UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 8, 1995
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Date of Report (Date of earliest event reported)
Harnischfeger Industries, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-9299 39-1566457
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(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
13400 Bishops Lane, Brookfield, Wisconsin 53005
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(Address of principal executive offices)
(414) 671-4400
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
This Form 8-K is submitted by Harnischfeger Industries,
Inc. ("the Company") to file its fiscal 1995 financial
statements, Management's Discussion and Analysis, related
schedules and exhibits as indicated in the index below.
Item 7. Financial Statements and Exhibits
The following financial statements and exhibits are
filed as part of this report:
(1) Management's Discussion and Analysis of Financial
Statements
(2) Financial Statements
Report of Price Waterhouse LLP
Report of Arthur Andersen LLP
Statement of Income for the years ended October
31, 1995, 1994 and 1993.
Balance Sheet at October 31, 1995 and 1994.
Statement of Cash Flows for the years ended
October 31, 1995, 1994 and 1993.
Statement of Shareholders' Equity for the years
ended October 31, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements
Financial Statement Schedules
For the Years Ended October 31, 1995, 1994 and 1993
II. Valuation and Qualifying Accounts
(3) Five Year Review of Selected Financial Data
(4) Exhibits
Exhibit
Number Exhibit
------- ---------------------------------------------
23(a) Consent of Price Waterhouse LLP
23(b) Consent of Arthur Andersen LLP
27 Financial Data Schedule (electronic filing only)
Management's Discussion and Analysis of Financial Statements
OVERVIEW
Focused energy, the driver of our continuing momentum,
resulted in the Company posting record results in fiscal
1995. The Company reported income from continuing
operations of $92.1 million, or $1.99 per share, on
consolidated net sales of $2,152.1 million. This compares
with income from continuing operations of $36.6 million, or
$0.84 per share, last year on sales of $1,551.7 million. In
addition, bookings increased 38% in 1995 while backlog at
October 31, 1995 was up 11%.
All three of the Company's core business segments continue
to experience strong order and sales activity. Leading the
way in 1995 was the Papermaking Machinery and Systems
segment, reporting net sales of $970.4 million, up 36% over
1994 levels, reflecting the continued upturn in the cyclical
worldwide pulp and paper industry. Operating profit
improved from $32.2 million in 1994 to $85.7 million in
1995.
The Mining Equipment segment, which includes the results
of P&H Mining Equipment and Joy Mining Machinery, reported
net sales of $941.8 million, up 29% from 1994. Return on
sales for the segment amounted to 13.0% in 1995 compared to
11.3% in 1994, an improvement due primarily to improved
manufacturing absorption and reduced manufacturing
variances.
Sales for the Material Handling segment increased 119% to
$239.9 million in 1995 from $109.4 million in 1994 and
operating profit increased from $12.1 million in 1994 to
$22.9 million in 1995. These strong results are primarily
due to the acquisition of Morris Mechanical Handling Limited
in September, 1994 (accounted for as a purchase), as well as
improved results from existing product lines.
Management continues to focus on the five characteristics
required for consideration as a core business as outlined
two years ago: a global marketplace, leadership positions
in the industries served, strong aftermarket sales
potential, technological superiority and the ability to earn
positive Economic Value Added ("EVA"). In 1995, acquisitions
once again were a prominent feature of this strategy. On
November 29, 1994, the acquisition of Joy Technologies
Inc.("Joy") was consummated with an exchange of common stock
and has now been fully integrated into the Harnischfeger
family of businesses. In early fiscal 1996, the Company
completed the acquisition of Dobson Park Industries plc
("Dobson"). Dobson, a manufacturer of roof supports and
face conveyors, is complementary with Joy, a producer of
underground mining equipment, and will significantly
strengthen the position of the Mining Equipment segment.
These acquisitions, as well as others in the Paper segment
and in the Material Handling segment, are discussed in more
detail below.
Fiscal 1995 marked the third year that the Company has been
guided by the EVA philosophy and the second year that EVA
has been fully adopted for purposes of management incentive
compensation. EVA, which measures net earnings in excess of
the weighted average after-tax cost of capital as an
important component of overall profitability, has helped to
drive down the Company's capital base and contributed to
improved earnings and share value. Each of the Company's
continuing segments again posted an improvement in EVA
achievement in 1995.
Acquisitions and Divestitures
The completion of the acquisition of Dobson early in fiscal
1996 firmly establishes the Company as a world leader in
both surface and underground mining equipment. The
transaction was completed for a purchase price of
approximately $330.0 million including transaction costs,
and will be accounted for as a purchase.
Dobson, headquartered in the United Kingdom, is an
industrial engineering group with interests in mining
equipment, industrial electronic control systems, toys and
plastics. Longwall International, one of the main
subsidiaries of Dobson, is engaged in the manufacture, sale
and service of mining equipment for the international coal
mining industry. Its principal products include
electronically controlled roof support systems, armored face
conveyors, pumps, and belt conveyor components and systems.
The acquisition of Dobson will enable Joy to offer
integrated underground longwall mining systems to the
worldwide mining industry. See additional discussion below
(Liquidity and Capital Resources) and Note 17 - Acquisition
of Dobson Park Industries plc.
On November 29, 1994, the Company completed the acquisition
of Joy through a stock-for-stock merger following approval
of the merger by shareholders of each company. Under the
terms of the acquisition, accounted for as a pooling of
interests, the Company exchanged 17,720,750 shares of
Company common stock for all of Joy's 31,353,000 outstanding
shares, at an exchange ratio of .5652 of a share of the
Company's common stock for each of Joy's common shares.
Joy's Mining Group is a leader in the worldwide
development, manufacture, distribution and service of
underground mining equipment for the extraction of coal and
other bedded materials.
Effective November 1, 1994, the fiscal year of Joy was
conformed to the Company's fiscal year. All periods
presented have been retroactively restated. Amounts related
to Joy in fiscal 1994 have been retroactively adjusted to
reflect the adoption of Statement of Financial Accounting
Standards ("SFAS") No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", through the
immediate recognition of the obligation to conform with the
Company's adoption. In addition, Joy's operating results
for the period February 26, 1994, to November 1, 1994, a net
loss of $(4.6) million on sales of $293.3 million, have been
reflected as an adjustment to the combined Company's
retained earnings on November 1, 1994.
Transaction costs incurred to complete the Joy merger of
$17.5 million ($11.4 million after tax or $0.24 per share)
were charged to income and consisted primarily of investment
banker, attorney and accountant fees, severance and related
benefits and printing, mailing and registration expenses.
In October, 1995, the Company's Beloit Corporation
subsidiary completed the acquisition of the roll-covering
business of Rollin, S.A. of France for a purchase price of
$13.5 million. This transaction is expected to
significantly strengthen Beloit's market position in the
roll-covering portion of the aftermarket throughout Europe.
The acquisition has been accounted for as a purchase.
In September, 1994, Beloit completed the acquisition of
OASIS, a company that provides specialty services to the
paper industry, for a purchase price of $7.0 million.
Fiscal 1995 proved to be a very active year for the
Material Handling segment which completed several
acquisitions aimed at strengthening its market presence both
internationally and domestically. Acquisitions included a
Canadian manufacturer of brake systems, manufacturers of
cranes (and related service aspects) located in Singapore
and the United States and two service-related organizations
in the United Kingdom. These transactions, together with
the acquisition of Morris Mechanical Handling Limited of the
United Kingdom and Hercules of Mexico in fiscal 1994, have
transformed this operating unit into a truly global
business.
In fiscal 1994, the Company announced its decision to
divest itself of Syscon Corporation ("Syscon"), the
remaining unit in the Company's Systems Group. The assets
and liabilities and operating results of Syscon were
segregated in the consolidated financial statements and were
reflected as net assets and results of discontinued
operations in the Balance Sheet and Statement of Income,
respectively. On February 16, 1995, the Company completed
the sale of Syscon to Logicon, Inc. for a cash price of
$45.0 million. In connection with this sale, the Company
recorded a loss on sale of discontinued operations of
$(21.9) million or $(0.48) per share, net of applicable
income taxes, in the first quarter of 1995.
On April 12, 1995, the Company announced its decision to
divest of Joy Environmental Technologies ("JET"), a unit of
Joy that supplies air pollution and ash handling equipment
for electric utilities and other industrial operations.
Accordingly, the operating results of JET were segregated
and reflected in the consolidated Statement of Income as a
discontinued operation. As a result, the Statement of
Income reflects an estimated loss from discontinued
operations of $(9.3) million or $(0.19) per share for fiscal
1995. Prior comparative periods have also been restated to
reflect JET as a discontinued operation. The Company
expects the unit to be sold early in fiscal 1996.
On October 29, 1993, the Company completed the sale of H-K
Systems, Inc.("H-K"), formerly Harnischfeger Engineers,
Inc., a unit in the former Systems Group, to that unit's
senior management and some equity partners. Proceeds from
the sale were $45.2 million and the Company reported a $16.2
million after-tax gain on the sale in 1993.
Results of Operations - Consolidated
SALES. Worldwide sales in fiscal 1995 amounted to $2,152.1
million representing an increase of 39% over 1994 sales of
$1,551.7 million.
All three segments reported strong increases, led by a 36%
increase in the Paper segment. Mining Equipment segment
sales surged ahead 29% over the prior year due to strong
increases in both the P&H Mining Equipment and Joy Mining
Machinery businesses. Material Handling segment sales
increased 119% over the prior year due to the full year
impact of the Morris Mechanical Handling Limited acquisition
in 1994 and improvements in existing product lines.
Sales for fiscal 1994 of $1,551.7 million were 10% greater
than 1993 sales of $1,409.2 million, boosted in particular
by the strong increase in the Paper segment of 23%. Sales
for the Mining Equipment segment of $729.5 million improved
over 1993 levels of $711.8 million. The Material Handling
segment saw a modest decline in sales.
COSTS AND EXPENSES. Cost of sales increased 40% to $1,671.9
million in 1995 from $1,195.9 million in 1994. This change
was primarily due to the strong increase in sales volume
reported during the period. Product development, selling
and administrative expenses as a percent of sales decreased
to 15.4% compared to 18.0% last year. This significant
decline reflects the synergies gained from the integration
of Joy into the Company during the year and continued
efforts to control costs across the board.
Cost of sales in 1994 increased 10% to $1,195.9 million
from $1,083.8 million in 1993. This increase is consistent
with the 10% increase in sales for the same period. Product
development, selling and administrative expenses as a
percent of sales decreased to 18.0% from 18.4% in 1993.
OPERATING RESULTS FROM CONTINUING OPERATIONS. The Company
reported income from continuing operations of $92.1 million
in 1995 ($103.5 million or $2.23 per share before Joy merger
costs), as compared to income from continuing operations of
$36.6 million in 1994 and a loss from continuing operations
of $(27.5) million in 1993. Significant factors
contributing to the increase in 1995 included a $103.9
million increase in segment operating profit, caused
primarily by higher net sales in 1995 and a $29.7 million
gain on the sale of the Company's investment in Measurex
Corporation. Offsetting this increase were higher taxes of
$39.5 million due to higher pre-tax results, Joy merger
transaction costs of $17.5 million and higher minority
interest due to higher comparative operating results of the
Paper segment.
1993 Restructuring Actions
In the third quarter of fiscal 1993, the Company recorded a
restructuring charge of $67.0 million ($43.1 million after-
tax, or $.97 per share) to strengthen and streamline its
papermaking machinery and mining equipment businesses
consistent with action plans developed in light of the
Company's previously determined five core business criteria.
The restructuring actions were substantially completed by
the end of fiscal 1994.
Details regarding specific restructuring actions are as
follows:
<TABLE>
<CAPTION>
1993 Restructuring Actions
(in millions)
P&H
Paper Mining
Segment Equipment Other Total
------- ---------- ------ ------
<S> <C> <C> <C> <C>
Closure of facilities $20.5 $ - $ - $20.5
Inventory dispositions - 13.0 - 13.0
Product line discontinuance
or modification 14.0 9.0 - 23.0
Employee severance - 3.5 - 3.5
Other 5.5 - 1.5 7.0
Pre-tax total $40.0 $ 25.5 $ 1.5 $67.0
</TABLE>
The cash and noncash elements of the restructuring charge
approximated $39.0 million and $28.0 million, respectively.
Additional details are discussed in the "Operating Results
by Business Segment" section which follows.
INCOME TAXES
The Company's effective tax rate from continuing
operations was 35.0% in 1995 (compared to a 35.0% federal
statutory rate), 26.5% in 1994, and (33.8)% in 1993. The
effective tax rate for 1994 differed from the federal
statutory rate of 35% due primarily to differences in
foreign and U.S. tax rates, general business credits and
lower state taxes due to net operating losses for state
income tax purposes.
A more detailed discussion of income taxes can be found in
the Notes to Consolidated Financial Statements Note 6 -
Income Taxes.
Adoption of New Accounting Standards
During the first quarter of fiscal 1994, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes" (SFAS 109), by restating prior
years' financial statements, retroactive to 1989. The
impact of adopting this standard was to reduce previously
reported shareholders' equity by $15.0 million at November
1, 1991.
During the first quarter of fiscal 1994, the Company adopted
SFAS No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions" through the immediate
recognition of the obligation. Under SFAS 106, the costs of
retiree health care and life insurance benefits are accrued
over relevant employee service periods. Previously, these
costs were charged to expense as claims were paid. The
cumulative effect of the accounting change required by this
Standard was a one-time pre-tax charge of $136.3 million
($81.7 million or $1.87 per share after taxes and minority
interest). The discount rate used in determining the
liability was 8.2%.
In 1993, the Board of Directors of the Company approved a
general approach that would culminate in the elimination of
all Company contributions towards postretirement health care
benefits. Increases in costs paid by the Company were
capped for certain plans beginning in 1994 extending through
1998 and Company contributions will be eliminated on January
1, 1999 for most employee groups, excluding Joy. For Joy,
based upon existing plan terms, future eligible retirees
will participate in a premium cost-sharing arrangement which
is based upon age as of March 1, 1993 and position at the
time of retirement. Active Joy employees under age 45 as of
March 1, 1993 and any new hires after April 1, 1993 will be
required to pay 100% of the applicable premium.
The initial one-time, pre-tax charge reflected all plan
terms and amendments in place on November 1, 1993. Negative
plan amendments made subsequent to November 1, 1993 are
being amortized from the date of amendment to January 1,
1999. Postretirement benefit expense recognized during
fiscal 1995 was reduced by $9.4 million for amortization of
negative plan amendments. See further discussion in
"Liquidity and Capital Resources" below.
The Company adopted SFAS 112, "Employers' Accounting for
Postemployment Benefits" in the first quarter of fiscal
1995. The impact of adoption of SFAS 112 on the Company's
results of operations and financial position was not
material.
<TABLE>
<CAPTION>
Bookings and Backlog
Backlog at October 31, 1995, 1994 and 1993 by business segment was as follows:
(in thousands)
1995 1994 1993
----- ----- ------
<S> <C> <C> <C>
Papermaking machinery and systems $ 679,625 $633,770 $550,660
Mining equipment 221,540 190,900 169,390
Material handling 130,879 107,112 43,112
-------- -------- ---------
$1,032,044 $931,782 $763,162
========= ======== =========
</TABLE>
Bookings were $2,252.3 million in 1995, $1,636.9 million in
1994 and $1,487.5 million in 1993. A discussion of changes
in bookings by segment is presented in the "Operating
Results by Business Segment" section which follows.
Liquidity and Capital Resources
<TABLE>
<CAPTION>
The Company's capital structure at October 31, 1995 and 1994
was as follows:
(in thousands)
1995 1994
---- -----
<S> <C> <C>
Short-term notes payable $ 18,921 $ 14,419
Long-term obligations, including current portion 462,991 571,054
-------- --------
481,912 585,473
Minority interest 89,611 85,570
Shareholders' equity, excluding SECT 619,759 556,125
-------- --------
Total capitalization $1,191,282 $1,227,168
========= =========
Debt to capitalization ratio 40.5% 47.7%
======== ========
</TABLE>
The Company's debt to capitalization ratio decreased to
40.5% at October 31, 1995 from 47.7% at October 31, 1994.
Significant decreases in long-term debt and an increase in
equity from strong operating profits resulted in the
improvement. Equity in the ratio calculation excludes the
Stock Employee Compensation Trust ("SECT") balance because
shares in the SECT are issued and outstanding.
Cash flow from operating activities was $125.3 million in
1995 compared to $117.3 million in 1994 and $62.5 million in
1993. The increase in cash flow between the periods was
primarily a result of higher operating income offset by a
net increase in working capital items.
Net working capital of $490.1 million at October 31, 1995
increased $58.8 million or 13.6% over October 31, 1994
levels of $431.3 million. Higher cash, accounts receivable
and inventory levels resulting from the strong fourth
quarter, more than offset increases in accounts payable,
employee compensation accruals and advance payments.
Net working capital increased to $431.3 million in 1994
from $375.2 million in 1993, due primarily to increases in
cash and accounts receivable.
Cash provided by investing activities in 1995 was $44.1
million, primarily generated from the sale of the Company's
investment in Measurex Corporation and from the sale of
Syscon Corporation, offset by acquisitions and capital
expenditures. Cash used in investing activities in 1994,
primarily for acquisitions and capital expenditures, was
$74.2 million.
Capital expenditures for net property, plant and equipment
in 1995 were $61.8 million compared with $41.7 million in
1994. The $20.1 million increase, more than half of which
was in the Paper segment, is reflective of the strong
cyclical upturn in the industries served by the Company and
management's commitment to maintain the most advanced plant
and equipment to serve those industries. Depreciation and
amortization was $70.5 million and $73.2 million in 1995 and
1994, respectively.
Cash used for financing activities in 1995 of $102.6
million was primarily for the redemption of Joy's bank
facility term loan and partial redemption of Joy's 10 1/4%
Senior Notes (see below), and for dividend requirements
offset by cash received from the exercise of stock options.
The $11.7 million use of cash for financing activities in
1994 reflects proceeds from the sale of treasury stock
offset by decreases in short-term obligations.
The acquisition of Joy, completed on November 29, 1994,
significantly altered the Company's capital structure. At
the time the transaction was completed, Joy's outstanding
long-term borrowings totaled approximately $318.0 million.
Of this amount, a $84.1 million bank facility, which was
subject to a change in control provision, was immediately
retired by the Company from available cash. Other debt
included $200.0 million of 10 1/4% Senior Notes due 2003
("Senior Notes") and approximately $34.0 million of
Industrial Revenue Bonds and other debt.
The indenture for the Senior Notes provides that, upon a
"Change in Control" as defined therein, each holder of the
Senior Notes shall have the right to require the repurchase
of the Senior Notes at a cash purchase price equal to 101%
of the principal amount thereof plus accrued but unpaid
interest, if any, to the date of purchase. The acquisition
of Joy constituted a "Change in Control" under the
indenture. On December 29, 1994, Joy offered to purchase
for cash any and all of its outstanding Senior Notes. This
offer expired on February 10, 1995 with $.3 million being
redeemed under the offer. Prior to this tender offer, the
Company had purchased $11.4 million of outstanding 10 1/4%
Senior Notes in unsolicited open market transactions. As a
result of the bank facility and Senior Note redemptions, the
Company recorded an extraordinary loss on debt retirement,
net of applicable income taxes, of $(3.5) million or $(0.08)
per share, consisting primarily of unamortized financing
costs and redemption premiums. The Company may, at its
option, redeem the Senior Notes in whole or in part at any
time on or after September 1, 1998 at 105.125% of their
principal amount, plus accrued interest, declining to 100%
of their principal amount, plus accrued interest, on or
after September 1, 2000.
In connection with the Joy acquisition, the Company
exchanged 17,720,750 common shares to consummate the
transaction, after which 47,666,301 common shares were
outstanding. In addition, the Company increased its
authorized common stock from 50,000,000 to 100,000,000
shares.
Other changes to the Company's capital structure in 1993-
1995 have been as follows:
(1) The sale of 2,000,000 shares of treasury stock in
September 1994 for $46.8 million in a private transaction.
This sale was executed in connection with the Company's
merger with Joy to satisfy requirements under the pooling of
interests accounting rules relating to treasury stock
purchases.
(2) In May, 1993, following a "Dutch auction" self-tender
offer, the Company purchased for cash 2,500,000 common
shares, or approximately 9% of common shares then
outstanding, at $19 5/8 per share, in conjunction with the
establishment of the Harnischfeger Industries, Inc. Stock
Employee Compensation Trust ("SECT"). Shares in the SECT
are being used to fund future employee benefit obligations
under plans that currently require shares of Company Common
Stock.
The Company maintains the ability to expand its borrowings
in several ways, including the following:
(1) A shelf registration with the Securities and Exchange
Commission for the sale of up to $150.0 million of debt
securities. To date, no securities have been issued under
this registration; however, see discussion below regarding
the acquisition of Dobson.
(2) A Revolving Credit Facility Agreement between the
Company and certain domestic and foreign financial
institutions that allows for borrowings of up to $240.0
million at rates expressed in relation to the LIBOR and
other rates.
(3) A short-term $200.0 million bridge financing facility
to be used temporarily, along with available cash, to
finance the Dobson acquisition in early December.
(4) Short-term bank credit lines of foreign subsidiaries of
approximately $122.1 million of which approximately $18.9
million was outstanding at October 31, 1995.
The Company believes its available cash, cash flow
provided by operating activities and committed credit lines
provide adequate liquidity on both a short- and long-term
basis.
The Company completed the acquisition of Dobson Park
Industries plc in early fiscal 1996 for a purchase price of
approximately $330.0 million including transaction costs.
The transaction was funded via the short-term bridge
financing facility arranged specifically for this
acquisition, issuance of commercial paper, other short-term
facilities and available cash. It is expected that up to
$150.0 million of these borrowings will be replaced with the
issuance of 30-year debt securities in mid-December 1995
under the Company's shelf registration, discussed above.
The Company has no significant capital commitments as of
October 31, 1995, other than the acquisition of Dobson
discussed above. Any future capital commitments are
expected to be funded through cash flow from operations and,
if necessary, from available lines of credit.
It is the Company's policy not to participate in high-
yield financings, highly leveraged transactions, or other
"derivative" instruments. Hedging of specific foreign
exchange transaction exposures does occur in certain
circumstances.
The Company intends to continue to expand its businesses,
both internally and through acquisitions. Acquisitions are
evaluated in light of the five characteristics required of a
core business. It is expected that new acquisitions would
be financed primarily by internally-generated funds or
additional borrowings.
The Company's restructuring actions announced in the third
quarter of fiscal 1993 were substantially completed by the
end of fiscal 1994. Related cash requirements in 1994 were
financed internally.
The previously discussed implementation in the first
quarter of 1994 of SFAS 106 will have no negative impact on
the Company's cash outlays for these retiree benefits. Cash
flow will improve in the future as Company contributions are
capped in future years and then eliminated in 1999 for
certain plans.
Operating Results by Business Segment
Papermaking Machinery and Systems
<TABLE>
<CAPTION>
(in thousands)
1995 1994 1993
-------- ------ --------
<S> <C> <C> <C>
Net sales $970,418 $712,778 $580,421
Operating profit before restructuring
charge 85,719 32,195 21,887
Restructuring charge - - (40,000)
Operating profit (loss) after
restructuring charge 85,719 32,195 (18,113)
Bookings 1,016,273 795,888 686,712
</TABLE>
The Papermaking Machinery and Systems segment reported
sales of $970.4 million and operating profit of $85.7
million for 1995. Sales volume in 1995 was 36% higher than
the prior year's level of $712.8 million, reflecting the
continued upturn in the cyclical worldwide pulp and paper
industry's spending for original equipment and aftermarket
services. Foreign sales of this segment amounted to 41% of
total sales in 1995 and 30% in 1994 compared to a more
typical 50/50 split, as U.S. activity was stronger than in
Europe. Operating profit in 1995 was 8.8% of sales
compared to 4.5% in 1994. Operating profit included
stronger gross margins due to stronger sales, improved
absorption of manufacturing overhead and a $29.7 million
gain from the sale of the Measurex Corporation investment.
Both sales and operating profit are expected to improve in
1996 as the cyclical upturn continues.
Net sales and operating profit amounted to $712.8 million
and $32.2 million, respectively, in 1994. Net sales were
23% higher than in 1993 reflecting the cyclical upturn in
the worldwide pulp and paper industry. Operating profit as
a percent of sales increased to 4.5% in 1994 from 3.8% in
1993 (before restructuring charges, discussed below).
In July, 1993, the Company announced plans to strengthen
and streamline its core businesses. As part of these plans,
the Paper segment recorded a $40.0 million restructuring
charge, primarily for the closure of its Canadian
papermaking machinery manufacturing facilities and
consolidation of North American papermaking machine
manufacturing operations in Beloit, Wisconsin. The Paper
segment's restructuring activities were substantially
completed in 1994.
Bookings activity improved in 1995 to $1,016.3 million
from $795.9 million in 1994. The 28% increase reflects
improved bookings in both pulp and paper machinery and
aftermarket products and services, as well as continued
strength in overseas markets. Bookings in 1996 are expected
to exceed new orders recorded in 1995. The Paper segment
continues to maintain its leadership in papermaking
machinery and allied products and services for the pulp and
paper industries.
Mining Equipment
<TABLE>
<CAPTION>
(in thousands)
1995 1994 1993
-------- ------- -------
<S> <C> <C> <C>
Net sales $941,779 $729,521 $711,751
Operating profit before restructuring
and nonrecurring charges 122,116 82,541 75,586
Restructuring and nonrecurring charges - - (33,500)
Operating profit (loss) after
restructuring and nonrecurring charges 122,116 82,541 42,086
Bookings 972,419 703,354 702,689
</TABLE>
The Mining Equipment segment reported net sales of $941.8
million in 1995, a 29% increase from 1994 sales of $729.5
million. The sales increase is due to increases in both
original equipment and aftermarket activity for both the
surface and underground mining operations. Operating profit
was $122.1 million or 13.0% of sales compared to operating
profit of $82.5 million or 11.3% of sales in 1994. The
increase in operating profit is primarily due to increased
sales, improved manufacturing absorption and reduced
manufacturing variances. Foreign sales of the Mining
Equipment segment amounted to 44% of total sales in 1995,
48% in 1994 and 49% in 1993.
Net sales and operating profit before restructuring and
nonrecurring charges amounted to $711.8 million and $75.6
million, respectively, in 1993.
In the third quarter of fiscal 1993, the Mining Equipment
segment recorded a $25.5 million restructuring charge for
activities related principally to its plans to reduce
worldwide inventory and to enhance manufacturing and repair
parts capabilities. Other elements in the restructuring
charge provided for refocusing manufacturing and marketing
efforts and for employee severance costs. In addition, an
$8.0 million nonrecurring charge was recorded to reflect the
reestimation of certain warranty reserves. These charges
reduced operating results to $42.1 million in 1993. The
activities addressed in the reserve were completed in 1994.
Bookings amounted to $972.4 million in 1995 and $703.4
million in 1994 representing a 38% increase. Strong
bookings levels are expected to continue in fiscal 1996 in
both surface and underground mining products.
Material Handling
<TABLE>
<CAPTION>
(in thousands)
1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
Net sales $239,882 $109,429 $117,032
Operating profit 22,850 12,094 6,753
Bookings 263,649 137,689 98,101
</TABLE>
The Material Handling segment reported net sales of $239.9
million in 1995, an increase of 119% from 1994 levels of
$109.4 million. Operating profit increased to $22.9 million
compared to $12.1 million in 1994. Both sales and
profitability increases are due to the September 1994
acquisition of Morris Mechanical Handling Limited as well as
improving results from original equipment sales and
aftermarket services from existing businesses. While sales
of the Material Handling segment were principally in the
U.S. in 1994, foreign sales in 1995 amounted to 48%
reflecting the growing international presence of this
segment.
Net sales of the Material Handling segment decreased to
$109.4 million in 1994 from $117.0 million in 1993.
Operating profit, however, increased to $12.1 million from
$6.8 million in 1993, reflecting higher machine margins and
the continued growth of the segment's aftermarket business.
Bookings amounted to $263.6 million in 1995, a 91%
increase from $137.7 million in 1994. The 1994 bookings do
not include purchased backlog of the Morris acquisition of
$35.7 million. The sharp increase in bookings in 1995
reflects the acquisition of Morris, the segment's leadership
in the domestic equipment market and the continued growth of
its aftermarket business.
Discontinued Operations
<TABLE>
<CAPTION>
(in thousands)
1995 1994 1993
--------- ---------- -----------
<S> <C> <C> <C>
Net sales $101,472 $263,274 $406,619
Income (loss) from discontinued
operations (31,235) (3,982) 7,760
</TABLE>
Net sales and loss from discontinued operations in 1995 were
$101.5 million and $(31.2) million, respectively. The
decrease in sales activity from 1994 is due to the sale of
Syscon Corporation to Logicon, Inc. on February 16, 1995,
and lower comparative sales of Joy Environmental
Technologies.
Net sales and loss from discontinued operations in 1994
amounted to $263.3 million and $(4.0) million, respectively,
as compared to $406.6 million and $7.8 million,
respectively, for 1993. The decrease from 1993 was
primarily from the sale of H-K Systems, Inc. (formerly
Harnischfeger Engineers, Inc.) in October, 1993.
See Note 16 - Discontinued Operations.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Directors and Shareholders of
Harnischfeger Industries, Inc.
In our opinion, based upon our audits and the report of
other auditors, the consolidated financial statements listed
in the accompanying index present fairly, in all material
respects, the financial position of Harnischfeger
Industries, Inc. and its subsidiaries (the "Company") at
October 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years
in the period ended October 31, 1995, in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Company's
management; our responsibility is to express an opinion on
these financial statements based on our audits. We did not
audit the consolidated financial statements of Joy
Technologies Inc., which statements reflect total assets of
$543.1 million at February 25, 1994 and total revenues of
$572.7 million and $583.3 million for the years ended
February 25, 1994 and February 26, 1993, respectively.
Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed
herein, insofar as it relates to the amounts included for
Joy Technologies Inc. as of February 25, 1994 and for the
years ended February 25, 1994 and February 26, 1993, is
based solely on the report of the other auditors. We
conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors
provide a reasonable basis for the opinion expressed above.
As discussed in Note 9, in the first quarter of fiscal 1994,
the Company changed its method of accounting for
postretirement benefits other than pensions.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
November 28, 1995
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Joy Technologies Inc.:
We have audited the accompanying consolidated balance sheet
of Joy Technologies Inc. (a Delaware corporation) and
Subsidiaries as of February 25, 1994, and the related
consolidated statements of income, accumulated deficit and
cash flows for each of the two years in the period ended
February 25, 1994. These financial statements (not
presented separately herein) are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Joy Technologies Inc. and
Subsidiaries as of February 25, 1994, and the results of
their operations and their cash flows for each of the two
years in the period ended February 25, 1994, in conformity
with generally accepted accounting principles.
As discussed in Note 12 to the consolidated financial
statements, the Company changed its method of accounting for
postretirement benefits other than pensions.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 25, 1994
<PAGE>
<TABLE>
<CAPTION>
Statement of Income
Year Ended October 31,(Dollar amounts in thousands except per share amounts)
Years ended October 31,
-----------------------
1995
--------
<S> <C>
Revenues
Net sales $2,152,079
Other income 61,865
----------
2,213,944
Cost of Sales 1,671,932
Product Development, Selling
and Administrative Expenses 330,990
Restructuring Charges -
Nonrecurring Charge -
--------
Operating Income (Loss) 211,022
Interest Expense-Net (40,713)
--------
Income (Loss) before
Joy Merger Costs,Provision
(Credit) for Income Taxes
and Minority Interest 170,309
Joy Merger Costs (17,459)
Provision (Credit) for Income
Taxes (including credit
of $6,075 relating to
Joy merger costs) 53,500
Minority Interest (7,230)
---------
Income (Loss) from Continuing
Operations (after deducting
$11,384, net of applicable
income taxes, related to Joy
merger costs) 92,120
Income (Loss) from and (Net Loss)
on Sale of Discontinued
Operations, net of applicable
income taxes (31,235)
Extraordinary Loss on Retirement of
Debt, net of applicable
income taxes (3,481)
Cumulative Effect of Accounting Change,
net of applicable income taxes and
minority interest -
---------
Net Income (Loss) $ 57,404
=========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting $0.24
per share related to Joy merger
costs) $ 1.99
Income (loss) from and (net loss) on
sale of discontinued operations (0.67)
Extraordinary loss on retirement of
debt (0.08)
Cumulative effect of accounting
change -
---------
Net Income (Loss)Per Share $ 1.24
=========
The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Income
Year Ended October 31,(Dollar amounts in thousands except per share amounts)
Years ended October 31,
-----------------------
1994
---------
<S> <C>
Revenues
Net sales $1,551,728
Other income 23,301
----------
1,575,029
Cost of Sales 1,195,851
Product Development, Selling
and Administrative Expenses 279,016
Restructuring Charges -
Nonrecurring Charge -
----------
Operating Income (Loss) 100,162
Interest Expense-Net (47,366)
-----------
Income (Loss) before
Joy Merger Costs,Provision
(Credit) for Income Taxes
and Minority Interest 52,796
Joy Merger Costs -
Provision (Credit) for Income
Taxes (including credit
of $6,075 relating to
Joy merger costs) 13,979
Minority Interest (2,224)
-----------
Income (Loss) from Continuing
Operations (after deducting
$11,384, net of applicable
income taxes, related to Joy
merger costs) 36,593
Income (Loss) from and (Net Loss)
on Sale of Discontinued
Operations, net of applicable
income taxes (3,982)
Extraordinary Loss on Retirement of
Debt, net of applicable
income taxes (4,827)
Cumulative Effect of Accounting Change,
net of applicable income taxes and
minority interest (81,696)
---------
Net Income (Loss) $ (53,912)
=========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting $0.24
per share related to Joy merger
costs) $ 0.84
Income (loss) from and (net loss) on
sale of discontinued operations (0.09)
Extraordinary loss on retirement of
debt (0.11)
Cumulative effect of accounting
change (1.87)
--------
Net Income (Loss)Per Share $ (1.23)
========
The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Income
Year Ended October 31,(Dollar amounts in thousands except per share amounts)
Years ended October 31,
----------- ---------------
1993
------
<S> <C>
Revenues
Net sales $1,409,204
Other income 9,040
----------
1,418,244
Cost of Sales 1,083,846
Product Development, Selling
and Administrative Expenses 259,831
Restructuring Charges 67,000
Nonrecurring Charge 8,000
----------
Operating Income (Loss) (433)
Interest Expense-Net (48,313)
----------
Income (Loss) before
Joy Merger Costs,Provision
(Credit) for Income Taxes
and Minority Interest (48,746)
Joy Merger Costs -
Provision (Credit) for Income
Taxes (including credit
of $6,075 relating to
Joy merger costs) (16,497)
Minority Interest 4,799
----------
Income (Loss) from Continuing
Operations (after deducting
$11,384, net of applicable
income taxes, related to Joy
merger costs) (27,450)
Income (Loss) from and (Net Loss)
on Sale of Discontinued
Operations, net of applicable
income taxes 7,760
Extraordinary Loss on Retirement of
Debt, net of applicable
income taxes -
Cumulative Effect of Accounting Change,
net of applicable income taxes and
minority interest -
----------
Net Income (Loss) $ (19,690)
==========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting $0.24
per share related to Joy merger
costs) $ (0.62)
Income (loss) from and (net loss) on
sale of discontinued operations 0.18
Extraordinary loss on retirement of
debt -
Cumulative effect of accounting
change -
----------
Net Income (Loss)Per Share $ (0.44)
==========
The Accompanying Notes are an Integral Part of the Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet
October 31,(Dollar amounts in thousands)
October 31,
------------
1995
----------
<S> <C>
Assets
Current Assets:
Cash and cash equivalents (including cash equivalents
of $197,230 and $153,224 in 1995 and 1994,
respectively, at cost which approximates market) $ 239,043
Accounts receivable-net 499,953
Inventories 416,395
Net current assets of discontinued operation -
Other current assets 57,999
-----------
1,213,390
Property, Plant and Equipment:
Land and improvements 31,571
Buildings 233,788
Machinery and equipment 676,546
-----------
941,905
Accumulated depreciation (454,249)
-----------
487,656
Investments and Other Assets:
Investment in Measurex Corporation -
Goodwill 147,943
Intangible assets 66,796
Other assets 124,982
Net noncurrent assets of discontinued operation -
-----------
339,721
Total Assets $2,040,767
===========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term notes payable, including current portion of
long-term obligations $ 22,802
Trade accounts payable 263,750
Employee compensation and benefits 100,041
Advance payments and progress billings 154,401
Accrued warranties 43,801
Other current liabilities 138,508
-----------
723,303
Long-term Obligations 459,110
Other Liabilities:
Liability for postretirement benefits 101,605
Accrued pension and related costs 52,237
Other liabilities 20,820
Deferred income taxes 34,805
-----------
209,467
Minority Interest 89,611
Shareholders' Equity:
Common stock (issued 51,117,774 shares
and 50,506,471
shares, respectively) 51,118
Capital in excess of par value 603,712
Retained earnings 53,560
Cumulative translation adjustments (42,118)
-----------
666,272
Less: Stock Employee Compensation Trust (1,920,100
shares and 2,150,416 shares, respectively)
at market (60,483)
Treasury Stock (2,504,613 shares and
2,852,604 shares, respectively) at cost (46,513)
-----------
559,276
-----------
$2,040,767
===========
The Accompanying Notes are an Integral Part of
the Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet
October 31,(Dollar amounts in thousands)
October 31,
--------------
1994
-------------
<S> <C>
Assets
Current Assets:
Cash and cash equivalents (including cash equivalents
of $197,230 and $153,224 in 1995 and 1994,
respectively, at cost which approximates market) $ 196,455
Accounts receivable-net 421,871
Inventories 357,847
Net current assets of discontinued operation 20,047
Other current assets 47,181
-----------
1,043,401
Property, Plant and Equipment:
Land and improvements 31,999
Buildings 235,708
Machinery and equipment 633,975
-----------
901,682
Accumulated depreciation (411,445)
-----------
490,237
Investments and Other Assets:
Investment in Measurex Corporation 66,347
Goodwill 143,899
Intangible assets 69,729
Other assets 125,089
Net noncurrent assets of discontinued operation 43,251
-----------
448,315
Total Assets $1,981,953
===========
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term notes payable, including current portion of
long-term obligations $ 16,540
Trade accounts payable 237,618
Employee compensation and benefits 75,679
Advance payments and progress billings 121,212
Accrued warranties 33,529
Other current liabilities 127,498
-----------
612,076
Long-term Obligations 568,933
Other Liabilities:
Liability for postretirement benefits 118,610
Accrued pension and related costs 55,409
Other liabilities 18,239
Deferred income taxes 20,751
-----------
213,009
Minority Interest 85,570
Shareholders' Equity:
Common stock (issued 51,117,774 shares and 50,506,471
shares, respectively) 50,506
Capital in excess of par value 576,886
Retained earnings 19,936
Cumulative translation adjustments (39,194)
-----------
608,134
Less: Stock Employee Compensation Trust (1,920,100 shares
and 2,150,416 shares, respectively) at market (53,760)
Treasury Stock (2,504,613 shares and 2,852,604 shares,
respectively) at cost (52,009)
-----------
502,365
-----------
$1,981,953
===========
The Accompanying Notes are an Integral Part of the Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Cash Flows
Year Ended October 31,(Dollar amounts in thousands)
Years ended October 31,
--------------------
1995
-----
<S> <C>
Operating Activities
Net income (loss) $57,404
Add(deduct)-Items not affecting cash:
Income (loss) from discontinued operations 31,235
Restructuring charges -
Nonrecurring charge -
Extraordinary loss on retirement of debt,
net of income taxes 3,481
Cumulative effect of accounting change, net of
income taxes and minority interest -
Gain on sale of investment in Measurex
Corporation, net of income taxes (18,684)
Depreciation and amortization 70,512
Minority interest, net of dividends paid 3,589
Deferred income taxes-net 10,937
Other-net 3,621
Changes in working capital, excluding the
effects of acquisitions
(Increase) decrease in accounts receivable-net (73,343)
(Increase) decrease in inventories (28,003)
(Increase) in net current assets of
discontinued operations -
(Increase) decrease in other current assets (7,776)
Increase (decrease) in trade accounts payable 13,922
Increase (decrease) in employee compensation and
benefits 16,217
Increase in advance payments and progress
billings 34,156
Increase (decrease) in other current
liabilities 8,033
---------
Net cash provided by operating activities 125,301
---------
Investment and Other Transactions
Acquisitions (27,905)
Proceeds from sales of discontinued operations 45,000
Proceeds from sale of investment in
Measurex Corporation 96,004
Property, plant and equipment-net (61,760)
Other-net (7,249)
---------
Net cash provided by (applied to) investment and
other transactions 44,090
---------
Financing Activities
Sale of treasury stock -
Purchase of stock for Stock Employee
Compensation Trust -
Purchase of treasury stock (3,009)
Dividends paid (18,524)
Exercise of stock options 17,309
Issuance of long-term obligations 9,588
Redemption of long-term obligations (108,769)
Increase (decrease) in short-term notes payable 828
---------
Net cash (applied to) financing activities (102,577)
---------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (520)
---------
Increase (Decrease) in Cash and Cash Equivalents 66,294
(Use) of Cash by Joy Technologies from
February 26, 1994 to November 1, 1994 (23,706)
Cash and Cash Equivalents at Beginning of Year 196,455
---------
Cash and Cash Equivalents at End of Year $239,043
=========
The Accompanying Notes are an Integral Part of the Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Cash Flows
Year Ended October 31,(Dollar amounts in thousands)
Years ended October 31,
-------------------------
1994
-----
<S> <C>
Operating Activities
Net income (loss) $(53,912)
Add(deduct)-Items not affecting cash:
Income (loss) from discontinued operations 3,982
Restructuring charges -
Nonrecurring charge -
Extraordinary loss on retirement of debt,
net of income taxes 4,827
Cumulative effect of accounting change, net of
income taxes and minority interest 81,696
Gain on sale of investment in Measurex
Corporation, net of income taxes -
Depreciation and amortization 73,243
Minority interest, net of dividends paid 571
Deferred income taxes-net (12,853)
Other-net (17,194)
Changes in working capital, excluding the
effects of acquisitions
(Increase) decrease in accounts receivable-net (16,598)
(Increase) decrease in inventories 22,470
(Increase) in net current assets of
discontinued operations (20,047)
(Increase) decrease in other current assets (3,903)
Increase (decrease) in trade accounts payable 53,971
Increase (decrease) in employee
compensation and benefits (6,420)
Increase in advance payments and progress
billings 45,247
Increase (decrease) in other current
liabilities (37,739)
--------
Net cash provided by operating activities 117,341
--------
Investment and Other Transactions
Acquisitions (34,479)
Proceeds from sales of discontinued operations -
Proceeds from sale of investment in
Measurex Corporation -
Property, plant and equipment-net (41,737)
Other-net 2,056
---------
Net cash provided by (applied to) investment and
other transactions (74,160)
---------
Financing Activities
Sale of treasury stock 46,760
Purchase of stock for Stock Employee
Compensation Trust -
Purchase of treasury stock (124)
Dividends paid (10,477)
Exercise of stock options 2,983
Issuance of long-term obligations 197,411
Redemption of long-term obligations (195,350)
Increase (decrease) in short-term notes payable (52,917)
---------
Net cash (applied to) financing activities (11,714)
---------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (86)
---------
Increase (Decrease) in Cash and Cash Equivalents 31,381
(Use) of Cash by Joy Technologies from
February 26, 1994 to November 1, 1994 -
Cash and Cash Equivalents at Beginning of Year 165,074
---------
Cash and Cash Equivalents at End of Year $196,455
=========
The Accompanying Notes are an Integral Part
of the Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Statement of Cash Flows
Year Ended October 31,(Dollar amounts in thousands)
Years ended October 31,
------------------------
1993
------
<S> <C>
Operating Activities
Net income (loss) $ (19,690)
Add(deduct)-Items not affecting cash:
Income (loss) from discontinued operations (7,760)
Restructuring charges 67,000
Nonrecurring charge 8,000
Extraordinary loss on retirement of debt,
net of income taxes -
Cumulative effect of accounting change, net of
income taxes and minority interest -
Gain on sale of investment in Measurex
Corporation, net of income taxes -
Depreciation and amortization 72,629
Minority interest, net of dividends paid (7,956)
Deferred income taxes-net (28,268)
Other-net (9,653)
Changes in working capital, excluding the
effects of acquisitions
(Increase) decrease in accounts receivable-net 64,946
(Increase) decrease in inventories (9,132)
(Increase) in net current assets of
discontinued operations -
(Increase) decrease in other current assets 9,091
Increase (decrease) in trade accounts payable (7,803)
Increase (decrease) in employee compensation and
benefits (24,138)
Increase in advance payments and progress
billings 7,271
Increase (decrease) in other current liabilities (52,060)
--------
Net cash provided by operating activities 62,477
--------
Investment and Other Transactions
Acquisitions (410)
Proceeds from sales of discontinued operations 23,219
Proceeds from sale of investment in
Measurex Corporation -
Property, plant and equipment-net (70,361)
Other-net (2,028)
--------
Net cash provided by (applied to) investment and
other transactions (49,580)
--------
Financing Activities
Sale of treasury stock -
Purchase of stock for Stock Employee
Compensation Trust (49,431)
Purchase of treasury stock (1,381)
Dividends paid (10,669)
Exercise of stock options 266
Issuance of long-term obligations 343
Redemption of long-term obligations (49,972)
Increase (decrease) in short-term notes payable 20,620
--------
Net cash (applied to) financing activities (90,224)
--------
Effect of Exchange Rate Changes on Cash
and Cash Equivalents (8,855)
--------
Increase (Decrease) in Cash and Cash Equivalents (86,182)
(Use) of Cash by Joy Technologies from
February 26, 1994 to November 1, 1994 -
Cash and Cash Equivalents at Beginning of Year 251,256
---------
Cash and Cash Equivalents at End of Year $165,074
=========
The Accompanying Notes are an Integral Part
of the Financial Statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of Shareholders' Equity
(Dollar amounts in thousands)
Capital in
Common Excess of
Stock Par Value
------- ---------
<S> <C> <C>
Balance at October
31, 1992 $50,596 $553,798
Net loss
Exercise of stock
options 3 49
Issuance of
restricted stock 11 132
Dividends paid ($0.40 per
share)
Dividends on
shares held
by SECT 508
Establishment of SECT
Adjust SECT shares to
market value 6,277
Translation adjustments
2,577,500 shares
acquired as
Treasury Stock
Purchase of shares
by employee benefit
plans
Other activity - net (35) (586)
-------- ---------
Balance at October
31, 1993 50,575 560,178
Net loss
Exercise of stock
options 3 (963)
Issuance of
restricted stock (120)
Dividends paid ($0.40 per
share)
Dividends on
shares held
by SECT 902
Adjust SECT shares to
market value 6,496
Translation adjustments
4,875 shares acquired
as Treasury Stock
Sale of 2,000,000 shares of
Treasury Stock 10,300
Purchase of shares
by employee benefit
plans
Other activity - net (72) 93
--------- --------
Balance at October
31, 1994 50,506 576,886
Adjustment related to
Joy Technologies
from February 26,1994-
November 1, 1994 13 182
--------- ---------
Adjusted Balance
at November 1, 1994 50,519 577,068
Net income
Exercise of 861,930
stock options 599 9,131
Dividends paid ($0.40
per share)
Dividends on
shares held by
SECT 681
Adjust SECT shares to
market value 16,832
Translation adjustments
110,000 shares acquired
as Treasury Stock
457,991 shares transferred
from Treasury Stock
to SECT
425,345 shares purchased
by employee benefit
plans
------- ----------
Balance at October
31, 1995 $51,118 $603,712
-------- ----------
The Accompanying Notes are an Integral
Part of the Financial Statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Statement of Shareholders' Equity
(Dollar amounts in thousands)
Cumulative
Retained Translation
Earnings Adjustments
--------- ------------
<S> <C> <C>
Balance at October
31, 1992 $116,094 $(22,883)
Net loss (19,690)
Exercise of stock
options
Issuance of
restricted stock
Dividends paid ($0.40 per
share) (11,177)
Dividends on
shares held
by SECT
Establishment of SECT
Adjust SECT shares to
market value
Translation adjustments (17,683)
2,577,500 shares
acquired as
Treasury Stock
Purchase of shares
by employee benefit
plans
Other activity - net
-------- -----------
Balance at October
31, 1993 85,227 (40,566)
Net loss (53,912)
Exercise of stock
options
Issuance of
restricted stock
Dividends paid ($0.40 per
share) (11,379)
Dividends on
shares held
by SECT
Adjust SECT shares to
market value
Translation adjustments 1,372
4,875 shares acquired
as Treasury Stock
Sale of 2,000,000 shares of
Treasury Stock
Purchase of shares
by employee benefit
plans
Other activity - net
------ ----------
Balance at October
31, 1994 19,936 (39,194)
Adjustment related to
Joy Technologies
from February 26, 1994-
November 1, 1994 (4,575) 1,742
-------- ----------
Adjusted Balance
at November 1, 1994 15,361 (37,452)
Net income 57,404
Exercise of 861,930
stock options
Dividends paid ($0.40
per share) (19,205)
Dividends on
shares held by
SECT
Adjust SECT shares to
market value
Translation adjustments (4,666)
110,000 shares acquired
as Treasury Stock
457,991 shares transferred
from Treasury Stock
to SECT
425,345 shares purchased
by employee benefit
plans
----------- ------------
Balance at October
31, 1995 $53,560 $(42,118)
=========== ============
The Accompanying Notes are an Integral Part
of the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Shareholders' Equity
(Dollar amounts in thousands)
Treasury
SECT Stock
------ ---------
<S> <C> <C>
Balance at October
31, 1992 - $(87,533)
Net loss
Exercise of stock
options 214
Issuance of
restricted stock
Dividends paid ($0.40 per
share)
Dividends on
shares held
by SECT
Establishment of SECT (50,000) 50,000
Adjust SECT shares to
market value (6,277)
Translation adjustments
2,577,500 shares
acquired as
Treasury Stock (50,812)
Purchase of shares
by employee benefit
plans 163
Other activity - net
-------- ---------
Balance at October
31, 1993 (55,900) (88,345)
Net loss
Exercise of stock
options 3,943
Issuance of
restricted stock 262
Dividends paid ($0.40 per
share)
Dividends on
shares held
by SECT
Adjust SECT shares to
market value (6,496)
Translation adjustments
4,875 shares acquired
as Treasury Stock (124)
Sale of 2,000,000 shares of
Treasury Stock 36,460
Purchase of shares
by employee benefit
plans 4,431
Other activity - net
-------- ---------
Balance at October
31, 1994 (53,760) (52,009)
Adjustment related to
Joy Technologies
from February 26, 1994-
November 1, 1994 - -
-------- ----------
Adjusted Balance
at November 1, 1994 (53,760) (52,009)
Net income
Exercise of 861,930
stock options 7,579
Dividends paid ($0.40
per share)
Dividends on
shares held by
SECT
Adjust SECT shares to
market value (16,832)
Translation adjustments
110,000 shares acquired
as Treasury Stock (3,009)
457,991 shares transferred
from Treasury Stock
to SECT (8,505) 8,505
425,345 shares purchased
by employee benefit
plans 11,035
--------- ----------
Balance at October
31, 1995 $(60,483) $(46,513)
========= ==========
The Accompanying Notes are an Integral Part
of the Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Shareholders' Equity
(Dollar amounts in thousands)
Total
-------
<S> <C>
Balance at October
31, 1992 $610,072
Net loss (19,690)
Exercise of stock
options 266
Issuance of
restricted stock 143
Dividends paid ($0.40 per
share) (11,177)
Dividends on
shares held
by SECT 508
Establishment of SECT -
Adjust SECT shares to
market value -
Translation adjustments (17,683)
2,577,500 shares
acquired as
Treasury Stock (50,812)
Purchase of shares
by employee benefit
plans 163
Other activity - net (621)
--------
Balance at October
31, 1993 511,169
Net loss (53,912)
Exercise of stock
options 2,983
Issuance of
restricted stock 142
Dividends paid ($0.40 per
share) (11,379)
Dividends on
shares held
by SECT 902
Adjust SECT shares to
market value -
Translation adjustments 1,372
4,875 shares acquired
as Treasury Stock (124)
Sale of 2,000,000
shares of
Treasury Stock 46,760
Purchase of shares
by employee benefit
plans 4,431
Other activity - net 21
-------
Balance at October
31, 1994 502,365
Adjustment related to
Joy Technologies
from February 26, 1994-
November 1, 1994 (2,638)
--------
Adjusted Balance
at November 1, 1994 499,727
Net income 57,404
Exercise of 861,930
stock options 17,309
Dividends paid ($0.40
per share) (19,205)
Dividends on
shares held by
SECT 681
Adjust SECT shares to
market value -
Translation adjustments (4,666)
110,000 shares acquired
as Treasury Stock (3,009)
457,991 shares transferred
from Treasury Stock
to SECT -
425,345 shares purchased
by employee benefit
plans 11,035
---------
Balance at October
31, 1995 $559,276
==========
The Accompanying Notes are an Integral Part of the Financial
Statements.
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Dollar amounts in thousands unless indicated.)
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The consolidated financial
statements and related notes give retroactive effect to the
merger on November 29, 1994 with Joy Technologies Inc.
("Joy") for all periods presented, accounted for as a
pooling of interests. The consolidated balance sheets as of
October 31, 1995 and 1994 include the accounts of Joy as of
October 31, 1995 and February 25, 1994, respectively. The
consolidated statements of income and of cash flows for each
of the three years ended October 31, 1995 include the
results of Joy for the years ended October 31, 1995,
February 25, 1994, and February 26, 1993, respectively. The
consolidated statements of income for each of these three
years have also been restated to reflect the Company's
divestiture of the Systems Group in 1995 and Joy
Environmental Technologies ("JET") accounted for as
discontinued operations. See Note 16 - Discontinued
Operations. The term "Company" as used in these consolidated
financial statements refers to Harnischfeger Industries,
Inc. and its subsidiaries, including Joy.
PRINCIPLES OF CONSOLIDATION - The consolidated financial
statements include the accounts of all majority-owned
subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
INVENTORIES - Inventories are stated at the lower of cost or
market value. Cost is determined by the last-in, first-out
(LIFO) method for substantially all domestic inventories and
by the first-in, first-out (FIFO) method for the majority of
inventories of foreign subsidiaries.
REVENUE RECOGNITION - Revenue on long-term contracts is
generally recorded using the percentage-of-completion method
for financial reporting purposes. Such contracts include
contracts for papermaking machinery, certain mining
equipment and custom-engineered cranes. Losses, if any, are
recognized in full as soon as identified. Sales of other
products and services are recorded as products are shipped
or services are rendered.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and
equipment is stated at historical cost. Expenditures for
major renewals and improvements are capitalized, while
maintenance and repairs which do not significantly improve
the related asset or extend its useful life are charged to
expense as incurred.
For financial reporting purposes, plant and equipment is
depreciated primarily by the straight-line method over the
estimated useful lives of the assets. Depreciation claimed
for income tax purposes is computed by accelerated methods.
CASH EQUIVALENTS - The Company considers all highly liquid
debt instruments with a maturity of three months or less at
the date of purchase to be cash equivalents.
FOREIGN EXCHANGE CONTRACTS - Any gain or loss on forward
contracts designated as hedges of commitments is deferred
and included in the measurement of the related foreign
currency transaction, except that permanent losses are
recognized immediately.
FOREIGN CURRENCY TRANSLATION - The majority of the assets
and liabilities of the Company's international operations
are translated at year-end exchange rates; income and
expenses are translated at average exchange rates prevailing
during the year.
For operations whose functional currency is the local
currency, translation adjustments are accumulated in a
separate section of shareholders' equity. Transaction gains
and losses, as well as translation adjustments relating to
operations whose functional currency is the U.S. dollar, are
reflected in income. Pre-tax foreign exchange gains
(losses) included in operating income were $1,901, $(1,619)
and $2,769 in 1995, 1994 and 1993, respectively.
GOODWILL AND INTANGIBLE ASSETS - Goodwill represents the
excess of the purchase price over the fair value of
identifiable net assets of acquired companies and is
amortized on a straight-line basis over periods ranging from
25 to 40 years. The Company assesses the carrying value of
goodwill at each balance sheet date. Consistent with
Financial Accounting Standard (SFAS) No. 121, "Accounting
for the Impairment of Long-Lived Assets," such assessments
include, as appropriate, a comparison of (a) the estimated
future nondiscounted cash flows anticipated to be generated
during the remaining amortization period of the goodwill to
(b) the net carrying value of goodwill. The Company
recognizes diminution in value of goodwill, if any, on a
current basis. Other intangible assets are amortized over
the shorter of their legal or economic useful lives ranging
from 5 to 20 years. Accumulated amortization was $98,200
and $76,480 at October 31, 1995 and 1994, respectively.
INCOME TAXES - In 1994, the Company adopted SFAS No. 109,
"Accounting for Income Taxes", retroactive to November 1,
1988. Under SFAS 109, deferred income taxes are recognized
for the tax consequences of "temporary differences" by
applying enacted statutory tax rates applicable to future
years to differences between the financial statement
carrying amounts and the tax bases of existing assets and
liabilities, and for tax basis carryforwards. A valuation
allowance is provided for deferred tax assets where it is
considered more likely than not that the Company will not
realize the benefit of such assets. The consolidated
financial statements for each year presented take into
account the effects of SFAS 109. See Note 6-Income Taxes.
RESEARCH AND DEVELOPMENT EXPENSES - Research and development
costs are expensed as incurred. Such costs incurred in the
development of new products or significant improvements to
existing products amounted to $30,348, $28,879, and $26,710
in 1995, 1994 and 1993, respectively. Certain capital
expenditures used in research activities, such as the
construction of a pilot paper machine used in research and
for customer tests, are capitalized and depreciated over
their expected useful lives.
EARNINGS PER SHARE - Earnings per share are based upon the
weighted average number of common shares outstanding during
the year. The number of shares used in the computation were
46,218,144 in 1995, 43,716,464 in 1994, and 44,393,043 in
1993. Common stock equivalents were not significant in any
of the years presented. Shares in the Stock Employee
Compensation Trust ("SECT") are not considered outstanding
for purposes of computing earnings per share.
NOTE 2
ACQUISITIONS
On November 29, 1994, the Company completed the acquisition
of Joy Technologies Inc. upon the approval of the
shareholders of each company. Under the terms of the
acquisition, accounted for as a pooling of interests, the
Company exchanged 17,720,750 common shares for all of Joy's
31,353,000 outstanding shares, at an exchange ratio of .5652
of a share of the Company's common stock for each of Joy's
common shares.
The fiscal year of Joy has been conformed to the Company's
fiscal year effective November 1, 1994, and all periods
presented have been retroactively restated (See Note 1 -
Significant Accounting Policies - Basis of Presentation).
Joy's operating results for the period from February 25,
1994 (the end of Joy's fiscal year before the acquisition)
to October 31, 1994, a net loss of $(4,575) on net sales of
$293,290, have been reflected as an adjustment to the
combined Company's retained earnings on November 1, 1994.
Transaction costs incurred to complete the Joy merger of
$17,459 ($11,384 after tax or $0.24 per share) were charged
to income and consisted primarily of investment banker,
attorney and accountant fees, severance and related benefits
and printing, mailing and registration expenses.
In October, 1995, the Company's Beloit Corporation
subsidiary completed the acquisition of the roll-covering
business of Rollin, S.A. of France for a purchase price of
$13,500. This transaction is expected to significantly
strengthen Beloit's market position in the roll-covering
portion of the aftermarket throughout Europe. The
acquisition will be accounted for as a purchase. The
investment has been included in Other Assets while a
purchase allocation to individual assets is being completed.
The Material Handling segment completed several
acquisitions in 1995 aimed at strengthening its market
presence both internationally and domestically.
Acquisitions totaling approximately $10,000 include a
Canadian manufacturer of brake systems, manufacturers of
cranes (and related service aspects) located in Singapore
and the United States and two service-related organizations
in the United Kingdom. In addition, the Company's Mining
Equipment segment completed the acquisition of a servicer of
above-ground mining equipment headquartered in the United
States for approximately $4,000, further broadening its
aftermarket capabilities. These acquisitions have been
accounted for as purchases.
In September, 1994, the Company completed the acquisition of
all of the outstanding shares of MMH (Holdings) Limited, a
holding company for Morris Mechanical Handling Limited
("Morris") and related companies for $24,890. The
acquisition was accounted for as a purchase transaction.
The purchase price was allocated to the specific net assets
acquired based upon independent appraisal. Morris,
headquartered in Great Britain, is a manufacturer of a broad
line of cranes, hoists, and other lifting equipment and has
an extensive service organization that provides aftermarket
services for a broad spectrum of lifting equipment. Morris
also has operations in the United States, the Far East and
South Africa, and is a unit of the Material Handling
segment.
In addition, the Company completed two smaller
acquisitions during 1994. In July, 1994, the Company
acquired a Mexican company, Hercules, S.A. de C.V., for
$2,589. Hercules, a manufacturer of overhead cranes and
hoists serving the Mexican and South American markets, is
also a unit of the Material Handling segment. The
acquisition was accounted for as a purchase.
Beloit acquired substantially all of the common shares of
OASIS (Optical Alignment Systems and Inspection Services,
Inc.) for $7,000 in September, 1994. The transaction was
accounted for as a purchase. The New Hampshire-based
company provides specialty services principally to the paper
industry.
NOTE 3
RESTRUCTURING AND NONRECURRING CHARGES
In fiscal 1993, the Company recorded a restructuring charge
to strengthen and streamline its papermaking machinery and
mining equipment businesses. The total estimated cost of
the restructuring activities reduced pre-tax income by
$67,000. Of the total, $40,000 related to the Paper
segment, which was primarily for the closure of its Canadian
papermaking machinery manufacturing facilities and
consolidation of North American papermaking machine
manufacturing in Beloit, Wisconsin. The $25,500 charge for
Harnischfeger Corporation's Mining Equipment Division
related principally to its plans to reduce worldwide
inventories and to enhance manufacturing and repair parts
capabilities. Other elements in the restructuring charge
provided for refocusing manufacturing and marketing efforts
(to reduce non-value-added activities, to reduce
nonoperating assets and to focus on capital carrying costs)
as well as employee severance costs. Substantially all of
the restructuring reserve was used by the end of fiscal
1994.
In addition, the Company recorded a charge in fiscal 1993
resulting from the reestimation of certain warranty reserves
carried by the Mining Equipment Division. The charge reduced
pre-tax income by $8,000. This nonrecurring charge was the
result of a much deeper analysis of open warranty claims and
customer requests, field experience on new products and
additional analytical data provided by new systems which has
since resulted in engineering, design and manufacturing
changes. The Company's warranty methodology, while
long-established, is by its very nature based on
management's judgement and is not mathematically precise or
actuarially based. The resultant warranty reserves are
reevaluated periodically and reflect refinements of
estimated warranty exposure on evolving product lines.
NOTE 4
ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
Accounts receivable at October 31 consisted of the following:
(in thousands)
1995 1994
-------- --------
<S> <C> <C>
Trade receivables $412,276 $329,263
Unbilled receivables 95,281 99,838
Allowance for doubtful accounts and
contract losses (7,604) (7,230)
--------- ----------
$499,953 $421,871
========= ==========
</TABLE>
The amount of accounts receivable due beyond one year is not
significant.
NOTE 5
INVENTORIES
<TABLE>
<CAPTION>
Inventories at October 31 consisted of the following:
(in thousands)
1995 1994
--------- ---------
<S> <C> <C>
Finished goods $211,555 $182,084
Work in process and purchased parts 170,027 158,038
Raw materials 106,999 79,766
--------- ---------
488,581 419,888
Less excess of current cost over
stated LIFO value (72,186) (62,041)
--------- ---------
$416,395 $357,847
========= =========
</TABLE>
Inventories valued using the LIFO method represented
approximately 80% and 81% of consolidated inventories at
October 31, 1995 and 1994, respectively.
The Company has reduced inventory by $6,051 and $3,739 at
October 31, 1995 and 1994, respectively, for progress
payments received on contracts accounted for on the
completed contract method.
NOTE 6
INCOME TAXES
The components of income (loss) from continuing operations
before provision for income taxes and minority interest for
the Company's domestic and foreign operations for the years
ended October 31 were as follows:
<TABLE>
<CAPTION>
(in thousands)
1995 1994
------- -------
<S> <C> <C>
Domestic $132,358 $ 27,095
Foreign 37,951 25,701
-------- ----------
Income (loss) from continuing
operations before Joy merger costs,
provision (credit) for income taxes
and minority interest $170,309 $ 52,796
======== ==========
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
1993
-------
<S> <C>
Domestic $(29,720)
Foreign (19,026)
---------
Income (loss) from continuing
operations before Joy merger costs,
provision (credit) for income taxes
and minority interest $(48,746)
=========
</TABLE>
The consolidated provision (credit) for income taxes
included in the statement of income for the years ended
October 31 consisted of the following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current provision:
Federal $17,934 $ 11,167 $ 6,111
State 1,311 1,486 2,963
Foreign 14,690 7,080 6,453
-------- --------- ---------
Total Current 33,935 19,733 15,527
-------- --------- ---------
Deferred provision (credit):
Federal 7,721 (59,840) (22,745)
State and foreign 1,509 (4,180) (2,563)
------- --------- ---------
Total Deferred 9,230 (64,020) (25,308)
------- --------- ---------
Total consolidated income
tax provision (credit) $43,165 $(44,287) $(9,781)
======= ========= =========
</TABLE>
Income tax provision (credit) is included in the statement
of income as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
------- ------- --------
<S> <C> <C> <C>
Continuing operations $53,500 $ 13,979 $(16,497)
Income (loss) from
discontinued operations (8,015) (702) 6,716
Extraordinary item -
retirement
of debt (2,320) (3,495) -
Cumulative effect of
accounting change - (54,069) -
--------- --------- ---------
$43,165 $(44,287) $(9,781)
========= ========= =========
</TABLE>
The difference between the federal statutory tax rate and
the effective tax rate on continuing operations for the
years ended October 31 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
----- ------ -------
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% (34.8)%
Goodwill amortization not
deductible for tax purposes 0.7 2.3 2.5
Differences in foreign and
U.S. tax rates 0.3 (0.8) 1.8
Differences in Foreign Sales
Corporation and U.S. tax rate (1.5) (3.9) (2.4)
State income taxes, net of
federal tax impact 0.5 (1.2) 1.8
General business and other
credits utilized (1.5) (3.8) (0.5)
Other items-net 1.5 (1.1) (2.2)
------- ------- -------
Effective tax rate 35.0% 26.5% (33.8)%
======= ======= =======
</TABLE>
Temporary differences and carryforwards which gave rise to
the net deferred tax liability at October 31 are as follows:
<TABLE>
<CAPTION>
October 31,(in thousands) 1995 1994
------ -------
<S> <C> <C>
Inventories $(22,437) $(26,554)
Reserves not currently
deductible 13,894 18,767
Depreciation and amortization in
excess of book expense (60,814) (74,275)
Employee benefit related items 35,378 34,507
Tax credit carryforwards 17,279 40,497
Tax loss carryforwards 41,875 37,426
Other - net (24,956) (35,438)
Valuation allowance (18,256) (14,206)
--------- ---------
Net deferred tax liability $(18,037) $(19,276)
========= =========
</TABLE>
This net liability is included on the Balance Sheet in the
following captions:
<TABLE>
<CAPTION>
<S> <C> <C>
Other Current Assets-net $ 16,768 $ 1,475
Deferred Income Taxes (34,805) (20,751)
-------- ---------
$(18,037) $(19,276)
======== =========
</TABLE>
At October 31, 1995, the Company had foreign tax credit
carryforwards of $535 expiring in 1999, general business tax
credits of $11,481 expiring in 2008-2010, and alternative
minimum tax credit carryforwards of $5,263 which do not
expire. In addition, tax loss carryforwards consisted of
foreign loss carryforwards of $27,865 with various
expiration dates, and domestic carryforwards of $14,010 with
various states and expiration dates. The carryforwards will
be available for the reduction of future income tax
liabilities.
U.S. income taxes, net of foreign taxes paid or payable,
have been provided on the undistributed profits of foreign
subsidiaries, except in those instances where such profits
are expected to be permanently reinvested. Such unremitted
earnings of subsidiaries which have been or are intended to
be permanently reinvested were $180,200 at October 31, 1995.
If, for some reason not presently contemplated, such profits
were to be remitted or otherwise become subject to U.S.
income tax, the Company expects to incur tax at
substantially less than the U.S. income tax rate as a result
of foreign tax credits that would be available.
Income taxes paid were $31,686, $16,979 and $20,859 for
1995, 1994 and 1993, respectively.
NOTE 7
LONG-TERM OBLIGATIONS, BANK CREDIT FACILITIES AND INTEREST
EXPENSE
Long-term obligations at October 31 consisted of the
following:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
-------- --------
<S> <C> <C>
10 1/4% Senior Notes due 2003 $188,380 $200,000
Bank Facility - 90,785
8.9% Debentures, due 2022 75,000 75,000
8.7% Debentures, due 2022 75,000 75,000
Senior Notes, Series A through D, at
interest rates of between 8.9%
and 9.1%, due 1996 to 2006 75,000 75,000
Industrial Revenue Bonds, at
interest rates of between 5.9% and
8.8%, due 1996 to 2017 28,428 32,632
Other 21,183 22,637
-------- -------
462,991 571,054
Less:
Amounts payable within one year 3,881 2,121
---------- ---------
$459,110 $568,933
========== =========
</TABLE>
In August 1995, the Company entered into a short-term
$200,000 bridge financing facility agreement between the
Company and certain foreign and domestic financial
institutions to be used in connection with the acquisition,
in early fiscal 1996, of Dobson Park Industries plc. See
additional discussion in Note 17 - Acquisition of Dobson
Park Industries plc.
The 10 1/4% Senior Notes have a maturity date of September
1, 2003 with semi-annual interest payments due March 1 and
September 1, commencing March 1, 1994. The Company may, at
its option, redeem the Senior Notes in whole or in part at
any time on or after September 1, 1998 at 105.125% of their
principal amount, plus accrued interest, declining to 100%
of their principal amount, plus accrued interest, on or
after September 1, 2000.
The Company is subject to certain restrictive covenants
under its existing debt agreements. In addition, upon a
change of control, Joy is required to make an offer to
purchase the Senior Notes then outstanding at a purchase
price equal to 101% of the principal amount thereof plus
accrued interest.
On December 29, 1994, Joy issued an offer to purchase for
cash at 101% any and all of its outstanding 10 1/4% Senior
Notes. This offer expired on February 10, 1995 with $270
being redeemed under the offer. Prior to this tender offer,
the Company had purchased $11,350 of outstanding 10 1/4%
Senior Notes in unsolicited open market transactions. As a
result of the Bank Facility and 10 1/4% Senior Note
redemptions (see below), the Company recorded an
extraordinary loss on debt retirement, net of applicable
income taxes, of $3,481 or $0.08 per share, consisting
primarily of unamortized financing costs and redemption
premiums.
During fiscal 1994, the Company recorded an extraordinary
after-tax charge of $4,827 associated with the prepayment of
Joy's outstanding Tranche A term loans existing under the
Bank Facility and all of Joy's 12.3% Junior Subordinated
Notes. This charge is comprised of the write-off of the
unamortized discount and unamortized capitalized financing
costs, call premiums and other expenses. The remaining
borrowings outstanding under the Bank Facility were repaid
in full on November 29, 1994, upon the consummation of the
Company's merger with Joy. The Tranche A term loans carried
an interest rate of 2.125% above LIBOR, and the Tranche B
term loan had a floating interest rate equal, at Joy's
option, to the base rate plus 2% or to the Euro-dollar rate
plus 3%. The Bank Facility agreement, including its
revolving credit agreement, was terminated concurrent with
the merger.
The Company has $150,000 of unsecured debentures
outstanding with interest rates ranging from 8.7% to 8.9%
due at maturity in 2022.
The Senior Notes, Series A through D, are privately placed
and unsecured. The terms of the Note Agreements place
limits on the amount of additional long-term debt the
Company may issue and require maintenance of a minimum
consolidated net worth, as defined. Additional funded debt
may be incurred if immediately thereafter consolidated
funded debt does not exceed 50% of consolidated total
tangible assets, as defined.
The Series D Notes provide for eleven equal annual
repayments beginning in 1996; Series A through C Notes are
due at maturity in 1999, 1999 and 2001, respectively.
In 1992, the Company filed a shelf registration with the
Securities and Exchange Commission for the proposed sale of
up to $150,000 of additional debt securities. To date, no
securities covered by the registration have been offered for
sale, however, see Note 17 - Acquisition of Dobson Park
Industries, plc.
In November, 1993, the Company entered into a four-year
Revolving Credit Facility Agreement between the Company and
certain domestic and foreign financial institutions that
allowed for borrowings of up to $150,000 at rates expressed
in relation to LIBOR and other rates. In November, 1994,
the facility was increased to $240,000 and was extended to
November, 1998. A facility fee is payable on the Revolving
Credit Facility.
The Industrial Revenue Bonds are secured by certain assets
of the Company's domestic operations.
Installments payable to holders of the outstanding
long-term obligations of the Company are due as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
1996. . . . . . . . . . . . . . . . . .$ 3,881
1997. . . . . . . . . . . . . . . . . . 5,840
1998. . . . . . . . . . . . . . . . . . 5,201
1999. . . . . . . . . . . . . . . . . . 39,811
2000. . . . . . . . . . . . . . . . . . 11,548
</TABLE>
At October 31, 1995, short-term bank credit lines of
foreign subsidiaries were approximately $122,072. The
outstanding borrowings were $18,921 with a weighted average
interest rate of 15.4%, reflecting higher rates in Poland
and South Africa. There were no compensating balance
requirements under these lines of credit.
Net interest expense consisted of the following:
<TABLE>
<CAPTION>
Year Ended October 31,(in thousands)
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Interest income $ 11,035 $ 7,138 $ 7,856
Interest expense (51,748) (54,504) (56,169)
---------- --------- ---------
Interest expense-net $ (40,713) $(47,366) $(48,313)
========== ========= ==========
</TABLE>
Interest paid was $52,615, $45,547 and $57,496 in 1995,
1994 and 1993, respectively.
NOTE 8
PENSIONS AND OTHER EMPLOYEE BENEFITS
The Company and its subsidiaries have a number of defined
benefit, defined contribution and government mandated
pension plans covering substantially all employees.
Benefits from these plans are based on factors which include
various combinations of years of service, fixed monetary
amounts per year of service, employee compensation during
the last years of employment and the recipient's social
security benefit. The Company's funding policy with respect
to its qualified plans is to contribute annually not less
than the minimum required by applicable law and regulation
nor more than the amount which can be deducted for income
tax purposes. The Company also has a nonqualified senior
executive supplemental pension plan, funded by Company
stock, which is based on credited years of service and
compensation during the last years of employment.
Certain foreign plans, which supplement or are coordinated
with government plans, many of which require funding through
mandatory government retirement or insurance company plans,
have pension funds or balance sheet accruals which
approximate the actuarially computed value of accumulated
plan benefits as of October 31, 1995 and 1994.
The Company recorded an additional minimum pension
liability and intangible asset of $9,698 and $23,645 in 1995
and 1994, respectively, to recognize the unfunded
accumulated benefit obligation of certain domestic plans.
Pension expense for all plans of the Company was $17,344
in 1995, $18,521 in 1994, and $20,248 in 1993. Net periodic
pension costs for U.S. plans and plans of subsidiaries
outside the United States for which SFAS No. 87, "Employers'
Accounting for Pensions" has been adopted included the
following components:
<TABLE>
<CAPTION>
Year Ended October 31,
(in thousands) 1995 1994 1993
-------- --------- ---------
<S> <C> <C> <C>
Service cost-benefits
earned during the year $16,854 $ 16,075 $ 15,457
Interest cost on projected
benefit obligation 33,655 29,523 27,297
Actual gain on plan assets (55,856) (14,035) (38,656)
Net amortization and deferral 20,134 (14,255) 14,355
-------- --------- ---------
Net periodic pension cost $14,787 $ 17,308 $ 18,453
======== ========= =========
</TABLE>
The discount rate used for U.S. plans was 8.0% in 1995,
7.9%-8.0% in 1994, and 8.5%-8.75% in 1993, and for non-U.S.
plans ranged from 8.0%-14.0%. The assumed rate of increase
in future compensation of U.S. salaried employees was 5.0%
in 1995, ranged from 4.5%-5.0% in 1994, and ranged from
5.0%-5.5% in 1993; and for non-U.S. salaried employees
ranged from 5.0%-11.0%. Benefits under the hourly employee
plans are generally not based on wages. The expected
long-term rate of return on assets for U.S. plans ranged
from 9.5%-10.0% and for non-U.S. plans ranged from 8.5%-
15.0%. The assumptions for non-U.S. plans were developed on
a basis consistent with that for U.S. plans, adjusted to
reflect prevailing economic conditions and interest rate
environments.
Primarily as a result of the sale of H-K Systems,
Inc.(formerly Harnischfeger Engineers, Inc.) in 1993 (see
Note 16 - Discontinued Operations), a curtailment occurred
within the Harnischfeger Salaried Pension Plan. Curtailment
gains of $4,527 were recorded in 1993, $3,969 of which was
included in the gain on sale of discontinued operations.
The following table sets forth the plans' funded status at
October 31, 1995 and 1994:
<TABLE>
<CAPTION>
(in thousands)
1995
Plans With Plans With
Assets Accumulated
Exceeding Benefits
Accumulated Exceeding
Benefits Assets
<S> <C> <C>
Actuarial present value of:
Vested benefits $315,236 $49,525
Accumulated benefits 339,527 56,988
Projected benefits 395,051 62,253
Net assets available for benefits 407,873 23,791
-------- -------
Plans' assets greater (less) than
projected benefits 12,822 (38,462)
Unrecognized (asset) obligation
existing at adoption (5,724) 989
Unrecognized prior service cost 20,509 6,823
Unrecognized net (gain) loss (6,871) 6,840
--------- ---------
Net pension asset (liability) $ 20,736 $(23,810)
========= =========
</TABLE>
<TABLE>
<CAPTION>
(in thousands)
1994
------------------
Plans With Plans With
Assets Accumulated
Exceeding Benefits
Accumulated Exceeding
Benefits Assets
------------ ------------
<S> <C> <C>
Actuarial present value of:
Vested benefits $184,537 $148,757
Accumulated benefits 197,680 166,980
Projected benefits 247,219 186,763
Net assets available for benefits 264,717 128,542
----------- ----------
Plans' assets greater (less) than
projected benefits 17,498 (58,221)
Unrecognized (asset) obligation
existing at adoption (10,695) 5,012
Unrecognized prior service cost 6,642 14,390
Unrecognized net (gain) loss (1,797) 20,379
----------- -----------
Net pension asset (liability) $ 11,648 $(18,440)
=========== ===========
</TABLE>
Pension plan assets consist primarily of trust funds with
diversified portfolios of primarily equity and fixed income
investments.
The Company has a qualified profit sharing plan which
covers substantially all domestic employees except employees
covered by collective bargaining agreements and employees of
subsidiaries with separate defined contribution plans.
Contributions to the plan are based on the Company's
Economic Value Added (EVA) performance. Profit sharing
expense was $6,321 in 1995 and $3,300 in 1994. The Company
made no profit sharing contribution in 1993.
In the first quarter of fiscal 1995, the Company implemented
SFAS No. 112, "Employers' Accounting for Postretirement
Benefits". The impact upon adoption of SFAS 112 on the
Company's results of operations and financial position was
not material.
NOTE 9
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company generally provides certain health care and life
insurance benefits under various plans for U.S. employees
who retire after attaining early retirement eligibility,
subject to the plan amendments discussed below.
During the first quarter of fiscal 1994, the Company
adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106),
through the immediate recognition of the obligation. Under
SFAS 106, the costs of retiree health care and life
insurance benefits are accrued over relevant employee
service periods. Previously, these costs were charged to
expense as claims were paid. The cumulative effect of the
accounting change required by this standard was a one time
pre-tax charge of $136,291 ($81,696 or $1.87 per share after
taxes and minority interest). The discount rate used in
determining the liability at October 31, 1994 was 7.9% and
as of October 31, 1995 the discount rate was 8.0%.
The following table sets forth the plans' funded status
and amounts recognized in the Company's balance sheet as of
October 31:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
------- ---------
<S> <C> <C>
Accumulated postretirement benefit
obligation:
Retirees $ 66,600 $ 73,424
Fully eligible active plan
participants 4,200 7,722
Other active plan participants 8,000 20,416
------- --------
Total 78,800 101,562
Plan assets at fair value 0 0
------- --------
Accumulated postretirement benefit
obligation in excess of plan assets 78,800 101,562
Unrecognized transition obligation 0 0
Unrecognized prior service credit 31,433 21,305
Unrecognized gain 7,873 12,840
------- -------
Accrued postretirement benefit liability 118,106 135,707
Less: Current portion 16,501 17,097
--------- ---------
$101,605 $118,610
========== =========
</TABLE>
For measurement purposes, with the exception of plans
sponsored by Joy, an annual rate of increase in the per
capita cost of covered health care benefits in the range of
10.25% to 12% for non-medicare eligible participants was
assumed for 1995 (a range of 5.8% to 10.25% was used for
medicare eligible participants); these rates were assumed to
decrease gradually to 5.0% for all participants by 2001 and
remain at that level thereafter. For plans sponsored by
Joy, the assumed medical cost trend rates for retirees who
have not yet reached age 65 is a range of 7% to 13% in 1995,
decreasing to a rate of 4% in 2001 and continuing at that
level into the future. The health care cost trend rate
assumption has an effect on the amounts reported. A one
percentage point increase in the assumed health care cost
trend rates each year would increase the accumulated
postretirement benefit obligation as of October 31, 1995 by
$3,050 and the aggregate service cost and interest cost
components of the net periodic postretirement benefit cost
for the year by $250. Postretirement life insurance
benefits have a minimal effect on the total benefit
obligation.
In 1993, the Board of Directors of the Company approved a
general approach that would culminate in the elimination of
all Company contributions towards postretirement health care
benefits. Increases in costs paid by the Company were
capped for certain plans beginning in 1994 extending through
1998 and Company contributions will be eliminated on January
1, 1999 for most employee groups, excluding Joy. For Joy,
based upon existing plan terms, future eligible retirees
will participate in a premium cost-sharing arrangement which
is based upon age as of March 1, 1993 and position at the
time of retirement. Active employees under age 45 as of
March 1, 1993 and any new hires after April 1, 1993 will be
required to pay 100% of the applicable premium.
The initial one-time pre-tax charge reflected all plan
terms and amendments in place on November 1, 1993. Negative
plan amendments made subsequent to November 1, 1993 are
being amortized from the date of amendment to January 1,
1999. Amortization of negative plan amendments amounted to
$9,417 and $2,995 in 1995 and 1994, respectively, which
reduced reported net periodic postretirement benefit cost.
Net periodic postretirement benefit cost for fiscal year
1995 and 1994 includes the following components:
<TABLE>
>caption>
(in thousands) 1995 1994
--------- ----------
<S> <C> <C>
Service cost $ 502 $ 974
Interest cost on accumulated
postretirement benefit
obligation 6,475 8,808
Actual return on plan assets 0 0
Amortization of prior service
cost(credit) (9,417) (2,995)
Net amortization and deferral (225) (237)
-------- --------
Net periodic postretirement
benefit cost $(2,665) $6,550
======== ========
</TABLE>
The cost of providing these benefits to retirees was $12,414
in 1993.
NOTE 10
SHAREHOLDERS' EQUITY AND STOCK OPTIONS
The Statement of Shareholders' Equity has been retroactively
restated for all years presented to give effect to the
acquisition on November 29, 1994 of Joy through a stock-for-
stock merger with an exchange ratio of .5652 of a share of
Company Common Stock for each share of Joy common stock (see
Note 2-Acquisitions). In connection with the acquisition,
the Company's authorized Common Stock was increased to
100,000,000 shares.
Joy's employee stock option plan is being administered by
the Company subsequent to the merger. All outstanding Joy
options were converted into options to purchase Company
Common Stock and adjusted to give effect to the .5652
exchange ratio.
A Preferred Stock Purchase Right is attached to each share
of Common Stock which entitles a shareholder to exercise
certain rights in the event a person or group acquires or
seeks to acquire 20% or more of the outstanding Common Stock
of the Company.
The Company's Incentive Stock Plan, as amended, provides
for the granting, up to January 31, 1998, of qualified and
non-qualified options, stock appreciation rights and
restricted stock to key employees for not more than
3,600,000 shares of Common Stock. At October 31, 1995,
2,245,628 shares were reserved for future stock options and
restricted stock.
Since the inception of the Incentive Stock Plan and Joy's
employee stock option plan, options for the purchase of
3,635,505 shares have been granted, at prices ranging from
$6.75 to $31.25 per share. At October 31, 1995, 1,444,286
of the options were outstanding, 1,279,831 had been
exercised and 911,388 had expired. Generally, the options
granted under the Incentive Stock Plan become exercisable in
cumulative installments of one-fourth of the shares in each
year beginning six months from the date of the grant. In
addition, 63,000 shares were reserved for restricted stock
in 1990. In 1995, none of the reserved restricted shares
was issued. The recipients of restricted stock have the
right to receive dividends and vote but such shares cannot
be transferred until they become fully vested. The shares
will become unrestricted following the end of fiscal 1995.
Compensation expense related to restricted stock is included
in income and amounted to $0 in 1995, $100 in 1994, and $170
in 1993.
Certain information regarding stock options, including Joy
options under the Joy stock option plan, is as follows:
<TABLE>
<CAPTION>
Number
of Shares
----------
<S> <C>
Outstanding at October 31, 1992 1,228,125
Granted 866,226
Exercised (16,875)
Canceled or expired (46,175)
-----------
Outstanding at October 31, 1993 2,031,301
Granted 188,349
Exercised (166,041)
Canceled or expired (234,290)
-----------
Outstanding at October 31, 1994 1,819,319
Activity related to Joy Technologies from
February 26, 1994-November 1, 1994
Granted 75,380
Exercised (12,434)
Canceled or expired (23,319)
----------
39,627
Activity from November 1, 1994-October 31, 1995
Granted 637,750
Exercised (861,930)
Canceled or expired (190,480)
-----------
Outstanding at October 31, 1995 1,444,286
-----------
Exercisable at October 31, 1995 385,496
-----------
</TABLE>
<TABLE>
<CAPTION>
Option Price
Per Share
--------------
<S> <C>
Outstanding at October 31, 1992 $14.38 to $27.00
Granted 15.92 to 22.12
Exercised 14.38 to 19.25
Canceled or expired 14.38 to 24.63
----------------
Outstanding at October 31, 1993 14.38 to 27.00
Granted 15.70 to 26.50
Exercised 14.38 to 24.63
Canceled or expired 14.38 to 24.63
----------------
Outstanding at October 31, 1994 14.38 to 27.00
Activity related to Joy Technologies from
February 26, 1994-October 31, 1994
Granted 17.91 to 24.55
Exercised 19.46
Canceled or expired 19.46
---------------
17.91 to 24.55
Activity from November 1, 1994-October 31, 1995
Granted 25.00 to 31.25
Exercised 14.38 to 27.00
Canceled or expired 14.38 to 25.00
---------------
Outstanding at October 31, 1995 14.38 to 31.25
---------------
Exercisable at October 31, 1995 $14.38 to $26.50
----------------
</TABLE>
In September, 1994, the Company sold 2,000,000 shares of
Common Stock in a private transaction. This sale satisfied
the requirements under the pooling of interests accounting
rules to replace shares repurchased during the two years
prior to the announcement of the Company's merger with Joy.
The shares were sold from treasury stock.
Following a "Dutch auction" self-tender offer in May,
1993, the Company purchased for cash 2,500,000 shares of
Common Stock, or approximately 9% of shares of Common Stock
outstanding at that time, at $19-5/8 per share, in
conjunction with the establishment of the Harnischfeger
Industries, Inc. Stock Employee Compensation Trust ("SECT").
Concurrent with the purchase, the Company sold 2,547,771
shares of Common Stock held in treasury to the SECT,
amounting to $50,000 at $19-5/8 per share. The purchase of
the treasury shares reduced shareholders' equity. The sale
of the treasury shares to the SECT had no impact on such
equity. Shares in the SECT are being used to fund future
employee benefit obligations under plans that currently
require shares of Company Common Stock.
Shares owned by the SECT are accounted for as treasury
stock until issued to existing benefit plans; they are
reflected as a reduction to shareholders' equity. Shares
owned by the SECT are valued at the closing market price
each period, with corresponding changes in the SECT balance
reflected in capital in excess of par value. Shares in the
SECT are not considered outstanding for computing earnings
per share.
NOTE 11
OPERATING LEASES
The Company leases certain plant, office and warehouse space
as well as machinery, vehicles, data processing and other
equipment.
Certain of the leases have renewal options at reduced
rates and provisions requiring the Company to pay
maintenance, property taxes and insurance.
Generally, all rental payments are fixed. The Company's
assets and obligations under capital lease arrangements are
not significant.
Total rental expense under operating leases, excluding
maintenance, taxes and insurance, was $20,822, $20,327 and
$20,021 in 1995, 1994 and 1993, respectively.
At October 31, 1995, the future payments for all operating
leases with remaining lease terms in excess of one year, and
excluding maintenance, taxes and insurance, were as follows:
<TABLE>
<CAPTION>
(in thousands)
Fiscal Year:
<S> <C>
1996. . . . . . . . . . . . . . . . .$19,187
1997. . . . . . . . . . . . . . . . . 15,813
1998. . . . . . . . . . . . . . . . . 12,120
1999. . . . . . . . . . . . . . . . . 4,443
2000. . . . . . . . . . . . . . . . . 3,228
2001 and thereafter . . . . . . . . . 5,094
</TABLE>
NOTE 12
COMMITMENTS, CONTINGENCIES AND OFF-BALANCE-SHEET RISKS
At October 31, 1995, the Company was contingently liable to
banks, financial institutions and others for approximately
$185,000 for outstanding letters of credit securing
performance of sales contracts and other guarantees in the
ordinary course of business, excluding the H-K Systems, Inc.
back-up bond guarantee facility (see Note 16-Discontinued
Operations). The Company may also guarantee performance of
its equipment at levels specified in sales contracts without
the requirement of a letter of credit. Performance
guarantees are a normal part of the Company's business and
have not resulted in significant cash outlays.
The Company is a party to litigation matters and claims
which are normal in the course of its operations and, while
the results of litigation and claims cannot be predicted
with certainty, management believes that the final outcome
of such matters will not have a materially adverse effect on
the Company's consolidated financial position or results of
operations.
The Company is also involved in a number of proceedings
and potential proceedings relating to environmental matters.
Although it is difficult to estimate the potential exposure
to the Company related to these environmental matters, the
Company believes that these matters will not have a
materially adverse effect upon its consolidated financial
position or results of operations.
The Company has entered into various foreign currency
exchange contracts with major international financial
institutions designed to minimize its exposure to exchange
rate fluctuations on foreign currency transactions. These
contracts are used to hedge known cash receipts and
disbursements in the ordinary course of business. At
October 31, 1995, the outstanding net U.S. dollar face
amounts of contracts to cover sales and purchase activity
totaled approximately $72,553. In addition, at October 31,
1995, the Company had outstanding foreign exchange contracts
totaling $15,783 to cover interest and borrowing
obligations. The difference between contract and estimated
fair values at October 31, 1995 was not significant. It is
the Company's policy not to participate in high-yield
financings, highly leveraged transactions or other
"derivative" instruments.
In 1993, a Federal court jury in Madison, Wisconsin returned
a verdict finding that J.M. Voith GmbH of Germany and its
subsidiary, Voith, Inc. of Appleton, Wisconsin infringed
upon Beloit's patent on its Bel-Champ(TM) drying technology
for large paper manufacturing machines. The verdict was
appealed by Voith. In 1995, the parties reached an
understanding concerning settlement of their outstanding
patent litigation.
In addition, in 1994, a Federal court jury in Madison,
Wisconsin returned a verdict finding that Valmet Corporation
of Finland infringed a Beloit patent on the Bel-Champ paper
machine drying technology. In connection with this suit,
the jury awarded Beloit $7,875 in damages. It is expected
that the verdict in this case will be appealed by Valmet.
The award has not been recorded in the Company's financial
statements.
NOTE 13
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for
which it is practicable to estimate that value:
Cash and Cash Equivalents: The carrying value approximates
fair value because of the short maturity of those
instruments.
Long-Term Obligations: The fair value of the Company's
long-term obligations has been based on prevailing market
quotations and by discounting cash flows using current
market yields quoted on similar issues.
The estimated fair values of the Company's financial
instruments at October 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995
(in thousands) Carrying Value Fair Value
-------------- -----------
<S> <C> <C>
Cash and Cash Equivalents $239,043 $239,043
========== ========
Long-Term Obligations (462,991) (522,426)
========== ========
</TABLE>
<TABLE>
<CAPTION>
1994
(in thousands) Carrying Value Fair Value
-------------- -----------
<S> <C> <C>
Cash and Cash Equivalents $ 196,455 $ 196,455
========= =========
Long-Term Obligations (571,054) (567,554)
========= =========
</TABLE>
NOTE 14
TRANSACTIONS WITH AFFILIATED COMPANIES
Mitsubishi Heavy Industries, Ltd. ("Mitsubishi") owns a 20%
interest in Beloit Corporation. In connection with this
ownership interest, Mitsubishi entered into certain
agreements that provide it with the right to designate one
of Beloit's five directors. The agreements also place
certain restrictions on the transfer of Beloit stock. In
the event of change in control of the Company, Mitsubishi
has the right to sell its 20% interest back to the Company
for the greater of $60,000 or the book value of its equity
interest.
Transactions with Mitsubishi for the years ending October
31, were as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994 1993
------ ------ -------
<S> <C> <C> <C>
Sales $1,553 $ 487 $ 152
Purchases 265 191 5,352
Receivables 6,413 2,335 1,712
License Income 7,582 3,931 3,794
</TABLE>
The Company believes that its transactions with Mitsubishi
were competitive with alternate sources of supply for each
party involved.
In 1990, the Company entered into an agreement to acquire
up to a 20% interest in Measurex Corporation. As of October
31, 1994, the Company's total investment in Measurex,
including related expenses, equity income and net of
dividends received, amounted to $66,347, representing a 20%
interest. As part of the agreement, Measurex elected a
nominee selected by the Company to its Board of Directors.
There were no significant transactions with Measurex in
fiscal 1994 or 1993. On December 29, 1994, Measurex
repurchased 2,026,900 shares of its stock which had been
purchased by the Company. On June 23, 1995, Measurex
repurchased the remaining 1,613,100 shares of its stock.
These transactions resulted in a gain of $29,657.
Measurex continues to have cooperative agreements with
Beloit.
NOTE 15
SEGMENT INFORMATION
The Company designs, manufactures and markets products
structured into three industry segments.
Papermaking Machinery and Systems (Beloit Corporation)
produces and markets papermaking machinery and allied
equipment for the pulp and paper industries.
The "Mining Segment" consists of P&H(TM) Mining Equipment
(Harnischfeger Corporation) and Joy Mining Machinery. P&H
Mining Equipment designs, manufactures and markets electric
mining shovels, electric and diesel-electric draglines,
buckets, hydraulic mining excavators, large rotary blasthole
drilling equipment and related replacement parts for the
surface mining and quarrying industries. Joy Mining
Machinery designs, manufactures and distributes continuous
miners, longwall shearers, shuttle cars and flexible
conveyor train continuous haulage systems for use in the
underground extraction of coal and other minerals. In
addition, Joy engineers, manufactures and markets worldwide
a highwall mining system for the extraction of coal from
exposed surface seams in the walls of surface coal mines,
trenches and mountain side benches. It also rebuilds and
services installed equipment and sells spare parts for the
equipment it manufactures.
The P&H Material Handling Division (Harnischfeger
Corporation) designs, manufactures, services and markets
overhead cranes, electric wire rope and chain hoists,
engineered products, container cranes and crane
modernizations and electrical products for use worldwide in
a variety of industries and applications.
Intersegment sales are not significant. Common operating
plants have been allocated to the respective segments.
Corporate assets include principally cash, cash
equivalents, amounts due from and the investment in H-K
Systems, Inc. and administration facilities.
<TABLE>
<CAPTION>
Segments of Business by Industry Total Operating
(in thousands) Sales Income(Loss)
-------- ----------
<S> <C> <C>
1995
Papermaking Machinery and Systems $ 970,418 $ 85,719
Mining Equipment 941,779 122,116
Material Handling Equipment 239,882 22,850
--------- ---------
Total continuing operations 2,152,079 230,685
Corporate - (19,663)
Discontinued Operations - -
--------- ---------
Consolidated total $2,152,079 $211,022
========= =========
1994
Papermaking Machinery and Systems $ 712,778 $ 32,195
Mining Equipment 729,521 82,541
Material Handling Equipment 109,429 12,094
--------- ---------
Total continuing operations 1,551,728 126,830
Corporate - (26,668)
Discontinued Operations - -
--------- ---------
Consolidated total $1,551,728 $100,162
========= =========
1993
Papermaking Machinery and Systems $ 580,421 $ (18,113)
Mining Equipment 711,751 42,086
Material Handling Equipment 117,032 6,753
--------- ----------
Total continuing operations 1,409,204 30,726
Corporate - (31,159)
Discontinued Operations - -
--------- ----------
Consolidated total $1,409,204 $ (433)
========= ==========
</TABLE>
<TABLE>
<CAPTION>
Segments of Business by Industry Depreciation and Capital
(in thousands) Amortization Expenditures
--------------- - --------------
<S> <C> <C>
1995
Papermaking Machinery and Systems $ 33,296 $ 39,227
Mining Equipment 29,280 25,963
Material Handling Equipment 4,517 5,609
-------- ----------
Total continuing operations 67,093 70,799
Corporate 675 2,473
Discontinued Operations 2,744 212
-------- ----------
Consolidated total $ 70,512 $ 73,484
======== ==========
1994
Papermaking Machinery and Systems $ 31,945 $ 27,599
Mining Equipment 36,085 17,465
Material Handling Equipment 2,981 3,935
------- --------
Total continuing operations 71,011 48,999
Corporate 860 330
Discontinued Operations 1,372 1,513
--------- --------
Consolidated total $ 73,243 $50,842
========= ========
1993
Papermaking Machinery and Systems $ 30,964 $ 44,347
Mining Equipment 35,286 23,494
Material Handling Equipment 2,588 1,419
--------- --------
Total continuing operations 68,838 69,260
Corporate 1,805 560
Discontinued Operations 1,986 1,941
--------- --------
Consolidated total $ 72,629 $ 71,761
========= ==========
</TABLE>
<TABLE>
<CAPTION>
Segments of Business by Industry Identifiable
(in thousands) Assets
-------------
<S> <C>
1995
Papermaking Machinery and Systems $817,411
Mining Equipment 797,921
Material Handling Equipment 154,905
----------
Total continuing operations 1,770,237
Corporate 222,881
Discontinued Operations 47,649
----------
Consolidated total $2,040,767
==========
1994
Papermaking Machinery and Systems $ 752,999
Mining Equipment 757,651
Material Handling Equipment 135,680
----------
Total continuing operations 1,646,330
Corporate 164,412
Discontinued Operations 171,211
----------
Consolidated total $1,981,953
==========
1993
Papermaking Machinery and Systems $ 730,955
Mining Equipment 733,689
Material Handling Equipment 85,276
----------
Total continuing operations 1,549,920
Corporate 154,453
Discontinued Operations 203,877
----------
Consolidated total $1,908,250
==========
</TABLE>
<TABLE>
<CAPTION>
Geographical Segment Information Total Interarea Sales to Unaffil-
(in thousands) Sales Sales iated Customers
----------- --------- -----------------
<S> <C> <C> <C>
1995
United States $1,690,096 $(199,940) $1,490,156
Europe 337,293 (43,604) 293,689
Other Foreign 381,493 (13,259) 368,234
Interarea Eliminations (256,803) 256,803 -
----------- ---------- ----------
$2,152,079 $ - $2,152,079
=========== ========== ==========
1994
United States $1,328,243 $(149,096) $1,179,147
Europe 165,624 (42,111) 123,513
Other Foreign 260,869 (11,801) 249,068
Interarea Eliminations (203,008) 203,008 -
----------- ---------- ----------
$1,551,728 $ - $1,551,728
=========== ========== ==========
1993
United States $1,113,903 $(118,661) $ 995,242
Europe 162,847 (11,007) 151,840
Other Foreign 278,136 (16,014) 263,122
Interarea Eliminations (145,682) 145,682 -
----------- ---------- ----------
$1,409,204 $ - $1,409,204
=========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Geographical Segment Information Operating Identifiable
(in thousands) Income (Loss) Assets
-------------- -------------
<S> <C> <C>
1995
United States $195,573 $1,202,038
Europe 19,520 313,822
Other Foreign 35,290 261,171
Interarea Eliminations (19,698) (6,794)
---------- -----------
$230,685 $1,770,237
========== ===========
1994
United States $ 100,265 $1,232,163
Europe 3,374 265,441
Other Foreign 23,071 195,205
Interarea Eliminations 120 (46,479)
---------- -----------
$ 126,830 $1,646,330
========== ===========
1993
United States $ 34,698 $ 1,165,267
Europe 8,684 213,692
Other Foreign (10,461) 219,382
Interarea Eliminations (2,195) (48,421)
---------- ------------
$ 30,726 $ 1,549,920
========== ============
</TABLE>
Exports of U.S.-produced products were approximately
$263,000, $190,000 and $144,000 in 1995, 1994 and 1993,
respectively.
Note 16
DISCONTINUED OPERATIONS
In 1993, the Board of Directors and management determined
that the Systems Group, consisting of H-K Systems, Inc. and
Syscon Corporation, did not meet the criteria of a core
business and that retention of the Systems Group was not
consistent with the Company's long-term goals.
On October 29, 1993, the Company completed the sale of H-K
Systems, Inc. to that unit's senior management and some
equity partners. The Company reported a $16,173 after-tax
gain on the sale in 1993. The Company has an $18,000
promissory note remaining from the sale which bears interest
at rates ranging from 10% to 20%. Quarterly principal
payments commence on October 31, 1997 with the final payment
due on October 31, 2003. The Company agreed to make
available a back-up bonding guarantee facility for certain
bid, performance and other contract bonds issued by H-K
Systems, Inc. The maximum amount of guarantees cannot
exceed $70,000 during 1996, with the maximum amount
decreasing to zero by November, 1998. Outstanding contract
bonds under the guarantee arrangement totaled approximately
$49,800 at October 31, 1995. H-K Systems Inc. typically
requires bonds from its major subcontractors. Such
guarantees have been a normal part of H-K Systems' business
in the past and have not resulted in significant cash
outlays. The back-up facility may not be used for new types
of business or for projects outside of North America, nor
does it permit exposure to consequential damages on
commercial contracts.
In 1994, the Company announced its decision to divest
itself of Syscon, the remaining unit in the Systems Group.
Accordingly, the assets and liabilities and operating
results of Syscon were segregated in the consolidated
financial statements and were reflected as net assets and
results of discontinued operations in the Balance Sheet and
Statement of Income, respectively. In February, 1995, the
Company completed the sale of Syscon to Logicon Inc., for a
cash price of $45,000. In connection with this sale, the
Company recorded a loss of $(21,948) or $(0.48) per share,
net of applicable income taxes, in the first quarter of
1995.
In April, 1995, the Company announced its decision to divest
of Joy Environmental Technologies ("JET"), a unit of Joy
which supplies air pollution and ash handling equipment for
electric utilities and other industrial operations.
Accordingly, the operating results of JET were segregated
and reflected in the consolidated Statement of Income as a
discontinued operation. The Company expects the unit to be
sold early in fiscal 1996.
As a result, the Statement of Income reflects an estimated
loss from the discontinued operations of $(9,287) or $(0.19)
per share for fiscal 1995. Prior comparative periods have
also been restated to reflect JET as a discontinued
operation.
Operating results of discontinued operations as of October
31, were as follows:
<TABLE>
<CAPTION>
(in thousands)
1995 1994 1993
----- ------ ------
<S> <C> <C> <C>
Net sales $101,472 $263,274 $406,619
Income (loss) before income taxes (39,250) (4,684) 14,476
Income taxes credit(provision) 8,015 702 (6,716)
Income (loss) from discontinued
operations (31,235) (3,982) 7,760
</TABLE>
NOTE 17 - ACQUISITION OF DOBSON PARK INDUSTRIES PLC
The Company completed the acquisition of Dobson Park
Industries plc in early fiscal 1996 for a purchase price of
approximately $330,000 including acquisition costs. The
acquisition will be accounted for as a purchase.
Dobson, headquartered in the United Kingdom, is an
industrial engineering group with interests in underground
mining equipment, industrial electronic control systems,
toys and plastics. Longwall International, one of the main
subsidiaries of Dobson, is engaged in the manufacture, sale
and service of underground mining equipment for the
international coal mining industry. Its products include
electronically controlled roof support systems, armored face
conveyors, pumps and belt conveyor components and systems.
The acquisition of Dobson will enable Joy to offer
integrated underground longwall mining systems to the
worldwide mining industry.
The transaction was funded via the short-term bridge
financing facility arranged specifically for this
acquisition, issuance of commercial paper, other short-term
facilities and available cash. It is expected that up to
$150,000 of these borrowings will be replaced with the
issuance of 30-year debt securities in mid-December 1995
under Company's shelf registration.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Balance at Additions Additions
Beginning by Charged
Classification of Year Acquisition to Expense
- ------------------------------ ------------ ------------ -----------
<S> <C> <C> <C>
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1995
Doubtful accounts $ 7,230 $ 495 $ 1,483
$ 7,230 $ 495 $ 1,483
For the year ended October 31, 1994
Doubtful accounts $ 9,795 $ 532 $ 1,458
Possible contract losses 2,687 - -
$12,482 $ 532 $ 1,458
For the year ended October 31, 1993
Doubtful accounts $ 6,227 - $ 7,630
Possible contract losses 2,890 - -
$ 9,117 - $ 7,630
(1) Represents write-off of bad debts, net of recoveries.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Currency
Translation
Classification Deductions(1) Effects
- ---------------------------------- ---------------- ------------
<S> <C> <C>
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1995
Doubtful accounts $(1,514) $ (26)
-------- -------
$(1,514) $ (26)
======== =======
For the year ended October 31, 1994
Doubtful accounts $(4,817) $ 262
Possible contract losses -
-------- -------
$(4,817) $ 262
======== =======
For the year ended October 31, 1993
Doubtful accounts $(3,738) $(270)
Possible contract losses - -
-------- -------
$(3,738) $(270)
======== =======
(1) Represents write-off of bad debts, net of recoveries.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Other Items,
Including
Tranactions
of Balance
Discontinued at End
Classification Operations of Year
- ------------------------------------ -------------- -------
<S> <C> <C>
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1995
Doubtful accounts $ (64) $ 7,604
-------- -------
$ (64) $ 7,604
======== =======
For the year ended October 31, 1994
Doubtful accounts $ - $ 7,230
Possible contract losses (2,687) -
-------- ----------
$(2,687) $ 7,230
======== =========
For the year ended October 31, 1993
Doubtful accounts $ (54) $ 9,795
Possible contract losses (203) 2,687
-------- --------
$ (257) $12,482
======== ========
(1) Represents write-off of bad debts, net of recoveries.
</TABLE>
<TABLE>
<CAPTION>
Allowance Deducted in Balance Sheet from Deferred Tax Assets:
Balance at Additions Balance
Beginning Charged at end
of Year to Expense of Year
----------- ----------- ---------
<S> <C> <C> <C>
For the year ended October 31, 1995 $ 14,206 $ 4,050 $ 18,256
========== ========== ========
For the year ended October 31, 1994 $ 12,421 $ 1,785 $ 14,206
========== ========== ========
For the year ended October 31, 1993 $ 7,696 $ 4,725 $ 12,421
========== ========== ========
</TABLE>
Exhibit 23 (a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectuses constituting part of the Registration
Statements on Form S-3 and in the Registration Statements
on Form S-8 listed below of Harnischfeger Industries, Inc.
of our report dated November 28, 1995 which appears in this
Current Report on Form 8-K.
1. Registration Statement on Form S-8 (Registration No.
33-42833)
2. Registration Statement on Form S-8 (Registration No.
33-23985)
3. Registration Statement on Form S-8 (Registration No.
33-18393)
4. Registration Statement on Form S-3 (Registration No.
33-51436)
5. Registration Statement on Form S-8 (Registration No.
33-46738)
6. Registration Statement on Form S-8 (Registration No.
33-46739)
7. Registration Statement on Form S-8 (Registration No.
33-46740)
8. Registration Statement on Form S-8 (Registration No.
33-57209)
9. Registration Statement on Form S-3 (Registration No.
33-57979)
10. Registration Statement on Form S-8 (Registration No.
33-58087)
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
December 8, 1995
Exhibit 23 (b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
inclusion of our report dated March 25, 1994, which is
referred to in this current report on Harnischfeger,
Industries, Inc.'s Form 8-K dated December 8, 1995.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
December 8, 1995
NOTE 18 UNAUDITED
QUARTERLY FINANCIAL DATA AND STOCK PRICES
(Dollar amounts in thousands, except per share and market price amounts)
<TABLE>
<CAPTION>
Fiscal Quarter
First Second Third
-------- -- ---------- ----------
<S> <C> <C> <C>
Net sales $ 449,369 $ 541,013 $ 547,676
Gross profit 97,746 123,923 119,532
Operating income 34,140 47,723 69,614
Income from continuing
operations 3,193 21,045 37,612
(Loss) from discontinued
operations, net of
applicable income
taxes (22,634) (1,776) -
Extraordinary loss on
retirement of debt,
net of applicable
income taxes (3,481) - -
--------- -------- ---------
Net income(loss) $(22,922) $19,269 $37,612
========= ======== =========
Earnings (loss) per share
Income from continuing
operations $0.07 $0.46 $0.81
Income (loss) from
discontinued
operations (0.49) (0.04) -
Extraordinary loss
on retirement of
debt (0.08) - -
-------- ------- ------
Net income(loss)per share $(0.50) $0.42 $0.81
======== ======= ======
Market price of common stock:
High $28 1/2 $29 7/8 $38 7/8
Low 24 3/4 26 29 3/8
</TABLE>
(Dollar amounts in thousands, except per share and market price amounts)
<TABLE>
<CAPTION>
Fiscal Quarter 1995
Fourth Year
-------------- --------- ---
<S> <C> <C>
Net sales $614,021 $2,152,079
Gross profit 138,946 480,147
Operating income 59,545 211,022
Income from continuing
operations 30,270 92,120
(Loss) from discontinued
operations, net of
applicable income
taxes (6,825) (31,235)
Extraordinary loss on
retirement of debt,
net of applicable
income taxes - (3,481)
---------- -----------
Net income(loss) $23,445 $57,404
========== ===========
Earnings (loss) per share
Income from continuing
operations $0.65 $1.99
Income (loss) from discontinued
operations (0.14) (0.67)
Extraordinary loss on
retirement of debt - (0.08)
Net income(loss)per share $0.51 $1.24
------- -------
Market price of common stock:
High $39 3/8 $39 3/8
Low 28 5/8 24 3/4
</TABLE>
<TABLE>
<CAPTION>
(Dollar amounts in thousands, except per share and market price amounts)
Fiscal Quarter
First Second Third
------- ------- ---------
<S> <C> <C> <C>
Net sales $340,904 $355,337 $391,079
Gross profit 75,579 78,777 87,993
Operating income 17,174 19,789 23,851
Income from continuing
operations 4,012 4,774 8,012
Income (loss) from
discontinued operations,
net of applicable
income taxes 32 331 (200)
Extraordinary loss on retirement
of debt, net of applicable
income taxes - - (4,827)
Cumulative effect of accounting
change, net of applicable income
taxes and minority interest (81,696) - -
---------- -------- --------
Net income(loss) $ (77,652) $ 5,105 $ 2,985
========== ======== ========
Earnings (loss) per share (1)
Income from continuing
operations $ 0.09 $0.11 $0.18
Income (loss) from discontinued
operations - 0.01 -
Extraordinary loss on retirement
of debt - - (0.11)
Cumulative effect of accounting
change (1.88) - -
--------- ------- -------
Net income(loss)per share $(1.79) $0.12 $0.07
========= ======= =======
Market price of common stock:
High $25 1/2 $25 3/4 $21 3/4
Low 21 1/2 20 1/8 18 1/2
</TABLE>
(1) Due to the effect of the sale of 2.0 million shares of
treasury stock in September, 1994 and the use of the
weighted average shares outstanding each quarter for
computing earnings (loss) per share, the sum of the
quarterly per share amounts does not equal the per
share amount for the fiscal year.
<TABLE>
<CAPTION>
(Dollar amounts in thousands, except per share and market price amounts)
Fiscal Quarter 1994
Fourth Year
-------------- ------
<S> <C> <C>
Net sales $464,408 $1,551,728
Gross profit 113,528 355,877
Operating income 39,348 100,162
Income from continuing
operations 19,795 36,593
Income (loss) from
discontinued operations,
net of applicable
income taxes (4,145) (3,982)
Extraordinary loss on retirement
of debt, net of applicable
income taxes - (4,827)
Cumulative effect of accounting
change, net of applicable income
taxes and minority interest - (81,696)
-------- ----------
Net income(loss) $ 15,650 $ (53,912)
======== ==========
Earnings (loss) per share (1)
Income from continuing
operations $0.44 $0.84
Income (loss) from discontinued
operations (0.09) (0.09)
Extraordinary loss on
retirement of debt - (0.11)
Cumulative effect of accounting
change - (1.87)
-------- ---------
Net income(loss)per share $0.35 $(1.23)
======== =========
Market price of common stock:
High $26 1/2 $26 1/2
Low 20 1/2 18 1/2
</TABLE>
(1) Due to the effect of the sale of 2.0 million shares of
treasury stock in September, 1994 and the use of the
weighted average shares outstanding each quarter for
computing earnings (loss) per share, the sum of the
quarterly per share amounts does not equal the per
share amount for the fiscal year.
Five-Year Review of Selected Financial Data
<TABLE>
<CAPTION>
Year-Ended October 31, (Dollar amounts in thousands except per share amounts)
1995 1994 1993
----------- -------- ---------
<S> <C> <C> <C>
Revenues
Net sales $2,152,079 $1,551,728 $1,409,204
Other income 61,865 23,301 9,040
------------ ----------- -----------
2,213,944 1,575,029 1,418,244
Cost of Sales 1,671,932 1,195,851 1,083,846
Product Development, Selling
and Administrative
Expenses 330,990 279,016 259,831
Restructuring Charges - - 67,000
Nonrecurring Charge - - 8,000
--------- --------- ----------
Operating Income (Loss) 211,022 100,162 (433)
Interest Expense-Net (40,713) (47,366) (48,313)
--------- --------- ----------
Income (Loss)before Joy
Merger Costs, Provision
(Credit) for Income Taxes
and Minority Interest 170,309 52,796 (48,746)
Joy Merger Costs (17,459) - -
Provision (Credit) for
Income Taxes (including
credit of $6,075 relating
to Joy merger costs) 53,500 13,979 (16,497)
Minority Interest (7,230) (2,224) 4,799
Income (Loss) from Continuing
Operations (after deducting
$11,384, net of applicable
incomes taxes, related to
Joy merger costs) 92,120 36,593 (27,450)
Income (Loss) from and
(Net Loss) on Sale
of Discontinued Operation,
net of applicable income
taxes (31,235) (3,982) 7,760
Extraordinary Loss on
Retirement of Debt,
net of applicable income
taxes (3,481) (4,827) -
Cumulative Effect of Accounting
Change, net of applicable
income taxes and minority
interest - (81,696) -
-------- -------- ---------
Net Income (Loss) before
Preferred Stock
Dividend Requirements 57,404 (53,912) (19,690)
Preferred Stock Dividend
Requirements(1) - - -
---------- --------- ---------
Net Income (Loss) applicable
to Common Shareholders $ 57,404 $ (53,912) $ (19,690)
=========== ========== =========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting
$0.24 per share related to
Joy merger costs) $1.99 $0.84 $(0.62)
Income (loss) from and
(net loss)on sale of
discontinued operation (0.67) (0.09) 0.18
Extraordinary loss on
retirement of debt (0.08) (0.11) -
Cumulative effect of
accounting change - (1.87) -
------- ---------- ----------
Net Income (Loss) Per
Common Share $1.24 $(1.23) $(0.44)
======= ========== ==========
Dividends Per Common Share $0.40 $ 0.40 $ 0.40
======= ========== ==========
Working Capital:
Current assets $1,213,390 $1,043,401 $983,038
Current liabilities 723,303 612,076 607,802
---------- ---------- ---------
Working capital $ 490,087 $ 431,325 $375,236
========== ========== =========
Current ratio 1.7 1.7 1.6
========== ========== =========
Plant and Equipment
Net properties $487,656 $490,237 $505,412
Capital expenditures 73,484 50,842 71,761
Depreciation expense 56,642 58,628 56,467
Total assets $2,040,767 $1,981,953 $1,908,250
========== ========== ==========
Debt and Capitalized Lease
Obligations
Long-term obligations (2) $ 462,991 $ 571,054 $ 559,852
Short-term notes payable 18,921 14,419 67,742
----------- ---------- ----------
$ 481,912 $ 585,473 $ 627,594
=========== ========== ==========
Exchangeable Redeemable
Preferred Stock - - -
Minority Interest $ 89,611 $ 85,570 $ 89,110
Debt to Capitalization Ratio 40.5% 47.7% 48.9%
Shareholders' Equity $ 559,276 $ 502,365 $ 511,169
Book value per share $11.98 $11.04 $11.83
Common shares
outstanding (3) 46,693,061 45,503,451 43,200,676
Number of (End of Year):
Employees 14,000 14,900 14,700
Common Shareholders of Record 2,114 2,261 2,512
</TABLE>
(1) Reflects declared and cumulative preferred stock
dividends for the senior and junior preferred stock of Joy.
(2) Includes amounts classified as current liabilities
(3) As of end of year, excluding SECT shares.
Five-Year Review of Selected Financial Data
<TABLE>
<CAPTION>
Year-Ended October 31, (Dollar amounts in thousands except per share amounts)
1992 1991
--------- -------
<S> <C> <C>
Revenues
Net sales $1,594,192 $1,863,703
Other income 18,571 20,468
----------- -----------
1,612,763 1,884,171
Cost of Sales 1,179,904 1,420,176
Product Development, Selling and
Administrative Expenses 267,568 269,313
Restructuring Charges - -
Nonrecurring Charge
---------- ----------
Operating Income (Loss) 165,291 194,682
Interest Expense-Net (53,216) (42,190)
---------- ----------
Income (Loss)before Joy Merger
Costs, Provision (Credit)
for Income Taxes
and Minority Interest 112,075 152,492
Joy Merger Costs - -
Provision (Credit) for Income Taxes
(including credit of $6,075 relating
to Joy merger costs) 42,634 52,781
Minority Interest (9,277) (15,509)
---------- ----------
Income (Loss) from Continuing
Operations (after deducting
$11,384, net of applicable
incomes taxes, related to
Joy merger costs) 60,164 84,202
Income (Loss) from and
(Net Loss) on Sale
of Discontinued Operation,
net of applicable income taxes 9,465 7,568
Extraordinary Loss on Retirement of
Debt, net of applicable income
taxes (22,816) -
Cumulative Effect of Accounting
Change, net of applicable
income taxes and
minority interest - -
--------- ---------
Net Income (Loss) before
Preferred Stock
Dividend Requirements 46,813 91,770
Preferred Stock Dividend
Requirements(1) (10,866) (11,804)
--------- ----------
Net Income (Loss) applicable
to Common Shareholders $ 35,947 $ 79,966
========= ==========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting
$0.24 per share related to
Joy merger costs) $1.17 $1.72
Income (loss) from and (net loss)on
sale of discontinued operation 0.23 0.18
Extraordinary loss on retirement
of debt (0.54) -
Cumulative effect of accounting
change - -
--------- --------
Net Income (Loss) Per Common Share $0.86 $1.90
========= ========
Dividends Per Common Share $0.40 $0.40
========= ========
Working Capital:
Current assets $1,215,956 $1,284,112
Current liabilities 643,205 747,811
---------- ----------
Working capital $ 572,751 $ 536,301
========== ==========
Current ratio 1.9 1.7
========== ==========
Plant and Equipment
Net properties $497,947 $471,881
Capital expenditures 63,973 59,772
Depreciation expense 51,572 48,110
Total assets $2,109,605 $2,135,627
========== ==========
Debt and Capitalized Lease Obligations
Long-term obligations (2) $ 608,301 $ 540,741
Short-term notes payable 48,041 36,163
----------- ----------
$ 656,342 $ 576,904
=========== ==========
Exchangeable Redeemable
Preferred Stock - - $ 60,979
Minority Interest $ 99,655 $ 97,135
Debt to Capitalization Ratio 48.0% 51.9%
Shareholders' Equity $ 610,072 $ 492,924
Book value per share $13.33 $11.98
Common shares outstanding (3) 45,777,956 41,129,956
Number of (End of Year):
Employees 15,800 17,100
Common Shareholders of Record 2,865 3,250
</TABLE>
(1) Reflects declared and cumulative preferred stock
dividends for the senior and junior preferred stock of Joy.
(2) Includes amounts classified as current liabilities
(3) As of end of year, excluding SECT shares.
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
HARNISCHFEGER INDUSTRIES, INC.
December 8, 1995 By /s/James C. Benjamin
--------------------
Vice President, Controller
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<CASH> 239,043
<SECURITIES> 0
<RECEIVABLES> 507,557
<ALLOWANCES> 7,604
<INVENTORY> 416,395
<CURRENT-ASSETS> 1,213,390
<PP&E> 941,905
<DEPRECIATION> 454,249
<TOTAL-ASSETS> 2,040,767
<CURRENT-LIABILITIES> 723,303
<BONDS> 459,110
<COMMON> 51,118
0
0
<OTHER-SE> 508,158
<TOTAL-LIABILITY-AND-EQUITY> 2,040,767
<SALES> 2,152,079
<TOTAL-REVENUES> 2,213,944
<CGS> 1,671,932
<TOTAL-COSTS> 2,002,922
<OTHER-EXPENSES> 17,459
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 40,713
<INCOME-PRETAX> 152,850
<INCOME-TAX> 53,500
<INCOME-CONTINUING> 92,120
<DISCONTINUED> (31,235)
<EXTRAORDINARY> (3,481)
<CHANGES> 0
<NET-INCOME> 57,404
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
