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 4, 1995
- ----------------------------------------------------------------
Date of Report (Date of earliest event reported)
Harnischfeger Industries, Inc.
- -----------------------------------------------------------------
(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 2. Acquisition or Disposition of Assets.
On December 4, 1995, a wholly-owned subsidiary of
Harnischfeger Industries, Inc. (the "Company")
acquired substantially all of the stock of Dobson
Park Industries plc ("Dobson") following an offer
to purchase all of the outstanding shares of
Dobson at a price of 130 pence per share. The
transaction was valued at approximately $330
million, plus the assumption of approximately $40
million of net debt. Initial payment came from a
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
million of these borrowings will be replaced with
the issuance of 30-year debt securities under the
Company's shelf registration.
Dobson is a manufacturer of mining equipment,
industrial electrical control systems, toys and
plastics. Dobson's principal subsidiary, Longwall
International, is engaged in the manufacture, sale
and service of mining equipment for the
international underground coal mining industry.
Its principal products include electronically
controlled hydraulic roof support systems, armored
face conveyors, pumps and belt conveyor components
and systems.
Item 7. Financial Statements and Exhibits
Filed with this Current Report on Form 8-K is pro
forma financial information relative to the
acquisition of Dobson required pursuant to Article
11 of Regulation S-X. Also filed as an exhibit is
the Company's five-year historical Computation of
Ratio of Earnings to Fixed Charges. Financial
statements of Dobson for the periods specified in
Rule 3-05(b) of Regulation S-X are filed on a
separate Current Report on Form 8-K, also dated
December 4, 1995(filed on December 11, 1995).
The following financial statements and exhibits
are filed as part of this report:
Page No.
--------
(b) Pro forma financial information
(1) Unaudited Combined Pro Forma
Condensed Financial Statements 3-7
(c) Exhibits
Exhibit
Number Exhibit
------- ------------------------
(12) Computation of Ratio of
Earnings To Fixed Charges 8
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Condensed
Financial Statements
The following unaudited pro forma financial
statements give effect to the acquisition by
Harnischfeger Industries, Inc. ("the Company") of
Dobson Park Industries plc ("Dobson") in a
transaction to be accounted for as a purchase. On
December 4, 1995 the Company acquired
substantially all of the stock of Dobson. The
unaudited pro forma balance sheet is based on the
individual balance sheets of the Company (as of
October 31, 1995) and Dobson (as of September 30,
1995) and has been prepared to reflect the
acquisition by the Company of Dobson as of October
31, 1995. The balance sheet of Dobson was
translated at an exchange rate of GBP 1.00 =
$1.5326, the exchange rate on December 4, 1995.
The unaudited pro forma statement of income is
based on the individual statements of income of
the Company (for the year ended October 31, 1995)
and Dobson (for the year ended September 30, 1995)
as if the acquisition had been consummated on
November 1, 1994. The statement of income of
Dobson was translated at an average exchange rate
of GBP 1.00 = $1.5836. These unaudited pro forma
financial statements should be read in conjunction
with the historical financial statements and notes
thereto of the Company included in the Current
Report on Form 8-K dated December 8, 1995 and of
Dobson included in a Current Report on Form 8-K
dated December 4, 1995(filed on December 11,
1995).
The pro forma data is presented for informational
purposes only and is not necessarily indicative of
the operating results or financial position that
would have occurred had the acquisition been
consummated on the dates indicated, nor is such
data necessarily indicative of future operating
results or financial position. There is no
assurance that similar results will be achieved in
the future. Allocations and adjustments have been
based on the best information currently available.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Balance Sheet
October 31, 1995
(In Thousands)
Dobson
Harnischfeger Park
Industries, Inc. Industries plc
---------------- ---------------
$ $
<S> <C> <C>
Assets
Current Assets:
Cash & cash equivalents 239,043 38,511
Accounts receivable-net 499,953 117,874
Inventories 416,395 101,250
Net assets of businesses to
be divested
Other current assets 57,999 11,347
---------- ---------
1,213,390 268,982
Property, plant & equipment-net 487,656 77,139
Intangible assets 214,739 2,262
Other assets 124,982 14,487
---------- ---------
Total Assets 2,040,767 362,870
========== =========
Liabilities & Shareholders' Equity
Current liabilities:
Short-term N/P, including current
portion of long-term
obligations 22,802 71,606
Trade accounts payable 263,750 75,724
Advanced payments & progress
billings 154,401 14,253
Accruals and other current
liabilities 282,350 77,974
----------- ---------
723,303 239,557
Long-term obligations 459,110 5,882
Deferred income taxes 34,805
Other liabilities 174,662 13,331
Minority interest 89,611
Shareholders' equity 559,276 104,100
---------- ----------
Total Liabilities &
Shareholders' Equity 2,040,767 362,870
========== ==========
</TABLE>
See accompanying Notes to Unaudited Combined Pro
Forma Financial Statements.
[/TABLE]
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Balance Sheet
October 31, 1995
(In Thousands)
Pro Forma Adjustments
--------------------------
Businesses Purchase
To Be Accounting
Divested(l) & Other
---------- ----------
$ $
<S> <C> <C>
Assets
Current Assets:
Cash & cash equivalents (16,062) (117,500)(a)
Accounts receivable-net (43,014)
Inventories (33,283) (8,000)(c)
Net assets of businesses to
be divested 110,000 (c)
Other current assets 811
--------- ------------
(91,548) (15,500)
Property, plant & equipment-net (18,572) 15,000 (c)
Intangible assets (2,418) 201,395 (m)
Other assets (66) (4,000)(c)
10,000 (b)
--------- ------------
Total Assets (112,604) 206,895
========= ============
Liabilities & Shareholders' Equity
Current liabilities:
Short-term N/P, including current
portion of long-term obligations 62,500 (a)
Trade accounts payable (28,364)
Advanced payments & progress
billings
Accruals and other current
liabilities (3,064) 22,000 (d)
--------- -----------
(31,428) 84,500
Long-term obligations 150,000 (a)
Deferred income taxes (6,270)(c)
(1,711)(b)
3,300 (b)
Other liabilities
Minority interest
Shareholders' equity (81,176) (22,924)
----------- ------------
Total Liabilities &
Shareholders' Equity (112,604) 206,895
========== ============
</TABLE>
See accompanying Notes to Unaudited Combined Pro Forma
Financial Statements.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Balance Sheet
October 31, 1995
(In Thousands)
Combined
Pro
Forma
----------
$
<S> <C>
Assets
Current Assets:
Cash & cash equivalents 143,992
Accounts receivable-net 574,813
Inventories 476,362
Net assets of businesses to
be divested 110,000
Other current assets 70,157
---------
1,375,324
Property, plant & equipment-net 561,223
Intangible assets 415,978
Other assets 145,403
---------
Total Assets 2,497,928
=========
Liabilities & Shareholders' Equity
Current liabilities:
Short-term N/P, including current
portion of long-term obligations 156,908
Trade accounts payable 311,110
Advanced payments & progress
billings 168,654
Accruals and other current
liabilities 379,260
---------
1,015,932
Long-term obligations 614,992
Deferred income taxes 30,124
Other liabilities 187,993
Minority interest 89,611
Shareholders' equity 559,276
---------
Total Liabilities &
Shareholders' Equity 2,497,928
=========
</TABLE>
See accompanying Notes to Unaudited Combined Pro Forma
Financial Statements.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Statement of Income
For the Year Ended October 31, 1995
(In Thousands, Except Per Share Amounts)
Dobson
Harnischfeger Park
Industries, Inc. Industries plc
------------------- --------------
$ $
<S> <C> <C>
REVENUES
Net sales 2,152,079 427,083
Other income 61,865 3,044
---------- --------
2,213,944 430,127
COST OF SALES (1,671,932) (305,157)
PRODUCT DEVELOPMENT, SELLING &
ADMINISTRATIVE EXPENSES (330,990) (104,185)
----------- ---------
OPERATING INCOME 211,022 20,785
INTEREST EXPENSE-NET (40,713) (3,009)
---------- ---------
INCOME BEFORE JOY MERGER COSTS,
PROVISION FOR INCOME TAXES &
MINORITY INTEREST 170,309 17,776
JOY MERGER COSTS (17,459)
PROVISION FOR INCOME TAXES (53,500) (8,241)
MINORITY INTEREST (7,230)
---------- ---------
INCOME FROM CONTINUING OPERATIONS 92,120 9,535
========== =========
WEIGHTED AVERAGE SHARES 46,218
EARNINGS PER SHARE $1.99
</TABLE>
See accompanying Notes to Unaudited Combined Pro Forma
Financial Statements.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Statement of Income
For the Year Ended October 31, 1995
(In Thousands, Except Per Share Amounts)
Pro Forma Adjustments
---------------------------------------------------
Businesses
Longwall (e) To Be
(3 1/2 Months) Divested(l)
-------------- ------------
$ $
<S> <C> <C>
REVENUES
Net sales 113,105 (182,006)
Other income (2,323) -
---------- --------
110,782 (182,006)
COST OF SALES (88,115) 122,461
PRODUCT DEVELOPMENT, SELLING &
ADMINISTRATIVE EXPENSES (19,478) 55,082
----------- ---------
OPERATING INCOME 3,189 (4,463)
INTEREST EXPENSE-NET 65
---------- ---------
INCOME BEFORE JOY MERGER COSTS,
PROVISION FOR INCOME TAXES &
MINORITY INTEREST 3,189 (4,398)
JOY MERGER COSTS
PROVISION FOR INCOME TAXES (1,116) 1,539
MINORITY INTEREST
---------- ---------
INCOME FROM CONTINUING OPERATIONS 2,073 (2,859)
========== ==========
WEIGHTED AVERAGE SHARES
EARNINGS PER SHARE
</TABLE>
See accompanying Notes to Unaudited Combined Pro Forma
Financial Statements.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc.
Unaudited Combined Pro Forma Statement of Income
For the Year Ended October 31, 1995
(In Thousands, Except Per Share Amounts)
Pro Forma Adjustments
---------------------
Purchase Combined
Accounting Pro
& Other Forma
------------- --------------
$ $
<S> <C> <C>
REVENUES
Net sales 2,510,261
Other income 62,586
---------- --------
2,572,847
COST OF SALES (2,146)(f) (1,944,889)
PRODUCT DEVELOPMENT, SELLING & (5,034)(g)
ADMINISTRATIVE EXPENSES 5,000 (h) (393,905)
5,700 (k)
----------- ---------
OPERATING INCOME 3,520 234,053
INTEREST EXPENSE-NET (16,948)(i) (60,605)
---------- ---------
INCOME BEFORE JOY MERGER COSTS,
PROVISION FOR INCOME TAXES &
MINORITY INTEREST (13,428) 173,448
JOY MERGER COSTS (17,459)
PROVISION FOR INCOME TAXES 6,722 (j) (54,596)
MINORITY INTEREST (7,230)
---------- ---------
INCOME FROM CONTINUING OPERATIONS (6,706) 94,163
============ =========
WEIGHTED AVERAGE SHARES 46,218
ARNINGS PER SHARE $2.04
</TABLE>
See accompanying Notes to Unaudited Combined Pro Forma
Financial Statements.
Harnischfeger Industries, Inc.
Notes to Unaudited Combined Pro Forma
Financial Statements
NOTE 1 - The pro forma statement of income has been prepared
assuming that the acquisition of Dobson occurred on November
1, 1994, and the pro forma balance sheet has been prepared
to reflect the acquisition of Dobson by the Company as of
October 31, 1995. Adjustments to the historical financial
statements have been made to reflect:
a. Assumes the expected issuance of $150 million of 30-
year notes at an assumed rate of 7.25% to replace
bridge financing initially used to fund a portion of
the aggregate purchase price of $330 million, the
balance of which was financed with $117.5 million of
cash and $62.5 million of short-term debt.
b. Adjustments necessary to present Dobson's historical
balance sheet on a basis consistent with U.S. generally
accepted accounting principles ("U.S. GAAP"). Specific
adjustments relate to overfunded pension plans and
deferred income taxes. Adjustments necessary to
conform Dobson's historical statement of income to U.S.
GAAP are not material to the pro forma results of
operations.
c. Longwall International Adjustments to the net assets of
Dobson to reflect estimated fair value, including $110
million related to businesses to be divested, and
related tax effects.
d. Provision for estimated facility closure and
termination costs, related to the acquired operations,
expected to be incurred as a result of plans to
integrate Dobson into the Company's existing mining
equipment operations.
e. Longwall International was included in the Dobson
historical financial statements on the equity basis of
accounting from October, 1994 to January, 1995 when
Dobson purchased the remaining outstanding minority
interest in Longwall. Adjustments necessary to reflect
Dobson's purchase of the remaining interest in Longwall
International as if such purchase had occurred on
October 1, 1994, the beginning of Dobson's fiscal year,
including the elimination of equity income included in
the historical financial statements of Dobson.
f. Additional depreciation resulting from the increased
basis of machinery and equipment acquired based on
estimated useful lives of seven years.
g. Amortization of goodwill on a straight-line basis over
40 years.
h. Reduction of expenses which reflects the conservative
estimated savings to be realized through the
integration of Dobson's operations with the Company's.
i. Annual interest charges resulting from the acquisition.
j. Reduction of income taxes relating to the foregoing
adjustments.
k. Elimination of nonrecurring takeover defense costs of
$5.7 million incurred by Dobson in connection with the
transaction.
l. The historical results and financial position of those
businesses to be divested by the Company. (See Note
2.)
m. The excess of acquisition costs over the fair value of
identifiable net assets acquired (goodwill).
NOTE 2 - The electronics and toys/plastics businesses of
Dobson are being evaluated in the context of the five
characteristics required for consideration as a core
business of the Company. As a result of this evaluation, it
is likely that businesses will be divested. The valuation
of the businesses to be divested by the Company reflects
management's best estimate of the proceeds to be received
upon the divestiture of such businesses based upon
preliminary internal and external analyses, estimated cash
flows from operations and allocated interest costs during
the holding period. For this purpose, it has been assumed
that $62.5 million of short-term borrowings incurred in
connection with the acquisition will be reduced with a
portion of the cash proceeds from the divestiture of these
businesses. It has been assumed that such divestitures will
occur over a six to twelve month period following the
acquisition date.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc. Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
(In thousands, except for ratios)
Year Ended October 31,
1995 1994
----- -----
<S> <C> <C>
Income (loss) from continuing operations
before provision (credit) for income
taxes and minority interest $152,850 $52,796
Add:
Interest Expense 51,748 54,504
Rental Expense 6,941 6,776
Subtract:
Undistributed earnings (loss) of
equity investees 20 738
---------- ---------
Earnings adjusted for fixed charges $211,559 $114,814
========== =========
Fixed Charges
Interest Expense 51,748 54,504
Rental Expense 6,941 6,776
Preferred Dividend Requirement - -
--------- ---------
Total fixed charges $58,689 $61,280
========= =========
Ratio of earnings to fixed charges (1) 3.60 1.87
========= =========
</TABLE>
(1) The ratio of earnings to fixed charges is defined
as income from continuing operations before provision
(credit) for income taxes and minority interest plus
interest expense (including amortization of debt issuance
expense), the portion of rental expense which represents
interest (deemed to be one-third of rentals ) and dividends
received on less-than-fifty-percent-owned companies, reduced
(increased) by equity income (loss) recorded on
less-than-fifty-percent-owned companies, divided by fixed
charges. Fixed charges include interest expense (including
amortization of debt issuance expense), the portion of
rental expense which represents interest and preferred
dividend requirements, if applicable.
(2) Earnings did not cover fixed charges by $47,437 in
1993.
<TABLE>
<CAPTION>
Harnischfeger Industries, Inc. Exhibit 12
Computation of Ratio of Earnings to Fixed Charges
(In thousands, except for ratios)
Year Ended October 31,
1993 1992 1991
----- ----- ------
<S> <C> <C> <C>
Income (loss) from continuing operations
before provision (credit) for income
taxes and minority interest ($48,746) $112,075 $152,492
Add:
Interest Expense 56,169 69,459 69,678
Rental Expense 6,674 7,056 6,893
Subtract:
Undistributed earnings (loss) of
equity investees 1,309 3,803 (2,002)
--------- --------- ---------
Earnings adjusted for fixed charges $15,406 $192,393 $227,061
========= ========= =========
Fixed Charges
Interest Expense 56,169 69,459 69,678
Rental Expense 6,674 7,056 6,893
Preferred Dividend requirement - 17,526 18,160
-------- --------- ---------
Total fixed charges $62,843 $94,041 $94,731
======== ========= =========
Ratio of earnings to fixed charges (1) - (2) 2.05 2.40
======== ========= =========
</TABLE>
(1) The ratio of earnings to fixed charges is defined
as income from continuing operations before provision
(credit) for income taxes and minority interest plus
interest expense (including amortization of debt issuance
expense), the portion of rental expense which represents
interest (deemed to be one-third of rentals ) and dividends
received on less-than-fifty-percent-owned companies, reduced
(increased) by equity income (loss) recorded on
less-than-fifty-percent-owned companies, divided by fixed
charges. Fixed charges include interest expense (including
amortization of debt issuance expense), the portion of
rental expense which represents interest and preferred
dividend requirements, if applicable.
(2) Earnings did not cover fixed charges by $47,437 in
1993.
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 11, 1995 By /s/James C. Benjamin
--------------------------
Vice President, Controller
and Chief Accounting Officer
