SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended
October 31, 1996.
/ / Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the transition
period from to .
Commission file number 1-9299
HARNISCHFEGER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 39-1566457
(State of (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
3600 South Lake Drive, St. Francis, Wisconsin 53235-3716
(Address of Principal Executive Office)
Registrant's Telephone Number, Including Area Code:
(414) 486-6400
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
Common Stock, $1 Par Value New York and Pacific Stock
Exchanges
Preferred Stock Purchase Rights New York and Pacific Stock
Exhanges
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /X/
The aggregate market value of Registrant's Common
Stock held by non-affiliates, as of January 27, 1997, based
on a closing price of $45, was approximately $2,212.7
million.
The number of shares outstanding of Registrant's
Common Stock, as of January 27, 1997, was 49,171,007.
DOCUMENTS INCORPORATED BY REFERENCE
Management's Discussion and Analysis of Financial
Statements, Consolidated Financial Statements, Notes to
Consolidated Financial Statements, Report of Independent
Accountant's and Five-Year Review of Financial Data of
Registrant's. Registrant's proxy statement for the 1997
annual meeting of stockholders to be filed within 120 days
of the end of the Registrant's fiscal year.
HARNISCHFEGER INDUSTRIES, INC.
INDEX TO
ANNUAL REPORT ON FORM 10-K
For The Fiscal Year Ended October 31, 1996
Page
----
Part I
Item 1. Business........................ 3
Item 2. Properties...................... 10
Item 3. Legal Proceedings............... 13
Item 4. Submission of Matters to a
Vote of Security Holders...... 14
Part II
Item 5. Market for the Registrant's
Common Stock and Related
Stockholder Matters........... 14
Item 6. Selected Financial Data ........ 14
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations..... 14
Item 8. Financial Statements and
Supplementary Data............ 14
Item 9. Change in and Disagreements with
Accountants on Accounting and
Financial Disclosure.......... 14
Part III
Item 10.Directors and Executive Officers
of the Registrant............. 15
Item 11.Executive Compensation.......... 15
Item 12.Security Ownership of Certain
Beneficial Owners and
Management.................... 15
Item 13.Certain Relationships and Related
Transactions.................. 15
Part IV
Item 14.Exhibits, Financial Statement
Schedules and Reports
on Form 8-K................... 15
Signatures ............................... 19
<PAGE>
PART I
Item 1. Business
SEGMENTS OF BUSINESS
Harnischfeger Industries, Inc. ("Harnischfeger
Industries" or the "Company") is a holding company for
subsidiaries involved in the worldwide manufacture and
distribution of surface mining equipment (P&H Mining
Equipment); underground mining equipment (Joy Mining
Machinery); pulp and papermaking machinery (Beloit
Corporation); and material handling equipment (P&H Material
Handling). In early fiscal 1996, the Company completed the
acquisition of Dobson Park Industries plc ("Dobson"), an
industrial engineering group with interests in underground
mining equipment, industrial electronic 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 and has been integrated
into the Company's Mining Equipment Segment. In March
1996, the Company completed the purchase of the assets of
the pulp machinery division of Ingersoll-Rand Company.
Harnischfeger Industries is the direct successor to a
business begun over 100 years ago which, at October 31,
1996, through its subsidiaries, manufactures and markets
products classified into three industry segments: Pulp and
Papermaking Machinery, Mining Equipment, and Material
Handling.
The following discussion and the portions of the Company's
1996 Annual Report to Shareholders incorporated herein by
reference contain forward looking statements. Terms such
as "anticipate", "believe", "estimate", "expect",
"indicate", "may be", "objective", "plan", "predict", and
"will be" are intended to identify such statements.
Forward-looking statements are subject to certain risks,
uncertainties and assumptions which could cause actual
results to differ materially from those predicted. See
"Cautionary Factors" at the end of this Item 1.
MINING EQUIPMENT
P&H Mining Equipment is the world's largest producer
of electric mining shovels and is a significant producer of
electric and diesel-electric crawler and walking draglines,
hydraulic mining excavators, blasthole drills, and dredge
and dragline bucket products. Electric mining shovels range
in capacity from 18 to 80 cubic yards, crawler draglines
from 10 to 20 cubic yards and hydraulic mining excavators
from 12 to 27 cubic yards. Capacities for walking draglines
range from 20 to 150 cubic yards. Blasthole drill models
have drilling diameters ranging from 9 to 22 inches and bit
load capacities from 70,000 to 150,000 pounds.
The products of P&H Mining Equipment are used in
mines, quarries and earth-moving operations in the digging
and loading of such minerals and other ores as coal,
copper, gold, iron ore, lead, zinc, bauxite, uranium,
phosphate, stone and clay.
P&H Mining Equipment has a relationship in the mining
shovel business with Kobe Steel, Ltd. ("Kobe") pursuant to
which P&H Mining Equipment licenses Kobe to manufacture
certain electric mining shovels and related replacement
parts in Japan. Harnischfeger Corporation has the exclusive
right to market Kobe-manufactured mining shovels and parts
outside Japan (except in the case of certain government
sales). In addition, Harnischfeger Corporation is party to
an agreement with a corporate unit of the People's Republic
of China, licensing the manufacture and sale of two models
of electric mining shovels and related components. This
relationship provides P&H Mining Equipment with an
opportunity to sell component parts for shovels built in
China.
On November 29, 1994, pursuant to an exchange of
common stock, the Company completed its acquisition of Joy
Technologies Inc. ("Joy" or "Joy Mining Machinery"), a
world leader in underground mining equipment. Joy
manufactures and services mining equipment for the
underground extraction of coal and other bedded materials
and has facilities in Australia, South Africa, the United
Kingdom and the United States, as well as sales offices in
Poland and the People's Republic of China. Joy Mining
Machinery designs, manufactures and distributes continuous
miners; entry drivers and sump shearers; longwall shearers;
roof supports; armored face conveyors; shuttle cars; and
continuous haulage systems for use in underground mining.
Joy products are not sold into the general construction
industry, and demand for them is not tied to cycles in that
industry. Joy also maintains an extensive network of
service and spare parts distribution centers to rebuild and
service equipment and sell spare parts in support of its
installed base. This network includes seven service
centers in the United States and five outside of the United
States, all of which are strategically located in major
underground mining regions. The financial position and
results of operations of Harnischfeger Industries and Joy
were combined retroactively in fiscal 1995.
In early fiscal 1996, the Company completed the
acquisition of Dobson Park Industries plc for a purchase
price of approximately $330 million including acquisition
costs plus the assumption of net debt of approximately $40
million.
Dobson, headquartered in the United Kingdom, was an
industrial engineering group with interests in underground
mining equipment, industrial electronic control systems,
toys and plastics. Longwall International ("Longwall"),
one of the main subsidiaries of Dobson, was 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 Company is fully integrating
Longwall's operations into Joy, thus enabling Joy to offer
integrated underground longwall mining systems to the
worldwide mining industry. The industrial electronic and
toys/plastics businesses are held for sale. Several of the
businesses were sold during 1996. The remaining businesses
are expected to be sold within the next year.
Financial information with respect to the acquisition
of Dobson is presented in Note 2 to the Financial
Statements of the 1996 Annual Report to Shareholders
incorporated herein by reference.
PULP AND PAPERMAKING MACHINERY
The Pulp and Papermaking Machinery Division is
comprised of the Company's 80% interest in Beloit
Corporation ("Beloit"). Mitsubishi Heavy Industries, Ltd.
("Mitsubishi") is the owner of the other 20% interest in
Beloit. The Company and Mitsubishi have entered into
certain agreements that provide Mitsubishi with the right
to designate one of Beloit's five directors. These
agreements also place certain restrictions on the transfer
of Beloit stock. In the event of a change in control of the
Company, Mitsubishi has the right to sell its 20% interest
back to the Company for the greater of $60 million or the
book value of its equity interest.
Beloit is a leader in the design and manufacture of
pulp and papermaking machinery and related products used in
the pulp and paper industries. Beloit operates on a global
basis with major manufacturing facilities in ten countries
and sales and service offices located throughout the world.
In addition, licensing arrangements exist with several
major foreign companies.
Beloit's activities are divided into the following
categories: complete installations involving the design,
manufacture and installation of integrated pulp and
papermaking machinery; major rebuilds and servicing of
existing systems; and the sale of ancillary equipment and
replacement parts. This machinery is custom designed to
meet the specific needs of each customer. On March 27,
1996, the Company purchased the assets of the pulp
machinery division of Ingersoll-Rand Company ("IMPCO"),
which significantly strengthens Beloit's pulping equipment
offerings.
Beloit is known for the quality and dependability of
its products and is a leader in product innovation and
development. Beloit has made a continuous commitment to
research and development activities and has been granted
numerous patents on its designs. Beloit systems and
equipment are used by a substantial number of paper
producers, both domestic and foreign.
A major factor in Beloit's success in the pulp and
papermaking machinery industry has been its international
manufacturing operations. Beloit's overseas facilities have
been used to support both domestic and foreign sales and
have provided Beloit with the flexibility to shift its
manufacturing to more favorable locations as appropriate.
Beloit's manufacturing facilities are supported by a
domestic and international marketing network staffed by
experienced sales engineers.
Beloit Corporation spent nine months developing a
total strategic redesign of its business. A $43.0 million
pre-tax restructuring charge was recorded in the fourth
quarter to accomplish asset and employment reductions
necessary to implement the strategy. The restructuring and
refocus will be an all-out effort to improve operating
efficiencies and profit margins, expand Beloit Mill
Services offerings for aftermarket support, and satisfy the
vigorous growth in demand for pulp and papermaking
machinery in the Pacific Rim.
Formerly, the Pulp and Papermaking Machinery Division
also included the Company's 20% interest in Measurex
Corporation ("Measurex"). In fiscal 1995, Measurex
repurchased its stock which had been held by the Company
resulting in a pre-tax gain of $29.7 million. Measurex
continues to have cooperative agreements with Beloit.
P&H MATERIAL HANDLING
P&H Material Handling produces lines of
through-the-air material handling equipment designed for a
variety of users and container handling cranes for use in
ports in addition to providing aftermarket support and
distribution and service.
Engineered overhead cranes are comprised of several
product lines: engineered cranes, standard cranes, portal
cranes, ship-to-shore cranes, and crane components. Cranes
are designed for installation in a wide range of industrial
settings. Each crane is engineered to the customer's
specifications, using standard components wherever
possible. Engineered cranes are marketed for moderate to
severe duty cycle applications in capacities from 3 to 800
tons.
Standard overhead cranes are available in capacities
from 5 to 100 tons. Stacker cranes, ranging in capacities
from 2 to 50 tons, are particularly suitable for factory
automation projects. Portal cranes range in lifting
capacities from 5 to 100 tons and are used outdoors for
woodyard, scrap, and container handling.
P&H Material Handling has two groups specializing in
aftermarket support and distribution and service. The P&H
Aftermarket Group consists of Product Support, which
markets replacement products and repair parts and
Phoenix(TM), which handles pre-owned and remanufactured
cranes and parts plus provides engineering services for the
revitalization of crane and runway systems.P&H Distribution
and Service provides installation, erection and repair and
maintenance services under the ProCare trademark.
DISCONTINUED SEGMENTS
Environmental
The Company completed the sale of Joy Environmental
Technologies ("JET") in the first quarter of 1996. JET was
a unit of Joy which supplied air pollution and ash handling
equipment for electric utilities and other industrial
operations.
Systems
Syscon Corporation ("Syscon"), the remaining unit in
the Company's Systems Group, was sold in February 1995 to
Logicon, Inc. Syscon was engaged principally in providing
systems development, systems integration and systems
services to the U. S. Government, government agencies and
commercial enterprises.
INTERNATIONAL OPERATIONS
In 1996, 1995 and 1994, Beloit's foreign sales
amounted to 53%, 41% and 30%, respectively, of Beloit's
consolidated net sales.
Foreign sales of the Mining Equipment segment
generated approximately 58% of the segment's consolidated
net sales in 1996, 44% in 1995 and 48% in 1994.
Foreign sales of the P&H Material Handling segment's
consolidated net sales amounted to 39% in 1996 and 48% in
1995. Sales in 1994 were principally in the United States.
Beloit has granted licensing agreements to serve
certain foreign markets to companies located in Australia,
Japan and Spain. Beloit maintains sales and service offices
throughout the world.
Harnischfeger Industries' international operations are
subject to certain risks not generally applicable to its
domestic businesses, including currency fluctuations,
changes in tariff restrictions, restrictive regulations of
foreign governments (including price and exchange
controls), and other governmental actions. Harnischfeger
Industries 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.
GENERAL
Seasonality
No significant portion of Harnischfeger Industries'
business is subject to or influenced by seasonal factors;
however, the Company's business is influenced by the
cyclical nature of the paper, mining and capital goods
industries.
Distribution
P&H Mining and Joy Mining Machinery sales are made
mostly through sales at the segments' headquarters and
sales offices located around the world. Joy's worldwide
sales forces have marketing responsibility for new machine
sales, as well as for parts, components and rebuild
services provided to customers. A segment of the sales
force in the United States is dedicated to operating a
fleet of trucks which visit customer sites on a regular
basis in order to deliver components and parts.
Sales of Beloit products are principally made directly
to end users. Beloit maintains a worldwide marketing group
to coordinate and support worldwide facilities in marketing
strategies, technical sales support and participation in
major projects including interface with engineering firms
and financial institutions. Beloit offers systems and
turnkey alternatives to assist in related business
development throughout the world. Agents are used in
certain foreign countries to augment Beloit's sales force
stationed in the segment's manufacturing facilities and in
sales offices worldwide.
In the United States, overhead cranes and certain
electrical products are principally marketed directly from
the segments' headquarters and regional sales offices.
Electric wire rope and chain hoists and crane
modernizations are sold through dealers and distributors,
assisted and coordinated by corporate and regional office
personnel. P&H Material Handling has a dealer network of
regional distributorships (referred to as Material Handling
Centers).
The manufacture and sale of repair and replacement
parts and the servicing of equipment are important aspects
of each of the Company's businesses.
Competition
Harnischfeger Industries conducts its domestic and
foreign operations under highly competitive market
conditions, requiring that its products and services be
competitive in price, quality, service and delivery.
The pulp and paper capital machinery market is
globally competitive; Beloit's two major paper machinery
competitors are foreign-owned companies. The principal
competitors are Valmet Paper Machinery, Inc., with
controlling interest held by Valmet Corporation, Finland,
and Voith Sulzer Papiertechnik GMBH, with headquarters in
Germany. The principal competitors in pulp machinery are
Sunds Difibrator, Ahlstrom, and Kvaerner, Black-Clawson and
Andritz. In the aftermarket area, Beloit competes with
various small suppliers.
P&H Mining Equipment's principal competitors in
electric mining shovels are Bucyrus International, Inc. and
Marion, a division of Global Industrial Technologies.
Harnischfeger Industries believes P&H Mining Equipment is
the leading participant in this market. Its principal
competitors in the hydraulic mining excavator market are
Demag, Hitachi, Caterpillar and Orenstein & Koppel. In
draglines, the main competitors are Bucyrus International,
Inc. and Marion. The Division's main competitors in drills
are Ingersoll-Rand, Driltech and Bucyrus International,
Inc.
In the underground coal mining industry, Joy competes
primarily on the basis of the quality and reliability of
its products and its ability to provide timely, extensive
and cost-effective repair and rebuild services and delivery
of spare parts. Joy's primary competitors in the
continuous mining machinery industry are EIMCO, Voest
Alpine(a Tampella Tamrock Company), Simmons-Rand Company(a
subsidiary of Long-Airdox Company) and Jeffrey. In the
longwall shearer new equipment market, Joy competes
primarily with Anderson Longwall (a subsidiary of Long-Airdox Company),
Eickhoff Corporation, and Mitsui Miike
Machinery Company, Ltd. In the continuous haulage market,
Joy competes with Long-Airdox, Fairchild International and
Jeffrey. In roof supports and armored face conveyors, Joy
primarily competes with DBT, Long-Airdox Company and
several regional suppliers. In the sale of spare parts for
Joy's equipment, Joy competes with various small suppliers.
The principal worldwide competitors for the P&H
Material Handling Division are Demag and Konecranes
International KCI. Harnischfeger Industries believes that
P&H Material Handling is one of the largest worldwide
participants in this market. When considering any specific
geographic market, the competitors would normally be split
into overhead cranes, dockside cranes, hoists, and service.
There are significant numbers of competitors in each of the
geographic markets and segments of those markets.
Customers
During 1996, there were no sales or services made to
an individual customer amounting to 10% or more of
consolidated sales.
Backlog
Backlog by business segment for the Company's
continuing operations (in thousands of dollars) as of the
end of fiscal years 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
October 31,
-------------------------
1996 1995
---------- -----------
<S> <C> <C>
Mining Equipment............................. $ 453,480 $ 221,540
Pulp and Papermaking Machinery............... 846,137 679,625
Material Handling ........................... 132,550 130,879
---------- ----------
$1,432,167 $1,032,044
========== ==========
</TABLE>
Supply of Materials and Purchased Components
P&H Mining Equipment Division and P&H Material
Handling manufacture machines and heat-treated gears,
pinions, shafts, structural fabrications, electrical
motors, generators and other electrical parts. They
purchase raw and semi-processed steel, castings, forgings,
copper and other materials for these parts and components
from approximately 400 suppliers. In addition, component
parts, such as engines, bearings, controls, hydraulic
components, and a wide variety of mechanical and electrical
items are purchased from approximately 1,500 suppliers.
Purchases of materials and components are made on a
competitive basis with no single source being dominant.
Joy purchases electric motors, gears, hydraulic
parts, electronic components, forgings, steel, clutches and
other components and raw materials from outside suppliers.
Although Joy purchases certain components and raw materials
from a single supplier, alternative sources of supply are
available for all such quantities. Joy believes that it
has adequate sources of supplies of component parts and raw
materials for its manufacturing requirements.
The Pulp and Papermaking Machinery Division purchases
raw materials used in its products which include plates,
sheets, shapes, carbon and alloy steel, stainless steel,
brass and bronze, nickel alloy, and aluminum. Purchases of
semi-processed and component parts include castings,
valves, filters, pumps, dryers, electrical equipment, and
various vacuum, drying, hydraulic, combustion,
material-handling and temperature control systems. Beloit
has approximately 5,300 suppliers, of which approximately
1,600 are most commonly used. No single source is dominant.
Patents and Licenses
Patents are important in the papermaking industry. All
major papermaking machinery manufacturers use patents
extensively to protect the technology base that results
from research and development. Beloit has been granted
numerous patents on its designs and more are pending. Most
are registered in all of the major countries into which
Beloit and its licensees sell.
Joy and P&H Mining Equipment and their respective
subsidiaries own numerous patents and trademarks and have
patent licenses from others relating to their respective
products and manufacturing methods. Also, patent licenses
are granted to others throughout the world and royalties
are received under most of these licenses. While they do
not consider any particular patent or license or group of
patents or licenses to be essential to their respective
business as a whole, they consider their patents and
licenses significant to the conduct of its business in
certain product areas.
P&H Material Handling has numerous trademarks and
domestic and foreign patents, patent applications and
patent licensing agreements. P&H Material Handling does not
consider these businesses materially dependent upon any
patent or patent license agreement.
Research and Development
Harnischfeger Industries maintains a strong commitment
to research and development with engineering staffs that
are engaged in full-time research and development of new
products, and improvement of existing products. Beloit
maintains research and development facilities in Rockton,
Illinois; Pittsfield, Massachusetts; Bolton, United
Kingdom; Clarks Summit, Pennsylvania; Portland, Oregon; and
Waukesha, Wisconsin. Harnischfeger Corporation maintains
research and development facilities in Milwaukee,
Wisconsin. Joy pursues technological development through
the engineering of new products, systems and applications;
the improvement and enhancement of licensed technology; and
synergistic acquisitions of technology. Research and
development expenses were $34.5 million in 1996, $30.3
million in 1995 and $28.9 million in 1994.
Environmental and Health and Safety Matters
The activities of the Company are regulated by
federal, state and local statutes, regulations and
ordinances relating to both environmental protection and
worker health and safety. These laws govern current
operations, require remediation of environmental impacts
associated with past or current operations, and under
certain circumstances provide for civil and criminal
penalties and fines, as well as injunctive and remedial
relief. The Company's foreign operations are subject to
similar requirements as established by their respective
countries.
The Company has expended substantial managerial and
financial resources in developing and implementing actions
for continued compliance with these requirements. The
Company believes that it has substantially satisfied these
diverse requirements. However, because these requirements
are complex and, in many areas, rapidly evolving, there can
be no guarantee against the possibility of sizeable
additional costs for compliance in the future. These same
requirements must also be met by the Company's competitors
and, therefore, the costs for present and future compliance
with these laws should not create a competitive
disadvantage. Further, these laws have not had, and are not
presently expected to have, a material adverse effect on
the Company.
The Company's operations or facilities have been and
may become the subject of formal or informal enforcement
actions or proceedings for alleged noncompliance with
either environmental or worker health and safety laws or
regulations. Such matters have typically been resolved
through direct negotiations with the regulatory agency and
have typically resulted in corrective actions or abatement
programs. However, in some cases, fines or other penalties
have been paid. Historically, neither such commitments nor
such penalties have been material.
Employees
As of October 31, 1996, Harnischfeger Industries
employed approximately 17,200, of which approximately 9,600
were employed in the United States. Approximately 3,700 of
the U. S. employees are represented by local unions under
collective bargaining agreements with expiration dates from
March 22, 1997 to April 1, 2001. Harnischfeger Industries
believes that it maintains generally good relationships
with its employees.
Financial Information about Industry Segments
The financial information on industry segments is
presented in Note 15 to the Financial Statements
incorporated herein by reference.
Cautionary Factors
------------------
This report and other documents or oral statements which
have been and will be prepared or made in the future
contain or may contain forward-looking statements by or on
behalf of the Company. Such statements are based upon
management's expectations at the time they are made. In
addition to the assumptions and other factors referred to
specifically in connection with such statements, the
following factors, among others, could cause actual results
to differ materially from those contemplated.
The Company's principal businesses involve designing,
manufacturing, marketing and servicing large, complex
machines for the mining, papermaking and capital goods
industries. Long periods of time are necessary to plan,
design and build these machines. With respect to new
machines and equipment, there are risks of customer
acceptances and start-up or performance problems. Large
amounts of capital are required to be devoted by the
Company's customers to purchase these machines and to
finance the mines, paper mills, steel mills and other
facilities that use these machines. The Company's success
in obtaining and managing a relatively small number of
sales opportunities can have a material effect on the
Company's financial performance. In addition, many
projects are located in undeveloped or developing economies
where business conditions are less predictable. In recent
years, more than 50% of the Company's total sales occurred
outside the United States.
Other factors that could cause actual results to differ
materially from those contemplated include:
- Factors affecting purchases of new equipment,
rebuilds, parts and services such as:
production capacity, stockpiles and production
and consumption rates of coal, copper, iron,
gold, fiber, paper/paperboard, recycled paper,
steel and other commodities; the cash flows of
customers; the cost and availability of
financing to customers and the ability of
customers to obtain regulatory approval for
investments in mining, papermaking, steel
making, automotive manufacturing and other
heavy industrial projects; the ages,
efficiencies and utilization rates of existing
equipment; the development of new technologies;
the availability of used or alternative
equipment; consolidations among customers; work
stoppages at customers or providers of
transportation; and the timing, severity and
duration of customer buying cycles,
particularly in the paper and mining
businesses.
- Factors affecting the Company's ability to
capture available sales opportunities,
including: customers' perceptions of the
quality and value of the Company's products as
compared to competitors' products; the
existence of patents protecting or restricting
the Company's ability to offer features
requested by customers; whether the Company has
successful reference installations to show
customers, especially for papermaking and
mining equipment; customers perceptions of the
health and stability of the Company as compared
to its competitors; the availability of
manufacturing capacity at the Company's
factories; and whether the Company can offer
the complete package of products and services
sought by its customers.
- Factors affecting the Company's ability to
successfully manage sales it obtains, such as:
the accuracy of the Company's cost and time
estimates for major projects; the Company's
success in completing projects on time and
within budget; the Company's success in
recruiting and retaining managers and key
employees; wage stability and cooperative labor
relations; plant capacity and utilization; and
whether acquisitions are assimilated and
divestitures completed without notable
surprises or unexpected difficulties.
- Factors affecting the Company's general
business, such as: unforeseen patent, tax,
product, environmental, employee health or
benefit or contractual liabilities;
nonrecurring restructuring charges; changes in
accounting or tax rules or regulations; and
reassessments of asset valuations such as
inventories.
- Factors affecting general business levels, such
as: political turmoil and economic growth in
major markets such as the United States,
Canada, Europe, The Far East, South Africa,
Australia and Chile; environmental and trade
regulations; and the stability and ease of
exchange of currencies.
Item 2. Properties
As of October 31, 1996, the following principal
properties were owned, except as indicated. All of these
plants are generally suitable for operations.
Harnischfeger Industries owns a 94,000 square foot
office building in St. Francis, Wisconsin, which is used as
its worldwide corporate headquarters.
<TABLE>
<CAPTION>
MINING EQUIPMENT LOCATIONS
Floor Space Land Area
Plant and Location (Sq. Ft.) (Acres) Principal Operations
- ------------------------- ----------- --------- -------------------------
<S> <C> <C> <C>
Milwaukee, Wisconsin..... 1,067,000 46 Electric mining shovels,
hydraulic mining
excavators, electric and
diesel-electric draglines
and large rotary blasthole
drills. Crane welding.
Milwaukee, Wisconsin..... 180,000 13 Electrical products, heavy
duty overhead and portal
crane components and
service parts warehouse.
Crane assembly.
Franklin, Pennsylvania... 714,640 63 Underground coal mining
machinery, components and
parts.
Warrendale, Pennsylvania. 82,750 13 Underground coal mining
parts and service.
Reno, Pennsylvania....... 121,400 22 Components and parts for
mining machinery.
Brookpark, Ohio.......... 85,000 4 Components and parts for
mining machinery.
Solon, Ohio.............. 96,800 14 Components and parts for
mining machinery.
Abingdon, Virginia....... 63,400 22 Underground coal mining
machinery and components.
Bluefield, Virginia...... 102,160 15
Duffield, Virginia....... 72,000 11
Homer City, Pennsylvania. 79,500 10 Mining machinery rebuild,
Meadowlands, Pennsylvania 118,316 13 service and parts sales.
Mt. Vernon, Illinois..... 107,130 12
Price, Utah.............. 44,200 6
New Philadelphia, Ohio... 277,600 17 Axial vane, and centrifugal
fans, components and parts.
Bassendean, Australia.... 75,500 5 Components and parts for
mining shovels.
Mt. Thorley, Australia... 20,000 6 Components and parts for
mining shovels.
Kurri Kurri,
Australia.............. 61,000 7 Mining machinery rebuild,
service and parts sales.
Litigow, Australia....... 9,000 2 Parts sales for mining
machinery parts sales.
Wollongong, Australia.... 54,000 3 Rebuild service center
Moss Vale, Australia..... 107,000 18 Underground coal mining
machinery, components and
parts.
Rockhampton, Australia... 8,000 3 Sales
Johannesburg, So.
Africa................. 44,000(1) 1 Electrical products and
components for mining
shovels.
Steeledale, South Africa. 557,400 15 Underground coal mining
machinery, components and
parts.
Wadeville, South Africa 154,000 34 Coal mining machinery,
assembly and service.
Belo Horizonte, Brazil... 37,700 1 Components and parts for
mining shovels.
Pinxton, U.K............. 76,000 10 Fabrication.
Wigan, U.K............... 337,000 27 Mining machinery, components
and parts.
Worcester, U.K........... 100,000 9 Mining machinery, components
and parts.
Bestwood, U.K............ 190,000 16 Service and rebuilds.
- -------------------------
(1) Under a lease expiring in 2005.
</TABLE>
The mining equipment segment operates warehouses in
Casper and Green River, Wyoming; Hibbing, Minnesota;
Charleston and Pineville, West Virginia; Milwaukee,
Wisconsin; Phoenix, Arizona; Elco, Nevada; Birmingham,
Alabama; Carlsbad, New Mexico; Norton, Virginia; Lovely and
Henderson, Kentucky; Hinton, Sparwood, Cornwall and
Vancouver, Canada; Bayswater, Mt. Thorley, Gracemere,
Rockhampton, Emerald, Kurri Kurri, Litigow and Mackay,
Australia; Belo Horizonte, Brazil; Weiterstadt, Germany;
Johannesburg, Wadeville and Hendrina, South Africa;
Stobswood and Bestwood, United Kingdom and Puerto Ordaz,
Venezuela. The warehouses in Casper, Hibbing, Milwaukee,
Mt. Thorley, Belo Horizonte and Johannesburg are owned; the
others are leased. In addition, the segment leases sales
offices throughout the United States and in principal
locations in other countries.
<TABLE>
<CAPTION>
PULP AND PAPERMAKING MACHINERY LOCATIONS
Floor Space Land Area
Plant and Location (Sq. Ft.) (Acres) Principal Operations
- -------------------------- ----------- --------- ------------------------
<S> <C> <C> <C>
Beloit, Wisconsin......... 928,000 40 Papermaking machinery and
finished product processing equipment.
Beloit, Wisconsin......... 230,000 15 Castings, pattern shop.
Waukesha, Wisconsin....... 57,000 10 Castings, pattern shop and
finished product processing.
Waukesha, Wisconsin....... 76,000(1) 13 Refiner plate machining,
finished product processing
and warehousing.
Rockton, Illinois......... 469,000 203 Papermaking machinery,
finished product processing
equipment and R&D center.
South Beloit, Illinois.... 163,000 11 Castings.
Dalton, Massachusetts..... 277,000 55 Stock and pulp preparation
equipment and specialized
processing systems.
Lenox, Massachusetts...... 127,000 19 Winders.
Pittsfield,
Massachusetts........... 36,000 30 Research and development
facility and pilot plant
for process simulation.
Aiken, South Carolina..... 127,000 17
Columbus, Mississippi..... 133,000 22 Rubber and polymeric covers
Federal Way, Washington... 55,000 3 for rolls; rubber blankets;
Neenah, Wisconsin......... 77,000 10 rubber linings and metal
Clarks Summit, PA......... 99,800 10 roll repairs.
Renfrew, Canada........... 145,000 22
Hattiesburg, Mississippi.. 100,000 15 Component parts and repair
of stock and pulp
preparation equipment,
papermaking machinery and
finished product processing
equipment.
Kalamazoo, Michigan....... 23,500 1 Filled rolls for
supercalenders and
specialty rolls.
Portland, Oregon.......... 41,000 5 Bulk materials handling
and drying systems.
Rochester, New Hampshire.. 15,650 5 Specialty services provided
principally to the paper
industry.
Nashua, New Hampshire..... 425,000 63 Stock and pulp preparation
equipment and specialized
processing systems.
Pensacola, Florida........ 7,250 2 Specialty services provided
principally to the paper
industry.
Sandusky, Ohio............ 254,000 13 Centrifugal castings.
Glenrothes, U. K.......... 56,000 8 Centrifugal castings.
Sherbrooke, Quebec, Canada 337,000 26 Stock and pulp preparation
equipment and specialized
processing systems.
Campinas, Brazil.......... 202,000 33 Papermaking machinery and
finished product processing
equipment; stock and pulp
preparation equipment;
woodyard and pulp plant
equipment.
Bolton, U.K............... 465,400 73 Papermaking machinery and
finished product processing
equipment; stock and pulp
preparation equipment.
Pinerolo, Italy........... 517,400 18 Papermaking machinery and
finished product processing
equipment; stock and pulp
preparation equipment.
Jelenia Gora, Poland...... 522,000 40 Papermaking machinery and
finished product processing
equipment; stock and
pulp preparation equipment.
Swiecie, Poland........... 37,000 (2) 4 Components and parts for
papermaking machinery
equipment.
Cernay, France............ 35,200 15 Roll-covering service.
- -------------------------
(1) Under a lease expiring in 2007.
(2) Under a lease expiring in 2019.
</TABLE>
The Pulp and Papermaking Machinery business has
warehouse space at the above facilities and in addition
maintains leased facilities in Memphis, Tennessee; Swiecie,
Poland; and Montreal, Canada. Sales offices are also
maintained at various locations throughout the world.
<TABLE>
<CAPTION>
P&H MATERIAL HANDLING LOCATIONS
Floor Space Land Area
Plant and Location (Sq. Ft.) (Acres) Principal Operations
- ----------------------- ----------- --------- ---------------------
<S> <C> <C> <C>
Windsor, Wisconsin..... 55,000 (1) 5 Remanufacture of
overhead cranes,
hoists and material
handling equipment.
Oak Creek, Wisconsin..... 277,000 36 Engineered and standard
overhead cranes, hoists
and material handling
equipment.
Loughborough, UK......... 420,000 36 Engineered and standard
overhead cranes, hoists,
controls and material
handling equipment.
Johannesburg, So. Africa 124,000 7 Engineered and standard
overhead cranes, hoists
and material handling
equipment.
Mexico City, Mexico...... 65,000 3 Engineered and standard
overhead cranes, hoists
and material handling
equipment.
Birmingham, Alabama...... 36,500 3 Standard overhead cranes
and service.
Simpsonville, S. Carolina 40,400 (2) 6 Standard overhead cranes
and service.
Mississauga, Canada...... 17,600 (3) 1 Manufacture of brakes.
Edmonton, Canada......... 32,300 3 Standard overhead cranes
and service.
Singapore, Singapore..... 21,200 (4) 1 Standard overhead cranes
and hoist distribution.
(1) Under a lease expiring in 2002
(2) Under a lease expiring in 1999
(3) Under a lease expiring in 2000
(4) Under a lease expiring in 2024
</TABLE>
The material handling division has leased facilities
for its company owned Material Handling Centers in San
Leandro, California; Reno, Nevada; Dallas and Houston,
Texas; New Orleans, Louisiana; Chicago, Illinois; Detroit
and Grand Rapids, Michigan; Pittsburgh, Pennsylvania;
Cleveland, Ohio; Denver, Colorado; Waukesha, Wisconsin;
Lynwood, Washington; Phoenix, Arizona; and Richmond,
Calgary and Saskatoon, Canada. In addition, the division
leases sales offices throughout the United States and in
principal locations in other countries. It also has
approximately 18 leased locations for service operations in
the United Kingdom, Mexico and South Africa.
Information relating to lease commitments is presented
in Note 11 to the Financial Statements incorporated herein
by reference.
Item 3. Legal Proceedings
The Company is party to litigation matters and claims,
which are normal in the course of its operations. Also, as
a normal part of their operations, the Company's
subsidiaries undertake certain contractual obligations,
warranties and guarantees in connection with the sale of
products or services. In the case of Beloit Corporation,
certain claims are currently pending in connection with its
contractual undertakings. While the outcome of such
litigation and claims cannot be predicted with certainty
and favorable or unfavorable judgements or resolutions may
affect income on a quarter-to-quarter basis, management
believes that such matters will not have a materially
adverse effect on the Company's consolidated financial
position or annual 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 on its
consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security
holders during the fourth quarter of fiscal 1996.
Executive Officers of the Registrant
The following table sets forth, through the date of
filing this 10-K report, the executive officers of
Harnischfeger Industries, their ages, their offices with
Harnischfeger Industries and the period during which they
have held such offices.
<TABLE>
<CAPTION>
Name Age Current Office and Principle Occupation
- ---------------------------- --- -------------------------------------
<S> <C> <C>
Jeffery T. Grade............ 53 Chairman of the Board and Chief Executive
Officer since 1993; Chief Executive
Officer since 1992; President and Chief
Operating Officer from 1986 to 1995;
Director since 1983; Senior Vice
President, Finance and Administration
and Chief Financial Officer from 1983
to 1986.
Number of Years as an Officer 14
John Nils Hanson............ 54 President and Chief Operating Officer
since July 1, 1995; President and Chief
Executive Officer of Joy Mining Machinery
1990 to July 1995. Director since 1996.
Number of Years as an Officer 1
Francis M. Corby, Jr........ 52 Executive Vice President for Finance and
Administration since December 1994;
Senior Vice President, Finance and
Chief Financial Officer from 1986 to
December 1994. Director since 1996.
Number of Years as an Officer 11
K. Thor Lundgren............ 49 Executive Vice President for Law and
Government Affairs since December 1994;
Senior Vice President and General
Counsel from 1991 to December 1994.
Number of Years as an Officer 5
</TABLE>
Mr. Lundgren joined the Company in September 1991.
Prior to joining the Company, Mr. Lundgren was a partner
with the law firm of Michael, Best & Friedrich.
The business address of each such person is 3600
South Lake Drive, St. Francis, Wisconsin 53235-3716. All
officers listed above are citizens of the United States of
America. Officers are elected annually but may be removed
at any time at the discretion of the Board of Directors.
There are no family relationships between the foregoing
officers.
PART II
The information required by Items 6 through 8 is
incorporated herein by reference from the 1996 Annual
Report to Shareholders.
<TABLE>
<CAPTION>
Form 10-K
Item Number
- -----------
<S> <C>
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters (filed in this report on Form 10-K)
Item 6. Selected Financial Data for the Registrant for Each of
the Last Five Fiscal Years
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and disagreements with Accountants on Accounting
and Financial Disclosure: None
</TABLE>
PART III
All information required by Items 10 through 13 of
Part III, with the exception of information on the
Executive Officers which appears in Part I of this report,
is incorporated by reference from the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders to be
filed with the Securities and Exchange Commission within
120 days after the close of the fiscal year.
PART IV
The information required by item 14 is incorporated
by reference herein from the 1996 Annual Report to
Shareholders.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) The following documents are filed as part of this
report:
(1) Financial Statements*
Consolidated Statement of Income for the years ended
October 31, 1996, 1995 and 1994
Consolidated Balance Sheet at October 31, 1996 and
1995
Consolidated Statement of Cash Flow for the years
ended October 31, 1996, 1995 and 1994
Consolidated Statement of Shareholders' Equity for
the years ended October 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
* Incorporated by reference from the 1996 Annual Report to
Shareholders
(2) Financial Statement Schedule
Report of Independent Accountants on Financial
Statement Schedule...............................
For the Years Ended October 31, 1996, 1995 and 1994:
II. Valuation and Qualifying Accounts...............
All other schedules are omitted because they are
either not applicable or the required information is shown
in the financial statements or notes thereto.
Financial statements of 50% or less-owned companies
have been omitted because the proportionate share of their
profit before income taxes and total assets are less than
20% of the respective consolidated amounts and investments
in such companies are less than 20% of consolidated total
assets.
<TABLE>
<CAPTION>
(3) Exhibits
Exhibit
Number Exhibit
------- ---------------------------------------------------
<S> <C>
3(a) Certificate of Incorporation of Harnischfeger Industries,
Inc. (incorporated by reference to Exhibit 3(a) of the
Registration Statement on Form S-4, File No. 33-8821).
(b) Bylaws of Harnischfeger Industries, Inc., as amended on
December 9, 1996.
(c) Certificate of Designations of Preferred Stock, Series D
(incorporated by reference to Exhibit 28.1(b) to
Registrant's Current Report on Form 8-K dated
March 25, 1992).
(d) Amendment to Certificate of Incorporation of Harnischfeger
Industries, Inc. dated November 29, 1994(incorporated by
reference to Exhibit 4.1(c) to Registration Statement on
Form S-8, File No. 33-57209).
4(a) 9.1% Series A Senior Note Agreement dated as of
September 15, 1989 (incorporated by reference to Exhibit
4(b) to Report of Harnischfeger Industries, Inc. on
Form 10-K for the year ended October 31, 1991,
File No.1-9299).
(b) 9.1% Series B Senior Note Agreement dated as of
October 15, 1989 (incorporated by reference to
Exhibit 4(c) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1991, File No.
1-9299).
(c) 8.95% Series C Senior Note Agreement dated as of
February 15, 1991 (incorporated by reference to
Exhibit 4(d) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1991, File No.
1-9299).
(d) 8.9% Series D Senior Note Agreement dated as of
October 1, 1991 (incorporated by reference to
Exhibit 4(e) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1991, File No.
1-9299).
(e) Indenture for Debentures issued March 3, 1992 between
Harnischfeger Industries, Inc. and Continental Bank,
National Association, Trustee, dated March 1, 1992
(incorporated by reference to Exhibit 4(f) to Report of
Harnischfeger Industries, Inc. on Form 10-K for the year
ended October 31, 1992, File No. 1-9299).
(f) First Supplemental Indenture for Debentures issued
June 22, 1992 between Harnischfeger Industries, Inc.
and Continental Bank, National Association,
Trustee, dated June 12, 1992 (incorporated by reference
to Exhibit 4(g) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1992,
File No. 1-9299).
(g) Registration Statement filed on Form S-3, for issuance
of Debt Securities of up to $150,000,000 dated
August 22, 1992, File No. 33-51436 (incorporated by
reference to Exhibit 4(h) to Report of Harnischfeger
Industries, Inc. on Form 10-K for the year ended
October 31, 1992, File No. 1-9299).
(h) Registration Statement filed on Form S-3, for issuance
of Debt Securities of up to $200,000,000 dated
April 10, 1996, File No. 333-2401.
(i) Rights Agreement dated as of February 8, 1989 between
the Registrant and the First National Bank of Boston,
as Rights Agent, which includes as Exhibit A
the Certificate of Designations of Preferred Stock,
Series D, setting forth the terms of the Preferred Stock,
Series D; as Exhibit B the Form of Rights Certificate;
and as Exhibit C the Summary of Rights to Purchase
Preferred Stock, Series D (Incorporated by reference to
Exhibit 1 to Registrant's Registration Statement on
Form 8-A filed on February 9, 1989).
(j) Harnischfeger Industries, Inc. Stock Employee Compensation
Trust Agreement effective as of March 23, 1993
(incorporated by reference to Exhibit 4(k) to Report
of Harnischfeger Industries, Inc. on Form 10-K for the
year ended October 31, 1993, File No.1-9299).*
(k) Amendment One to Harnischfeger Industries, Inc. Stock
Employee Compensation Trust Agreement dated
January 1, 1994.(incorporated by reference to Exhibit
4(j) to Report of Harnischfeger Industries, Inc. on Form
10-K for the year ended October 31, 1995, File No. 1-9299).*
(l) Amendment Two to Harnischfeger Industries, Inc. Stock
Employee Compensation Trust Agreement dated May 6, 1995.*
(m) $240,000,000 Amended and Restated Credit Agreement
dated as of November 25, 1994 among Harnischfeger
Industries Inc. as borrower and financial institutions
from time to time thereto as lenders, the First National
Bank of Chicago and Royal Bank of Canada, as co-agents
and Chemical Bank as Agent (incorporated by reference to
Exhibit 4(k) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1994,
File No.1-9299).
(n) Form of Indenture, dated as of September 1, 1993, for
Joy Technologies Inc.'s 10 1/4% Senior Notes due 2002
(incorporated by reference to Exhibit 4.1 to Joy
Technologies Inc.'s Report on Form 10-Q for the quarter
ended August 27, 1993, filed October 7, 1993).
9(a) Amendment No. 1 to Form of Indenture for Joy Technolgies
Inc.'s 10 1/4% Senior Notes due 2002.
(b) Amendment No. 2 to Form of Indenture for Joy
Technologies Inc.'s 10 1/4% Senior Note due 2002.
10(a) Harnischfeger Industries, Inc. 1988 Incentive Stock Plan,
as amended on March 6, 1995 incorporated by reference
to Exhibit 10(a) to Report of Harnischfeger Industries,
Inc. on Form 10-K for the year ended October 31, 1995,
File No. 01-9299).*
(b) Harnischfeger Industries, Inc. Stock Incentive Plan
as amended as of October 14, 1996*
(c) Harnischfeger Industries, Inc. Executive Incentive Plan,
as amended as of October 14, 1996.*
(d) Harnischfeger Industries, Inc. Executive Incentive Plan,
as amended as of October 14, 1996.*
(e) Harnischfeger Industries, Inc. Supplemental Retirement
and Stock Funding Plan, as amended as of October 14, 1996.*
(f) Directors Stock Compensation Plan,as amended as of
October 14, 1996.*
(g) Service Compensation Agreement for Directors effective
as of June 1, 1992 (incorporated by reference to
Exhibit 10(g) to Report of Harnischfeger
Industries, Inc. on Form 10-K for the year ended
October 31, 1992, File No. 1-9299).*
(h) Joy Technologies Inc. 1991 Stock Option and Equity
Incentive Plan dated November 12, 1991 (incorporated
by reference to Exhibit 99-1999.1 to Registration
Statement on For S-8, File No. 33-57209).*
(i) Amendment to Joy Technologies Inc. 1991 Stock Option
and Equity Incentive Plan dated November 29, 1994
(incorporated by reference to Exhibit 99-1999.2 to
Registration Statement on Form S-8, File No. 33-57209).*
(j) Harnischfeger Industries Deferred Compensation Trust as
amended and restated as of October 9, 1995 (incorporated
by reference to exhibit 10 to Report of Harnischfeger
Industries, Inc. on Form 10-Q for the quarter ended
January 31, 1995, File No. 01-9299).*
(k) Amendment No. 1 to Harnischfeger Industries Deferred
Compensation Trust as amended and restated as of
October 9, 1995.*
11 Statement Re Computation of Earnings Per Share.
13 1996 Annual Report to Shareholders
21 Subsidiaries of the Registrant.
23(a) Consent of Price Waterhouse LLP
23(b) Consent of Arthur Andersen LLP
24 Powers of Attorney.
27 Financial Data Schedule
</TABLE>
- -------------------------------------------
* Represents a management contract or compensatory plan
or arrangement required to be filed as an exhibit pursuant
to Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
NONE
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
Harnischfeger Industries, Inc.
Our audits of the consolidated financial statements
referred to in our report dated November 21, 1996 appearing
in the 1996 Annual Report to Shareholders of Harnischfeger
Industries, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the
Financial Statement Schedule listed in Item 14(a) of this
Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with
the related consolidated financial statements.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
November 21, 1996<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of St.
Francis, Wisconsin, on the 28th day of January 1997.
HARNISCHFEGER INDUSTRIES, INC.
(Registrant)
/s/FRANCIS M. CORBY, JR.
Francis M. Corby, Jr.
Executive Vice President for
Finance and Administration
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in
the capacities indicated on January 28, 1997.
<TABLE>
<CAPTION>
Signature Title
- -------------------------------- -------------------------------------
<S> <C>
/s/JEFFERY T. GRADE Chairman and Chief Executive Officer
-------------------------
Jeffery T. Grade
/s/JOHN NILS HANSON Director and President and Chief
------------------------ Operating Officer
John Nils Hanson
/s/FRANCIS M. CORBY, JR. Director and Executive Vice President
------------------------- for Finance and Administration
Francis M. Corby, Jr.
/s/JAMES C. BENJAMIN Vice President and Controller
-------------------------
James C. Benjamin
(1) Director
-------------------------
Donna M. Alvarado
(1) Director
-------------------------
Larry D. Brady
(1) Director
-------------------------
John D. Correnti
(1) Director
-------------------------
Harry L. Davis
(1) Director
-------------------------
Robert M. Gerrity
(1) Director
-------------------------
Robert B. Hoffman
(1) Director
-------------------------
Ralph C. Joynes
(1) Director
-------------------------
Herbert V. Kohler, Jr.
(1) Director
-------------------------
Jean-Pierre Labruyere
(1) Director
-------------------------
Robert F. Schnoes
(1) Director
-------------------------
Donald Taylor
- -------------------------
(1) Jeffery T. Grade, by signing his name hereto, does
hereby sign and execute this report on behalf of each of
the above-named Directors of Harnischfeger Industries, Inc.
pursuant to powers of attorney executed by each of such
Directors and filed with the Securities and Exchange
Commission as an exhibit to this report.
January 28, 1997
By: /s/JEFFERY T. GRADE
-----------------------
Jeffery T. Grade,
Attorney-in-fact
</TABLE>
<PAGE>
Item 5
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
THE ANNUAL MEETING
The annual meeting of the shareholders of Harnischfeger
Industries, Inc. will be held at Milwaukee's Wyndham Hotel,
139 E. Kilbourn Ave., on Tuesday, April 15, 1997 at 10:00
a.m.
ANNUAL REPORT ON FORM 10-K
Copies of the annual report on Form 10-K, filed with the
Securities and Exchange Commission, will be available to
shareholders after February 15, 1997 without charge on
request to:
Shareholder Services
Harnischfeger Industries, Inc.
P.O. Box 554
Milwaukee, WI 53201-0554
Telephone: (414)486-6480
TRANSFER AGENT AND REGISTRAR
Bank of Boston
c/o Boston EquiServe
Mail Stop 45-02-64
P.O. Box 644
Boston, MA 02102-0644
Telephone:(617)575-3400
MARKET AND OWNERSHIP OF COMMON STOCK
The principal market for the Company's Common Stock is the
New York Stock Exchange, where its trading symbol is HPH.
As of October 31, 1996, the approximate number of holders
of record of the Company's Common Stock was 2,000. In
addition, there were an estimated 10,000 beneficial owners
of shares held of record by brokers and fiduciaries.
CORPORATE HEADQUARTERS
3600 South Lake Drive
St. Francis, WI 53235-3716
MAILING ADDRESS
P.O. Box 554
Milwaukee, WI 53201-0554
SHAREHOLDER SERVICES
Annual Report Requests and General Information:
(414)486-6626
FINANCIAL INFORMATION
To obtain fax copies of recent financial press releases and
quarterly statements on request, please call 1-800-758-5804
and use access code 396450 at the prompt.
Our press releases are available on the World Wide Web at
http://www.prnewswire.com. Click on Company News On Call
to find Harnischfeger.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Balance at Additions
Beginning by
Classification of Year Acquisition
- ------------------------------ ---------- -----------
<S> <C> <C>
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1996
Doubtful accounts $ 7,604 $ 2,240
------ ------
$ 7,604 $ 2,240
======= =======
For the year ended October 31, 1995
Doubtful accounts $ 7,230 $ 495
------ -------
$ 7,230 $ 495
====== ======
For the year ended October 31, 1994
Doubtful accounts $ 9,795 $ 532
Possible Contract Losses 2,687 -
------- -------
$12,482 $ 532
====== =======
(1) Represents write-off of bad debts, net of recoveries.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Additions
Charged
Classification to Expense Deductions(1)
- ------------------------------ ---------- -----------
<S> <C> <C>
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1996
Doubtful accounts $ 4,278 $ (4,381)
------ --------
$ 4,278 $ (4,381)
======= =======
For the year ended October 31, 1995
Doubtful accounts $ 1,483 $ (1,514)
------ ----------
$ 1,483 $(1,514)
======= =========
For the year ended October 31, 1994
Doubtful accounts $ 1,458 $(4,817)
Possible Contract Losses - -
------- -------
$ 1,458 $ (4,817)
======= =========
(1) Represents write-off of bad debts, net of recoveries.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Transactions
Currency of Balance
Translation Discontinued at End
Classification Effects Operations of Year
- ------------------------------ ---------- ----------- ----------
<S> <C> <C> <C>
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1996
Doubtful accounts $(1,117) $ (12) $ 8,612
------ ------- -------
$(1,117) $ (12) $ 8,612
======= ======= =======
For the year ended October 31, 1995
Doubtful accounts $ (26) $ (64) $ 7,604
------ ------ -------
$ (26) $ (64) $ 7,604
====== ======= =======
For the year ended October 31, 1994
Doubtful accounts $ 262 $ - $ 7,230
Possible Contract Losses (2,687) -
------- ------- -------
$ 262 $ (2,687) $ 7,230
====== ======== =======
(1) Represents write-off of bad debts, net of recoveries.
</TABLE>
<TABLE>
Allowance Deducted in Balance Sheet from Deferred Tax Assets:
<CAPTION>
Balance at Additions Balance
Beginning Charged at end
of Year to
Expense of Year
---------- ---------- --------
<S> <C> <C> <C>
For the year ended October 31, 1996 $ 18,256 $ 26,712 $ 44,968
========== ========== ========
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
========== ========== ========
<PAGE>
EXHIBIT 9(a)
AMENDMENT No. 1
to
INDENTURE dated as of September 1, 1993,
between
JOY TECHNOLOGIES INC.
and
BANK OF MONTREAL TRUST COMPANY
THIS AMENDMENT No. 1 to the Joy Technologies Inc.
("JTI") 10 1/4% Senior Notes Due 2003 Indenture dated as of
September 1, 1993 (the "Indenture") is adopted by JTI, Bank
of Montreal Trust Company as Trustee ("Trustee") and
Harnischfeger Industries, Inc. ("HII") on ____ __, 1996.
Capitalized terms not defined in this Amendment No. 1 shall
have the meanings given them in the Indenture.
WHEREAS, as of September 1, 1993, JTI and the Trustee
became parties to the Indenture; and
WHEREAS, on November 29, 1994, HII acquired JTI
through a stock-for-stock merger; and
WHEREAS, the parties hereto deem it desirable to
amend the Indenture to modify the reporting requirements of
Section 4.02 of the Indenture and, in connection with such
modification, to provide for the guarantee by HII of
obligations of JTI under the Indenture.
NOW, THEREFORE, effective upon the written consent to
this amendment by the Holders (as defined in the Indenture)
of at least a majority in principal amount of the
Securities (as defined in the Indenture), and by virtue and
in exercise of the power reserved to JTI and the Trustee by
Article 9 of the Indenture, the Indenture be and hereby is
amended in the following particulars:
I. The form of HII guarantee attached hereto as
Attachment A is hereby appended to the
Indenture as
------------
Attachment A; and
------------
II. Section 4.02 SEC Reports. of the Indenture is
-----------
amended and restated as follows:
SECTION 4.02 SEC Reports.
------------
Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file with
the SEC and provide the Trustee and Securityholders with
such annual reports and such information, documents and
other reports which are specified in Sections 13 and 15(d)
of the Exchange Act. The Company also shall comply with
the other provisions of TIA Section 314(a).
Notwithstanding the
- --------------------
foregoing, at any time the guarantee attached hereto as
Attachment A is in effect, the filing and reporting
- ------------
requirements of the first sentence of this Section 4.02 may
be satisfied by the Guarantor (as defined in Attachment A)
------------
filing with the SEC and providing the Trustee and the
Securityholders such annual reports and information,
documents and other reports of the Guarantor which are
specified in Sections 13 and 15(d) of the Exchange Act.
Subsequent to the Guaranty becoming effective,
Trustee shall notify Securityholders of the effectiveness
of the Guaranty and shall endorse or imprint a notice of
the Guaranty on certificates representing the Notes
authenticated thereafter upon transfer or exchange in
accordance with Section 9.05 of the Indenture.
IN WITNESS WHEREOF, the parties have caused this
AMENDMENT No. 1 to be duly executed as of the date first
written above.
HARNISCHFEGER INDUSTRIES, INC.,
by
______________________________
Title:
BANK OF MONTREAL TRUST COMPANY, as Trustee
by
______________________________
Title:
JOY TECHNOLOGIES INC.,
by
______________________________
Title:
<PAGE>
EXHIBIT 9(b)
AMENDMENT No. 2 to
INDENTURE dated as of September 1, 1993, relating
to JOY TECHNOLOGIES INC. 10 1/4% Senior Notes Due
2003
THIS AMENDMENT No. 2 to the Joy Technologies
Inc. ("JTI") 10 1/4% Senior Notes Due 2003
Indenture dated as of September 1, 1993 (the
"Indenture") is adopted by JTI and First Trust of
Illinois, National Association, as successor
trustee ("Trustee") and Harnischfeger Industries,
Inc. ("HII").
WHEREAS, the parties deem it desirable to
amend the Indenture by appending thereto the
Harnischfeger Industries, Inc.guarantee ("HII
Guarantee") attached hereto as Attachment A.
-----------
NOW, THEREFORE, effective upon the execution
by JTI, HII and Trustee, the Indenture is amended
by appending the HII Guarantee thereto as
Attachment A.
- ------------
Upon execution of this Amendment No. 2, JTI
shall notify Securityholders of its effectiveness
and shall endorse or imprint a notice of the HII
Guaranty on certificates representing the Notes
authenticated thereafter upon transfer or exchange
in accordance with Section 9.05 of the Indenture.
IN WITNESS WHEREOF, the parties have caused
this AMENDMENT No. 2 to be duly executed.
FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION, as
Trustee
by: _____________________________
Title:
Date:
JOY TECHNOLOGIES INC.,
by: ______________________________
Title:
Date:
HARNISCHFEGER INDUSTRIES, INC.
by: ______________________________
Title:
Date:
EXHIBIT 10(b)
THE HARNISCHFEGER INDUSTRIES, INC. STOCK INCENTIVE PLAN
Section 1. Purpose; Definitions
The purpose of the Plan is to give the Corporation
and its Affiliates a competitive advantage in attracting,
retaining and motivating officers and employees and to
provide the Corporation and its Affiliates with the ability
to provide incentives more directly linked to the
performance of the Corporation's businesses and increases
in economic value and shareholder value. For purposes of
the Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means:
(i) a corporation at least fifty percent of the
common stock or voting power of which is owned, directly or
indirectly by the Corporation, and
(ii) any other corporation or other entity
controlled by the Corporation and designated by the
Committee from time to time as such.
(b) "Award" means a Stock Appreciation Right, Stock
Option, Restricted Stock or Performance Unit.
(c) "Award Cycle" shall mean a period of consecutive
fiscal years or portions thereof designated by the
Committee over which Performance Units are to be earned.
(d) "Board" means the Board of Directors of the
Corporation.
(e) "Cause" means:
(i) willful and continued failure to
substantially perform the reasonably assigned duties with
the Corporation which are consistent with the participant's
position and, in the event of a Change in Control, those
duties assigned prior to the Change in Control, other than
any such failure resulting from incapacity due to physical
or mental illness, or
(ii) participant's willful engagement in
illegal conduct which is materially and demonstratably
injurious to the Corporation. For purposes of this
definition, no act, or failure to act, on participant's
part shall be considered "willful" unless done, or omitted
to be done, in knowing bad faith and without reasonable
belief that the action or omission was in, or not opposed
to, the best interests of the Corporation. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the
advice of counsel for the Corporation shall be conclusively
presumed to be done, or omitted to be done, in good faith
and in the best interests of the Corporation.
(f) "Change in Control" and "Change in Control
Price" have the meanings set forth in Sections 10(b) and
(c), respectively.
(g) "Code" means the Internal Revenue Code of l986,
as amended from time to time, and any successor thereto.
(h) "Commission" means the Securities and Exchange
Commission or any successor agency.
(i) "Committee" means the Committee referred to in
Section 2.
(j) "Common Stock" means common stock, par value
$1.00 per share, of the Corporation.
(k) "Corporation" means Harnischfeger Industries,
Inc., a Delaware corporation.
(l) "Covered Employee" shall mean a participant
designated prior to the grant of shares of Restricted Stock
or Performance Units by the Committee who is or may be a
"covered employee" within the meaning of Section 162(m)(3)
of the Code in the year in which Restricted Stock or
Performance Units are taxable to such participant.
(m) "Disability" means permanent and total
disability as determined under procedures established by
the Committee for purposes of the Plan.
(n) "Disinterested Person" shall mean a member of
the Board who qualifies as a Non-Employee Director as
defined in Rule 16b-3(b)(3), as promulgated by the
Commission under the Exchange Act, or any successor
definition adopted by the Commission, and as an "outside
director" for purposes of Section 162(m) of the Code.
(o) "Early Retirement" of an employee means
Termination of Employment with the Corporation or an
Affiliate at a time when the employee is entitled to early
retirement benefits pursuant to the early retirement
provisions of the applicable pension plan of such employer.
(p) "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time, and any successor
thereto.
(q) "Fair Market Value" means, except as provided
in Sections 5(j) and 6(b)(ii)(2), as of any given date, the
mean between the highest and lowest reported sales prices
of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any
other national securities exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public
trading market for such Common Stock, the Fair Market Value
of the Common Stock shall be determined by the Committee in
good faith.
(r) "Incentive Stock Option" means any Stock Option
designated as, and qualified as, an "incentive stock
option" within the meaning of Section 422 of the Code.
(s) "Non-Qualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
(t) "Normal Retirement" of an employee means
retirement from active employment with the Corporation or
Affiliate at or after age 65.
(u) "Performance Goals" means the performance goals
established in writing by the Committee prior to the grant
of Restricted Stock or Performance Units. Such Performance
Goals may comprise one or any combination of the following:
specified levels of economic value added, earnings per
share from continuing operations, operating income,
revenues, cash flow, retained earnings, return on assets,
return on invested capital, return on sales, market share,
equity growth, net worth growth, achieving strategic
objectives, customer satisfaction, product quality, project
milestones, shareholder return (measured in terms of stock
price appreciation) and/or total shareholder return
(measured in terms of stock price appreciation and/or
dividend growth), return on equity, and individual
performance measures. Such Performance Goals also may be
based upon the attainment of specified levels of
performance of the Corporation or one or more Affiliates
under one or more of the measures described above relative
to the performance of other corporations. With respect to
Covered Employees, all Performance Goals shall be objective
performance goals satisfying the requirements for
"performance-based compensation" within the meaning of
Section 162(m)(4) of the Code, and shall be set by the
Committee within the time period prescribed by Section
162(m) of the Code and related regulations.
(v) "Performance Unit" means an award made pursuant
to Section 8.
(w) "Plan" means the Harnischfeger Industries, Inc.
Stock Incentive Plan, as set forth herein and as
hereinafter amended from time to time.
(x) "Restricted Stock" means an award granted under
Section 7.
(y) "Retirement" means Normal or Early Retirement.
(z) "Rule 16b-3" means Rule 16b-3, as promulgated by
the Commission under Section 16(b) of the Exchange Act, as
amended from time to time.
(aa) "Stock Appreciation Right" means a right
granted under Section 6.
(bb) "Stock Option" means an option granted under
Section 5.
(cc) "Termination of Employment" means the
termination of the participant's employment with the
Corporation and any Affiliate. A participant employed by
an Affiliate shall also be deemed to incur a Termination of
Employment if the Affiliate ceases to be an Affiliate and
the participant does not immediately thereafter become an
employee of the Corporation or another Affiliate. In
addition, certain other terms used herein have definitions
given to them in the first place in which they are used.
Section 2. Administration. The Plan shall be
administered by the Human Resources Committee of the Board
or such other committee of the Board, as the Board may from
time to time determine, composed solely of not less than
two Disinterested Persons, each of whom shall be appointed
by and serve at the pleasure of the Board. The Committee
shall have full authority to grant Awards pursuant to the
terms of the Plan to officers and employees of the
Corporation and its Affiliates. Among other things, the
Committee shall have the authority, subject to the terms of
the Plan:
(a) to select the officers and employees to whom
Awards may from time to time be granted;
(b) to determine whether and to what extent
Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock and Performance Units
or any combination thereof are to be granted hereunder;
(c) to determine the number of shares of Common
Stock to be covered by each Award granted hereunder;
(d) to determine the terms and conditions of any
Award granted hereunder (including, but not limited to, the
option price (subject to Section 5(a)), any vesting
condition, restriction or limitation (which may be related
to the performance of the participant, the Corporation or
any Affiliate) and any vesting acceleration or forfeiture
waiver regarding any Award and the shares of Common Stock
relating thereto, based on such factors as the Committee
shall determine;
(e) to modify, amend or adjust the terms and
conditions of any Award, at any time or from time to time,
including but not limited to Performance Goals; provided,
however, that the Committee may not adjust upwards the
amount payable to a designated Covered Employee with
respect to a particular Award upon the satisfaction of
applicable Performance Goals;
(f) to determine to what extent and under what
circumstances Common Stock and other amounts payable with
respect to an Award shall be deferred; and
(g) to determine under what circumstances an Award
may be settled in cash or Common Stock under Sections 5(j)
and 8(b)(i). The Committee shall have the authority to
adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms
and provisions of the Plan and any Award issued under the
Plan (and any agreement relating thereto) and to otherwise
supervise the administration of the Plan. The Committee
may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to an
officer of the Corporation the authority to make decisions
pursuant to paragraphs (c), (f), (g), (h) and (i) of
Section 5 (provided that no such delegation may be made
that would cause Awards or other transactions under the
Plan to cease to be exempt from Section 16(b) of the
Exchange Act) and (ii) authorize any one or more of their
number or any officer of the Corporation to execute and
deliver documents on behalf of the Committee. Any
determination made by the Committee or pursuant to
delegated authority pursuant to the provisions of the Plan
with respect to any Award shall be made in the sole
discretion of the Committee or such delegate at the time of
the grant of the Award or, unless in contravention of any
express term of the Plan, at any time thereafter. All
decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan
shall be final and binding on all persons, including the
Corporation and its Affiliates and Plan participants.
Section 3. Common Stock Subject to Plan; Other
Limitations. The total number of shares of Common Stock
reserved and available for issuance under the Plan shall be
2,000,000, but no more than 250,000 shares of Common Stock
may be issued as Restricted Stock. No participant may be
granted Awards covering in excess of 100,000 shares of
Common Stock in any one calendar year. Shares subject to
an Award under the Plan may be authorized and unissued
shares or may be treasury shares. No participant may be
granted Performance Units in any one calendar year payable
in cash in an amount that would exceed $1,000,000. Subject
to Section 7(c)(iv), if any shares of Restricted Stock are
forfeited for which the participant did not receive any
benefits of ownership (as such phrase is construed by the
Commission or its staff), or if any Stock Option (and
related Stock Appreciation Right, if any) terminates
without being exercised, or if any Stock Appreciation Right
is exercised for cash, shares subject to such Awards shall
again be available for use in connection with Awards under
the Plan. In the event of any change in corporate
capitalization, such as a stock split, or a corporate
transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or
property of the Corporation, any reorganization (whether or
not such reorganization comes within the definition of such
term in Section 368 of the Code) or any partial or complete
liquidation of the Corporation, the Committee or Board may
make such substitution or adjustments in the aggregate
number and kind of shares reserved for issuance under the
Plan, in the number, kind and option price of shares
subject to outstanding Stock Options and Stock Appreciation
Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other
equitable substitution or adjustments as it may determine
to be appropriate in its sole discretion; provided,
however, that Awards previously made shall not be reduced
or eliminated and the number of shares subject to any Award
shall always be a whole number. Such adjusted option price
shall also be used to determine the amount payable by the
Corporation upon the exercise of any Stock Appreciation
Right associated with a Stock Option.
Section 4. Eligibility. Officers and salaried
employees of the Corporation and its Affiliates who are
responsible for or contribute to the management, growth and
profitability of the business of the Corporation and its
Affiliates are eligible to be granted Awards under the
Plan. No grant shall be made under this Plan to a director
who is not an officer or a salaried employee of the
Corporation or an Affiliate.
Section 5. Stock Options. Stock Options may be
granted alone or in addition to other Awards granted under
the Plan and may be of two types: Incentive Stock Options
and Nonqualified Stock Options. Any Stock Option granted
under the Plan shall be in such form as the Committee may
from time to time approve. The Committee shall have the
authority to grant any optionee Incentive Stock Options,
Nonqualified Stock Options or both types of Stock Options
(in each case with or without Stock Appreciation Rights);
provided, however, that grants hereunder are subject to the
aggregate limit on grants to individual participants set
forth in Section 3. Incentive Stock Options may be granted
only to employees of the Corporation and its subsidiaries
(within the meaning of Section 424(f) of the Code). To the
extent that any Stock Option is not designated as an
Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a
Nonqualified Stock Option. Stock Options shall be
evidenced by option agreements, the terms and provisions of
which may differ. An option agreement shall indicate on
its face whether it is intended to be an agreement for an
Incentive Stock Option or a Nonqualified Stock Option. The
grant of a Stock Option shall occur on the date the
Committee by resolution selects an individual to be a
participant in any grant of a Stock Option, determines the
number of shares of Common Stock to be subject to such
Stock Option to be granted to such individual and specifies
the terms and provisions of the Stock Option. The
Corporation shall notify a participant of any grant of a
Stock Option, and a written option agreement or agreements
shall be duly executed and delivered by the Corporation to
the participant. Such agreement or agreements shall become
effective upon execution by the Corporation and the
participant. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive
Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the optionee affected,
to disqualify any Incentive Stock Option under such Section
422. Stock Options granted under the Plan shall be subject
to the following terms and conditions and shall contain
such additional terms and conditions as the Committee shall
deem desirable:
(a) Option Price. The option price per share of
Common Stock purchasable under a Stock Option shall be
determined by the Committee and set forth in the option
agreement, and shall not be less than the Fair Market Value
of the Common Stock subject to the Stock Option on the date
of grant.
(b) Option Term. The term of each Stock Option
shall be fixed by the Committee, but no Incentive Stock
Option shall be exercisable more than 10 years after the
date the Stock Option is granted.
(c) Exercisability. Except as otherwise provided
herein, Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments,
the Committee may at any time waive such installment
exercise provisions, in whole or in part, based on such
factors as the Committee may determine. In addition, the
Committee may at any time accelerate the exercisability of
any Stock Option.
(d) Method of Exercise. Subject to the provisions
of this Section 5, Stock Options may be exercised, in whole
or in part, at any time during the option term by giving
written notice of exercise to the Corporation specifying
the number of shares of Common Stock subject to the Stock
Option to be purchased. Such notice shall be accompanied
by payment in full of the purchase price by certified or
bank check or such other instrument as the Corporation may
accept. If approved by the Committee, payment in full or
in part may also be made in the form of unrestricted Common
Stock already owned by the optionee of the same class as
the Common Stock subject to the Stock Option and, in the
case of the exercise of a Nonqualified Stock Option,
Restricted Stock subject to an Award hereunder which is of
the same class as the Common Stock subject to the Stock
Option (based, in each case, on the Fair Market Value of
the Common Stock on the date the Stock Option is
exercised); provided, however, that, in the case of an
Incentive Stock Option, the right to make a payment in the
form of already owned shares of Common Stock of the same
class as the Common Stock subject to the Stock Option may
be authorized only at the time the Stock Option is granted.
If payment of the option exercise price of a Nonqualified
Stock Option is made in whole or in part in the form of
Restricted Stock, the number of shares of Common Stock to
be received upon such exercise equal to the number of
shares of Restricted Stock used for payment of the option
exercise price shall be subject to the same forfeiture
restrictions to which such Restricted Stock was subject,
unless otherwise determined by the Committee. In the
discretion of the Committee, payment for any shares subject
to a Stock Option may also be made by delivering a properly
executed exercise notice to the Corporation, together with
a copy of irrevocable instructions to a broker to deliver
promptly to the Corporation the amount of sale or loan
proceeds to pay the purchase price, and, if requested by
the Corporation, the amount of any federal, state, local or
foreign withholding taxes. To facilitate the foregoing,
the Corporation may enter into agreements for coordinated
procedures with one or more brokerage firms. In
addition, in the discretion of the Committee, payment for
any shares subject to a Stock Option may also be made by
instructing the Committee to withhold a number of such
shares having a Fair Market Value on the date of exercise
equal to the aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full
payment therefor has been made. Subject to any forfeiture
restrictions that may apply if a Stock Option is exercised
using Restricted Stock, an optionee shall have all of the
rights of a shareholder of the Corporation holding the
class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote
the shares and the right to receive dividends), when the
optionee has given written notice of exercise, has paid in
full for such shares and, if requested, has given the
representation described in Section 14(a).
(e) Nontransferability of Stock Options. No Stock
Option shall be transferable by the optionee other than:
(i) by will or by the laws of descent and
distribution or
(ii) in the case of a Nonqualified Stock
Option, pursuant to (a) a qualified domestic relations
order (as defined in the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the
rules thereunder) or (b) a gift to such optionee's
children, whether directly or indirectly or by means of a
trust or partnership or otherwise, if expressly permitted
under the applicable option agreement. All Stock Options
shall be exercisable, during the optionee's lifetime, only
by the optionee or by the guardian or legal representative
of the optionee or, in the case of a Nonqualified Stock
Option, its alternative payee pursuant to a qualified
domestic relations order or a gift permitted under the
applicable option agreement, it being understood that the
terms "holder" and "optionee" include the guardian and
legal representative of the optionee named in the option
agreement and any person to whom an option is transferred
by will or the laws of descent and distribution or, in the
case of a Nonqualified Stock Option, pursuant to a
qualified domestic relations order or a gift permitted
under the applicable option agreement.
(f) Termination by Death. Unless otherwise
determined by the Committee, if an optionee's employment
terminates by reason of death, any Stock Option held by
such optionee may thereafter be exercised, to the extent
then exercisable, or on such accelerated basis as the
Committee may determine, for a period of one year (or such
other period as the Committee may specify in the option
agreement) from the date of such death or until the
expiration of the stated term of such Stock Option,
whichever period is the shorter.
(g) Termination by Reason of Disability. Unless
otherwise determined by the Committee, if an optionee's
employment terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time
of termination, or on such accelerated basis as the
Committee may determine, for a period of three years (or
such shorter period as the Committee may specify in the
option agreement) from the date of such termination of
employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter;
provided, however, that if the optionee dies within such
three-year period (or such shorter period), any unexercised
Stock Option held by such optionee shall, notwithstanding
the expiration of such three-year (or such shorter) period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of one year
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Nonqualified Stock
Option.
(h) Termination by Reason of Retirement. Unless
otherwise determined by the Committee, if an optionee's
employment terminates by reason of Retirement, any Stock
Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time
of such Retirement, or on such accelerated basis as the
Committee may determine, for a period of three years (or
such shorter period as the Committee may specify in the
option agreement) from the date of such termination of
employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter;
provided, however, that if the optionee dies within such
three-year (or such shorter) period any unexercised Stock
Option held by such optionee shall, notwithstanding the
expiration of such three-year (or such shorter) period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of one year
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Nonqualified Stock
Option.
(i) Other Termination. Unless otherwise determined
by the Committee, if an optionee incurs a Termination of
Employment for any reason other than death, Disability or
Retirement, any Stock Option held by such optionee shall
thereupon terminate, except that such Stock Option, to the
extent then exercisable, or on such accelerated basis as
the Committee may determine, may be exercised for the
lesser of three months from the date of such Termination of
Employment or the balance of such Stock Option's stated
term if such Termination of Employment of the optionee is
involuntary; provided, however, that if the optionee dies
within such three-month period, any unexercised Stock
Option held by such optionee shall, notwithstanding the
expiration of such three-month period, continue to be
exercisable to the extent to which it was exercisable at
the time of death for a period of one year from the date of
such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
Notwithstanding the foregoing, if an optionee incurs a
Termination of Employment at or after a Change in Control
(as defined in Section 10(b)), other than by reason of
death, Disability or Retirement, any Stock Option held by
such optionee shall be exercisable for the lesser of (1)
six months and one day from the date of such Termination of
Employment, and (2) the balance of such Stock Option's
stated term. In the event of Termination of Employment, if
an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be
treated as a Nonqualified Stock Option.
(j) Cashing Out of Stock Option. On receipt of
written notice of exercise, the Committee may elect to cash
out all or part of the portion of the shares of Common
Stock for which a Stock Option is being exercised by paying
the optionee an amount, in cash or Common Stock, equal to
the excess of the Fair Market Value of the Common Stock
over the option price times the number of shares of Common
Stock for which the Option is being cashed out on the
effective date of such cash-out.
(k) Change in Control Cash-Out. Notwithstanding any
other provision of the Plan, during the 90-day period from
and after a Change in Control (the "Exercise Period"),
unless the Committee shall determine otherwise at the time
of grant, an optionee shall have the right, whether or not
the Stock Option is fully exercisable and in lieu of the
payment of the exercise price for the shares of Common
Stock being purchased under the Stock Option and by giving
notice to the Corporation, to elect (within the Exercise
Period) to surrender all or part of the Stock Option to the
Corporation and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the
Change in Control Price per share of Common Stock shall
exceed the exercise price per share of Common Stock under
the Stock Option (the "Spread") multiplied by the number of
shares of Common Stock granted under the Stock Option as to
which the right granted under this Section 5(k) shall have
been exercised
Section 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights
may be granted in conjunction with all or part of any Stock
Option granted under the Plan. In the case of a
Nonqualified Stock Option, such rights may be granted
either at or after the time of grant of such Stock Option.
Stock Appreciation Rights also may be granted with respect
to options (other than options intended to qualify as
"incentive stock options" within the meaning of Section 422
of the Code) granted under the Harnischfeger Industries,
Inc. 1988 Incentive Stock Plan (the "Old Plan") ("Old
Options"). In the case of an Incentive Stock Option, such
rights may be granted only at the time of grant of such
Stock Option. A Stock Appreciation Right shall terminate
and no longer be exercisable upon the termination or
exercise of the related Stock Option. A Stock Appreciation
Right may be exercised by an optionee in accordance with
Section 6(b) by surrendering the applicable portion of the
related Stock Option or Old Option in accordance with
procedures established by the Committee. Upon such
exercise and surrender, the optionee shall be entitled to
receive an amount determined in the manner prescribed in
Section 6(b). Stock Options and Old Options which have
been so surrendered shall no longer be exercisable to the
extent the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights
shall be subject to such terms and conditions as shall be
determined by the Committee, including the following:
(i) Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent
that the Stock Options and Old Options to which they relate
are exercisable in accordance with the provisions of
Section 5 and this Section 6.
(ii) Upon the exercise of a Stock Appreciation
Right, an optionee shall be entitled to receive an amount
in cash, shares of Common Stock or both equal in value to
the excess of the Fair Market Value of one share of Common
Stock over the option price per share specified in the
related Stock Option or Old Option multiplied by the number
of shares in respect of which the Stock Appreciation Right
shall have been exercised, with the Committee having the
right to determine the form of payment.
(iii) Stock Appreciation Rights shall be
transferable only to permitted transferees of the
underlying Stock Option in accordance with Section 5(e) or
the underlying Old Option in accordance with the provisions
of the Old Plan.
(iv) Upon the exercise of a Stock Appreciation
Right, the Stock Option or Old Option or part thereof to
which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares
of Common Stock to be issued under the Plan, but only to
the extent of the number of shares as to which the Stock
Appreciation Right is exercised at the time of exercise.
Section 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may
be awarded either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the
officers and employees to whom and the time or times at
which grants of Restricted Stock will be awarded, the
number of shares to be awarded to any participant (subject
to the aggregate limit on grants to individual participants
set forth in Section 3), the conditions for vesting, the
time or times within which such Awards may be subject to
forfeiture and any other terms and conditions of the
Awards, in addition to those contained in Section 7(c).
The Committee shall in the case of Covered Employees, and
may in the case of other participants, condition the
vesting of Restricted Stock upon the attainment of
Performance Goals established before or at the time of
grant. The Committee may, in addition to requiring
satisfaction of any applicable Performance Goals, also
condition vesting upon the continued service of the
participant. The provisions of Restricted Stock Awards
(including the applicable Performance Goals) need not be
the same with respect to each recipient.
(b) Awards and Certificates. Shares of Restricted
Stock shall be evidenced in such manner as the Committee
may deem appropriate, including book-entry registration or
issuance of one or more stock certificates. Any
certificate issued in respect of shares of Restricted Stock
shall be registered in the name of such participant and
shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award,
substantially in the following form: "The transferability
of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including
forfeiture) of the Harnischfeger Industries, Inc. Stock
Incentive Plan and a Restricted Stock Agreement. Copies of
such Plan and Agreement are on file at the offices of
Harnischfeger Industries, Inc. at 3600 S. Lake Dr., St.
Francis, Wisconsin 53235". The Committee may require that
the certificates evidencing such shares be held in custody
by the Corporation until the restrictions thereon shall
have lapsed and that, as a condition of any Award of
Restricted Stock, the participant shall have delivered a
stock power, endorsed in blank, relating to the Common
Stock covered by such Award.
(c) Terms and Conditions. Shares of Restricted
Stock shall be subject to the following terms and
conditions:
(i) Subject to the provisions of the Plan
(including Section 5(d)) and the Restricted Stock Agreement
referred to in Section 7(c)(vi), during the period, if any,
set by the Committee, commencing with the date of such
Award for which such participant's continued service is
required (the "Restriction Period"), and until the later of
(i) the expiration of the Restriction Period and (ii) the
date the applicable Performance Goals (if any) are
satisfied, the participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares of
Restricted Stock; provided that the foregoing shall not
prevent a participant from pledging Restricted Stock as
security for a loan, the sole purpose of which is to
provide funds to pay the option price for Stock Options.
Within these limits, the Committee may provide for the
lapse of restrictions based upon period of service in
installments or otherwise and may accelerate or waive, in
whole or in part, restrictions based upon period of service
or upon performance; provided, however, that in the case of
Restricted Stock with respect to which a participant is a
Covered Employee, any applicable Performance Goals have
been satisfied.
(ii) Except as provided in this paragraph (ii)
and Section 7(c)(i) and the Restricted Stock Agreement, the
participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a shareholder of the
Corporation holding the class or series of Common Stock
that is the subject of the Restricted Stock, including, if
applicable, the right to vote the shares and the right to
receive any cash dividends. If so determined by the
Committee in the applicable Restricted Stock Agreement and
subject to Section 14(f) of the Plan, (1) cash dividends on
the class or series of Common Stock that is the subject of
the Restricted Stock Award shall be automatically deferred
and reinvested in additional Restricted Stock, held subject
to the vesting of the underlying Restricted Stock, or held
subject to meeting Performance Goals applicable only to
dividends, and (2) dividends payable in Common Stock shall
be paid in the form of Restricted Stock of the same
class as the Common Stock with which such dividend was
paid, held subject to the vesting of the underlying
Restricted Stock, or held subject to meeting Performance
Goals applicable only to dividends.
(iii) Except to the extent otherwise provided
in the applicable Restricted Stock Agreement, any
applicable employment agreement and Sections 7(c)(i),
7(c)(iv) and 10(a)(ii), upon a participant's Termination of
Employment for any reason during the Restriction Period or
before the applicable Performance Goals are satisfied, all
shares still subject to restriction shall be forfeited by
the participant.
(iv) Except to the extent otherwise provided
in Section 10(a)(ii) or any applicable written employment
agreement, in the event that a participant retires or such
participant's employment is involuntarily terminated (other
than for Cause), the Committee shall have the discretion to
waive in whole or in part any or all remaining restrictions
(other than, in the case of Restricted Stock with respect
to which a participant is a Covered Employee, satisfaction
of the applicable Performance Goals unless the
participant's employment is terminated by reason of death
or Disability) with respect to any or all of such
participant's shares of Restricted Stock.
(v) If and when the applicable Performance
Goals are satisfied and the Restriction Period expires
without a prior forfeiture of the Restricted Stock,
unlegended certificates for such shares shall be delivered
to the participant upon surrender of the legended
certificates.
(vi) Each Award shall be confirmed by, and be
subject to the terms of, a Restricted Stock Agreement.
Section 8. Performance Units.
(a) Administration. Performance Units may be
awarded either alone or in addition to other Awards granted
under the Plan. Performance Units may be denominated in
shares of Common Stock or cash, or may represent the right
to receive dividend equivalents with respect to shares of
Common Stock, as the Committee shall determine. The
Committee shall determine the officers and employees to
whom and the time or times at which Performance Units shall
be awarded, the form and number of Performance Units to be
awarded to any participant (subject to the aggregate limit
on grants to individual participants set forth in Section
3), the duration of the Award Cycle and any other terms and
conditions of the Award, in addition to those contained in
Section 8(b). The Committee shall condition the settlement
of Performance Units upon the continued service of the
participant, attainment of Performance Goals, or both. The
provisions of such Awards (including the applicable
Performance Goals) need not be the same with respect to
each recipient.
(b) Terms and Conditions. Performance Units Awards
shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and
the Performance Unit Agreement referred to in Section
8(b)(vi), Performance Units may not be sold, assigned,
transferred, pledged or otherwise encumbered during the
Award Cycle. At the expiration of the Award Cycle, the
Committee shall evaluate actual performance in light of the
Performance Goals for such Award and shall determine the
number of Performance Units granted to the participant
which have been earned and the Committee may then elect to
deliver cash, shares of Common Stock, or a combination
thereof, in settlement of the earned Performance Units, in
accordance with the terms thereof.
(ii) Except to the extent otherwise provided in
the applicable Performance Unit Agreement and Sections
8(b)(iii) and 10(a)(iii) or any applicable written
employment agreement, upon a participant's Termination of
Employment for any reason during the Award Cycle or before
the applicable Performance Goals are satisfied, the rights
to the shares still covered by the Performance Units Award
shall be forfeited by the participant.
(iii) Except to the extent otherwise provided
in Section 10(a)(iii) or any applicable written employment
agreement, in the event that a participant's employment is
involuntarily terminated (other than for Cause), or in the
event a participant retires, the Committee shall have the
discretion to waive in whole or in part any or all
remaining payment limitations (other than, in the case
of Performance Units with respect to which a participant is
a Covered Employee, satisfaction of the applicable
Performance Goals unless the participant's employment is
terminated by reason of death or Disability) with respect
to any or all of such participant's Performance Units.
(iv) A participant may elect to further defer
receipt of the Performance Units payable under an Award (or
an installment of an Award) for a specified period or until
a specified event, subject in each case to the Committee's
approval and to such terms as are determined by the
Committee (the "Elective Deferral Period"). Subject to any
exceptions adopted by the Committee, such election must
generally be made prior to commencement of the Award Cycle
for the Award (or for such installment of an Award).
(v) If and when the applicable Performance
Goals are satisfied and the Elective Deferral Period
expires without a prior forfeiture of the Performance
Units, payment in accordance with Section 8(b)(i) hereof
shall be made to the participant.
(vi) Each Award shall be confirmed by, and be
subject to the terms of, a Performance Unit Agreement.
Section 9. Tax Offset Bonuses At the time an
Award is made hereunder or at any time thereafter, the
Committee may grant to the participant receiving such Award
the right to receive a cash payment in an amount specified
by the Committee, to be paid at such time or times (if
ever) as the Award results in compensation income to the
participant, for the purpose of assisting the participant
to pay the resulting taxes, all as determined by the
Committee and on such other terms and conditions as the
Committee shall determine.
Section 10. Change in Control Provisions.
(a) Impact of Event. Notwithstanding any other
provision of the Plan to the contrary, in the event of a
Change in Control:
(i) Any Stock Options and Stock Appreciation
Rights outstanding as of the date such Change in Control is
determined to have occurred and not then exercisable and
vested shall become fully exercisable and vested to the
full extent of the original grant.<PAGE>
(ii) The restrictions applicable to any
Restricted Stock shall lapse, and such Restricted Stock
shall become free of all restrictions and become fully
vested and transferable to the full extent of the original
grant.
(iii) All Performance Units shall be
considered to be earned and payable in full and any
deferral or other restriction shall lapse and such
Performance Units shall be settled in cash as promptly as
is practicable.
(b) Definition of Change in Control. For purposes
of the Plan, a "Change in Control" shall mean:
(i) The acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of either (1) the
then outstanding shares of common stock of the Corporation
(the "Outstanding Corporation Common Stock") or (2) the
combined voting power of the then outstanding voting
securities of the Corporation entitled to vote generally in
the election of directors (the "Outstanding Corporation
Voting Securities"); provided, however, that for purposes
of this subparagraph (i), the following acquisitions shall
not constitute a Change in Control: (x) any acquisition by
the Corporation, (y) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by
the Corporation or any corporation controlled by the
Corporation or (z) any acquisition by any corporation
pursuant to a transaction which complies with clauses (x),
(y) and (z) of subsection (iii) of this Section 10(b); or
(ii) Individuals who, as of the effective date
of the Plan, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming
a director subsequent to the effective date of the Plan
whose election, or nomination for election by the
Corporation's stockholders, was approved by a vote of at
least two-thirds (2/3) of the directors then comprising the
Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; but,
excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the
election or removal of directors or any other actual or
threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board; or
(iii) Consummation of a reorganization,
merger, consolidation, or sale or other disposition of all
or substantially all of the assets of the Corporation (a
"Business Combination"), in each case, unless following
such Business Combination, (x) all of the individuals and
entities who were the beneficial owners, respectively, of
the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities immediately prior to such
Business Combination beneficially own, directly or
indirectly, more than 80% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns the Corporation
or all or substantially all of the Corporation's assets
either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (y) no
Person (excluding any corporation resulting from such
Business Combination or any employee benefit plan (or
related trust) of the Corporation or such corporation
resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively,
the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting
securities of such corporation except to the extent that
such ownership existed prior to the Business Combination
and (z) at least two-thirds (2/3) of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business
Combination; or
(iv) Approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the
Corporation.
(c) Change in Control Price. For purposes of the
Plan, "Change in Control Price" means the higher of:
(i) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported
on the New York Stock Exchange Composite Tape or other
national exchange on which such shares are listed or on
NASDAQ during the 60-day period prior to and including the
date of a Change in Control or
(ii) if the Change in Control is the result of
a tender or exchange offer or a Business Combination, the
highest price per share of Common Stock paid in such tender
or exchange offer or Business Combination; provided,
however, that (x) in the case of a Stock Option which (A)
is held by an optionee who is an officer or director of the
Corporation and is subject to Section 16(b) of the Exchange
Act and (B) was granted within 240 days of the Change in
Control, then the Change in Control Price for such Stock
Option shall be the Fair Market Value of the Common Stock
on the date such Stock Option is exercised or deemed
exercised and (y) in the case of Incentive Stock Options
and Stock Appreciation Rights relating to Incentive Stock
Options, the Change in Control Price shall be in all cases
the Fair Market Value of the Common Stock on the date such
Incentive Stock Option or Stock Appreciation Right is
exercised. To the extent that the consideration paid in
any such transaction described above consists all or in
part of securities or other non-cash consideration, the
value of such securities or other non-cash consideration
shall be determined in the sole discretion of the Incumbent
Board.
Section 11. Loans. The Corporation may make loans
to a participant in connection with Awards subject to the
following terms and conditions and such other terms and
conditions not inconsistent with the Plan as the Committee
shall impose from time to time, including without
limitation the rate of interest, if any, and whether such
loan shall be recourse or non-recourse. No loan made under
the Plan shall exceed the sum of (i) the aggregate price
payable with respect to the Award in relation to which the
loan is made, plus (ii) the amount of the reasonably
estimated combined amounts of Federal and state income
taxes payable by the participant. No loan shall have an
initial term exceeding ten (10) years; provided that the
loans under the Plan shall be renewable at the discretion
of the Committee; and provided, further, that the
indebtedness under each loan shall become due and payable,
as the case may be, on a date no later than (i) one year
after Termination of Employment due to death, Retirement or
Disability, or (ii) the day of Termination of Employment
for any reason other than death, Retirement or Disability.
Loans under the Plan may be satisfied by the participant,
as determined by the Committee, in cash or, with the
consent of the Committee, in whole or in part in the form
of unrestricted Common Stock already owned by the
participant where such Common Stock shall be valued at Fair
Market Value on the date of such payment. When a loan
shall have been made, Common Stock with a Fair Market Value
on the date of such loan equivalent to the amount of the
loan shall be pledged by the participant to the Corporation
as security for payment of the unpaid balance of the loan.
Any portions of such Common Stock may, in the discretion of
the Committee, be released from time to time as it deems
not to be needed as security. The making of any loan is
subject to satisfying all applicable laws, as well as any
regulations and rules of the Federal Reserve Board and any
other governmental agency having jurisdiction.
Section 12. Term, Amendment and Termination. The
Plan will terminate 10 years after the effective date of
the Plan. Under the Plan, Awards outstanding as of such
date shall not be affected or impaired by the termination
of the Plan. The Board may amend, alter, or discontinue
the Plan, but no amendment, alteration or discontinuation
shall be made which would impair the rights of an optionee
under a Stock Option or a recipient of a Stock Appreciation
Right, Restricted Stock Award or Performance Unit Award
theretofore granted without the optionees or recipient's
consent, except such an amendment made to cause the Plan to
qualify for the exemption provided by Rule 16b-3. In
addition, no such amendment shall be made without the
approval of the Corporation's shareholders to the extent
such approval is required by law or agreement. The
Committee may amend the terms of any Stock Option or other
Award theretofore granted, prospectively or retroactively,
but no such amendment shall impair the rights of any holder
without the holder's consent except such an amendment made
to cause the Plan or Award to qualify for the exemption
provided by Rule 16b-3. Subject to the above provisions,
the Board shall have authority to amend the Plan to take
into account changes in law and tax and accounting rules,
as well as other developments and to grant Awards which
qualify for beneficial treatment under such rules without
shareholder approval.
Section 13. Unfunded Status of Plan. It is
presently intended that the Plan constitute an "unfunded"
plan for incentive and deferred compensation. The
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan
to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines,
the existence of such trusts or other arrangements is
consistent with the "unfunded" status of the Plan.
Section 14. General Provisions.
(a) The Committee may require each person purchasing
or receiving shares pursuant to an Award to represent to
and agree with the Corporation in writing that such person
is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any
legend which the Committee deems appropriate to reflect any
restrictions on transfer. Notwithstanding any other
provision of the Plan or agreements made pursuant thereto,
the Corporation shall not be required to issue or deliver
any certificate or certificates for shares of Common Stock
under the Plan prior to fulfillment of all of the following
conditions:
(i) The listing or approval for listing upon
notice of issuance, of such shares on the New York Stock
Exchange, Inc., or such other securities exchange or market
system as may at the time be the principal market for the
Common Stock;
(ii) Any registration or other qualification
of such shares of the Corporation under any state or
federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the
Committee shall, in its absolute discretion upon the advice
of counsel, deem necessary or advisable; and
(iii) The obtaining of any other consent,
approval, or permit from any state or federal governmental
agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine
to be necessary or advisable.
(b) Nothing contained in the Plan shall prevent the
Corporation or any Affiliate from adopting other or
additional compensation arrangements for its employees.
(c) The adoption of the Plan shall not confer upon
any employee any right to continued employment nor shall it
interfere in any way with the right of the Corporation or
any Affiliate to terminate the employment of any employee
at any time.
(d) No later than the date as of which an amount
first becomes includible in the gross income of the
participant for federal income tax purposes with respect to
any Award under the Plan, the participant shall pay to the
Corporation, or make arrangements satisfactory to the
Corporation regarding the payment of, any federal, state,
local or foreign taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise
determined by the Corporation, withholding obligations may
be settled with Common Stock, including Common Stock that
is part of the Award that gives rise to the withholding
requirement. The obligations of the Corporation under the
Plan shall be conditional on such payment or arrangements,
and the Corporation and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the participant. The
Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections,
for the settlement of withholding obligations with Common
Stock.
(e) At the time of Award, the Committee may provide
in connection with any Award that any shares of Common
Stock received as a result of such Award shall be subject
to a right of first refusal pursuant to which the
participant shall be required to offer to the Corporation
any shares that the participant wishes to sell at the then
Fair Market Value of the Common Stock, subject to such
other terms and conditions as the Committee may specify at
the time of Award.
(f) The reinvestment of dividends in additional
Restricted Stock at the time of any dividend payment shall
only be permissible if sufficient shares of Common Stock
are available under Section 3 for such reinvestment (taking
into account then outstanding Stock Options and other
Awards).
(g) The Committee shall establish such procedures as
it deems appropriate for a participant to designate a
beneficiary to whom any amounts payable in the event of the
participant's death are to be paid or by whom any rights of
the participant, after the participant's death, may be
exercised.
(h) In the case of a grant of an Award to any
employee of an Affiliate, the Corporation may, if the
Committee so directs, issue or transfer the shares of
Common Stock, if any, covered by the Award to the
Affiliate, for such lawful consideration as the Committee
may specify, upon the condition or understanding that the
Affiliate will transfer the shares of Common Stock to the
employee in accordance with the terms of the Award
specified by the Committee pursuant to the provisions of
the Plan.
(i) Notwithstanding any other provision of the Plan,
if any right granted pursuant to this Plan would make a
Change in Control transaction ineligible for pooling of
interests accounting under APB No. 16 that but for the
nature of such grant would otherwise be eligible for
such accounting treatment, the Committee may, at its
discretion, but shall not be required to, substitute for
the cash payable pursuant to such grant Common Stock (or
the common stock of the issuer for which the Common Stock
is being exchanged in such Change in Control transaction)
with a Fair Market Value equal to the cash that would
otherwise be payable hereunder.
(j) The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance
with the laws of the State of Delaware, without reference
to principles of conflict of laws.<PAGE>
Section 14. Effective Date of Plan. The Plan
shall be effective as of the date it is approved by the
affirmative votes of the holders of a majority of the
Common Stock present, or represented, and entitled to vote
at a meeting duly held in accordance with the applicable
laws of the State of Delaware (provided, that the total
vote cast represents 50% of the voting power of all the
shares of Common Stock entitled to vote).
EXHIBIT 10(c)
HARNISCHFEGER INDUSTRIES, INC.
------------------------------
EXECUTIVE INCENTIVE PLAN
------------------------
(as amended and restated October 14, 1996)
1. Purpose. Harnischfeger Industries, Inc.
-------
Executive Incentive Plan (the "Plan") was established by
Harnischfeger Industries, Inc. (the "Company") effective as
of October 30, 1990 to provide as an incentive the
possibility of payment of additional compensation to or on
behalf of the key officers of the Company and its
subsidiaries who contribute materially to the success and
profitability of the Company and who become participants in
the Plan.
2. Administration. The Plan will be
--------------
administered by a committee of two or more directors, each
of whom is a Non-Employee Director as defined in paragraph
(b)(3) of Rule 16b-3 promulgated pursuant to the Securities
Exchange Act of 1934 as amended (the "Committee"), which
Committee from time to time may delegate the performance of
certain of its ministerial duties under the Plan, such as
the keeping of records and participants' accounts, to such
person or persons as it may select. The Plan shall be
administered on the basis of a plan year (the "Plan Year")
which coincides with the fiscal year of the Company, which
currently is the 12-month period beginning on November 1
and ending on the next following October 31. The Company
shall pay the cost of Plan administration. The Committee
shall have the power, right and duty to interpret the
provisions of the Plan and may from time to time adopt
rules with respect to the administration of the Plan and
the determination and distribution of benefits under the
Plan, and may amend any and all rules previously
established. Any decision made by the Committee in good
faith in connection with its administration of or
responsibilities under the Plan, including the
interpretation of any provision of the Plan, the
application of any rule established under the Plan, any
determination as to the officers eligible to participate in
the Plan for any Plan Year, the amount allocated to each
for any Plan Year and the manner, conditions and terms of
payment of such amount, shall be conclusive on all persons.
3. Participation: Prior to October 1 of
-------------
each Plan Year, the Committee shall select those executives
who will be participants in the Plan for the following Plan
Year. The inclusion or selection of any executive as a
participant in the Plan (a "Participant") for any Plan Year
shall not require the inclusion or selection of such person
as a Participant for any subsequent Plan Year, or, if such
person is subsequently so included or selected, shall not
require the same benefit provided the Participant under the
Plan for an earlier Plan Year be provided such Participant
for the subsequent Plan Year.
4. Performance Goals. On or after
-----------------
September 15 of each Plan Year, the Chief Executive
Officer of the Company shall recommend to the Committee
performance goals for the Company and each of its divisions
and subsidiaries for the following Plan Year. Prior to
October 15 of each Plan Year, the Committee shall either
approve the Chief Executive Officer's recommended
performance goals for the following Plan Year, or in the
Committee's sole discretion, shall establish the
performance goals for that Plan Year at such levels as it
considers appropriate. The Committee shall also establish,
by October 15 of each Plan Year, threshold performance
levels for the year for the Company and each of its
divisions and subsidiaries, over and under performance
levels and percentages for the year for the Company and
each of its divisions and subsidiaries, and other features
of the incentive compensation program for the following
Plan Year. If the business unit fails to meet the
established threshold performance level for a Plan Year, no
amount will be awarded to Participants in that business
unit's Plan for that year.
5. Target Incentive Percentage. As of the
---------------------------
date that the Committee determines the executives who shall
be eligible to participate in the Plan for a Plan Year, the
Committee also shall establish with respect to each
Participant a "target incentive percentage", which
percentage shall be based upon the appropriate performance
goals referred to in Section 4 as well as the Participant's
responsibility level as determined by the Committee. For
each Plan Year that the threshold performance level has
been achieved, the target incentive percentage for each
Participant (adjusted for any under or over performance or
other features of the incentive compensation program as
provided in Section 4) shall be multiplied by his base
salary earned in the fiscal year. The resulting amount
with respect to each Participant for a Plan Year is his
"Incentive Award" for that year.
6. Source, Time and Manner of Payment.
----------------------------------
Each Participant's Incentive Award for a Plan Year shall be
paid from the general assets of the Company, in accordance
with the following:
(a) All of a Participant's Incentive Award
for a Plan Year shall be payable, without
interest, on or before the January 10
next following the end of that Plan Year
except for such portion of said Incentive
Award that such Participant shall have
previously elected to have deferred in
accordance with Section 6 (b).
(b) Each Participant may elect to defer the
payment of up to 100% of the Incentive
Award payable to such Participant
pursuant to Section 6 (a), in accordance
with the provisions of Section 7 hereof.
7. Election of Stock in Lieu of Pay. Each
--------------------------------
Participant shall have the right to elect to have up to
100% of the Incentive Award payable to such Participant in
accordance with Section 6 hereof converted into shares of
the Company's common stock ("Stock") and delivered into the
Harnischfeger Industries Deferred Compensation Trust
("Rabbi Trust") for the benefit of such Participant subject
to the terms hereinafter set forth:
(a) A Participant in the Plan for any Plan
Year may by written notice filed with the
Company before the beginning of such Plan
Year elect to convert into Stock up to
100% of his Incentive Award for that Plan
Year. Such election shall be
irrevocable.
(b) Shares of Stock equal to the number
(rounded to the nearest integer) derived
by dividing seventy five percent (75%) of
the average closing price of the Stock on
the New York Stock Exchange Composite
Tape for the month of October of the Plan
Year into the amount of Incentive Award
that each Participant has elected to
convert into Stock shall be registered by
the Company in the name of the Rabbi
Trust and delivered to the Rabbi Trust
for allocation to such Participant's
account, provided, however, that (i) the
Company may direct the trustee of the
Rabbi Trust (the "Trustee") to use for
this purpose shares of Stock previously
delivered by the Company to the Rabbi
Trust if such shares have not been
allocated to the account of any
Participant and (ii) the total number of
shares that may be delivered by the
Company to the Rabbi Trust for the
accounts of all Participants during any
Plan Year shall not exceed two percent of
the total number of shares outstanding at
the beginning of such Plan Year adjusted
for any stock split, stock dividend,
combination of shares, or similar change
in Stock, and provided further that if
there are not sufficient available shares
during any Plan Year to fully convert all
Incentive Awards which the Participants
have elected to convert, all available
shares for that Plan Year shall be
allocated to electing Participants on a
pro rata basis and the balance of each
Participant's Incentive Award shall be
paid to the Participant in cash. The
aforesaid calculation and funding of each
Participant's account shall take place as
soon as practical after the January 1
immediately following the end of each
such Plan Year beginning with the Plan
Year ending October 31, 1990. The Stock
allocated to a Participant's account
pursuant hereto may at the Company's
option be acquired through open market
purchases or may be either treasury
shares or newly issued shares provided
that any treasury or newly issued shares
are duly registered pursuant to
applicable federal and state securities
laws and stock exchange regulations.
Although the Company intends to exert its
best efforts so that the shares allocated
or distributed to Participants hereunder
will be registered under, or exempt from
the registration requirements of, the
Securities Act of 1933 (the "Securities
Act") and any applicable state securities
laws, if the allocation or distribution
would otherwise result in the violation
by the Company of any provision of the
Securities Act or of any state securities
law, the Company may require that such
allocation or distribution be deferred
until the Company has taken appropriate
action to avoid any such violation.
(c) An account shall be maintained in the
name of each Participant which will
reflect the shares of Stock into which
his Incentive Award has been converted,
and shall be credited to reflect all
dividends, stock splits and other
distributions with respect to such
shares. All cash distributions with
respect to Stock shall be invested by the
Trustee in shares of Stock through open
market or other appropriate purchases as
soon as practicable after receipt of
same; provided, however, that the number
of shares allocated to each Participant's
account in respect of each cash
distribution will be the same as if the
cash distribution were used to purchase
shares of Stock at 75% of the average
price paid by the Trustee for Stock
purchased when it reinvests such cash
dividends in Stock as provided in
Paragraph 4.1 of the Rabbi Trust. The
Company shall from time to time as needed
make available to the Trustee sufficient
shares of Stock for allocation to
Participants' accounts in connection with
such discounted purchase of Stock with
cash dividends. Each such Stock account
shall be charged with any distribution
made to a Participant when made.
(d) The Stock in a Participant's account
shall be distributed to him (or to his
beneficiary in the event of his death)
promptly (but not sooner than sixty (60)
days) following his termination of
employment with the Company or its
subsidiaries; provided, however, that a
Participant may upon written notice to
the Committee given at least one year
prior to his termination of employment,
elect an annual distribution of such
Stock over a period of time of up to ten
(10) years (e.g. if a ten year election,
one tenth of the balance at the time of
the first distribution, one ninth at the
time of the second distribution, etc.)
and provided further that a Participant
may upon written notice to the Committee
given at least one year prior to his
termination of employment elect to delay
until the next calendar year following
his termination of employment either the
distribution of or, if the Participant
has elected annual distributions over a
period of time, the initial distribution
from his account. During the first fifty
(50) days following a Participant's
termination of employment, the
Participant (or the Participant's
beneficiary in the event of the
Participant's death) shall have the right
to elect to have the Participant's
account distributed in cash, Stock or a
combination of cash and Stock. Upon
receipt of a written request from a
Participant that a part or all of the
distribution be made in cash, the Company
shall direct the Trustee to credit such
Participant's account with an amount (the
"Cash Portion") equal to the product of
the number of shares of Stock then
credited to Participant's account
necessary to comply with the request (the
"Diversified Shares") and the closing
price of the Stock on the New York Stock
Exchange Composite Tape as of the date
the request is received by the Company.
Thereafter, the Trustee shall keep such
Participant's account as if the Cash
Portion were invested in cash, cash
equivalents, mutual funds or marketable
securities as directed by the Commitee
from time to time and as if the
Diversified Shares had been sold.
(e) Notwithstanding the foregoing, in the
event of a "Change in Control" of the
Company (as defined in the Rabbi Trust),
the Company shall purchase for cash all
shares of Stock then in all Participants'
accounts at a per-share price equal to
the the Change in Control Price, and the
Trustee is directed to sell such shares
upon such terms. Immediately after the
Company purchases any shares pursuant to
this Section 7(f), the Committee shall
cause the Trustee to effect a
distribution of all cash proceeds to the
Participants in accordance with their
accounts. As used herein, "Change in
Control Price" means the higher of (i)
the highest reported sales price, regular
way, of a share of Stock in any
transaction reported on the New York
Stock Exchange Composite Tape or other
national securities exchange on which
such shares are listed or on NASDAQ, as
applicable, during the 60-day period
prior to and including the date of a
Change in Control and (ii) if the Change
in Control is the result of a tender or
exchange offer or a Business Combination
(as defined in the Rabbi Trust), the
highest price per share of Stock paid in
such tender or exchange offer or Business
Combination. To the extent that the
consideration paid in any such
transaction described above consists all
or in part of securities or other non-cash consideration, the value of such
securities or other non-cash
consideration shall be determined by the
Incumbent Board (as defined in the Rabbi
Trust).
(f) In the event that the Committee
determines that the laws of a country in
which a Participant resides make it
impracticable to allocate Stock to the
account of such Participant, the election
of Stock in lieu of pay pursuant to this
Section 7 shall not be available to such
Participant. However, at the discretion
of the Committee, the Participant may be
placed in a plan to be designated the
Stock Equivalent Unit Plan which will
provide deferred compensation in the same
manner and amounts as would have been
provided under this Plan except such
amounts will not be funded through the
Rabbi Trust. Notwithstanding the
foregoing, in the event of a Change in
Control, the Company shall fund accounts
in the Stock Equivalent Unit Plan with
cash in a manner similar to that
described in Section 7(f) above.
(h) Participants shall not be eligible to
elect to receive Stock in lieu of pay
pursuant to this Section 7 for a period
of twelve (12) months following the
receipt of a hardship distribution from
any cash or deferred compensation plan of
the Company maintained pursuant to
Section 401(k) of the Internal Revenue
Code.
8. Designation of Beneficiaries. Each
----------------------------
Participant from time to time may name any person or
persons (who may be named concurrently, contingently or
successively) to whom his benefits under the Plan are to be
paid if he dies before he receives his Incentive Award or
the proceeds of his Rabbi Trust account. Each such
beneficiary designation will revoke all prior designations
by the Participant, shall not require the consent of any
previously named beneficiary, shall be in a form prescribed
by the Committee, and will be effective only when filed
with the Committee during the Participant's lifetime. If a
Participant fails to designate a beneficiary before his
death, the beneficiary shall be the Participant's estate.
9. General. No Participant or other person
-------
shall have any right, title or interest in any amount
awarded under this Plan prior to the payment thereof to
such person or in any property of the Company. Neither the
establishment nor continuance of this Plan shall affect or
enlarge the employment rights of any Participant or
constitute a contract of employment with any Participant.
Neither the Company nor any Committee member shall be
personally liable for any act done or omitted to be done in
good faith in the administration of the Plan. Except as
provided in Section 7 hereof, nothing herein shall require
the Company to segregate or set aside any funds or other
property for the purpose of paying any amounts, the payment
of which has been deferred under the Plan.
10. Facility of Payment. When a person
-------------------
entitled to benefits under the Plan is under legal
disability, or, in the Committee's opinion, is in any way
incapacitated so as to be unable to manage his affairs, the
Committee may direct the payment of benefits to such
person's legal representative, or to a relative or friend
of such person for such person's benefit, or the Committee
may direct the application of such benefits for the benefit
of such person. Any payments made in accordance with the
preceding sentence shall be a full and complete discharge
of any liability for such payment under the Plan.
11. Withholding for Taxes. Notwithstanding
---------------------
any other provision of the Plan, the Committee may on
behalf of the Participant withhold or direct the Trustee to
withhold from any payment to be made under the Plan,
whether in the form of cash or shares of Stock, such amount
or amounts as may be required for purposes of complying
with appropriate federal, state or foreign tax withholding
provisions. Subject to the discretion of the Committee, no
distribution will be made to the Participant until all tax
withholding obligations have been satisfied.
12. Benefit Statements. The Company shall
------------------
provide statements of account to Participants on a periodic
basis but not less than annually in such form and at such
time as it deems appropriate.
13. Amendment and Termination. Because
-------------------------
unforeseen circumstances may make it undesirable to
continue the Plan in any form, or to continue it without
change, the Board of Directors of the Company must
necessarily reserve and hereby has reserved the right to
amend the Plan from time to time and to terminate the Plan
at any time, except that no such amendment or any
termination of the Plan shall change the terms and
conditions of payment of any Incentive Award theretofore
awarded to a Participant without the consent of the
Participant concerned, nor shall any termination of the
Plan eliminate any obligations of the Company which
theretofore shall have arisen under the Plan.
16. Controlling Law. The laws of Wisconsin
---------------
shall be controlling in all matters relating to the Plan.
17. Gender and Number. Where the context
-----------------
admits, words in the masculine gender shall include the
feminine and neuter genders, the plural shall include the
singular and the singular shall include the plural.
-------------------------------------------
EXHIBIT 10(d)
HARNISCHFEGER INDUSTRIES, INC.
------------------------------
SUPPLEMENTAL RETIREMENT AND STOCK FUNDING PLAN
----------------------------------------------
(as amended and restated October 14, 1996)
SECTION 1: Introduction
- --------- ------------
1.1 The Plan and its Effective Date.
-------------------------------
Harnischfeger Industries, Inc. Supplemental Retirement and
Stock Funding Plan (the "Supplemental Plan") is the
amendment and restatement effective as of October 1, 1990
of the plan that was originally established by
Harnischfeger Industries, Inc., a Delaware corporation (the
"Company"), effective March 1, 1987 as the Harnischfeger
Industries, Inc. Supplemental Retirement Plan.
1.2 Purpose. The Company maintains a
-------
Harnischfeger Salaried Employees' Retirement Plan (the
"Retirement Plan"), which is intended to meet the
requirements of a "qualified plan" under the Internal
Revenue Code of 1986, as amended (the "Code"). While the
Code and the Employee Retirement Income Security Act of
1974, as amended (the "Act"), place limitations on the
benefits which may be paid from a qualified plan, the Code
and the Act permit the payment under a non-qualified
supplemental retirement plan of the benefits which may not
be paid under the qualified plan because of such
limitations. The purposes of this Supplemental Plan are
(i) to provide benefits which may not be provided under the
Retirement Plan because of limitations imposed by the Code
or the Act, including those relating to nondiscrimination
and maximum benefit limitations, elections to defer
compensation made by the participants, and the granting of
past service credits and (ii) to provide the opportunity
for qualified executives to have their supplemental
benefits converted into shares of the Company's common
stock upon the terms hereinafter set forth.
SECTION 2: Participation and Benefits
- ---------- --------------------------
2.1 Eligibility for Benefits Related to
-----------------------------------
Retirement Plan. Subject to the conditions and
- ---------------
limitations hereof, if a participant in the Retirement Plan
(i) has been granted credit for prior service or elected to
defer compensation which may not be taken into account
under the Retirement Plan because of applicable
nondiscrimination or other rules, or (ii) has accrued a
vested pension benefit under the Retirement Plan (or would
have accrued a vested benefit if his prior service were
taken into account), and such benefit has been limited as a
result of the maximum benefit limitations imposed by
Sections 401(a)(17) and 415 of the Code, he shall be a
participant ("Participant") in this Supplemental Plan and
shall be entitled to receive under this Supplemental Plan
the portion of his benefits under the Retirement Plan,
determined without regard to the limitations on the
inclusions of prior service or deferred compensation or the
maximum benefit limitations therein, which exceeds the
benefits payable to him under the Retirement Plan after
applying such limitations. If a Participant was employed
by another "Harnischfeger Company", as defined in the
Retirement Plan, and such other company also maintains a
supplemental plan covering the Participant, the benefits
hereunder and under such other plan shall be limited so as
to not be duplicative and the Participant's benefits
hereunder and under such other plan shall be paid by the
Company and such other Harnischfeger Company in such
proportions as the Company shall determine. The term
"Company" as hereinafter used shall be deemed to include a
reference to each such other Harnischfeger Company.
2.2 Payment of Benefits. Except to the
-------------------
extent a Participant becomes entitled to receive Company
common stock as provided in Section 3, his benefits under
this Supplemental Plan shall be paid to him, or in the
event of his death to his beneficiary, at the same time and
in the same manner as his pension benefits under the
Retirement Plan.
2.3 Funding. Benefits payable under this
-------
Supplemental Plan to a Participant or his beneficiary shall
be paid directly by the Company or at its discretion
through Harnischfeger Industries Deferred Compensation
Trust ("Rabbi Trust"), a grantor trust established by the
Company. Prior to a "Change in Control" of the Company (as
hereinafter defined), the Company shall not be required
(but may do so in its discretion) to fund through the Rabbi
Trust or otherwise any benefits under this Supplemental
Plan, except that shares of Company stock shall be issued
and transferred to the Rabbi Trust as herein provided.
SECTION 3: Conversion of Benefits into Common
- --------- ----------------------------------
Stock
- -----
3.1 Eligible Stock Participant. As used
--------------------------
herein, the term "Eligible Stock Participant" means each
Participant who is an active senior executive of the
Company as of October 1, 1990 (and each Participant
designated from time to time hereafter by the Committee, as
defined in Section 4.1 hereof) whose accrued benefits as of
October 1, 1990 under this Supplemental Plan equals or
exceeds a monthly normal retirement annuity of $1,000 per
month.
3.2 Initial Stock Funding. Each Eligible
---------------------
Stock Participant shall have the right to elect to have all
benefits payable under this Supplemental Plan converted, on
the terms hereinafter set forth, into shares of the
Company's common stock and delivered into the Rabbi Trust
for the benefit of such Participant. The present value of
each such electing Participant's prospective supplemental
pension benefits shall be calculated as of October 1, 1990
using the most recent assumptions adopted by the Company
for purposes of calculating the actuarial present value of
the Company's pension obligations, provided, however,
--------
that the discount rate used herein shall be one half
percent less than the discount rate used in such
assumptions. Shares of stock equal to the number (rounded
to the nearest integer) derived by dividing the average
closing price for the Company's common stock reflected on
the New York Stock Exchange Composite Tape for the month of
September, 1990 into the aforesaid present value shall be
registered by the Company in the name of the trustee of the
Rabbi Trust (the "Trustee") and delivered to the Rabbi
Trust for allocation to such Participant's account. The
aforesaid calculation and funding of each Participant's
account shall take place as soon as is practicable after
October 1, 1990. The shares allocated to an Eligible Stock
Participant's account pursuant to Sections 3.2 or 3.3 may
be either treasury shares or newly issued shares provided
any treasury or newly issued shares are duly registered
pursuant to applicable federal and state securities, and
stock exchange, regulations. Although the Company intends
to exert its best efforts so that the shares allocated or
distributed to Participants hereunder will be registered
under, or exempt from the registration requirements of, the
Securities Act of 1933 (the "Securities Act") and any
applicable state securities laws, if the allocation or
distribution would otherwise result in the violation by the
Company of any provision of the Securities Act or of any
state securities law, the Company may require that such
allocation or distribution be deferred until the Company
has taken appropriate action to avoid any such violation.
3.3 Subsequent Stock Funding. As soon as
------------------------
practicable after November 1st of each year (beginning with
November of 1991), the present value of each Eligible Stock
Participant's prospective supplemental pension benefits
payable hereunder shall be calculated as of such November
1st using the then current assumptions adopted by the
Company for purposes of calculating the actuarial present
value of the Company's pension obligations, provided that
the discount rate used for purposes of such calculation
shall be one half percent less than the rate used in such
assumptions. Shares of the Company's common stock equal to
the number (rounded to the nearest integer) derived by
dividing the average closing price of the Company's common
stock on the New York Stock Exchange Composite Tape for the
immediately preceding month of October into the difference
between the aforesaid present value and the amount of the
present value calculated for the immediately preceding year
pursuant to the terms of this Supplemental Plan (if no
previous calculation has been made, a zero value shall be
used for the previous calculation) shall be registered by
the Company in the name of the Trustee and delivered to the
Rabbi Trust (if adequate shares or other consideration have
not theretofore been delivered by the Company to the Rabbi
Trust) for allocation to such Participant's account,
provided, however, that the total number of shares that may
be delivered by the Company to the Rabbi Trust for the
accounts of all Eligible Stock Participants during any
fiscal year shall not exceed one percent of the total
number of shares outstanding at the beginning of such
fiscal year adjusted for any stock split, stock dividend,
combination of shares or similar change in Stock, provided
further that if there are not sufficient available shares
during any fiscal year to fully fund the accounts of the
Eligible Stock Participants, all available shares for that
fiscal year shall be allocated to Eligible Stock
Participant accounts on a pro rata basis and the balance of
each Participant's account shall be paid to the Participant
in cash. The stock allocated to an Eligible Stock
Participant's account pursuant hereto may at the Company's
option be acquired through open market purchases or may be
either treasury shares or newly issued shares provided that
any treasury or newly issued shares are duly registered
pursuant to applicable federal and state securities laws
and stock exchange regulations. Although the Company
intends to exert its best efforts so that the shares
allocated or distributed to Participants hereunder will be
registered under, or exempt from the registration
requirements of, the Securities Act and any applicable
state securities laws, if the allocation or distribution
would otherwise result in the violation by the Company of
any provision of the Securities Act or of any state
securities law, the Company may require that such
allocation or distribution be deferred until the Company
has taken appropriate action to avoid any such violation.
3.4 Non-Electing Eligible Stock
---------------------------
Participants. If any Eligible Stock Participant
- ------------
shall elect not to have his supplemental benefits earned
prior to October 1, 1990 converted into the Company's
common stock as provided in Section 3.2, such supplemental
benefits shall be calculated and paid as if this
Supplemental Plan had terminated on October 1, 1990. Any
supplemental pension benefits accruing to such Participant
after October 1, 1990 shall be converted into shares of the
Company's common stock pursuant to the provisions of
Section 3.3 and shall be calculated as if such Participant
first became an employee of the Company on October 1, 1990.
3.5 Participants' Accounts. An account
----------------------
shall be maintained in the name of each Eligible Stock
Participant which will reflect the shares of the Company's
common stock into which his benefits have been converted.
Each Eligible Stock Participant's account shall be credited
to reflect all dividends, stock splits and other
distributions with respect to such shares, and all non-stock distributions with respect to Company shares shall be
invested by the Trustee in shares of the Company's common
stock through open market or other appropriate purchases as
soon as practicable after receipt of same or, if the Rabbi
Trust has unallocated shares, using such shares valued at
the last closing price for the Company's common stock on
the New York Stock Exchange Composite Tape immediately
preceding such allocation. Each such stock account shall
be charged with any distribution made to a Participant when
made. In addition, appropriate plan records shall be
maintained to reflect a Participant's benefits under
Section 2 which have not been converted into the Company's
common stock, including benefits accrued up to date of
termination.
3.6 Payment of Benefits.
-------------------
3.6.1 Stock Benefits. As used in this
--------------
section, the term "Stock Benefits" shall mean all shares of
the Company's common stock, all distributions thereon not
used by the Trustee to purchase additional shares of the
Company's common stock, any other amounts allocable to an
Eligible Stock Participant's account as of the date of such
determination, and the amount of any benefits accrued
hereunder that have not been converted into shares of the
Company's common stock.
3.6.2 Payments. Benefits forming a
--------
portion of the Stock Benefits that have not been funded at
the distribution date shall be paid directly by the
Company.
3.6.2.1 If an Eligible Stock
Participant voluntarily terminates his employment with the
Company prior to attaining age 55 or is terminated with
"Cause" (as hereinafter defined) at any age, all Stock
Benefits shall be forfeited to the Company and such
Participant shall receive benefits under Section 2 to the
same extent as if none of his benefits had ever been funded
with Company stock under Section 3 of this Supplemental
Plan (subject to any prior payments made pursuant to the
provisions of Section 3.4).
3.6.2.2 Subject the Committee's sole
discretion to waive the provisions of this Section, if an
Eligible Stock Participant's employment is voluntarily
terminated after the attainment of age 55 and prior to
attainment of age 62, his Stock Benefits shall be reduced
in accordance with the early retirement reduction factors
under the Retirement Plan based upon his attained age at
his termination of employment and paid to him in a lump
sum; that portion of his Stock Benefits not paid to him due
to such reduction shall be forfeited to the Company.
3.6.2.3 If an Eligible Stock
Participant's employment is (a) voluntarily terminated
following attainment of age 62 (55 in the event the
Committee elects to waive the provisions of Section 3.6.2.2
hereof) or (b) is involuntarily terminated at any age
without Cause, including termination due to death or
disability, all of his Stock Benefits shall be distributed
to him (or to his beneficiary in the event of his death)
promptly (but not sooner than sixty (60) days) following
his termination of employment with the Company or its
subsidiaries; provided, however, that a Participant may
upon written notice to the Committee given at least one
year (ninety (90) days for any such notice given prior to
January 1, 1995) prior to his termination, elect an annual
distribution of such Stock over a period of time of up to
ten (10) years (e.g. if a ten year election, one tenth of
the balance at the time of the first distribution, one
ninth of the balance at the time of the second
distribution, etc.) and provided further that a Participant
may upon written notice to the Committee given at least one
year (ninety (90) days for any such notice given prior to
January 1, 1995) prior to his termination of employment
elect to delay until the next calendar year following his
termination of employment either the distribution of or, if
the Participant has elected annual distributions over a
period of time, the initial distribution from his account.
During the first fifty (50) days following a Participant's
termination of employment, the Participant (or the
Participant's beneficiary in the event of the Participant's
death) shall have the right to elect to have the
Participant's account distributed in cash, stock or a
combination of cash and stock. Upon receipt of a written
request that a part or all of the distribution be made in
cash, the Company shall direct the Trustee to credit such
Participant's account with an amount (the "Cash Portion")
equal to the product of the number of shares of Stock then
credited to Participant's account necessary to comply with
the request (the "Diversified Shares") and the closing
price of the Stock on the New York Stock Exchange Composite
Tape as of the date the request is received by the Company.
Thereafter, the Trustee shall keep such Participant's
account as if the Cash Portion were invested in cash, cash
equivalents, mutual funds or marketable securities as
directed by the Commitee from time to time and as if the
Diversified Shares had been sold.
3.6.3 Change In Control.
-----------------
Notwithstanding the foregoing, in the event of a "Change in
Control" of the Company (as defined in the Rabbi Trust),
the Company shall purchase for cash all shares of Company
common stock then forming a portion of the Stock Benefits
at a per-share price equal to the the Change in Control
Price, and the Trustee shall be directed to sell such
shares upon such terms. Immediately after the Company
purchases any shares pursuant to this Section 3.6.3, the
Committee shall cause the Trustee to effect a distribution
of all Stock Benefits, including such cash proceeds, to the
Eligible Stock Participants. As used herein, "Change in
Control Price" means the higher of (i) the highest reported
sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange
Composite Tape or other national securities exchange on
which such shares are listed or on NASDAQ, as applicable,
during the 60-day period prior to and including the date of
a Change in Control and (ii) if the Change in Control is
the result of a tender or exchange offer or a Business
Combination (as defined in the Rabbi Trust), the highest
price per share of Stock paid in such tender or exchange
offer or Business Combination. To the extent that the
consideration paid in any such transaction described above
consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration shall be determined by the Incumbent
Board (as defined in the Rabbi Trust).
3.6.4 Cause. For purposes of this
-----
Supplemental Plan, "Cause" shall mean termination upon (a)
Participant's willful and continued failure to perform
substantially the reasonably assigned duties with the
Company consistent with those duties specified pursuant to
his contract of employment prior to a Change in Control of
the Company (other than any such failure resulting from
incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to
Participant by the Chairman of the Board or Chief Executive
Officer of the Company which specifically identifies the
manner in which such person believes that Participant has
not substantially performed such assigned duties, or (b)
Participant's willful engagement in illegal conduct which
is materially and demonstrably injurious to the Company.
For purposes of this Section, no act, or failure to act on
Participant's part shall be considered "willful" unless
done, or omitted to be done, in knowing bad faith and
without reasonable belief that the action or omission was
in, or not opposed to, the best interests of the Company.
Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, in
good faith and in the best interests of the Company.
Notwithstanding the foregoing, Participant shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board
at a meeting of the Board called and held for the purpose
(after reasonable notice to Participant and an opportunity
for Participant, together with his counsel, to be heard
before the Board), finding that in the good faith opinion
of the Board Participant was guilty of the conduct set
forth above in (a) or (b) of this Section and specifying
the particulars thereof in detail.
3.7 Diversification. After an Eligible
---------------
Stock Participant reaches age 55, he shall have the right,
subject to the provisions of this Section 3.7, to elect to
have up to 50% of the value of his Stock Benefits
determined as if such portion were thereafter invested in
such investments, and in such manner, as the Company's
Pension and Investment Committee shall from time to time
authorize.
SECTION 4: General Provisions
- --------- ------------------
4.1 Committee. This Supplemental Plan shall
---------
be administered by a committee of two or more directors,
each of whom is a Non-Employee Director as defined in
paragraph (b)(3) of Rule 16b-3 promulgated pursuant to the
Securities Exchange Act of 1934 (the "Committee"),
disregarding any changes in the members of the Committee
following a Change in Control of the Company. The Company
shall pay the cost of administration of the Supplemental
Plan. The Committee shall have the power, right and duty
to interpret the provisions of the Supplemental Plan and
may from time to time adopt rules with respect to the
administration of the Supplemental Plan and the
determination and distribution of benefits under the
Supplemental Plan, and may amend any and all rules
previously established. Any decision made by the Committee
in good faith in connection with its administration of or
responsibilities under the Supplemental Plan, including the
interpretation of any provision of the Supplemental Plan,
the application of any rule established under the
Supplemental Plan, any determination as to the officers
eligible to participate in the Supplemental Plan, the
amount allocated to each and the manner, conditions and
terms of payment of such amount, shall be conclusive on all
persons.
4.2 Beneficiary. A Participant's
-----------
"beneficiary" under this Supplemental Plan means any person
who becomes entitled to benefits under the Retirement Plan
because of the Participant's death; provided that, if a
Participant dies while his benefits under this Supplemental
Plan are payable to him in installments, his beneficiary
under this Supplemental Plan shall be either (i) the person
or persons designated by him by signing and filing with the
Committee a form furnished by the Committee, or (ii) if the
Participant failed to designate a beneficiary in (i) above,
or if the beneficiary designated in (i) above dies before
the date of the Participant's death, the Participant's
estate.
4.3 Discretion. Notwithstanding any
----------
provisions in this Supplemental Plan to the contrary, the
Committee shall have the discretion to allow any benefits
to be paid that would otherwise be forfeited.
4.4 Employment Rights. Establishment of the
-----------------
Supplemental Plan shall not be construed to give any
Participant the right to be retained in the Company's
service or to any benefits not specifically provided by the
Supplemental Plan.
4.5 Interests Not Transferable. Except as
--------------------------
to withholding of any tax under the laws of the United
States or any state, the interests of the Participants and
their beneficiaries under the Supplemental Plan are not
subject to the claims of their creditors and may not be
voluntarily or involuntarily transferred, assigned,
alienated or encumbered, provided, however, that the
Committee shall have discretion to waive this restriction,
in whole or in part. No Participant shall have any right
to any benefit payments hereunder prior to his termination
of employment with the Company other than pursuant to
Section 3.6.3.
4.6 Payment with Respect to Incapacitated
-------------------------------------
Participants or Beneficiaries. If any person
- -----------------------------
entitled to benefits under the Supplemental Plan is under a
legal disability or in the Committee's opinion is
incapacitated in any way so as to be unable to manage his
financial affairs, the Committee may direct the payment of
all or a portion of such benefits to such person's legal
representative or to a relative or friend of such person
for such person's benefit, or the Committee may direct the
application of such benefits for the benefit of such person
in any manner which the Committee may elect that is
consistent with the Supplemental Plan. Any payments made
in accordance with the foregoing provisions of this section
shall be a full and complete discharge of any liability for
such payments.
4.7 Limitation of Liability. To the extent
-----------------------
permitted by law, no person (including the Company, its
Board of Directors, the Committee, any present or former
member of the Company's Board of Directors or the
Committee, and any present or former officer of the
Company) shall be personally liable for any act done or
omitted to be done in good faith in the administration of
the Supplemental Plan.
4.8 Controlling Law. The laws of Wisconsin
---------------
shall be controlling in all matters relating to the
Supplemental Plan.
4.9 Gender and Number. Where the context
-----------------
admits, words in the masculine gender shall include the
feminine and neuter genders, the plural shall include the
singular and the singular shall include the plural.
4.10 Successor to the Company. The term
------------------------
"Company" as used in the Supplemental Plan shall include
any successor to the Company by reason of merger,
consolidation, the purchase of all or substantially all of
the Company's assets or otherwise.
4.11 Withholding for Taxes. Notwithstanding
---------------------
any other provision of this Supplemental Plan, the
Committee may on behalf of the Participant withhold or
direct the Trustee to withhold from any payment to be made
under this Supplemental Plan, whether in the form of cash
or shares of stock, such amount or amounts as may be
required for purposes of complying with appropriate
federal, state or foreign tax withholding provisions.
Subject to the discretion of the Committee, no distribution
will be made to the Participant until all tax withholding
obligations have been satisfied.
SECTION 5: Amendment and Termination
- --------- -------------------------
5.1 Amendment and Termination. The Board
-------------------------
of Directors of the Company reserves the right to amend the
Supplemental Plan from time to time or to terminate the
Supplemental Plan at any time, provided that no amendment
of the Supplemental Plan nor the termination of the
Supplemental Plan may cause the reduction, forfeiture or
cessation of any benefits that were accrued as of the date
of such amendment or termination and which would otherwise
be payable under this Supplemental Plan, but for such
amendment or termination.
-------------------------------------------
EXHIBIT 10(d)
HARNISCHFEGER INDUSTRIES, INC.
------------------------------
SUPPLEMENTAL RETIREMENT AND STOCK FUNDING PLAN
----------------------------------------------
(as amended and restated October 14, 1996)
SECTION 1: Introduction
- --------- -------------
1.1 The Plan and its Effective Date.
-------------------------------
Harnischfeger Industries, Inc. Supplemental Retirement and
Stock Funding Plan (the "Supplemental Plan") is the
amendment and restatement effective as of October 1, 1990
of the plan that was originally established by
Harnischfeger Industries, Inc., a Delaware corporation (the
"Company"), effective March 1, 1987 as the Harnischfeger
Industries, Inc. Supplemental Retirement Plan.
1.2 Purpose. The Company maintains a
-------
Harnischfeger Salaried Employees' Retirement Plan (the
"Retirement Plan"), which is intended to meet the
requirements of a "qualified plan" under the Internal
Revenue Code of 1986, as amended (the "Code"). While the
Code and the Employee Retirement Income Security Act of
1974, as amended (the "Act"), place limitations on the
benefits which may be paid from a qualified plan, the Code
and the Act permit the payment under a non-qualified
supplemental retirement plan of the benefits which may not
be paid under the qualified plan because of such
limitations. The purposes of this Supplemental Plan are
(i) to provide benefits which may not be provided under the
Retirement Plan because of limitations imposed by the Code
or the Act, including those relating to nondiscrimination
and maximum benefit limitations, elections to defer
compensation made by the participants, and the granting of
past service credits and (ii) to provide the opportunity
for qualified executives to have their supplemental
benefits converted into shares of the Company's common
stock upon the terms hereinafter set forth.
SECTION 2: Participation and Benefits
- ---------- --------------------------
2.1 Eligibility for Benefits Related to
-----------------------------------
Retirement Plan. Subject to the conditions and
- ---------------
limitations hereof, if a participant in the Retirement Plan
(i) has been granted credit for prior service or elected to
defer compensation which may not be taken into account
under the Retirement Plan because of applicable
nondiscrimination or other rules, or (ii) has accrued a
vested pension benefit under the Retirement Plan (or would
have accrued a vested benefit if his prior service were
taken into account), and such benefit has been limited as a
result of the maximum benefit limitations imposed by
Sections 401(a)(17) and 415 of the Code, he shall be a
participant ("Participant") in this Supplemental Plan and
shall be entitled to receive under this Supplemental Plan
the portion of his benefits under the Retirement Plan,
determined without regard to the limitations on the
inclusions of prior service or deferred compensation or the
maximum benefit limitations therein, which exceeds the
benefits payable to him under the Retirement Plan after
applying such limitations. If a Participant was employed
by another "Harnischfeger Company", as defined in the
Retirement Plan, and such other company also maintains a
supplemental plan covering the Participant, the benefits
hereunder and under such other plan shall be limited so as
to not be duplicative and the Participant's benefits
hereunder and under such other plan shall be paid by the
Company and such other Harnischfeger Company in such
proportions as the Company shall determine. The term
"Company" as hereinafter used shall be deemed to include a
reference to each such other Harnischfeger Company.
2.2 Payment of Benefits. Except to the
-------------------
extent a Participant becomes entitled to receive Company
common stock as provided in Section 3, his benefits under
this Supplemental Plan shall be paid to him, or in the
event of his death to his beneficiary, at the same time and
in the same manner as his pension benefits under the
Retirement Plan.
2.3 Funding. Benefits payable under this
-------
Supplemental Plan to a Participant or his beneficiary shall
be paid directly by the Company or at its discretion
through Harnischfeger Industries Deferred Compensation
Trust ("Rabbi Trust"), a grantor trust established by the
Company. Prior to a "Change in Control" of the Company (as
hereinafter defined), the Company shall not be required
(but may do so in its discretion) to fund through the Rabbi
Trust or otherwise any benefits under this Supplemental
Plan, except that shares of Company stock shall be issued
and transferred to the Rabbi Trust as herein provided.
SECTION 3: Conversion of Benefits into Common
- --------- ----------------------------------
Stock
- -----
3.1 Eligible Stock Participant. As used
--------------------------
herein, the term "Eligible Stock Participant" means each
Participant who is an active senior executive of the
Company as of October 1, 1990 (and each Participant
designated from time to time hereafter by the Committee, as
defined in Section 4.1 hereof) whose accrued benefits as of
October 1, 1990 under this Supplemental Plan equals or
exceeds a monthly normal retirement annuity of $1,000 per
month.
3.2 Initial Stock Funding. Each Eligible
---------------------
Stock Participant shall have the right to elect to have all
benefits payable under this Supplemental Plan converted, on
the terms hereinafter set forth, into shares of the
Company's common stock and delivered into the Rabbi Trust
for the benefit of such Participant. The present value of
each such electing Participant's prospective supplemental
pension benefits shall be calculated as of October 1, 1990
using the most recent assumptions adopted by the Company
for purposes of calculating the actuarial present value of
the Company's pension obligations, provided, however,
--------
that the discount rate used herein shall be one half
percent less than the discount rate used in such
assumptions. Shares of stock equal to the number (rounded
to the nearest integer) derived by dividing the average
closing price for the Company's common stock reflected on
the New York Stock Exchange Composite Tape for the month of
September, 1990 into the aforesaid present value shall be
registered by the Company in the name of the trustee of the
Rabbi Trust (the "Trustee") and delivered to the Rabbi
Trust for allocation to such Participant's account. The
aforesaid calculation and funding of each Participant's
account shall take place as soon as is practicable after
October 1, 1990. The shares allocated to an Eligible Stock
Participant's account pursuant to Sections 3.2 or 3.3 may
be either treasury shares or newly issued shares provided
any treasury or newly issued shares are duly registered
pursuant to applicable federal and state securities, and
stock exchange, regulations. Although the Company intends
to exert its best efforts so that the shares allocated or
distributed to Participants hereunder will be registered
under, or exempt from the registration requirements of, the
Securities Act of 1933 (the "Securities Act") and any
applicable state securities laws, if the allocation or
distribution would otherwise result in the violation by the
Company of any provision of the Securities Act or of any
state securities law, the Company may require that such
allocation or distribution be deferred until the Company
has taken appropriate action to avoid any such violation.
3.3 Subsequent Stock Funding. As soon as
------------------------
practicable after November 1st of each year (beginning with
November of 1991), the present value of each Eligible Stock
Participant's prospective supplemental pension benefits
payable hereunder shall be calculated as of such November
1st using the then current assumptions adopted by the
Company for purposes of calculating the actuarial present
value of the Company's pension obligations, provided that
the discount rate used for purposes of such calculation
shall be one half percent less than the rate used in such
assumptions. Shares of the Company's common stock equal to
the number (rounded to the nearest integer) derived by
dividing the average closing price of the Company's common
stock on the New York Stock Exchange Composite Tape for the
immediately preceding month of October into the difference
between the aforesaid present value and the amount of the
present value calculated for the immediately preceding year
pursuant to the terms of this Supplemental Plan (if no
previous calculation has been made, a zero value shall be
used for the previous calculation) shall be registered by
the Company in the name of the Trustee and delivered to the
Rabbi Trust (if adequate shares or other consideration have
not theretofore been delivered by the Company to the Rabbi
Trust) for allocation to such Participant's account,
provided, however, that the total number of shares that may
be delivered by the Company to the Rabbi Trust for the
accounts of all Eligible Stock Participants during any
fiscal year shall not exceed one percent of the total
number of shares outstanding at the beginning of such
fiscal year adjusted for any stock split, stock dividend,
combination of shares or similar change in Stock, provided
further that if there are not sufficient available shares
during any fiscal year to fully fund the accounts of the
Eligible Stock Participants, all available shares for that
fiscal year shall be allocated to Eligible Stock
Participant accounts on a pro rata basis and the balance of
each Participant's account shall be paid to the Participant
in cash. The stock allocated to an Eligible Stock
Participant's account pursuant hereto may at the Company's
option be acquired through open market purchases or may be
either treasury shares or newly issued shares provided that
any treasury or newly issued shares are duly registered
pursuant to applicable federal and state securities laws
and stock exchange regulations. Although the Company
intends to exert its best efforts so that the shares
allocated or distributed to Participants hereunder will be
registered under, or exempt from the registration
requirements of, the Securities Act and any applicable
state securities laws, if the allocation or distribution
would otherwise result in the violation by the Company of
any provision of the Securities Act or of any state
securities law, the Company may require that such
allocation or distribution be deferred until the Company
has taken appropriate action to avoid any such violation.
3.4 Non-Electing Eligible Stock
---------------------------
Participants. If any Eligible Stock Participant
- ------------
shall elect not to have his supplemental benefits earned
prior to October 1, 1990 converted into the Company's
common stock as provided in Section 3.2, such supplemental
benefits shall be calculated and paid as if this
Supplemental Plan had terminated on October 1, 1990. Any
supplemental pension benefits accruing to such Participant
after October 1, 1990 shall be converted into shares of the
Company's common stock pursuant to the provisions of
Section 3.3 and shall be calculated as if such Participant
first became an employee of the Company on October 1, 1990.
3.5 Participants' Accounts. An account
----------------------
shall be maintained in the name of each Eligible Stock
Participant which will reflect the shares of the Company's
common stock into which his benefits have been converted.
Each Eligible Stock Participant's account shall be credited
to reflect all dividends, stock splits and other
distributions with respect to such shares, and all non-stock distributions with respect to Company shares shall be
invested by the Trustee in shares of the Company's common
stock through open market or other appropriate purchases as
soon as practicable after receipt of same or, if the Rabbi
Trust has unallocated shares, using such shares valued at
the last closing price for the Company's common stock on
the New York Stock Exchange Composite Tape immediately
preceding such allocation. Each such stock account shall
be charged with any distribution made to a Participant when
made. In addition, appropriate plan records shall be
maintained to reflect a Participant's benefits under
Section 2 which have not been converted into the Company's
common stock, including benefits accrued up to date of
termination.
3.6 Payment of Benefits.
-------------------
3.6.1 Stock Benefits. As used in this
--------------
section, the term "Stock Benefits" shall mean all shares of
the Company's common stock, all distributions thereon not
used by the Trustee to purchase additional shares of the
Company's common stock, any other amounts allocable to an
Eligible Stock Participant's account as of the date of such
determination, and the amount of any benefits accrued
hereunder that have not been converted into shares of the
Company's common stock.
3.6.2 Payments. Benefits forming a
--------
portion of the Stock Benefits that have not been funded at
the distribution date shall be paid directly by the
Company.
3.6.2.1 If an Eligible Stock
Participant voluntarily terminates his employment with the
Company prior to attaining age 55 or is terminated with
"Cause" (as hereinafter defined) at any age, all Stock
Benefits shall be forfeited to the Company and such
Participant shall receive benefits under Section 2 to the
same extent as if none of his benefits had ever been funded
with Company stock under Section 3 of this Supplemental
Plan (subject to any prior payments made pursuant to the
provisions of Section 3.4).
3.6.2.2 Subject the Committee's sole
discretion to waive the provisions of this Section, if an
Eligible Stock Participant's employment is voluntarily
terminated after the attainment of age 55 and prior to
attainment of age 62, his Stock Benefits shall be reduced
in accordance with the early retirement reduction factors
under the Retirement Plan based upon his attained age at
his termination of employment and paid to him in a lump
sum; that portion of his Stock Benefits not paid to him due
to such reduction shall be forfeited to the Company.
3.6.2.3 If an Eligible Stock
Participant's employment is (a) voluntarily terminated
following attainment of age 62 (55 in the event the
Committee elects to waive the provisions of Section 3.6.2.2
hereof) or (b) is involuntarily terminated at any age
without Cause, including termination due to death or
disability, all of his Stock Benefits shall be distributed
to him (or to his beneficiary in the event of his death)
promptly (but not sooner than sixty (60) days) following
his termination of employment with the Company or its
subsidiaries; provided, however, that a Participant may
upon written notice to the Committee given at least one
year (ninety (90) days for any such notice given prior to
January 1, 1995) prior to his termination, elect an annual
distribution of such Stock over a period of time of up to
ten (10) years (e.g. if a ten year election, one tenth of
the balance at the time of the first distribution, one
ninth of the balance at the time of the second
distribution, etc.) and provided further that a Participant
may upon written notice to the Committee given at least one
year (ninety (90) days for any such notice given prior to
January 1, 1995) prior to his termination of employment
elect to delay until the next calendar year following his
termination of employment either the distribution of or, if
the Participant has elected annual distributions over a
period of time, the initial distribution from his account.
During the first fifty (50) days following a Participant's
termination of employment, the Participant (or the
Participant's beneficiary in the event of the Participant's
death) shall have the right to elect to have the
Participant's account distributed in cash, stock or a
combination of cash and stock. Upon receipt of a written
request that a part or all of the distribution be made in
cash, the Company shall direct the Trustee to credit such
Participant's account with an amount (the "Cash Portion")
equal to the product of the number of shares of Stock then
credited to Participant's account necessary to comply with
the request (the "Diversified Shares") and the closing
price of the Stock on the New York Stock Exchange Composite
Tape as of the date the request is received by the Company.
Thereafter, the Trustee shall keep such Participant's
account as if the Cash Portion were invested in cash, cash
equivalents, mutual funds or marketable securities as
directed by the Commitee from time to time and as if the
Diversified Shares had been sold.
3.6.3 Change In Control.
-----------------
Notwithstanding the foregoing, in the event of a "Change in
Control" of the Company (as defined in the Rabbi Trust),
the Company shall purchase for cash all shares of Company
common stock then forming a portion of the Stock Benefits
at a per-share price equal to the the Change in Control
Price, and the Trustee shall be directed to sell such
shares upon such terms. Immediately after the Company
purchases any shares pursuant to this Section 3.6.3, the
Committee shall cause the Trustee to effect a distribution
of all Stock Benefits, including such cash proceeds, to the
Eligible Stock Participants. As used herein, "Change in
Control Price" means the higher of (i) the highest reported
sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange
Composite Tape or other national securities exchange on
which such shares are listed or on NASDAQ, as applicable,
during the 60-day period prior to and including the date of
a Change in Control and (ii) if the Change in Control is
the result of a tender or exchange offer or a Business
Combination (as defined in the Rabbi Trust), the highest
price per share of Stock paid in such tender or exchange
offer or Business Combination. To the extent that the
consideration paid in any such transaction described above
consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration shall be determined by the Incumbent
Board (as defined in the Rabbi Trust).
3.6.4 Cause. For purposes of this
-----
Supplemental Plan, "Cause" shall mean termination upon (a)
Participant's willful and continued failure to perform
substantially the reasonably assigned duties with the
Company consistent with those duties specified pursuant to
his contract of employment prior to a Change in Control of
the Company (other than any such failure resulting from
incapacity due to physical or mental illness) after a
demand for substantial performance is delivered to
Participant by the Chairman of the Board or Chief Executive
Officer of the Company which specifically identifies the
manner in which such person believes that Participant has
not substantially performed such assigned duties, or (b)
Participant's willful engagement in illegal conduct which
is materially and demonstrably injurious to the Company.
For purposes of this Section, no act, or failure to act on
Participant's part shall be considered "willful" unless
done, or omitted to be done, in knowing bad faith and
without reasonable belief that the action or omission was
in, or not opposed to, the best interests of the Company.
Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, in
good faith and in the best interests of the Company.
Notwithstanding the foregoing, Participant shall not be
deemed to have been terminated for Cause unless and until
there shall have been delivered to him a copy of a
resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board
at a meeting of the Board called and held for the purpose
(after reasonable notice to Participant and an opportunity
for Participant, together with his counsel, to be heard
before the Board), finding that in the good faith opinion
of the Board Participant was guilty of the conduct set
forth above in (a) or (b) of this Section and specifying
the particulars thereof in detail.
3.7 Diversification. After an Eligible
---------------
Stock Participant reaches age 55, he shall have the right,
subject to the provisions of this Section 3.7, to elect to
have up to 50% of the value of his Stock Benefits
determined as if such portion were thereafter invested in
such investments, and in such manner, as the Company's
Pension and Investment Committee shall from time to time
authorize.
SECTION 4: General Provisions
- --------- ------------------
4.1 Committee. This Supplemental Plan shall
---------
be administered by a committee of two or more directors,
each of whom is a Non-Employee Director as defined in
paragraph (b)(3) of Rule 16b-3 promulgated pursuant to the
Securities Exchange Act of 1934 (the "Committee"),
disregarding any changes in the members of the Committee
following a Change in Control of the Company. The Company
shall pay the cost of administration of the Supplemental
Plan. The Committee shall have the power, right and duty
to interpret the provisions of the Supplemental Plan and
may from time to time adopt rules with respect to the
administration of the Supplemental Plan and the
determination and distribution of benefits under the
Supplemental Plan, and may amend any and all rules
previously established. Any decision made by the Committee
in good faith in connection with its administration of or
responsibilities under the Supplemental Plan, including the
interpretation of any provision of the Supplemental Plan,
the application of any rule established under the
Supplemental Plan, any determination as to the officers
eligible to participate in the Supplemental Plan, the
amount allocated to each and the manner, conditions and
terms of payment of such amount, shall be conclusive on all
persons.
4.2 Beneficiary. A Participant's
-----------
"beneficiary" under this Supplemental Plan means any person
who becomes entitled to benefits under the Retirement Plan
because of the Participant's death; provided that, if a
Participant dies while his benefits under this Supplemental
Plan are payable to him in installments, his beneficiary
under this Supplemental Plan shall be either (i) the person
or persons designated by him by signing and filing with the
Committee a form furnished by the Committee, or (ii) if the
Participant failed to designate a beneficiary in (i) above,
or if the beneficiary designated in (i) above dies before
the date of the Participant's death, the Participant's
estate.
4.3 Discretion. Notwithstanding any
----------
provisions in this Supplemental Plan to the contrary, the
Committee shall have the discretion to allow any benefits
to be paid that would otherwise be forfeited.
4.4 Employment Rights. Establishment of the
-----------------
Supplemental Plan shall not be construed to give any
Participant the right to be retained in the Company's
service or to any benefits not specifically provided by the
Supplemental Plan.
4.5 Interests Not Transferable. Except as
--------------------------
to withholding of any tax under the laws of the United
States or any state, the interests of the Participants and
their beneficiaries under the Supplemental Plan are not
subject to the claims of their creditors and may not be
voluntarily or involuntarily transferred, assigned,
alienated or encumbered, provided, however, that the
Committee shall have discretion to waive this restriction,
in whole or in part. No Participant shall have any right
to any benefit payments hereunder prior to his termination
of employment with the Company other than pursuant to
Section 3.6.3.
4.6 Payment with Respect to Incapacitated
-------------------------------------
Participants or Beneficiaries. If any person
- -----------------------------
entitled to benefits under the Supplemental Plan is under a
legal disability or in the Committee's opinion is
incapacitated in any way so as to be unable to manage his
financial affairs, the Committee may direct the payment of
all or a portion of such benefits to such person's legal
representative or to a relative or friend of such person
for such person's benefit, or the Committee may direct the
application of such benefits for the benefit of such person
in any manner which the Committee may elect that is
consistent with the Supplemental Plan. Any payments made
in accordance with the foregoing provisions of this section
shall be a full and complete discharge of any liability for
such payments.
4.7 Limitation of Liability. To the extent
-----------------------
permitted by law, no person (including the Company, its
Board of Directors, the Committee, any present or former
member of the Company's Board of Directors or the
Committee, and any present or former officer of the
Company) shall be personally liable for any act done or
omitted to be done in good faith in the administration of
the Supplemental Plan.
4.8 Controlling Law. The laws of Wisconsin
---------------
shall be controlling in all matters relating to the
Supplemental Plan.
4.9 Gender and Number. Where the context
-----------------
admits, words in the masculine gender shall include the
feminine and neuter genders, the plural shall include the
singular and the singular shall include the plural.
4.10 Successor to the Company. The term
------------------------
"Company" as used in the Supplemental Plan shall include
any successor to the Company by reason of merger,
consolidation, the purchase of all or substantially all of
the Company's assets or otherwise.
4.11 Withholding for Taxes. Notwithstanding
---------------------
any other provision of this Supplemental Plan, the
Committee may on behalf of the Participant withhold or
direct the Trustee to withhold from any payment to be made
under this Supplemental Plan, whether in the form of cash
or shares of stock, such amount or amounts as may be
required for purposes of complying with appropriate
federal, state or foreign tax withholding provisions.
Subject to the discretion of the Committee, no distribution
will be made to the Participant until all tax withholding
obligations have been satisfied.
SECTION 5: Amendment and Termination
- --------- -------------------------
5.1 Amendment and Termination. The Board
-------------------------
of Directors of the Company reserves the right to amend the
Supplemental Plan from time to time or to terminate the
Supplemental Plan at any time, provided that no amendment
of the Supplemental Plan nor the termination of the
Supplemental Plan may cause the reduction, forfeiture or
cessation of any benefits that were accrued as of the date
of such amendment or termination and which would otherwise
be payable under this Supplemental Plan, but for such
amendment or termination.
-------------------------------------------
EXHIBIT 10(e)
HARNISCHFEGER INDUSTRIES, INC.
---------------------------------------
DIRECTORS STOCK COMPENSATION PLAN
---------------------------------
(as amended and restated October 14, 1996)
1. Purpose. The Harnischfeger Industries,
-------
Inc. Directors Stock Compensation Plan (the "Directors
Plan") has been established effective as of March 2, 1992
by Harnischfeger Industries, Inc., a Delaware corporation
(the "Company"), to provide benefits to certain members of
the Board of Directors of the Company (the "Board"). The
Directors Plan is intended to assist and enable the Company
to attract and retain directors of the highest capabilities
and to facilitate the director's ability to acquire an
ownership interest in the common stock of the Company.
2. Administration. The Plan will be
--------------
administered by a committee of two or more directors, each
of whom is a Non-Employee Director as defined in paragraph
(b)(3) of Rule 16b-3 promulgated pursuant to the Securities
Exchange Act of 1934 as amended (the "Committee"), which
Committee from time to time may delegate the performance of
certain of its ministerial duties under the Plan, such as
the keeping of records and participants' accounts, to such
person or persons as it may select.
3. Eligibility. Effective on and after
-----------
March 2, 1992, each member of the Board who serves on the
Board as a director at any time after March 2, 1992, and
who is not an employee of the Company (herein "Director")
is eligible to participate in the Plan.
4. Participation. As of March 2, 1992,
-------------
each Director shall have the right to have up to 100% of
such Director's annual retainer and meeting fees (including
fees for committee meetings) (collectively, the
"Compensation") payable during the period beginning March
2, 1992 and ending October 31, 1992 (the "Initial Period")
and the 12 month period beginning each November 1st
starting with November 1, 1992 ("Plan Year") converted into
shares of the Company's common stock ("Stock") and
delivered into the Harnischfeger Industries Deferred
Compensation Trust ("Rabbi Trust") for the benefit of such
Director subject to the following terms:
(a) Written notice shall be given by a
Director to the Company prior to March 3, 1992 for
the Initial Period and annually prior to May 1 of
each subsequent Plan Year stating that such Director
elects to convert into Stock up to 100% of such
Director's Compensation payable during the Initial
Period or the next Plan Year respectively. Directors
who become Directors on or after May 1 of any Plan
Year may by written notice to the Company elect to
covert their Compensation into Stock under the
Directors Plan effective six months after the date
such notice is delivered to the Company.
(b) As soon as practicable after each date
determined by the Company for payment of compensation
to Directors, the number of shares of Stock (rounded
to the nearest whole share) derived by dividing the
closing price of the Stock on the New York Stock
Exchange Composite Tape on such payment date into the
amount of Compensation each Director has elected to
convert into Stock shall be delivered into the Rabbi
Trust for the benefit of such Director.
(c) The annual retainer fee for Directors
shall be $22,600.00, the fee for each Board meeting
attended shall be $1,250.00 and the fee for each
meeting of a committee or subcommittee of the Board
attended shall be $1,000.000 for regular members and
$1,250.00 for committee and subcommittee chairs,
provided that, subject to Section 15 hereof, the
amount of such fees may be changed at the discretion
of the Company from time to time.
5. Source of Stock. The Stock allocated to
---------------
each Director's account pursuant hereto may at the
Company's option be acquired through open market purchase,
or may be either treasury shares or newly issued shares;
provided that any treasury or newly issued shares are duly
registered pursuant to applicable federal and state
securities laws and stock exchange regulations. The
Company may, in lieu of delivering shares to the trustee of
the Rabbi Trust (the "Trustee"), direct the Trustee to use
for the purposes of this Directors Plan shares of Stock
previously delivered by the Company to the Rabbi Trust if
such shares have not been allocated to the account of any
Directors Plan participant. Although the Company intends
to exert its best efforts so that the shares allocated or
distributed to Directors hereunder will be registered
under, or exempt from the registration requirements of, the
Securities Act of 1933 (the "Securities Act") and any
applicable state securities laws, if the allocation or
distribution would otherwise result in the violation by the
Company of any provision of the Securities Act or of any
state securities law, the Company may require that such
allocation or distribution be deferred until the Company
has taken appropriate action to avoid any such violation.
6. Participants' Accounts. An account
----------------------
shall be maintained in the name of each Director
participating in the Plan which will reflect the shares of
Stock into which his Compensation has been converted, and
shall be credited to reflect all dividends, stock splits
and other distributions with respect to such shares. All
cash distributions with respect to Stock shall be invested
by the Trustee in shares of Stock through open market or
other appropriate purchases as soon as practicable after
receipt of same. Each such Stock account shall be charged
with any distribution made to a Director when made.
7. Distribution of Stock. The Stock in a
---------------------
Director's account shall be distributed to him (or to his
beneficiary in the event of his death) promptly (but not
sooner than sixty (60) days) following the termination of
his status as a Director of the Company; provided, however,
that a Director may upon written notice to the Company
given one year prior to his termination, request that the
Company approve an annual distribution of such Stock over a
period of time not to exceed ten (10) years (e.g. if a ten
year election, one tenth of the balance at the time of the
first distribution, one ninth of the balance at the time of
the second distribution, etc.) and provided further that a
Director may upon written notice to the Company given at
least one year prior to termination of his status as a
Director elect to delay until the next calendar year
following termination of his status as a Director either
the distribution of or, if the Director has elected annual
distributions over a period of time, the initial
distribution from his account. During the first fifty (50)
days following a Director's termination, the Director (or
the Director's beneficiary in the event of the Director's
death) shall have the right to elect to have the Director's
account distributed in cash, stock or a combination of cash
and stock. Upon receipt of a request that a part or all of
the distribution be made in cash, the Company shall direct
the Trustee to credit such Participant's account with an
amount (the "Cash Portion") equal to the product of the
number of shares of Stock then credited to Participant's
account necessary to comply with the request (the
"Diversified Shares") and the closing price of the Stock
on the New York Stock Exchange Composite Tape as of the
date the request is received by the Company. Thereafter,
the Trustee shall keep such Participant's account as if the
Cash Portion were invested in cash, cash equivalents,
mutual funds or marketable securities as directed by the
Commitee from time to time and as if the Diversified Shares
had been sold.
8. Change in Control. Notwithstanding the
-----------------
foregoing, in the event of a "Change in Control" of the
Company (as defined in the Rabbi Trust), the Company shall
purchase for cash all shares of Stock then in all
Directors' accounts at a per-share price equal to the the
Change in Control Price, and the Trustee is directed to
sell such shares upon such terms. Immediately after the
Company purchases any shares pursuant to this Section 9,
the Committee shall cause the Trustee to effect a
distribution of all cash proceeds to the Directors in
accordance with their accounts. As used herein, "Change in
Control Price" means the higher of (i) the highest reported
sales price, regular way, of a share of Stock in any
transaction reported on the New York Stock Exchange
Composite Tape or other national securities exchange on
which such shares are listed or on NASDAQ, as applicable,
during the 60-day period prior to and including the date of
a Change in Control and (ii) if the Change in Control is
the result of a tender or exchange offer or a Business
Combination (as defined in the Rabbi Trust), the highest
price per share of Stock paid in such tender or exchange
offer or Business Combination. To the extent that the
consideration paid in any such transaction described above
consists all or in part of securities or other non-cash
consideration, the value of such securities or other non-cash consideration shall be determined by the Incumbent
Board (as defined in the Rabbi Trust).
9. Designation of Beneficiaries. Each
----------------------------
Director from time to time may name any person or persons
(who may be named concurrently, contingently or
successively) to whom his benefits under the Plan are to be
paid if he dies before he receives the proceeds of his
Directors Plan account. Each such beneficiary designation
will revoke all prior designations by the Director, shall
not require the consent of any previously named
beneficiary, shall be in a form prescribed by the Company,
and will be effective only when filed with the Company
during the Director's lifetime. If a Director fails to
designate a beneficiary before his death, as provided
above, or if the beneficiary designated by a Director dies
before the date of the Director's death or before complete
payment of the Director's Stock Compensation Plan account,
the Company, in its discretion, may pay such benefits to
either (i) one or more of the Director's relatives by
blood, adoption or marriage and in such proportions as the
Company determines, or (ii) the legal representative or
representatives of the estate of the last to die of the
Director and his designated beneficiary.
10. General. No Director or other person
-------
shall have any right, title or interest in any amount
awarded under this Plan prior to the payment thereof to
such person. No rights or interests of Directors under
this Plan shall be assignable either voluntarily or
involuntarily. Neither the Company nor any officer of the
Company shall be personally liable for any act done or
omitted to be done in good faith in the administration of
the Plan.
11. Facility of Payment. When a person
-------------------
entitled to benefits under the Plan is under legal
disability, or, in the Company's opinion, is in any way
incapacitated so as to be unable to manage his affairs, the
Company may direct the payment of benefits to such person's
legal representative, or to a relative or friend of such
person for such person's benefit, or the Company may direct
the application of such benefits for the benefit of such
person. Any payments made in accordance with the preceding
sentence shall be a full and complete discharge of any
liability for such payment under the Plan.
12. Withholding for Taxes. Notwithstanding
---------------------
any other provision of the Plan, the Company may on behalf
of the Directors withhold or direct the Trustee to withhold
from any payment to be made under the Directors Plan,
whether in the form of cash or stock, such amount or
amounts as may be required for purposes of complying with
applicable federal, state or foreign tax withholding
provisions. Subject to the discretion of the Company, no
distribution will be made to the Director until all tax
withholding obligations have been satisfied.
13. Benefit Statements. The Company shall
------------------
provide statements of account to participating Directors on
a periodic basis but not less than annually in such form
and at such time as it deems appropriate.
14. Amendment and Termination. The Board of
-------------------------
Directors of the Company hereby reserves the right to amend
this Plan from time to time and to terminate this Plan at
any time, except that no such amendment or any termination
of this Plan shall change the terms and conditions of
payment of any Compensation previously payable to a
Director without the consent of the Director concerned, nor
shall any termination of the Plan eliminate any obligations
of the Company which theretofore shall have arisen under
the Plan.
15. Controlling Law. The laws of Wisconsin
---------------
shall be controlling in all matters relating to the Plan.
16. Gender and Number. Where the context
-----------------
admits, words in the masculine gender shall include the
feminine and neuter genders, the plural shall include the
singular and the singular shall include the plural.
---------------------------------------------
EXHIBIT 10(j)
AMENDMENT No. 1
to the agreement as amended and restated as of October 9,
1995 (the "Trust Agreement")
providing for the
HARNISCHFEGER INDUSTRIES DEFERRED COMPENSATION TRUST
by and between Harnischfeger Industries, Inc. (the
"Company")
and Marshall & Ilsley Trust Company (the "Trustee").
WHEREAS, amendment of the Trust Agreement now is
considered desirable;
NOW, THEREFORE, by virtue and in exercise of the
power reserved to the Company and Trustee by paragraph 10.1
of the trust, the Trust Agreement be and hereby is amended,
effective September __, 1996, in the following particulars:
1. By inserting at the end of paragraph 3.1 (c)
the following:
"Nothing contained in this paragraph 3.1 (c) is
intended to have the effect of making the
assets of the Trust unavailable to the general
creditors of the Company as provided in
paragraph 5.4 hereof, and this paragraph 3.1
(c) shall be subject in its entirety to the
provisions of paragraph 5.4 hereof."
2. By substituting for subparagraph 5.4 the
following:
"5.4 Claims of Creditors. Rights
-------------------
of Participants shall be unsecured contractual rights and
Trust Assets shall be treated as assets of the Company and
shall be subject to the claims of the general creditors of
the Company. In the event that any of the Trust Assets are
at any time paid to a creditor of the Company (including
without limitation the Trustee, in its capacity as such,
but excluding a Participant or a Beneficiary in his
capacity as such), the Trustee will immediately notify the
Committee and the Company will, within ten business days
after receipt of such notice, deposit equivalent assets
with the Trustee as additional Trust Assets."
3. By substituting for subparagraph 10.1 of the
Trust Agreement the following:
"10.1 Amendment. This Trust
---------
Agreement may be amended by a written instrument executed
by the Committee and the Trustee; provided that, this Trust
Agreement may not be amended in any manner that may
reasonably be expected to be adverse to any Participant
unless such Participant gives his or her signed consent to
such amendment. Neither the Company, the Committee nor the
Trustee may take any action with respect to the Trust that
may have an adverse effect on the ability of the Trustee to
make payments to the Participants hereunder, including
without limitation merging the Trust, transferring Trust
assets from the Trust other than to the Participants or in
accordance with paragraph 5.4 and terminating the Trust."<PAGE>
IN WITNESS WHEREOF, this Amendment No. 1 has been executed by the
undersigned members of the Committee and on behalf of the Company and the Trustee.
HARNISCHFEGER INDUSTRIES, INC.
By: ________________________
Jeffery T. Grade
Its: Chairman and Chief Executive Officer
By: ________________________
John N. Hanson
Its: President and Chief Operating Officer
By: ________________________
K. Thor Lundgren
Its: Executive Vice President for Law
and Government Affairs
By: ________________________
Francis M. Corby, Jr.
Its: Executive Vice President for Finance
and Administration
As members of the Management
Policy Committee of
Harnischfeger Industries, Inc.
MARSHALL & ILSLEY TRUST COMPANY,
as Trustee
By: ______________________
Its: ______________________
ATTEST:
_______________________
Its: ____________________
(SEAL)
EXHIBIT 11
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
CALCULATIONS OF EARNINGS (LOSS) PER SHARE
(Dollar amounts in thousands except per share amounts)
Year Ended October 31,
--------------------
Determination of Number of Shares 1996
- ------------------------------------ -------
<S> <C>
Average shares outstanding................. 47,196,388
Net Income (Loss)
----------------
Income from Continuing Operations........... $114,217
Loss from and Net Loss on Sale of of
Discontinued
Operations, net of applicable income taxes .. -
Extraordinary Loss on Retirement of Debt, net
of applicable income taxes................... -
Cumulative Effect of Accounting Change, net of
applicable
taxes and minority interest................... - ---------
Net Income (Loss).............................. $114,217
=========
Earnings (Loss) Per Share
--------------------------
Income from continuing operations.............. $ 2.42
Loss from and net loss on sale of
discontinued operation.......................... -
Extraordinary loss on retirement of debt......... -
Cumulative effect of accounting change........... -
---------
Net Income (Loss) Per Share...................... $ 2.42
========
</TABLE>
EXHIBIT 11
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
CALCULATIONS OF EARNINGS (LOSS) PER SHARE
(Dollar amounts in thousands except per share amounts)
Year Ended October 31,
-----------------------
Determination of Number of Shares 1995 1994
- ---------------------------------- ----- ------
<S> <C> <C>
Average shares outstanding........ 46,218,144 43,716,464
========== ===========
Net Income (Loss)
Income from Continuing Operations.... $ 92,120 $ 36,593
Loss from and Net Loss on Sale of
of Discontinued
Operations, net of applicable
income taxes............. (31,235) (3,982)
Extraordinary Loss on Retirement
of Debt, net of
applicable income taxes........... (3,481) (4,827)
Cumulative Effect of Accounting
Change, net of applicable
taxes and minority interest....... - (81,696)
-------- ---------
Net Income (Loss)................. $ 57,404 $(53,912)
======== =========
Earnings (Loss) Per Share
-------------------------
Income from continuing operations.... $ 1.99 $ 0.84
Loss from and net loss on sale of
discontinued operation.............. (0.67) (0.09)
Extraordinary loss on retirement of debt (0.08) (0.11)
Cumulative effect of accounting change - (1.87)
--------- ---------
Net Income (Loss) Per Share......... $ 1.24 $(1.23)
========= =========
</TABLE>
Management's Discussion and Analysis of Financial
Statements
Overview
Fiscal 1996 was a year of global growth and financial
achievement. The Company reported strong financial results,
showing income from continuing operations of $114.2
million, or $2.42 per share, on consolidated net sales of
$2,863.9 million. Included in income from continuing
operations was a restructuring charge totaling $43.0
million ($21.8 million after tax and minority interest, or
$0.46 per share). This compares with income from continuing
operations of $92.1 million, or $1.99 per share, in 1995 on
sales of $2,152.1 million. In addition, bookings increased
33% in 1996 while backlog at October 31, 1996 was up 39%.
All three of the Company's core business segments continued
to experience strong order and sales activity. Leading the
way in 1996 was the Mining Equipment segment, which
includes P&H Mining Equipment and Joy Mining Machinery
("Joy"). The segment reported net sales of $1,405.9
million, up 49% over 1995 levels, reflecting continued
expansion, the acquisition of Dobson Park Industries plc
("Dobson") and growth in the worldwide mining market.
Operating income improved from $122.1 million in 1995 to
$183.1 million in 1996.
The Pulp and Paper Machinery segment also reported strong
results with net sales of $1,134.8 million, up 17% from
1995. The increase is due to continued strength in the
market for papermaking machines and the acquisition of the
Pulp Machinery Division of Ingersoll-Rand Company
("IMPCO").
Sales for the Material Handling segment increased 35% to
$323.2 million in 1996 from $239.9 million in 1995.
Operating income increased from $22.9 million in 1995 to
$33.1 million in 1996. These strong results are due
primarily to improved results in existing product lines and
continued global expansion.
In 1996, the strategy of focusing on the five
characteristics required of a core business - 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") - continued to steer the actions of the
Company.
Acquisitions once again were a prominent feature of this
strategy. In early 1996, the Company completed the Dobson
acquisition. Dobson, a manufacturer of roof supports and
face conveyors, is complementary with the fiscal 1995
purchase of Joy, a producer of underground mining
equipment, and has significantly strengthened the Mining
Equipment segment. On March 27, 1996, the Company's Beloit
Corporation subsidiary purchased the assets of IMPCO. This
acquisition strengthens pulping equipment product lines and
enables Beloit to grow through existing global distribution
channels.
Fiscal 1996 marked the fourth year that the Company was
guided by the EVA philosophy and the third year that EVA
has been fully implemented for purposes of management
incentive compensation. EVA, which measures operating
results after taxes in excess of the after-tax cost of
capital, has helped to maintain and sometimes reduce the
capital base at a time of increasing profits and sales.
Each of the Company's segments posted positive EVA
achievement in 1996.
The discussion in Management's Discussion and Analysis
contains forward-looking statements. When used in this
document, terms such as "anticipate", "believe",
"estimate", "expect", "indicate", "may be", "objective",
"plan", "predict", and "will be" are intended to identify
such statements. Forward-looking statements are subject to
certain risks, uncertainties and assumptions which could
cause actual results to differ materially from those
projected. (See Cautionary Factors below)
Acquisitions and Divestitures
Fiscal 1996 was a year of continued global expansion for
the Company. Key acquisitions in each segment enhanced the
Company's presence in the worldwide market.
In early fiscal 1996, the Company completed the acquisition
of Dobson which firmly establishes the Company as a world
leader in both surface and underground mining equipment.
The transaction was completed for a purchase price of $330
million, including acquisition costs, plus the assumption
of net debt of approximately $40.0 million. The acquisition
was accounted for as a purchase transaction with the
purchase price allocated to specific assets acquired and
liabilities assumed. Resultant goodwill is being amortized
over 40 years.
Dobson, headquartered in the United Kingdom, was an
industrial engineering group with interests in mining
equipment, industrial electronic control systems, toys and
plastics. Longwall International ("Longwall"), the main subsidiary of Dobson,
was engaged in the manufacture, sale and service of mining equipment for
the international coal mining industry. Its principal products included
electronically controlled roof support systems and armored face conveyors.
The acquisition of Dobson enables Joy to offer integrated, underground
longwall mining systems to the worldwide mining industry.
As a part of the Dobson acquisition, several non-mining
businesses were designated as businesses for sale. The
original value of the businesses was set at $100.0 million.
At October 31, 1996, three businesses remain unsold with a
total assigned value of $26.2 million. It is expected that
these remaining businesses will be sold within the next
year. Profit/losses of these businesses generated during
the period have been excluded from operating results.
On March 27, 1996, the Company's Beloit Corporation
subsidiary purchased the assets of IMPCO for $119.2
million, including acquisition costs. The acquisition was
accounted for as a purchase transaction with the purchase
price allocated to specific assets acquired and liabilities
assumed. Resultant goodwill is being amortized over 40
years. With this acquisition, Beloit now offers a full line
of pulping machinery and systems.
On November 29, 1994, the Company completed the acquisition
of Joy Technologies Inc. ("JTI") 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 JTI's
31,353,000 outstanding shares, at an exchange ratio of
.5652 of a share of the Company's common stock for each of
JTI's common shares.
Effective November 1, 1994, the fiscal year for JTI was
conformed to the Company's fiscal year. All periods
presented have been retroactively restated. Amounts related
to JTI 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, JTI'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 JTI 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 September, 1994, the Material Handling segment completed
the acquisition of Morris Mechanical Handling Limited in
the United Kingdom for a purchase price of $24.9 million.
The acquisition was accounted for as a purchase with
resultant goodwill being amortized over 40 years.
In addition, during fiscal years 1994 through 1996, the
Company made several smaller acquisitions in each of the
three business segments. All acquisitions were accounted
for as purchase transactions. Resultant goodwill is being
amortized over a 30- or 40-year period.
On April 12, 1995, the Company announced its decision to
divest of Joy Environmental Technologies ("JET"), a unit of
JTI 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. In December, 1995, the Company
completed the sale of JET to Babcock and Wilcox, an
operating unit of McDermott International, for $11.7
million. The loss on the sale, net of applicable taxes, was
recorded in fiscal 1995.
In fiscal 1994, the Company announced its decision to
divest 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
Consolidated Balance Sheet and Consolidated 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.
Results of Operations - Consolidated
Sales: Worldwide sales in fiscal 1996 amounted to $2,863.9
million representing an increase of 33% over 1995 sales of
$2,152.1 million. All three segments reported strong
increases, led by a 49% increase in the Mining Equipment
segment. The Pulp and Paper Machinery segment sales
increased 17% over the prior year and Material Handling
segment sales increased 35% over the prior year.
Sales for fiscal 1995 of $2,152.1 million were 39% greater
than 1994 sales of $1,551.7 million, led by a strong
increase in the Pulp and Paper Machinery segment of 36%.
Sales for the Mining Equipment segment rose 29%. The
Material Handling segment reported an increase of 119% due
mainly to the full-year impact of the Morris Mechanical
Handling Limited acquisition.
Costs and Expenses: Costs of sales increased 30% to
$2,166.8 million in 1996 from $1,671.9 million in 1995.
Strong increases in sales volume during the period were the
primary reason for the increase. Product development,
selling and administrative expenses as a percent of sales were 15.1% in 1996
and 15.4% in 1995.
This level of expenses reflects continued efforts by the Company to
control costs.
Cost of sales for 1995 increased 40% to $1,671.9 million
from $1,195.9 million in 1994. This increase is consistent
with the 39% increase in sales for the same period. Product
development, selling and administrative expenses as a
percent of sales decreased to 15.4% from 18.0% in 1994.
Operating Results from Continuing Operations: The Company
reported income from continuing operations of $114.2
million in 1996 ($136.0 million, or $2.88 per share before
the non-recurring restructuring charge), as compared to
income from continuing operations of $92.1 million in 1995
and $36.6 million in 1994. The primary factor contributing
to the increase in 1996 was a $62.6 million increase in
operating income offset by an increase in interest expense
resulting from acquisition debt and higher taxes due to
higher pre-tax results.
1996 Restructuring Actions
In the fourth quarter of fiscal 1996, the Company's Beloit
Corporation subsidiary recorded a restructuring charge of
$43.0 million ($21.8 million after tax and minority
interest, or $0.46 per share). The focus of the
restructuring is to improve financial returns and increase
customer satisfaction while significantly reducing costs
and cycle times. It is expected that the restructuring
actions will be substantially completed by the end of
fiscal 1997.
Details regarding specific restructuring actions are as
follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Employee severance $15,900
Machinery and equipment dispositions 7,600
Closure of facilities 6,800
Sale of businesses 6,000
Other 6,700
----------
Pre-tax charge $43,000
==========
</TABLE>
The cash and noncash elements of the restructuring charge
approximate $27.7 million and $15.3 million, respectively.
It is expected that restructuring actions will be funded
through cash flows from continuing operations.
Additional details are discussed in the (Operating Results
by Business Segment) section which follows and in the Notes
to Consolidated Financial Statements (Note 3 -
Restructuring Charge).
Income Taxes
The Company's effective tax rate from continuing operations
was 35.0% in 1996 (compared to a 35.0% federal statutory
rate), 35.0% in 1995, and 26.5% in 1994. The effective tax
rate in 1994 differed from the federal statutory rate of
35.0% 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 SFAS No. 109, "Accounting for Income Taxes", 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 to determine 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 on 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 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 for 1996
and 1995 was reduced by $10.8 million and $9.4 million,
respectively, for amortization of negative plan amendments.
The Company adopted SFAS No. 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.
In 1995, the Financial Accounting Standards Board issued
SFAS No. 123, "Accounting for Stock-Based Compensation".
The standard calls for recording stock-based compensation
at fair value instead of the currently used intrinsic value
method. The change is not required to be reported in the
financial statements but the pro-forma effect of the
standard must be included in the footnotes to the financial
statements.
The Company is not required to adopt the standard until
fiscal 1997. The current plan is to adopt the standard by
disclosing the pro-forma effects of the change to the fair
value method in the footnotes to the financial statements.
Bookings and Backlog
Backlog at October 31, 1996, 1995 and 1994 by business
segment was as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C>
Mining Equipment $453,480 $221,540 $190,900
Pulp and Paper
Machinery 846,137 679,625 633,770
Material Handling 132,550 130,879 107,112
---------- ----------- ----------
$1,432,167 $1,032,044 $931,782
========== =========== ==========
</TABLE>
Bookings were $3,000.8 million in 1996, $2,252.3 million in
1995 and $1,636.9 million in 1994. A discussion of changes
in bookings by segment is presented in the "Operating
Results by Business Segment" section which follows.
Liquidity and Capital Resources
The Company's capital structure at October 31, 1996 and
1995 was as follows:
<TABLE>
<CAPTION>
(in thousands) 1996 1995
---------- -----------
<S> <C> <C>
Short-term notes payable $45,261 $18,921
Long-term obligations,
including current portion 662,137 462,991
---------- -----------
707,398 481,912
Minority interest 93,652 89,611
Shareholders' equity 673,485 559,276
---------- -----------
Total capitalization $1,474,535 $1,130,799
========== ===========
Debt to capitalization ratio 48.0% 42.6%
======== ========
</TABLE>
The Company's debt to capitalization ratio increased to
48.0% at October 31, 1996 from 42.6% at October 31, 1995.
The increase was caused by an increase in long-term debt to
finance acquisitions, offset by an increase in equity from
strong operating results.
Cash flow from operating activities was $80.4 million in
1996 compared to $125.3 million in 1995 and $117.3 million
in 1994. The decrease in cash flow between periods was
caused primarily by a net increase in working capital
items, exclusive of acquisitions, offset by higher net
income.
Net working capital of $333.1 million at October 31, 1996
decreased $157.0 million or 32% from October 31, 1995
levels of $490.1 million. The change was primarily due to
cash used for acquisitions and the restructuring reserves.
Net working capital increased to $490.1 million in 1995
from $431.3 million in 1994, due mainly to higher cash,
accounts receivable and inventories, which were offset by
increases in accounts payable, employee compensation
accruals and advance payments.
Cash applied to investing activities in 1996 was $424.0
million, primarily caused by the acquisitions of Dobson and
IMPCO, offset by the sale of businesses. Cash provided by
investing activities in 1995, primarily generated from the
sale of the Company's investment in Measurex Corporation,
was $44.1 million.
Net capital expenditures for property, plant and equipment
in 1996 were $66.6 million compared with $61.8 million in
1995. Depreciation and amortization was $89.3 million and
$70.5 million in 1996 and 1995, respectively.
Cash provided by financing activities in 1996 of $140.4
million was primarily from the issuance of debt related to
the Dobson acquisition offset by a decrease in short-term
notes payable. The $102.6 million use of cash in 1995 was
primarily for the redemption of JTI's bank facility term
loan and partial redemption of JTI's 10 1/4 % Senior Notes
(see below).
The Company completed the acquisition of Dobson in early
1996 for a purchase price of approximately $330.0 million,
including acquisition costs. The transaction was funded via
a short-term bridge financing facility arranged
specifically for this acquisition, issuance of commercial
paper, other short-term facilities and available cash. The
short-term facilities were replaced with $150.0 million, 7
1/4 % debentures issued on December 19, 1995, at 99.153%.
The Company's Beloit Corporation subsidiary purchased the
assets of IMPCO on March 27, 1996 for a purchase price of
$119.2 million, including acquisition costs. The
acquisition of IMPCO was funded via short-term bridge loans
and the Revolving Credit Facility.
The acquisition of JTI, completed on November 29, 1994,
altered the Company's capital structure. At the time the
transaction was completed, JTI's outstanding long-term
borrowings totaled approximately $318.0 million. Of this
amount, an $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 JTI constituted a "Change in Control" under the
indenture. On December 29, 1994, JTI offered to purchase
for cash any and all of its outstanding Senior Notes. This
offer expired on February 10, 1995 with $0.3 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 JTI 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.
The Company completed the sale of 2,000,000 shares of
treasury stock in September, 1994 for $46.8 million in a
private transaction. The sale was executed in connection
with the Company's merger with JTI to satisfy requirements
under the pooling of interests accounting rules relating to
treasury stock purchases.
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 $200.0 million of debt
securities. To date, no securities have been issued under
this registration.
(2.) A Revolving Credit Facility Agreement expiring
November, 2000 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. Direct borrowings and commercial
paper are both considered a utilization of the facility. At
October 31, 1996, utilization of the facility amounted to
$40.0 million and $17.2 million for direct borrowings and
commercial paper, respectively.
(3.) Short-term bank credit lines of foreign subsidiaries
of approximately $167.5 million of which approximately
$25.1 million was outstanding at October 31, 1996.
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 has no significant capital commitments as of
October 31, 1996. Any future 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 fourth
quarter of fiscal 1996 are expected to be financed
internally through cash flows from continuing operations.
Operating Results by Business Segment
Mining Equipment
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
--------- -------- ---------
<S> <C> <C> <C>
Net sales $1,405,936 $941,779 $729,521
Operating income 183,141 122,116 82,541
Bookings 1,406,381 972,419 703,354
========= ======== ==========
</TABLE>
The Mining Equipment segment reported net sales of $1,405.9
million in 1996, a 49% increase from 1995 sales of $941.8
million. The sales increase is due to the acquisition of
Longwall and to increases in both original equipment and
aftermarket activity for both surface and underground
mining operations. Operating income was $183.1 million or
13.0% of sales, compared to operating income of $122.1
million or 13.0% of sales in 1995. The increase in
operating income is primarily due to increased sales.
Foreign sales of the Mining Equipment segment amounted to
58% of total sales in 1996, 44% in 1995 and 48% in 1994.
Net sales and operating income amounted to $729.5 million
and $82.5 million, respectively, in 1994.
Bookings amounted to $1,406.4 million in 1996 and $972.4
million in 1995, an increase of 45%. The increase was due
primarily to the acquisition of Longwall and strong markets
in both surface and underground mining equipment. Strong
bookings levels are expected to continue in fiscal 1997 in
both surface and underground mining products.
Pulp and Paper Machinery
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
-------- ------- -------
<S> <C> <C> <C>
Net sales $1,134,779 $970,418 $712,778
Operating income
before restructuring
charge 91,511 56,062 32,195
Restructuring charge (43,000) - -
Operating income
after restructuring
charge 48,511 56,062 32,195
Bookings 1,269,507 1,016,273 795,888
========= ========= ========
</TABLE>
The Pulp and Paper Machinery segment reported sales of
$1,134.8 million and operating income before restructuring
charge of $91.5 million for 1996. Sales volume in 1996 was
17% higher than the prior year's level of $970.4 million,
reflecting acquisitions and continued strength in the
worldwide pulp and paper industry's spending for original
equipment and aftermarket services. Foreign sales for this
segment amounted to 53% of total sales in 1996, 41% in 1995
and 30% in 1994. Operating income before the restructuring
charge in 1996 was 8.1% of sales compared to 5.8% in 1995.
Both sales and operating income are expected to improve in
1997 as the upturn continues and the effects of the
restructuring take effect.
Net sales and operating income amounted to $970.4 million
and
$56.1 million, respectively, in 1995. Net sales were 36%
higher than in 1994 reflecting the cyclical upturn in the
worldwide pulp and paper industry. Operating income as a
percent of sales increased to 5.8% in 1995 from 4.5% in
1994.
In the fourth quarter of fiscal 1996, the Pulp and Paper
Machinery segment recorded a restructuring charge of $43.0
million. The focus of the restructuring is to better serve
its customers, strengthen market position, enable the
segment
to increase EVA and improve profitability levels. The
charge
is primarily comprised of costs related to severance,
machinery and equipment dispositions, closure of certain
facilities and sale of businesses. Substantially all of the
cash portion of the restructuring charge is expected to be
funded in fiscal 1997.
Bookings activity improved in 1996 to $1,269.5 million from
$1,016.3 million in 1995. The 25% increase reflects
improved bookings in both pulp and paper machinery and
aftermarket services and products, as well as continued
acquisitions in overseas markets. Bookings in 1997 are
expected to exceed new orders secured in 1996. The Pulp and
Paper Machinery segment continues to maintain its
leadership in papermaking machinery and allied products and
services for the pulp and paper industries.
Material Handling
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
----------- ------------ -----------
<S> <C> <C> <C>
Net sales $323,216 $239,882 $109,429
Operating income 33,107 22,850 12,094
Bookings 324,887 263,649 137,689
=========== ============ ==========
</TABLE>
The Material Handling segment reported net sales of $323.2
million in 1996, an increase of 35% from 1995 levels of
$239.9 million. Operating income increased to $33.1 million
compared to $22.9 million in 1995, an increase of 45%.
Increases are primarily due to improved results from
existing businesses. Foreign sales amounted to 39% of total
sales in 1996 compared to 48% in 1995; sales were
principally in the U.S. for 1994.
Net sales of the Material Handling segment increased to
$239.9 million in 1995 from $109.4 million in 1994.
Operating income increased from $12.1 million in 1994 to
$22.9 million in 1995. The increase in both sales and
profitability is primarily due to the acquisition of Morris
Mechanical Handling Limited as well as improved results
from original equipment sales and aftermarket services from
existing businesses.
Bookings amounted to $324.9 million in 1996, a 23% increase
from $263.6 million in 1995. The increase in bookings in
1996 reflects the segment's leadership in the domestic
equipment market and continued growth of its aftermarket
business.
Discontinued Operations
<TABLE>
<CAPTION>
(in thousands) 1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ - $101,472 $263,274
Loss from
discontinued
operations - (31,235) (3,982)
============ ========= ============
</TABLE>
Net sales and loss from discontinued operations in 1995
were $101.5 million and $(31.2) million, respectively, as
compared to $263.3 million and $(4.0) million,
respectively, in 1994. 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
JET.
Cautionary Factors
This report and other documents or oral statements which
have been and will be prepared or made in the future
contain or may contain forward-looking statements by or on
behalf of the Company. Such statements are based upon
management's expectations at the time they are made. In
addition to the assumptions and other factors referred to
specifically in connection with such statements, the
following factors, among others, could cause actual results
to differ materially from those contemplated.
The Company's principal businesses involve designing,
manufacturing, marketing and servicing large, complex
machines for the mining, papermaking and capital goods
industries. Long periods of time are necessary to plan,
design and build these machines. With respect to new
machines and equipment, there are risks of customer
acceptance and start-up or performance problems. Large
amounts of capital are required to be devoted by the
Company's customers to purchase these machines and to
finance the mines, paper mills, steel mills and other
facilities that use these machines. The Company's success
in obtaining and managing a relatively small number of
sales opportunities, including warranties and guarantees
associated therewith, can affect the Company's financial
performance. In addition, many projects are located in
undeveloped or developing economies where business
conditions are less predictable. In recent years, more than
50% of the Company's total sales occurred outside the
United States.
Other factors that could cause actual results to differ
materially from those contemplated include:
- - Factors affecting purchases of new equipment, rebuilds,
parts and services such as: production capacity, stockpiles
and production and consumption rates of coal, copper, iron,
gold, fiber, paper/paperboard, recycled paper, steel and
other commodities; the cash flows of customers; the cost
and availability of financing to customers and the ability
of customers to obtain regulatory approval for investments
in mining, papermaking, steel making, automotive
manufacturing and other heavy industrial projects; the
ages, efficiencies and utilization rates of existing
equipment; the development of new technologies; the
availability of used or alternative equipment;
consolidations among customers; work stoppages at customers
or providers of transportation; and the timing, severity
and duration of customer buying cycles, particularly
in the paper and mining businesses.
- - Factors affecting the Company's ability to capture
available sales opportunities, including: customers'
perceptions of the quality and value of the Company's
products as compared to competitors' products; the
existence of patents protecting or restricting the
Company's ability to offer features requested by customers;
whether the Company has successful reference installations
to show customers, especially for papermaking and mining
equipment; customers' perceptions of the health and
stability of the Company as compared to its competitors;
the Company's ability to offer competitive seller financing
programs; the availability of manufacturing capacity at the
Company's factories; and whether the Company can offer the
complete package of products and services sought by its
customers.
- - Factors affecting the Company's ability to successfully
manage sales it obtains, such as: the accuracy of the
Company's cost and time estimates for major projects; the
Company's success in completing projects on time and within
budget; the Company's success in recruiting and retaining
managers and key employees; wage stability and cooperative
labor relations; plant capacity and utilization; and
whether acquisitions are assimilated and divestitures
completed without notable surprises or unexpected
difficulties.
- - Factors affecting the Company's general business, such
as: unforeseen patent, tax, product, environmental,
employee health or benefit or contractual liabilities;
nonrecurring restructuring charges; changes in accounting
or tax rules or regulations; and reassessments of asset
valuations such as inventories.
- - Factors affecting general business levels, such as:
political turmoil and economic growth in major markets such
as the United States, Canada, Europe, the Far East, South
Africa, Australia and Chile; environmental and trade
regulations; and the stability and ease of exchange of
currencies.
Consolidated Statement of Income
<TABLE>
<CAPTION>
Years Ended October 31,
(Dollar amounts in thousands except per share amounts) 1996
--------
<S> <C>
Revenues
Net sales $2,863,931
Other income 23,639
----------
2,887,570
Cost of Sales 2,166,775
Product Development, Selling
and Administrative Expenses 433,776
Restructuring Charge 43,000
----------
Operating Income 244,019
Interest Expense - Net (62,258)
----------
Income before Joy Merger Costs, Gain on Sale
of Measurex Investment, Provision
for Income Taxes and Minority Interest 181,761
Joy Merger Costs -
Gain on Sale of Measurex Investment -
Provision for Income Taxes (63,600)
Minority Interest (3,944)
----------
Income from Continuing Operations
(after deducting $21,830 in 1996
for the restructuring charge
and $11,384 in 1995 related to Joy
merger costs, and adding $18,657 in 1995
related to the gain on sale of Measurex investment) 114,217
Loss from and Net Loss on Sale of
Discontinued Operation,
net of applicable income taxes -
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) $114,217
===========
Earnings (Loss) Per Share
Income from continuing operations
(after deducting $0.46 per share in
1996 for the restructuring charge
and $0.24 per share in 1995 related to
Joy merger costs, and adding
$0.40 per share in 1995 related to the
gain on sale of Measurex investment) $2.42
Loss from and net loss on sale of
discontinued operation -
Extraordinary loss on retirement of debt -
Cumulative effect of accounting change -
----------
Net Income (Loss) Per Share $2.42
==========
The Accompanying Notes are an Integral Part of the Financial Statements.
</TABLE>
Consolidated Statement of Income
<TABLE>
<CAPTION>
Years Ended October 31,
(Dollar amounts in thousands except per share amounts) 1995
--------
<S> <C>
Revenues
Net sales $2,152,079
Other income 32,208
----------
2,184,287
Cost of Sales 1,671,932
Product Development, Selling
and Administrative Expenses 330,990
Restructuring Charge -
----------
Operating Income 181,365
Interest Expense - Net (40,713)
----------
Income before Joy Merger Costs, Gain on Sale
of Measurex Investment, Provision
for Income Taxes and Minority Interest 140,652
Joy Merger Costs (17,459)
Gain on Sale of Measurex Investment 29,657
Provision for Income Taxes (53,500)
Minority Interest (7,230)
----------
Income from Continuing Operations
(after deducting $21,830 in 1996
for the restructuring charge
and $11,384 in 1995 related to Joy
merger costs, and adding $18,657 in 1995
related to the gain on sale of Measurex investment) 92,120
Loss from and Net Loss on Sale of
Discontinued Operation,
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 from continuing operations
(after deducting $0.46 per share in
1996 for the restructuring charge
and $0.24 per share in 1995 related to
Joy merger costs, and adding
$0.40 per share in 1995 related to the
gain on sale of Measurex investment) $1.99
Loss from and net loss on sale of
discontinued operation (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>
Consolidated Statement of Income
<TABLE>
<CAPTION>
Years Ended October 31,
(Dollar amounts in thousands except per share amounts) 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 Charge -
----------
Operating Income 100,162
Interest Expense - Net (47,366)
----------
Income before Joy Merger Costs, Gain on Sale
of Measurex Investment, Provision
for Income Taxes and Minority Interest 52,796
Joy Merger Costs -
Gain on Sale of Measurex Investment -
Provision for Income Taxes (13,979)
Minority Interest (2,224)
---------
Income from Continuing Operations
(after deducting $21,830 in 1996
for the restructuring charge
and $11,384 in 1995 related to Joy
merger costs, and adding $18,657 in 1995
related to the gain on sale of Measurex investment) 36,593
Loss from and Net Loss on Sale of
Discontinued Operation,
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 from continuing operations
(after deducting $0.46 per share in
1996 for the restructuring charge
and $0.24 per share in 1995 related to
Joy merger costs, and adding
$0.40 per share in 1995 related to the
gain on sale of Measurex investment) $0.84
Loss from and net loss on sale of
discontinued operation (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>
<TABLE>
<CAPTION>
Consolidated Balance Sheet
Years Ended October 31,
(Dollar amounts in thousands) 1996 1995
----------- -----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents
(including cash equivalents of
$3,455 and $197,230 in 1996 and 1995,
respectively, at cost which
approximates market) $36,936 $ 239,043
Accounts receivable - net 667,786 499,953
Inventories 547,115 416,395
Businesses held for sale 26,152 -
Other current assets 132,261 57,999
---------- ------------
1,410,250 1,213,390
Property, Plant and Equipment:
Land and improvements 48,371 31,571
Buildings 301,010 233,788
Machinery and equipment 776,332 676,546
---------- ------------
1,125,713 941,905
Accumulated depreciation (491,668) (454,249)
---------- ------------
634,045 487,656
Investments and Other Assets:
Goodwill 512,693 147,943
Intangible assets 39,173 66,796
Other assets 93,868 124,982
---------- ------------
645,734 339,721
---------- ------------
$2,690,029 $2,040,767
========== ============
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term notes payable, including
current portion of long-term obligations $49,633 $22,802
Trade accounts payable 346,056 263,750
Employee compensation and benefits 160,488 100,041
Advance payments and progress billings 155,199 154,401
Accrued warranties 50,718 43,801
Other current liabilities 315,033 138,508
---------- ------------
1,077,127 723,303
Long-term Obligations 657,765 459,110
Other Liabilities:
Liability for postretirement benefits 78,814 101,605
Accrued pension and related costs 39,902 52,237
Other liabilities 14,364 20,820
Deferred income taxes 54,920 34,805
---------- ------------
188,000 209,467
Minority Interest 93,652 89,611
Shareholders' Equity:
Common stock (issued 51,406,946 shares
and 51,117,774 shares, respectively) 51,407 51,118
Capital in excess of par value 615,089 603,712
Retained earnings 148,175 53,560
Cumulative translation adjustments (37,584) (42,118)
Less: Stock Employee Compensation Trust
(1,533,993 shares and 1,920,100
shares, respectively) at market (61,360) (60,483)
Treasury Stock (2,274,613, shares and
2,504,613 shares, respectively)
at cost (42,242) (46,513)
----------- ------------
673,485 559,276
=========== ------------
$2,690,029 $2,040,767
=========== ============
The Accompanying Notes are an Integral Part of the
Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
Years Ended October 31,
(Dollar amounts in thousands) 1996 1995
--------- ---------
<S> <C> <C>
Operating Activities
Net income (loss) $114,217 $57,404
Add (deduct) - Items not affecting
cash:
Restructuring charge 43,000 -
Loss from discontinued operations,
net of income taxes - 31,235
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 - (18,657)
Depreciation and amortization 89,270 70,512
Minority interest, net of
dividends paid 3,254 3,589
Deferred income taxes - net 18,855 10,937
Other - net (22,065) 3,594
Changes in working capital, excluding
the effects of acquisition opening
balance sheets:
(Increase) in accounts
receivable - net (81,007) (73,343)
(Increase) decrease in inventories (30,291) (28,003)
(Increase) in net current assets
of discontinued operations - -
(Increase) in other current assets (10,978) (7,776)
Increase in trade accounts payable 18,223 13,922
(Decrease) increase in employee
compensation and benefits (6,729) 16,217
(Decrease) increase in advance
payments and progress billings (62,071) 34,156
Increase (decrease) in other
current liabilities 6,673 8,033
--------- --------
Net cash provided by operating
activities 80,351 125,301
Investment and Other Transactions
Purchase of Dobson Park Industries plc,
net of cash acquired of $4,631 (325,369) -
Purchase of Pulp Machinery Division
of Ingersoll-Rand, net of cash
acquired of $6,858 (112,372) -
Other acquisitions, net of cash
acquired (11,350) (27,905)
Proceeds from sale of non-core
Dobson Park businesses 73,848 -
Proceeds from sale of Joy
Environmental Technologies 11,651 -
Proceeds from sale of investment
in Measurex Corporation - 96,004
Proceeds from sale of Syscon
Corporation - 45,000
Property, plant and equipment - net (66,562) (61,760)
Other - net 6,174 (7,249)
--------- --------
Net cash (applied to) provided by
investment and other transactions (423,980) 44,090
Financing Activities
Sale of treasury stock - -
Purchase of treasury stock - (3,009)
Dividends paid (18,905) (18,524)
Exercise of stock options 6,762 17,309
Issuance of long-term obligations 198,892 9,588
Redemption of long-term obligations (2,334) (108,769)
(Decrease) increase in short-term
notes payable (43,973) 828
--------- ---------
Net cash provided by (applied to)
financing activities 140,442 (102,577)
--------- ---------
Effect of Exchange Rate Changes on
Cash and Cash Equivalents 1,080 (520)
--------- ---------
(Decrease) Increase in Cash and
Cash Equivalents (202,107) 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 239,043 196,455
--------- ---------
Cash and Cash Equivalents at
End of Year $36,936 $239,043
========= =========
The Accompanying Notes are an Integral Part of the Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
Years Ended October 31,
(Dollar amounts in thousands) 1994
---------
<S> <C>
Operating Activities
Net income (loss) $(53,912)
Add (deduct) - Items not affecting
cash:
Restructuring charge -
Loss from discontinued operations,
net of income taxes 3,982
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 acquisition opening
balance sheets:
(Increase) in accounts
receivable - net (16,598)
(Increase) decrease in inventories 22,470
(Increase) in net current assets
of discontinued operations (20,047)
(Increase) in other current assets (3,903)
Increase in trade accounts payable 53,971
(Decrease) increase in employee
compensation and benefits (6,420)
(Decrease) 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
Purchase of Dobson Park Industries plc,
net of cash acquired of $4,631 -
Purchase of Pulp Machinery Division
of Ingersoll-Rand, net of cash
acquired of $6,858 -
Other acquisitions, net of cash
acquired (34,479)
Proceeds from sale of non-core
Dobson Park businesses -
Proceeds from sale of Joy
Environmental Technologies -
Proceeds from sale of investment
in Measurex Corporation -
Proceeds from sale of Syscon
Corporation -
Property, plant and equipment - net (41,737)
Other - net 2,056
---------
Net cash (applied to) provided by
investment and other transactions (74,160)
Financing Activities
Sale of treasury stock 46,760
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)
(Decrease) increase in short-term
notes payable (52,917)
---------
Net cash provided by (applied to)
financing activities (11,714)
---------
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (86)
---------
(Decrease) Increase 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>
Consolidated Statement of Shareholders' Equity
Capital in
Common Excess of Retained
(Dollar amounts in thousands) Stock Par Value Earnings
-------- ---------- --------
<S> <C> <C> <C>
Balance at October 31, 1993 $50,575 $560,178 $85,227
Net loss (53,912)
Exercise of stock options 3 (963)
Issuance of restricted stock (120)
Dividends paid ($0.40 per share) (11,379)
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 202,612 shares
by employee benefit plans
Other activity - net (72) 93
--------- ---------- --------
Balance at October 31, 1994 50,506 576,886 19,936
Adjustment related to
Joy Technologies
from February 26, 1994-
November 1, 1994 13 182 (4,575)
--------- ---------- --------
Adjusted Balance at
November 1, 1994 50,519 577,068 15,361
Net income 57,404
Exercise of 861,930 stock
options 599 9,131
Dividends paid ($0.40 per share) (19,205)
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
Purchase of 425,345 shares
by employee benefit plans
-------- --------- --------
Balance at October 31, 1995 51,118 603,712 53,560
Net income 114,217
Exercise of 320,172 stock
options 282 5,730
Issuance of restricted stock 7 (11,555)
Dividends paid ($0.40 per share) (19,602)
Dividends on shares held by SECT 697
Adjust SECT shares to
market value 13,541
Translation adjustments
Purchase of 230,000 shares
by employee benefit plans 2,964
-------- ---------- ---------
Balance at October 31, 1996 $51,407 $615,089 $148,175
======== ========== =========
The Accompanying Notes are an Integral Part of the
Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
Cumulative
Translation
(Dollar amounts in thousands) Adjustments SECT
----------- -------
<S> <C> <C>
Balance at October 31, 1993 $(40,566) $(55,900)
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 1,372
4,875 shares acquired as
Treasury Stock
Sale of 2,000,000 shares of
Treasury Stock
Purchase of 202,612 shares
by employee benefit plans 4,431
Other activity - net
---------- --------
Balance at October 31, 1994 (39,194) (53,760)
Adjustment related to
Joy Technologies
from February 26, 1994-
November 1, 1994 1,742
--------- --------
Adjusted Balance at
November 1, 1994 (37,452) (53,760)
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 (4,666)
110,000 shares acquired
as Treasury Stock
457,991 shares transferred from
Treasury Stock to SECT (8,505)
Purchase of 425,345 shares
by employee benefit plans 11,035
--------- ---------
Balance at October 31, 1995 (42,118) (60,483)
Net income
Exercise of 320,172 stock
options 750
Issuance of restricted stock 11,914
Dividends paid ($0.40 per share)
Dividends on shares held by SECT
Adjust SECT shares to
market value (13,541)
Translation adjustments 4,534
Purchase of 230,000 shares
by employee benefit plans
--------- ---------
Balance at October 31, 1996 $(37,584) $(61,360)
========= =========
The Accompanying Notes are an Integral Part of the
Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement of Shareholders' Equity
Treasury
(Dollar amounts in thousands) Stock Total
--------- --------
<S> <C> <C>
Balance at October 31, 1993 $(88,345) $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) (124)
Sale of 2,000,000 shares of
Treasury Stock 36,460 46,760
Purchase of 202,612 shares
by employee benefit plans 4,431
Other activity - net 21
--------- --------
Balance at October 31, 1994 (52,009) 502,365
Adjustment related to
Joy Technologies
from February 26, 1994-
November 1, 1994 (2,638)
--------- --------
Adjusted Balance at
November 1, 1994 (52,009) 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) (3,009)
457,991 shares transferred from
Treasury Stock to SECT 8,505 -
Purchase of 425,345 shares
by employee benefit plans 11,035
-------- --------
Balance at October 31, 1995 (46,513) 559,276
Net income 114,217
Exercise of 320,172 stock
options 6,762
Issuance of restricted stock 366
Dividends paid ($0.40 per share) (19,602)
Dividends on shares held by SECT 697
Adjust SECT shares to
market value -
Translation adjustments 4,534
Purchase of 230,000 shares
by employee benefit plans 4,271 7,235
--------- --------
Balance at October 31, 1996 $(42,242) $673,485
========= ========
The Accompanying Notes are an Integral Part of the
Financial Statements.
</TABLE>
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.
("JTI") for all periods presented, accounted for as a
pooling of interests. The Consolidated Statements of
Income and of Cash Flow for each of the three years ended
October 31, 1996 include the results of JTI for the years
ended October 31, 1996, October 31, 1995 and February 25,
1994, respectively. The Consolidated Statement of Income
has 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.
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.
Use of Estimates - The preparation of financial statements
in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions, in certain circumstances, that affect the
reported amounts of assets and liabilities at the date of
the financial statements, and the reported amounts of
revenues and expenses during the reporting period.
Ultimate realization of assets and settlement of
liabilities in the future could differ from those
estimates.
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 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 (losses) gains included in operating income were
$(1,150), $1,901 and $(1,619) in 1996, 1995 and 1994,
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 30 to 40 years. The Company assesses the carrying
value of goodwill at each balance sheet date. Consistent
with Statement of Financial Accounting Standard ("SFAS")
No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", 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 $93,383 and $98,200 at October 31, 1996
and 1995, 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 $34,471,
$30,348, and $28,879 in 1996, 1995 and 1994, 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 47,196,388 in 1996, 46,218,144 in 1995,
and 43,716,464 in 1994. 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
In early fiscal 1996, the Company completed the
acquisition of Dobson Park Industries plc ("Dobson") for a
purchase price of approximately $330,000, including
acquisition costs, plus the assumption of net debt of
approximately $40,000. The acquisition was accounted for
as a purchase transaction with the purchase price
allocated to the fair value of specific assets acquired
and liabilities assumed. Resultant goodwill is being
amortized over 40 years.
Dobson, headquartered in the United Kingdom, was an
industrial engineering group with interests in
underground mining equipment, industrial electronic
control systems, toys and plastics. Longwall
International ("Longwall"), one of the main subsidiaries
of Dobson, was engaged in the manufacture, sale and
service of underground mining equipment for the
international coal mining industry. Longwall's products
included electronically controlled roof support systems
and armored face conveyors.
The Company is fully integrating Longwall's operations
into Joy Mining Machinery ("Joy"), thus enabling Joy to
offer integrated underground longwall mining systems to
the worldwide mining industry. As a result of this
integration, the Company has established purchase
accounting reserves to provide for the estimated costs of
this effort. The reserves related primarily to the closure
of selected manufacturing and service
facilities, severance and relocation costs approximate
$71,000. As of October 31, 1996, approximately $13,600 of
the reserves had been used.
The following unaudited pro-forma results of operations
give effect to the acquisition of Dobson as if it had
occurred on November 1, 1994:
<TABLE>
<CAPTION>
Fiscal Year
Ended
(in thousands, except per share amounts) October 31, 1995
-----------------
<S> <C>
Net sales $2,510,261
Income from continuing
operations 94,163
Net income 59,447
===========
Earnings per share:
Income from continuing operations $2.04
Net income 1.29
===========
</TABLE>
The unaudited pro-forma information is not necessarily
indicative of either results of operations that would have
occurred had the purchase been made on November 1, 1994,
or of future results of operations of the combined
companies.
The industrial electronic and toys/plastics businesses are
held for sale and are separately classified as such in the
Consolidated Balance Sheet. These businesses were
originally valued at $100,000. Several of the
businesseshave been sold during 1996, aggregating net
proceeds of $73,848. The remaining balance represents the
net realizable value including the expected cash flow from
such businesses. These businesses are expected to be sold
within the next year.
On March 27, 1996, the Company and its Beloit Corporation
subsidiary purchased the assets of the Pulp Machinery
Division of Ingersoll-Rand Company ("IMPCO") for $119,230,
including acquisition costs. The acquisition was accounted
for as a purchase transaction with the purchase price
allocated to the fair value of specific assets acquired
and liabilities assumed. Resultant goodwill is being
amortized over 40 years.
On November 29, 1994, the Company completed the acquisition
of JTI upon the approval of the shareholders of each
company. Under the terms of the acquisition, accounted for
as a pooling of interests, the Companyexchanged 17,720,750
common shares for all of JTI's 31,353,000 outstanding
shares, at an exchange ratio of .5652 of a share of the
Company's common stock for each of JTI's common shares.
The fiscal year of JTI 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).
JTI's operating results for the period from February 26,
1994 (the end of JTI's fiscal year before the acquisition)
to November 1, 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 JTI 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 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 fair value of
specific net assets acquired and liabilities assumed.
Resultant goodwill is being amortized over 40 years.
In addition, during fiscal years 1994 through 1996, the
Company made several smaller acquisitions in each of the
three business segments. All acquisitions were accounted
for as purchase transactions. Resultant goodwill is being
amortized over a 30- or 40-year period.
Note 3
Restructuring Charge
In the fourth quarter of fiscal 1996, the Company's Beloit
Corporation subsidiary recorded a restructuring charge.
The focus of the restructuring is to better serve its
customers and strengthen its market position in the
worldwide pulp and paper industry. The restructuring is
consistent with the Company's policy to generate positive
Economic Value Added ("EVA"). The restructuring initiative
involves organizing engineering and manufacturing
operations into Centers of Excellence and expanding the
aftermarket capabilities of the subsidiary. The total
estimated cost of the restructuring activities reduced
pre-tax income by $43,000 ($21,830 after tax and minority
interest, or $0.46 per share). Included in the charge are
costs related to severance for approximately 500 employees
worldwide, the disposition of machinery and equipment,
closure of certain facilities and the sale of businesses.
Details of the restructuring charge are listed below.
<TABLE>
<CAPTION>
<S> <C>
Employee severance $15,900
Machinery and equipment dispositions 7,600
Closure of facilities 6,800
Sale of businesses 6,000
Other 6,700
-------
Pre-tax charge $43,000
=======
</TABLE>
The cash and noncash elements of the restructuring charge
approximated $27,700 and $15,300, respectively. Cash
outflows to date are approximately $1,900. It is expected
that the restructuring actions will be substantially
completed by the end of fiscal 1997.
Note 4
Accounts Receivable
<TABLE>
<CAPTION>
Accounts receivable at October 31 consisted of the following:
1996 1995
-------- --------
<S> <C> <C>
Trade receivables $507,312 $412,276
Unbilled receivables 169,086 95,281
Allowance for doubtful accounts
and contract losses (8,612) (7,604)
-------- --------
$667,786 $499,953
======== ========
</TABLE>
The amount of accounts receivable due beyond one year is
not significant.
Note 5
Inventories
Inventories at October 31 consisted of the following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Finished goods $198,160 $211,555
Work in process and
purchased parts 278,671 170,027
Raw materials 134,448 106,999
-------- --------
611,279 488,581
Less excess of current
cost over stated
LIFO value (64,164) (72,186)
-------- --------
$547,115 $416,395
======== ========
</TABLE>
Inventories valued using the LIFO method represented
approximately 56% and 80% of consolidated inventories at
October 31, 1996 and 1995, respectively.
Note 6
Income Taxes
The components of income for the Company's domestic and
foreign operations for the years ended October 31 were as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Domestic $82,533 $102,701 $27,095
Foreign 99,228 37,951 25,701
-------- -------- -------
Pre-tax income from
continuing operations
before Joy merger
costs and gain on sale of
Measurex investment $181,761 $140,652 $52,796
======== ======== =======
</TABLE>
The consolidated provision (credit) for income taxes
included in the Consolidated Statement of Income for the
years ended October 31 consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
Current provision:
Federal $ 4,957 $17,934 $ 11,167
State 2,288 1,311 1,486
Foreign 36,474 14,690 7,080
-------- ------- --------
Total current 43,719 33,935 19,733
-------- ------- --------
Deferred provision (credit):
Federal 13,409 7,721 (59,840)
State and foreign 6,472 1,509 (4,180)
-------- ------- --------
Total deferred 19,881 9,230 (64,020)
-------- ------- --------
Total consolidated income
tax provision (credit) $ 63,600 $43,165 $(44,287)
======== ======= ========
</TABLE>
Income tax provision (credit) is included in the
Consolidated Statement of Income as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Continuing operations $63,600 $53,500 $ 13,979
Loss from discontinued
operations - (8,015) (702)
Extraordinary item -
retirement of debt - (2,320) (3,495)
Cumulative effect of
accounting change - - (54,069)
------- ------- --------
$63,600 $43,165 $(44,287)
======= ======= ========
</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>
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Federal statutory tax rate 35.0% 35.0% 35.0%
Goodwill amortization not
deductible for tax purposes 1.9 0.7 2.3
Differences in foreign and
U.S. tax rates 3.4 0.3 (0.8)
Differences in Foreign Sales
Corporation and U.S. tax rate (0.6) (1.5) (3.9)
State income taxes, net of
federal tax impact 1.8 0.5 (1.2)
General business and foreign
tax credits utilized (9.1) (1.5) (3.8)
Other items-net 2.6 1.5 (1.1)
----- ----- ------
Effective tax rate 35.0% 35.0% 26.5%
===== ===== ======
</TABLE>
Temporary differences and carryforwards which gave rise to
the net deferred tax asset (liability) at October 31 are
as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Inventories $(22,601) $(22,437)
Reserves not currently
deductible 59,892 13,894
Depreciation and amortization
in excess of book expense (54,666) (60,814)
Employee benefit related items 22,823 35,378
Tax credit carryforwards 14,579 17,279
Tax loss carryforwards 71,572 41,875
Other - net (36,956) (24,956)
Valuation allowance (44,968) (18,256)
-------- ---------
Net deferred tax asset
(liability) $ 9,675 $(18,037)
======== =========
</TABLE>
This net asset (liability) is included in the Consolidated
Balance Sheet in the following captions:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Other current assets $ 64,595 $ 16,768
Deferred income taxes (54,920) (34,805)
-------- -------
$ 9,675 $(18,037)
======== =========
</TABLE>
At October 31, 1996, the Company had general business tax
credits of $7,665 expiring in 2009-2011, and alternative
minimum tax credit carryforwards of $6,914 which do not
expire. In addition, tax loss carryforwards consisted of
foreign carryforwards of $30,339 with various expiration
dates, capital loss carryforwards of $22,933 with various
expiration dates, and domestic carryforwards of $18,300
with various states and expiration dates. The carryforwards
will be available for the reduction of future income tax
liabilities; a valuation allowance has been recorded
against certain of these carryforwards for which
utilization is uncertain.
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 $196,100 at October 31,
1996. 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 $30,205, $31,686 and $16,979 for
1996, 1995 and 1994, respectively.
Note 7
Long-Term Obligations, Bank Credit Facilities
and Interest Expense
Long-term obligations at October 31 consisted of the
following:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
10 1/4% Senior Notes, due 2003 $188,380 $188,380
8.9% Debentures, due 2022 75,000 75,000
8.7% Debentures, due 2022 75,000 75,000
7 1/4% Debentures, due 2025
(net of discount of $1,261) 148,739 -
Senior Notes, Series A
through D, at interest rates
of between 8.9% and 9.1%,
due 1997 to 2006 73,182 75,000
Revolving Credit Facility 40,000
Industrial Revenue Bonds, at
interest rates of between 5.9%
and 8.8%, due 1997 to 2017 34,629 28,428
Other 27,207 21,183
-------- --------
662,137 462,991
Less:
Amounts payable within
one year 4,372 3,881
-------- --------
$657,765 $459,110
======== ========
</TABLE>
The 10 1/4% Senior Notes have a maturity date of September
1, 2003. 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 addition, upon a change of control, JTI 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, JTI 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.
In 1995, as a result of the 10 1/4% Senior Note
redemptions and repayment of remaining borrowings under
JTI's Bank Facility, 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 JTI's outstanding Tranche A term loans existing under
the Bank Facility and all of JTI's 12.3% Junior
Subordinated Notes.
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 7 1/4% Debentures were issued on December 19, 1995 at
99.153%. The debentures mature on December 15, 2025, are
not redeemable prior to maturity and are not subject to
any sinking fund requirements.
The Senior Notes, Series A through D, are privately placed
and unsecured. 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.
The terms of certain of the debt instruments 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.
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
expires in November, 2000. A facility fee is payable on
the Revolving Credit Facility.
At October 31, 1996, direct outstanding borrowings under
the Facility were $40,000 and commercial paper borrowings,
considered a utilization of the Facility, were $17,167.
In 1996, the Company filed a shelf registration with the
Securities and Exchange Commission for the sale of up to
$200,000 of debt securities. To date, no securities
covered by the registration have been offered for sale.
Installments payable to holders of the outstanding
long-term obligations of the Company are due as follows:
1997 $ 4,372
1998 3,801
1999 38,709
2000 11,881
2001 68,136
At October 31, 1996, short-term bank credit lines of
foreign subsidiaries were approximately $167,503. The
outstanding borrowings were $25,094 with a weighted
average interest rate of 12.0%. There were no compensating
balance requirements under these lines of credit.
Net interest expense consisted of the following:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest income $ 6,505 $ 11,035 $ 7,138
Interest expense (68,763) (51,748) (54,504)
-------- -------- --------
Interest expense - net $(62,258) $(40,713) $(47,366)
======== ======== ========
</TABLE>
Interest paid was $65,161, $52,615 and $45,547 in 1996,
1995 and 1994, 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 held in a trust,
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, 1996 and
1995.
The Company recorded an additional minimum pension
liability and intangible asset of $5,600 and $9,698 in
1996 and 1995, respectively, to recognize the unfunded
accumulated benefit obligation of certain domestic plans.
Pension expense for all plans of the Company was $19,132
in 1996, $17,344 in 1995 and $18,521 in 1994. Net periodic
pension costs for U.S. plans and plans of subsidiaries
outside the United States for which SFAS 87, "Employers'
Accounting for Pensions," has been adopted included the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Service cost-benefits
earned during the year $22,892 $16,854 $16,075
Interest cost on projected
benefit obligation 56,792 33,655 29,523
Actual gain on plan assets (98,003) (55,856) (14,035)
Net amortization and
deferral 33,832 20,134 (14,255)
------- ------- -------
Net periodic pension cost $15,513 $14,787 $17,308
======= ======= =======
</TABLE>
The discount rate used for U.S. plans was 8.0% in 1996 and
1995 and 7.9%-8.0% in 1994, 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 1996
and 1995 and ranged from 4.5-5.0% in 1994, 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 was 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.
The following table sets forth the plans' funded status at
October 31, 1996 and 1995:
<TABLE>
<CAPTION>
1996
Plans With Plans With
Assets Accumulated
Exceeding Benefits
Accumulated Exceeding
Benefits Assets
----------- -----------
<S> <C> <C>
Actuarial present
value of:
Vested benefits $601,511 $ 34,139
Accumulated benefits 633,397 39,149
Projected benefits 704,585 46,243
Net assets available
for benefits 771,887 9,807
Plans' assets greater
(less) than projected
benefits 67,302 (36,436)
Unrecognized (asset)
obligation existing
at adoption (5,508) 846
Unrecognized prior
service cost 27,311 2,023
Unrecognized net (gain)
loss (38,358) 9,748
-------- --------
Net pension asset
(liability) $ 50,747 $(23,819)
======== ========
</TABLE>
<TABLE>
<CAPTION>
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>
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 EVA performance. Profit
sharing expense was $10,783 in 1996, $6,321 in 1995 and
$3,300 in 1994.
In the first quarter of fiscal 1995, the Company
implemented SFAS No. 112, "Employers' Accounting for
Postemployment 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", 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 weighted average
discount rate used in determining the postretirement
benefit obligation at October 31, 1996 and October 31, 1995
was 8%.
The following table sets forth the plans' funded status
and amounts recognized in the Company's Consolidated
Balance Sheet as of October 31:
<TABLE>
<CAPTION>
1996 1995
------- --------
<S> <C> <C>
Accumulated postretirement
benefit obligation:
Retirees $58,819 $ 66,600
Fully eligible active plan
participants 2,788 4,200
Other active plan participants 7,832 8,000
------- --------
Total 69,439 78,800
Plan assets at fair value - -
------- --------
Accumulated postretirement
benefit obligation in excess
of plan assets 69,439 78,800
Unrecognized transition
obligation - -
Unrecognized prior service
credit 20,653 31,433
Unrecognized gain 7,214 7,873
------- --------
Accrued postretirement benefit
liability 97,306 118,106
Less: Current portion 18,492 16,501
------- --------
$78,814 $101,605
======= ========
</TABLE>
For measurement purposes, an annual rate of increase in
the per capita cost of covered health care benefits in the
range of 6.4% to 10% for non-Medicare eligible participants
was assumed for 1996 (a range of 5.5% to 8.75% 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. 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, 1996 by $3,300 and the aggregate service cost and
interest cost components of the net periodic postretirement
benefit cost for the year by $300. 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.
Net periodic postretirement benefit cost includes the
following components:
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- ------
<S> <C> <C> <C>
Service cost $ 327 $ 502 $ 974
Interest cost on accumulated
postretirement benefit
obligation 5,632 6,475 8,808
Amortization of prior
service (credit) (10,780) (9,417) (2,995)
Net amortization and
deferral (2,624) (225) (237)
--------- -------- --------
Net periodic postretirement
benefit cost $ (7,445) $(2,665) $6,550
========= ======== ========
</TABLE>
Note 10
Shareholders' Equity and Stock Options
The Company's authorized Common Stock amounts to
100,000,000 shares. 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.
At the April 9, 1996 annual meeting, shareholders approved
a new Stock Incentive Plan. This plan provides the
granting, up to April 9, 2006, of qualified and
non-qualified options, stock appreciation rights,
restricted stock and performance units to key employees
for not more than 2,000,000 shares of Common Stock.
Non-qualified options covering 490,900 shares were granted
under this plan in fiscal year 1996.
The Company's 1988 Incentive Stock Plan provides for the
granting 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. In
fiscal 1996, non-qualified options and restricted stock
covering 4,000 and 347,857 shares, respectively, were
granted under this plan. The restricted stock was issued
in connection with the cancellation of the employment
contracts of certain senior executive officers. Such shares
are subject to restrictions and forfeiture under certain
circumstances. Following shareholder approval of the Stock
Incentive Plan, the 1988 Incentive Stock Plan terminated
for the granting of future awards.
Since the inception of the 1978 and 1988 Incentive Stock
Plans and the 1996 Stock Incentive Plan, options for the
purchase of 4,130,405 shares have been granted at prices
ranging from $6.75 to $37.88 per share. At October 31,
1996, 1,498,334 of the options were outstanding, 1,600,003
had been exercised and 1,032,068 had expired. Generally,
the options 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, 7,250
restricted shares were issued in 1996 under a restricted
stock award program established in 1990 under the 1988
Incentive Stock Plan. The shares became unrestricted in
1996.
Certain information regarding stock options is as follows:
<TABLE>
<CAPTION>
Number Option Price
of Shares Per Share
--------- ----------------
<S> <C> <C>
Outstanding at
October 31, 1993 2,031,301 $14.38 to $27.00
Granted 188,349 15.70 to 26.50
Exercised (166,041) 14.38 to 24.63
Canceled or expired (234,290) 14.38 to 24.63
--------- ----------------
Outstanding at
October 31, 1994 1,819,319 14.38 to 27.00
Activity related to
Joy Technologies Inc.
from February 26, 1994
to November 1, 1994
Granted 75,380 17.91 to 24.55
Exercised (12,434) 19.46
Canceled or expired (23,319) 19.46
--------- ----------------
39,627 17.91 to 24.55
Activity from
November 1, 1994 to
October 31, 1995
Granted 637,750 25.00 to 31.25
Exercised (861,930) 14.38 to 27.00
Canceled or expired (190,480) 14.38 to 25.00
--------- ----------------
Outstanding at
October 31, 1995 1,444,286 14.38 to 31.25
Granted 494,900 31.25 to 37.88
Exercised (320,172) 14.38 to 31.25
Canceled or expired (120,680) 17.25 to 31.25
--------- ----------------
Outstanding at
October 31, 1996 1,498,334 14.38 to 37.88
--------- ----------------
Exercisable at
October 31, 1996 456,650 $14.38 to $31.25
========= ================
</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
JTI. 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 $27,887, $20,822 and
$20,327 in 1996, 1995 and 1994, respectively.
At October 31, 1996, 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:
1997 $20,231
1998 14,709
1999 4,955
2000 2,156
2001 1,133
2002 and thereafter 2,599
Note 12
Commitments, Contingencies and Off-Balance-Sheet Risks
At October 31, 1996, the Company was contingently liable
to banks, financial institutions and others for
approximately $271,000 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. The
Company may also guarantee performance of its equipment at
levels specified in sales contracts without the
requirement of a letter of credit.
The Company is party to litigation matters and claims which
are normal in the course of its operations. Also, as a
normal part of their operations, the Company's subsidiaries
undertake certain contractual obligations, warranties and
guarantees in connection with the sale of products or
services. In the case of Beloit Corporation, certain claims
are currently pending in connection with its contractual
undertakings. While the outcome of such litigation and
claims cannot be predicted with certainty and favorable or
unfavorable judgements or resolutions may affect income on
a quarter-to-quarter basis, management believes that such
matters will not have a materially adverse effect on the
Company's consolidated financial position or annual 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 annual 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, 1996, the outstanding net U.S. dollar face
amounts of contracts to cover sales and purchase activity
totaled approximately $201,000. In addition, at October 31,
1996, the Company had outstanding foreign exchange
contracts totaling $15,072 to cover interest and borrowing
obligations. The difference between contract and estimated
fair values at October 31, 1996 was not significant. It is
the Company's policy not to participate in high-yield
financings, highly leveraged transactions or other
"derivative" instruments.
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 agreed to make available a
back-up bonding guarantee facility for certain bid,
performance and other contract bonds issued by H-K Systems,
Inc. Outstanding contract bonds under the guarantee
arrangement totaled approximately $47,800 at October 31,
1996. No new bonds can be issued during 1997.
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(TM)
paper machine drying technology. In connection with this
suit, the jury awarded Beloit $7,875 in damages. The
verdict has been 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, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996
Carrying Value Fair Value
--------------- -----------
<S> <C> <C>
Cash and Cash Equivalents $ 36,936 $ 36,936
=========== =========
Long-Term Obligations (662,137) (708,204)
=========== =========
1995
Carrying Value Fair Value
---------------- ------------
Cash and Cash Equivalents $ 239,043 $ 239,043
=========== =========
Long-Term Obligations (462,991) (522,426)
=========== =========
</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>
1996 1995 1994
------ ------ -------
<S> <C> <C> <C>
Sales $1,267 $1,553 $ 487
Purchases 223 265 191
Receivables 6,306 6,413 2,335
License Income 7,127 7,582 3,931
====== ====== ======
</TABLE>
The Company believes that its transactions with Mitsubishi
were competitive with alternate sources of supply for each
party involved.
As of October 31, 1994, the Company's total investment in
Measurex Corporation, including related expenses, equity
income and net of dividends received, amounted to $66,347,
representing a 20% interest. In fiscal 1995, Measurex
repurchased its stock which had been purchased by the
Company resulting in a pre-tax gain of $29,657.
Measurex continues to have cooperative agreements with
Beloit.
Note 15
Segment Information
The Company designs, manufactures, markets and services
products structured into three industry segments.
The "Mining Equipment Segment" consists of P&H 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, roof supports, face conveyors, 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 mountainside benches. It also
rebuilds and services installed equipment and sells spare
parts for the equipment it manufactures.
The "Pulp and Paper Machinery Segment" (Beloit Corporation)
designs, manufactures, services and markets papermaking
machinery and allied equipment for the pulp and paper
industries.
The "Material Handling Segment" (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, and administration facilities.
<TABLE>
<CAPTION>
Segments of Business by Industry Total Operating
Sales Income
------------ -----------
<S> <C> <C>
1996
Mining Equipment $1,405,936 $183,141
Pulp and Paper Machinery 1,134,779 48,511(1)
Material Handling 323,216 33,107
---------- -----------
Total continuing operations 2,863,931 264,759
Corporate - (20,740)
---------- -----------
Consolidated total $2,863,931 $244,019
========== ===========
1995
Mining Equipment $ 941,779 $122,116
Pulp and Paper Machinery 970,418 56,062
Material Handling 239,882 22,850
----------- ----------
Total continuing operations 2,152,079 201,028
Corporate - (19,663)
Discontinued Operations - -
------------- -----------
Consolidated total $2,152,079 $181,365
============= ===========
1994
Mining Equipment $ 729,521 $ 82,541
Pulp and Paper Machinery 712,778 32,195
Material Handling 109,429 12,094
----------- ----------
Total continuing operations 1,551,728 126,830
Corporate - (26,668)
Discontinued Operations - -
------------ -----------
Consolidated total $1,551,728 $100,162
============ ===========
(1) After restructuring charge of $43,000.
</TABLE>
<TABLE>
<CAPTION>
Segments of Business by Industry Depreciation and Capital
Amortization Expenditures
----------------- -------------
<S> <C> <C>
1996
Mining Equipment $44,051 $23,938
Pulp and Paper Machinery 38,788 39,769
Material Handling 5,893 6,833
---------- --------
Total continuing operations 88,732 70,540
Corporate 538 12,848
---------- ----------
Consolidated total $89,270 $83,388
========== ==========
1995
Mining Equipment $29,280 $25,963
Pulp and Paper Machinery 33,296 39,227
Material Handling 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
Mining Equipment $36,085 $17,465
Pulp and Paper Machinery 31,945 27,599
Material Handling 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
======== ==========
(1) After restructuring charge of $43,000.
</TABLE>
<TABLE>
<CAPTION>
Segments of Business by Industry Identifiable
Assets
------------
<S> <C>
1996
Mining Equipment $1,362,435
Pulp and Paper Machinery 1,023,819
Material Handling 204,412
----------
Total continuing operations 2,590,666
Corporate 99,363
-----------
Consolidated total $2,690,029
============
1995
Mining Equipment $ 797,921
Pulp and Paper Machinery 817,411
Material Handling 154,905
-----------
Total continuing operations 1,770,237
Corporate 222,881
Discontinued Operations 47,649
-------------
Consolidated total $2,040,767
=============
1994
Mining Equipment $ 757,651
Pulp and Paper Machinery 752,999
Material Handling 135,680
--------------
Total continuing operations 1,646,330
Corporate 164,412
Discontinued Operations 171,211
--------------
Consolidated total $1,981,953
==============
(1) After restructuring charge of $43,000.
</TABLE>
<TABLE>
<CAPTION>
Geographical Segment Information Total Interarea
Sales Sales
------------ -------------
<S> <C> <C>
United States $1,860,203 $(213,061)
Europe 837,815 (158,639)
Other Foreign 562,558 (24,945)
Interarea Eliminations (396,645) 396,645
---------- -----------
$2,863,931 $ -
========== ===========
1995
United States $1,690,096 $(199,940)
Europe 337,293 (43,604)
Other Foreign 381,493 (13,259)
Interarea Eliminations (256,803) 256,803
----------- ----------
$2,152,079 $ -
=========== ==========
1994
United States $1,328,243 $(149,096)
Europe 165,624 (42,111)
Other Foreign 260,869 (11,801)
Interarea Eliminations (203,008) 203,008
----------- ----------
$1,551,728 $ -
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
Sales to
Geographical Segment Information Unaffiliated Operating
Customers Income
--------------- -------------
<S> <C> <C>
1996
United States $1,647,142 $156,556
Europe 679,176 86,273
Other Foreign 537,613 49,263
Interarea Eliminations - (27,333)
----------- --------
$2,863,931 $264,759
=========== ========
1995
United States $1,490,156 $165,916
Europe 293,689 19,520
Other Foreign 368,234 35,290
Interarea Eliminations - (19,698)
----------- --------
$2,152,079 $201,028
=========== ========
1994
United States $1,179,147 $100,265
Europe 123,513 3,374
Other Foreign 249,068 23,071
Interarea Eliminations - 120
---------- --------
$1,551,728 $126,830
========== ========
</TABLE>
<TABLE>
<CAPTION>
Geographical Segment Information Identifiable
Assets
------------
<S> <C>
1996
United States $1,456,221
Europe 700,496
Other Foreign 478,847
Interarea Eliminations (44,898)
-----------
$2,590,666
===========
1995
United States $1,202,038
Europe 313,822
Other Foreign 261,171
Interarea Eliminations (6,794)
-----------
$1,770,237
===========
1994
United States $1,232,163
Europe 265,441
Other Foreign 195,205
Interarea Eliminations (46,479)
----------
$1,646,330
==========
</TABLE>
Exports of U.S.-produced products were approximately
$321,000, $263,000 and $190,000 in 1996, 1995 and 1994,
respectively.
Note 16
Discontinued Operations
In 1994, the Company announced its decision to divest of
Syscon Corporation, 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
Consolidated Balance Sheet and Consolidated 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
JTI 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.
In December, 1995, the Company completed the sale of
substantially all of the assets of JET to Babcock and
Wilcox, an operating unit of McDermott International, for
$11,651. The loss on sale, net of applicable income taxes,
was recorded in fiscal 1995.
As a result, the Consolidated Statement of Income reflects
a 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>
1996 1995 1994
------ -------- --------
<S> <C> <C> <C>
Net sales $ - $101,472 $263,274
Loss before income taxes - (39,250) (4,684)
Income taxes credit - 8,015 702
Loss from discontinued
operations - (31,235) (3,982)
===== ======== ========
</TABLE>
Note 17
Unaudited Quarterly Financial Data and Stock Prices
<TABLE>
<CAPTION>
Fiscal Quarter
(Dollar amounts in thousands, except 1996
per share and market price amounts) First Second
-------- --------
<S> <C> <C>
Net sales $632,684 $739,509
Gross profit 141,152 178,689
Operating income 53,178 72,649
Income from continuing operations 23,191 33,555
-------- ------
Net income $23,191 $33,555
======= =======
Earnings per share $0.50 $0.71
======= ========
Market price of common stock:
High $35 1/4 $42 1/8
Low 28 5/8 33 3/4
-------- --------
(1) After restructuring charge of $43,000 ($21,830 after tax, or $0.46 per
share)
Fiscal Quarter
(Dollar amounts in thousands, except 1995
per share and market price amounts) First Second
-------- --------
Net sales $449,369 $541,013
Gross profit 97,746 123,923
Operating income 27,506 47,723
Income from continuing operations 3,193 21,045
(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
========= ========
Earnings (loss) per share
Income from continuing operations $ 0.07 $ 0.46
(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
======== =======
Market price of common stock:
High $ 28 1/2 $ 29 7/8
Low 24 3/4 26
-------- --------
</TABLE>
Unaudited Quarterly Financial Data and Stock Prices
<TABLE>
<CAPTION>
Fiscal Quarter
(Dollar amounts in thousands, except 1996
per share and market price amounts) Third Fourth (1)
------- --------
<S> <C> <C>
Net sales $779,752 $711,986
Gross profit 182,487 194,828
Operating income 79,502 38,690
Income from continuing operations 37,692 19,779
--------- ---------
Net income $37,692 $19,779
======== =======
Earnings per share $0.80 $0.41
======== =======
Market price of common stock:
High $41 5/8 $41
Low 30 1/4 30 7/8
--------- -------
(1) After restructuring charge of $43,000 ($21,830 after
tax, or $0.46 per
share)
Fiscal Quarter
(Dollar amounts in thousands, except 1995
per share and market price amounts) Third Fourth
-------- --------
Net sales $547,676 $614,021
Gross profit 119,532 138,946
Operating income 46,591 59,545
Income from continuing operations 37,612 30,270
(Loss) from discontinued operations,
net of applicable income taxes - (6,825)
Extraordinary loss on retirement
of debt, net of applicable income taxes - -
-------- --------
Net income (loss) $ 37,612 $ 23,445
======== ========
Earnings (loss) per share
Income from continuing operations $ 0.81 $ 0.65
(Loss) from discontinued operations - (0.14)
Extraordinary loss on retirement of debt - -
--------- -------
Net income (loss) per share $ 0.81 $ 0.51
========= =======
Market price of common stock:
High $ 38 7/8 $39 3/8
Low 29 3/8 28 5/8
--------- -------
</TABLE>
Unaudited Quarterly Financial Data and Stock Prices
<TABLE>
<CAPTION>
(Dollar amounts in thousands, except 1996
per share and market price amounts) Year (1)
----
<S> <C>
Net sales $2,863,931
Gross profit 697,156
Operating income 244,019
Income from continuing operations 114,217
------
Net income $114,217
=========
Earnings per share $2.42
=========
Market price of common stock:
High $42 1/8
Low 28 5/8
----------
(1) After restructuring charge of $43,000 ($21,830 after tax, or $0.46 per
share)
Dollar amounts in thousands, except 1995
per share and market price amounts) Year
----------
Net sales $2,152,079
Gross profit 480,147
Operating income 181,365
Income from continuing operations 92,120
(Loss) from discontinued operations,
net of applicable income taxes (31,235)
Extraordinary loss on retirement
of debt, net of applicable income taxes (3,481)
---------
Net income (loss) 57,404
==========
Earnings (loss) per share
Income from continuing operations $ 1.99
(Loss) from discontinued operations (0.67)
Extraordinary loss on retirement of debt (0.08)
----------
Net income (loss) per share $ 1.24
===========
Market price of common stock:
High $ 39 3/8
Low 24 3/4
----------
</TABLE>
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, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years
in the period ended October 31, 1996, 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 revenues of $572.7 million and $583.3 million
for the years ended February 25, 1994. 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, 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 21, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Joy Technologies Inc.:
We have audited the accompanying consolidated balance
sheets of Joy Technologies Inc. (a Delaware corporation)
and subsidiaries as of February 25, 1994, and February 26,
1993, and the related consolidated statements of income,
accumulated deficit and cash flows for each of the three
years in the period ended February 25, 1994. 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 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 February 26,
1993, and the results of their operations and their cash
flows for each of the three 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
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data
Years Ended October 31,
(Dollar amounts in thousands
except per share amounts) 1996 1995
---------- ----------
<S> <C> <C>
Revenues
Net sales $2,863,931 $2,152,079
Other income 23,639 32,208
---------- ----------
2,887,570 2,184,287
Cost of Sales 2,166,775 1,671,932
Product Development, Selling and
Administrative Expenses 433,776 330,990
Restructuring Charges 43,000 -
Nonrecurring Charge - -
---------- ---------
Operating Income (Loss) 244,019 181,365
Interest Expense - Net (62,258) (40,713)
---------- ---------
Pre-tax Income (Loss) before Joy
Merger Costs and Gain on Sale of
Measurex Investment 181,761 140,652
Joy Merger Costs - (17,459)
Gain on Sale of Measurex Investment - 29,657
(Provision) Credit for Income Taxes (63,600) (53,500)
Minority Interest (3,944) (7,230)
--------- --------
Income (Loss) from Continuing
Operations (after deducting $21,830
in 1996 related to the restructuring
charge and $11,384 in 1995 related to
Joy merger costs, and adding $18,657
in 1995 relatedto the gain on sale
of Measurex investment) 114,217 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) before Preferred Stock
Dividend Requirements 114,217 57,404
Preferred Stock Dividend Requirements (1) - -
-------- -------
Net Income (Loss) applicable to Common
Shareholders $ 114,217 $ 57,404
======== =======
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting $0.46
per share in 1996 for the
restructuring charge and $0.24
per share in 1995 related to Joy
merger costs, and adding $0.40 in
1995 related to the gain on sale
of Measurex investment) $2.42 $ 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 Common Share $2.42 $ 1.24
======== =========
Dividends Per Common Share $0.40 $ 0.40
======== =========
Bookings $3,000,775 $2,252,341
========== ===========
</TABLE>
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data
Years Ended October 31,
(Dollar amounts in thousands
except per share amounts) 1994 1993
---------- ----------
<S> <C> <C>
Revenues
Net sales $1,551,728 $1,409,204
Other income 23,301 9,040
---------- ----------
1,575,029 1,418,244
Cost of Sales 1,195,851 1,083,846
Product Development, Selling and
Administrative Expenses 279,016 259,831
Restructuring Charges - 67,000
Nonrecurring Charge - 8,000
--------- ---------
Operating Income (Loss) 100,162 (433)
Interest Expense - Net (47,366) (48,313)
--------- ---------
Pre-tax Income (Loss) before Joy
Merger Costs and Gain on Sale of
Measurex Investment 52,796 (48,746)
Joy Merger Costs - -
Gain on Sale of Measurex Investment - -
(Provision) Credit for Income Taxes (13,979) 16,497
Minority Interest (2,224) 4,799
--------- ---------
Income (Loss) from Continuing
Operations (after deducting $21,830
in 1996 related to the restructuring
charge and $11,384 in 1995 related to
Joy merger costs, and adding $18,657
in 1995 relatedto the gain on sale
of Measurex investment) 36,593 (27,450)
Income (Loss) from and (Net Loss)
on Sale of Discontinued Operations,
net of applicable income taxes (3,982) 7,760
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) before Preferred Stock
Dividend Requirements (53,912) (19,690)
Preferred Stock Dividend Requirements (1) - -
--------- ---------
Net Income (Loss) applicable to Common
Shareholders $(53,912) $(19,690)
========= =========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting $0.46
per share in 1996 for the
restructuring charge and $0.24
per share in 1995 related to Joy
merger costs, and adding $0.40 in
1995 related to the gain on sale
of Measurex investment) $ 0.84 $(0.62)
Income (loss) from and (net loss)
on sale of discontinued operations (0.09) 0.18
Extraordinary loss on retirement
of debt (0.11) -
Cumulative effect of accounting
change (1.87) -
-------- -------
Net Income (Loss) Per Common Share $(1.23) $(0.44)
======== =======
Dividends Per Common Share $ 0.40 $ 0.40
========= =======
Bookings $1,636,931 $1,487,502
========== ============
</TABLE>
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data
Years Ended October 31,
(Dollar amounts in thousands
except per share amounts) 1992
----------
<S> <C>
Revenues
Net sales $1,594,192
Other income 18,571
----------
1,612,763
Cost of Sales 1,179,904
Product Development, Selling and
Administrative Expenses 267,568
Restructuring Charges -
Nonrecurring Charge -
----------
Operating Income (Loss) 165,291
Interest Expense - Net (53,216)
----------
Pre-tax Income (Loss) before Joy
Merger Costs and Gain on Sale of
Measurex Investment 112,075
Joy Merger Costs -
Gain on Sale of Measurex Investment -
(Provision) Credit for Income Taxes (42,634)
Minority Interest (9,277)
---------
Income (Loss) from Continuing
Operations (after deducting $21,830
in 1996 related to the restructuring
charge and $11,384 in 1995 related to
Joy merger costs, and adding $18,657
in 1995 relatedto the gain on sale
of Measurex investment) 60,164
Income (Loss) from and (Net Loss)
on Sale of Discontinued Operations,
net of applicable income taxes 9,465
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
Preferred Stock Dividend Requirements (1) (10,866)
---------
Net Income (Loss) applicable to Common
Shareholders $ 35,947
=========
Earnings (Loss) Per Share
Income (loss) from continuing
operations (after deducting $0.46
per share in 1996 for the
restructuring charge and $0.24
per share in 1995 related to Joy
merger costs, and adding $0.40 in
1995 related to the gain on sale
of Measurex investment) $1.17
Income (loss) from and (net loss)
on sale of discontinued operations 0.23
Extraordinary loss on retirement
of debt (0.54)
Cumulative effect of accounting
change -
--------
Net Income (Loss) Per Common Share $ 0.86
========
Dividends Per Common Share $ 0.40
========
Bookings $1,495,262
==========
</TABLE>
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data (continued)
Years Ended October 31,
(Dollar amounts in thousands
except per share amounts) 1996 1995
---------- --------
<S> <C> <C>
Working Capital:
Current assets $1,410,250 $1,213,390
Current liabilities 1,077,127 723,303
---------- ----------
Working capital $ 333,123 $ 490,087
Current ratio 1.3 1.7
----------- ---------
Plant and Equipment
Net properties $ 634,045 $ 487,656
Capital expenditures 83,388 73,484
Depreciation expense 67,051 56,642
=========== =========
Total assets $2,690,029 $2,040,767
=========== =========
Debt and Capitalized Lease Obligations
Long-term obligations (2) $ 662,137 $ 462,991
Short-term notes payable 45,261 18,921
---------- ----------
$ 707,398 $ 481,912
========== ==========
Minority Interest $ 93,652 $ 89,611
========== ==========
Debt to Capitalization Ratio (3) 48.0% 42.6%
========== ==========
Shareholders' Equity $ 673,485 $ 559,276
Book value per share $14.15 $11.98
Common shares outstanding (4) 47,598,340 46,693,061
=========== ==========
Number of (End of Year):
Employees 17,100 14,000
Common Shareholders of Record 1,972 2,114
=========== ==========
</TABLE>
(1) Reflects declared and cumulative preferred stock
dividends for the senior and junior preferred stock of JTI
(2) Includes amounts classified as current portion of
long-term obligations
(3) Total debt to total debt, minority interest and
shareholders' equity
(4) As of end of year, excluding SECT shares
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data (continued)
Years Ended October 31,
(Dollar amounts in thousands
except per share amounts) 1994 1993
-------- -------
<S> <C> <C>
Working Capital:
Current assets $1,043,401 $ 983,038
Current liabilities 612,076 607,802
---------- ---------
Working capital $ 431,325 $ 375,236
Current ratio 1.7 1.6
---------- ---------
Plant and Equipment
Net properties $ 490,237 $ 505,412
Capital expenditures 50,842 71,761
Depreciation expense 58,628 56,467
========== =========
Total assets $1,981,953 $1,908,250
========== =========
Debt and Capitalized Lease Obligations
Long-term obligations (2) $ 571,054 $ 559,852
Short-term notes payable 14,419 67,742
---------- ---------
$ 585,473 $ 627,594
========= =========
Minority Interest $ 85,570 $ 89,110
========= =========
Debt to Capitalization Ratio (3) 49.9% 51.1%
========= =========
Shareholders' Equity $ 502,365 $ 511,169
Book value per share $11.04 $11.83
Common shares outstanding (4) 5,503,451 43,200,676
========= ==========
Number of (End of Year):
Employees 14,900 14,700
Common Shareholders of Record 2,261 2,512
========== =========
</TABLE>
(1) Reflects declared and cumulative preferred stock
dividends for the senior and junior preferred stock of JTI
(2) Includes amounts classified as current portion of
long-term obligations
(3) Total debt to total debt, minority interest and
shareholders' equity
(4) As of end of year, excluding SECT shares
<TABLE>
<CAPTION>
Five-Year Review of Selected Financial Data (continued)
Years Ended October 31,
(Dollar amounts in thousands
except per share amounts) 1992
--------
<S> <C>
Working Capital:
Current assets $1,215,956
Current liabilities 643,205
----------
Working capital $ 572,751
Current ratio 1.9
----------
Plant and Equipment
Net properties $ 497,947
Capital expenditures 63,973
Depreciation expense 51,572
===========
Total assets $2,109,605
===========
Debt and Capitalized Lease Obligations
Long-term obligations (2) $ 608,301
Short-term notes payable 48,041
----------
$ 656,342
==========
Minority Interest $ 99,655
==========
Debt to Capitalization Ratio (3) 48.0%
==========
Shareholders' Equity $ 610,072
Book value per share $13.33
Common shares outstanding (4) 45,777,956
===========
Number of (End of Year):
Employees 15,800
Common Shareholders of Record 2,865
==========
</TABLE>
(1) Reflects declared and cumulative preferred stock
dividends for the senior and junior preferred stock of JTI
(2) Includes amounts classified as current portion of
long-term obligations
(3) Total debt to total debt, minority interest and
shareholders' equity
(4) As of end of year, excluding SECT shares
<PAGE>
EXHIBIT 21
HARNISCHFEGER INDUSTRIES, INC.
SUBSIDIARIES
October 31, 1996
Harnischfeger Industries, Inc. is publicly held and has no parent. The
following subsidiaries are wholly-owned except as noted below: "Certain
subsidiaries, which if considered in the aggregate as a single subsidiary would
not constitute a significant subsidiary, are omitted from this list."
Description (1)
Justification
-------------
Beloit Corporation (2) . . . . . . . . . . . . . . . . . . . Delaware
Beloit Canada Ltd./Ltee (3). . . . . . . . . . . . . . . . .Canada
Joy Technologies Canada Inc.(4) . . . . . . . . . . . . . . . . . . . .Canada
Harnischfeger Corporation of Canada, Ltd.(5). . . . . . . . . . . . Canada
Beloit Industrial Ltda. (6). . . . . . . . . . . . . . . . .Brazil
Beloit International Pty. Ltd.. . . . . . . . . . . . . . . . . . . .Australia
Beloit Pulping Group, Inc. . . . . . . . . . . . . . . . . . . . . . Delaware
Beloit Poland S.A. (7) . . . . . . . . . . . . . . . . . . Poland
BWRC, Inc. . . . . . . . . . . . . . . . . . . . . . . . .Delaware
Beloit Asia Pacific Pte.Ltd. . . . . . . . . . . . . . Singapore
Beloit Italia S.p.A. (8).. . . . . . . . . . . . . . . . . Italy
Beloit Lenox GmbH. . . . . . . . . . . . . . . . . . . . Germany
Beloit Walmsley Limited. . . . . . . . . . . . . .United Kingdom
J&L Fiber Services, Inc. . . . . . . . . . . . . . . . Wisconsin
IMPCO Voest Alpine Pulping Technologies GmbH. . . . . . . . . . . . .Germany
Optical Alignment Systems and Inspection Services, Inc.New Hampshire
Sandusky International, Inc.(9). . . . . . . . . . . . . . .Ohio
Harnischfeger Corporation (doing business under the names of
"P&H Mining Equipment" and "P&H Material Handling") . . . . . . . . Delaware
Birmingham Crane & Hoist, Inc. . . . . . . . . . . . . . . Alabama
Blooma Engineering Pte. Limited (10) . . . . . . . . . . Singapore
Harnischfeger of Australia Pty. Ltd. (11). . . . . . . . Australia
Harnischfeger do Brasil Comercio e Industria Limitada. . . .Brazil
Harnischfeger Distribution & Service, LLC . . . . . . . . . . . . . .Wisconsin
Harnischfeger de Chile Limitada(12). . . . . . . . . . . . . Chile
Harnischfeger Corporation of Canada, Ltd.. . . . . . . . . .Canada
Harnischfeger GmbH (13). . . . . . . . . . . . . . . . . . Germany
Harnischfeger (South Africa) (Proprietary) Limited . .South Africa
Harnischfeger Venezuela, S.A.. . . . . . . . . . . . . . Venezuela
HCHC, Inc. . . . . . . . . . . . . . . . . . . . . . . . .Delaware
Harnischfeger Contract Services, Inc.. . . . . . . . . .Delaware
Harnischfeger Holdings Limited . . . . . . . . . .United Kingdom
MMH (Holdings) Limited. . . . . . . . . . . . . . . . . . . United Kingdom
Harnischfeger Mexico Holdings S.A. de C.V. (14). . . . . . .Mexico
P&H Mining Equipment Peru S.A.(15) . . . . . . . . . . . . . . . . . . . Peru
SPH Crane and Hoist, Inc.. . . . . . . . . . . . . . . . .Delaware
Joy Technologies Inc.(doing business under the name "Joy Mining Machinery")
. . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware
Joy Manufacturing Company (Africa)(Pty)Ltd.. . . . . .South Africa
Joy Manufacturing Company Pty. Limited . . . . . . . . . Australia
Joy Mining Machinery Limited . . . . . . . . . . . .United Kingdom
Joy MM Holdings (U.K.) Ltd. . . . . . . . . . . . . . . . . United Kingdom
Joy Manufacturing Company (U.K.)Limited . . .United Kingdom
(1) Where the name of a subsidiary is indented, it is wholly-owned by its
immediate parent listed at the margin above it, unless otherwise indicated.
(2) Harnischfeger Industries, Inc. owns 80% of the voting securities of Beloit
Corporation.
(3) Beloit Corporation owns 70% of the voting securities of Beloit Canada
Ltd./Ltee. Harnischfeger Corporation, Joy Technologies Inc., and Joy
Technologies Canada Inc. each own 10% of the voting securities.
(4) Beloit Canada Ltd./Ltee owns 90% and Joy Technologies Inc. owns 10% of the
voting securities of Joy Technologies Canada Inc.
(5) Joy Technologies Canada Inc. owns 90% and Harnischfeger Corporation owns
10% of the voting securities of Harnischfeger Corporation of Canada
Limited.
(6) Beloit Corporation owns 45% of the voting quotas and 100% of the non-voting
quotas of Beloit Industrial Ltda. This gives Beloit Corporation an 82.1%
ownership of Beloit Industrial Ltda.
(7) Harnischfeger Corporation owns 99.6% of the voting securities of Beloit
Poland S.A.
(8) BWRC, Inc. owns 99.98% of the voting securities of Beloit Italia S.p.A.
(9) BWRC, Inc. owns 50% of the voting securities of Sandusky International,
Inc.
(10) Harnischfeger Corporation owns 85% of the voting securities of Blooma
Engineering Pte.
(11) Harnischfeger Corporation owns 75% of the voting securities of
Harnischfeger of Australia Pay. Ltd.
(12) HCHC, Inc. owns 90% and Harnischfeger Corporation owns 10% of the voting
securities of Harnischfeger de Chile Limitada.
(13) Harnischfeger Corporation owns 75% and Harnischfeger Australia Pty. Ltd.
owns 25% of the voting securities of Harnischfeger GmbH.
(14) HCHC, Inc. owns 90% and Harnischfeger Corporation owns 10% of the voting
securities of Harnischfeger Mexico Holdings S.A. de C.V.
(15) HCHC, Inc. owns 90% and Harnischfeger Corporation owns 10% of the voting
securities of P&H Mining Equipment Peru S.A
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 21, 1996 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. 33-46738)
4. Registration Statement on Form S-8 (Registration No. 33-46739)
5. Registration Statement on Form S-8 (Registration No. 33-46740)
6. Registration Statement on Form S-8 (Registration No. 33-57209)
7. Registration Statement on Form S-3 (Registration No. 33-57979)
8. Registration Statement on Form S-8 (Registration No. 33-58087)
9. Registration Statement on Form S-8 (Registration No. 333-01703)
10. Registration Statement on Form S-8 (Registration No. 333-01705)
11. Registration Statement on Form S-3 (Registration No.
333-02401)
12. Registration Statement on Form S-8 (Registration No.
333-10327)
13. Registration Statement on Form S-8 (Registration No.
333-10329)
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
January 28, 1997
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in Harnischfeger Industries,
Inc.'s Form 10-K of our report dated March 25, 1994,
included in Harnischfeger Industries, Inc. Registration
Statement File No. 1-9299.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania,
January 28, 1997
EXHIBIT 24
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission, under
the provisions of the Securities Exchange Act of 1934, a Form
10-K Annual Report for the fiscal year ended October 31,
1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, her attorney, with full
power to act for her and in her name, place and stead, to
sign her name in the aforesaid capacity to such Form 10-K
Annual Report, hereby ratifying and confirming all that said
attorney may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set her hand and seal this ninth day of December, 1996.
________________
(SEAL)
Donna M. Alvarado
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
_______________
(SEAL)
John D. Correnti
<PAGE>
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints John N. Hanson and Francis M. Corby, Jr., and
each or either of them, his attorney, with full power to
act for him and in his name, place and stead, to sign his
name in the aforesaid capacity to such Form 10-K Annual
Report, hereby ratifying and confirming all that said
attorney may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
____________________
(SEAL)
Jeffery T. Grade
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
______________
(SEAL)
Harry L. Davis
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
____________________
(SEAL)
Robert M. Gerrity
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
____________________
(SEAL)
Jean-Pierre Labruyere
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
____________________
(SEAL)
Ralph C. Joynes
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
________________________
(SEAL)
Herbert V. Kohler, Jr.
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
____________________
(SEAL)
Robert F. Schnoes
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
_____________
(SEAL)
Donald Taylor
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade and Francis M. Corby, Jr., and
each or either of them, his attorney, with full power to
act for him and in his name, place and stead, to sign his
name in the aforesaid capacity to such Form 10-K Annual
Report, hereby ratifying and confirming all that said
attorney may or shall lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
______________
(SEAL)
John N. Hanson
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
_______________
(SEAL)
Robert B. Hoffman
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade and John N. Hanson, and each or
either of them, his attorney, with full power to act for
him and in his name, place and stead, to sign his name in
the aforesaid capacity to such Form 10-K Annual Report,
hereby ratifying and confirming all that said attorney may
or shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
____________________
(SEAL)
Francis M. Corby, Jr.
POWER OF ATTORNEY
Form 10-K Annual Report
WHEREAS, Harnischfeger Industries, Inc., a Delaware
corporation (hereinafter referred to as the "Corporation"),
will file with the Securities and Exchange Commission,
under the provisions of the Securities Exchange Act of
1934, a Form 10-K Annual Report for the fiscal year ended
October 31, 1996; and,
WHEREAS, the undersigned is a Director of the
Corporation;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints Jeffery T. Grade, John N. Hanson and Francis M.
Corby, Jr., and each or any of them, his attorney, with
full power to act for him and in his name, place and stead,
to sign his name in the aforesaid capacity to such Form
10-K Annual Report, hereby ratifying and confirming all
that said attorney may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto
set his hand and seal this ninth day of December, 1996.
_________________
(SEAL)
Larry D. Brady
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