.

The fourth-quarter profit outlook of 50 cents to 65 cents per share, set in August, compared with analysts' expectations of 93 cents at the time.

"The stock has really been beaten up," Brady said. "Part of the fear was that some people thought Oshkosh had a liquidity problem, which is not the case."

The company could ask for a waiver on its credit agreements to ease some of the terms. But it is not in violation of the agreements at this time.

"During the last several months, we have improved our cost structure by downsizing our work force approximately 10% and lowering discretionary spending. We have been reducing our working capital by selling excess inventory, rationalizing production and pursuing receivables initiatives. These swift and decisive actions should help us to remain competitive in fiscal 2009," Robert Bohn, Oshkosh chairman and chief executive officer said in a written statement.

"Our ability to generate strong cash flow from earnings and working capital initiatives has driven better than anticipated debt reduction in the fourth quarter, and we expect to exit fiscal year 2008 with debt in the range of $2.80 to $2.85 billion," Bohn said. "With a defense business that we believe will grow, and a sharper focus on cash flow generation, we expect to drive significant cash flow and debt reduction in fiscal 2009, in spite of challenging market conditions, and exit fiscal 2009 with a stronger balance sheet."

Oshkosh has a policy that if it determines that earnings per share for future periods could be at or above its disclosed projections, it does not publicly disseminate that.

Thus, Friday's announcement was an exception to the policy made in light of existing market conditions, according to the company.

In October, Oshkosh hopes to learn whether it will be selected as a finalist in a competition for a $40 billion Defense Department program.

Earlier this year, Oshkosh and defense contractor Northrop Grumman entered into a partnership to compete for the program that's meant to create a replacement for thousands of military Humvees, a troop carrier and utility vehicle launched in the 1980s.

If selected for the Joint Light Tactical Vehicle program, Oshkosh would design and manufacture the vehicles; Northrop Grumman would be the prime contractor and systems integrator.

Competition for the program includes defense-industry heavyweights such as Boeing Co., General Dynamics and Lockheed Martin Corp. Production could start in 2012.

Oshkosh shares closed at $11, up $1.44 or 15%.

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