SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
X Annual Report Pursuant to Section 15 (d) of
- ---
the Securities Exchange Act of 1934
For the Fiscal Year Ended October 31, 1997
Transition Report Pursuant to Section 15 (d)
- ----
of the Securities Exchange Act of 1934 For the
transition period from to
----- ------
Commission file number:
Harnischfeger Industries
Employees' Savings Plan 1-9299
A. Full title of the Plan and the address of the
Plan, if different from that of the issuer named
below:
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
B. Name of issuer of the securities held
pursuant to the Plan and the address of its
principal executive office:
Harnischfeger Industries, Inc.
3600 South Lake Drive
St. Francis, Wisconsin 53235-3716
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
----------------------------------
To the Participants and Administrator of the
Harnischfeger Industries
Employees' Savings Plan
In our opinion, the accompanying statements of net
assets available for benefits and the related
statements of changes in net assets available for
benefits present fairly, in all material respects,
the net assets available for benefits of the
Harnischfeger Industries Employees' Savings Plan
(the "Plan") at October 31, 1997 and 1996, and the
changes in net assets available for benefits for
the years then ended, in conformity with generally
accepted accounting principles. These financial
statements are the responsibility of the Plan's
management; our responsibility is to express an
opinion on these financial statements based on our
audits. 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 provide
a reasonable basis for the opinion expressed
above.
Our audit was performed for the purpose of forming
an opinion on the basic financial statements taken
as a whole. The additional information included
in Schedules I and II is presented for purposes of
additional analysis and is not a required part of
the basic financial statements but is additional
information required by ERISA. Such information
has been subjected to the auditing procedures
applied in the audit of the basic financial
statements and, in our opinion, is fairly stated
in all material respects in relation to the basic
financial statements taken as a whole.
Price Waterhouse LLP
April 27, 1998
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1997
Fidelity
Fidelity Equity
Magellan Income Fixed Income
Fund Fund Fund
------------ ----------- -----------------
<S> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - 90,505,365
Mutual stock funds - 34,474,806 -
Mutual bond fund - - -
Diversification fund - - -
Harnischfeger common
stock fund - - -
Growth fund 62,096,161 - -
Loans to participants - - -
----------- ---------- ----------
Total Investments 62,096,161 34,474,806 90,505,365
----------- ---------- ----------
Receivables -
Employee contributions 121,551 80,809 134,593
----------- ---------- ----------
Total Assets 62,217,712 34,555,615 90,639,958
LIABILITIES:
Payables -
Accrued expenses - - 17,951
----------- ---------- ----------
Total Liabilities - - 17,951
----------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS 62,217,712 34,555,615 90,622,007
=========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1997
Fidelity Fidelity Spartan
Intermediate Overseas U.S. Equity
Bond Fund Fund Index Fund
------------ -------- -----------
<S> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - -
Mutual stock funds - 7,378,819 14,448,834
Mutual bond fund 3,078,489 - -
Diversification fund - - -
Harnischfeger common
stock fund - - -
Growth fund - - -
Loans to participants - - -
------------ ------------ ------------
Total Investments 3,078,489 7,378,819 14,448,834
------------ ------------ ------------
RECEIVABLES:
Receivables -
Employee contributions 26,294 17,586 35,561
------------ ------------ ------------
Total Assets 3,104,783 7,396,405 14,484,395
LIABILITIES:
Payables -
Accrued expenses - - -
------------ ------------ ------------
Total Liabilities - - -
------------ ------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS 3,104,783 7,396,405 14,484,395
============ ============ ============
The accompanying notes are an integral part
of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1997
Harnischfeger Fidelity PIMCO
Common Stock Asset Manager Total Return
Fund Fund Fund
-------------- ------------- -------------
<S> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - -
Mutual stock funds - - -
Mutual bond fund - - 599,249
Diversification fund - 4,227,919 -
Harnischfeger common
stock fund 31,221,844 - -
Growth fund - - -
Loans to participants - - -
---------- --------- -------
Total Investments 31,221,844 4,227,919 599,249
---------- --------- -------
RECEIVABLES:
Receivables -
Employee contributions 18,483 8,946 18,304
---------- --------- -------
Total Assets 31,240,327 4,236,865 617,553
LIABILITIES:
Payables -
Accrued expenses - - -
---------- --------- -------
Total Liabilities - - -
---------- --------- -------
NET ASSETS AVAILABLE
FOR BENEFITS 31,240,327 4,236,865 617,553
============ ========= =======
</TABLE>
The accompanying notes are an integral
part of these financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1997
PIMCO
PBHG Capital
Growth Appreciation Loans To
Fund Fund Participants
------ ------------ ------------
<S> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - -
Mutual stock funds - - -
Mutual bond fund - - -
Diversification fund - - -
Harnischfeger common
stock fund - - -
Growth fund 3,305,139 3,177,390 -
Loans to participants - - 5,294,933
--------- --------- ---------
Total Investments 3,305,139 3,177,390 5,294,933
--------- --------- ---------
RECEIVABLES:
Receivables -
Employee contributions 10,714 6,210 -
--------- --------- ---------
Total Assets 3,315,853 3,183,600 5,294,933
LIABILITIES:
Payables -
Accrued expenses - - -
--------- --------- ---------
Total Liabilities - - -
--------- --------- ---------
NET ASSETS AVAILABLE
FOR BENEFITS 3,315,853 3,183,600 5,294,933
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1997
Total
----------
<S> <C>
ASSETS: $
Investments -
Fixed income fund 90,505,365
Mutual stock funds 56,302,459
Mutual bond fund 3,677,738
Diversification fund 4,227,919
Harnischfeger common
stock fund 31,221,844
Growth fund 68,578,690
Loans to participants 5,294,933
------------
Total Investments 259,808,948
------------
RECEIVABLES:
Receivables -
Employee contributions 479,051
----------
Total Assets 260,287,999
LIABILITIES:
Payables -
Accrued expenses 17,951
------------
Total Liabilities 17,951
------------
NET ASSETS AVAILABLE
FOR BENEFITS 260,270,048
============
The accompanying notes are an integral
part of these financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1996
Fidelity
Fidelity Equity
Magellan Income Fixed Income
Fund Fund Fund
------------ ----------- -------------
<S> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - 92,577,208
Mutual stock funds - 24,554,017 -
Mutual bond fund - - -
Diversification fund - - -
Harnischfeger common
stock fund - - -
Growth fund 51,848,938 - -
Loans to participants - - -
---------- ---------- ----------
Total Investments 51,848,938 24,554,017 92,577,208
---------- ---------- ----------
RECEIVABLES:
Receivables -
Employee contributions 233,049 94,474 257,353
---------- ---------- ----------
Total Assets 52,081,987 24,648,491 92,834,561
LIABILITIES:
Payables -
Accrued expenses - - 109,603
---------- ---------- ----------
Total Liabilities - - 109,603
---------- ---------- ----------
NET ASSETS AVAILABLE
FOR BENEFITS 52,081,987 24,648,491 92,724,958
========== ========== ==========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1996
Fidelity Fidelity Fidelity
Intermediate Overseas U.S. Equity
Bond Fund Fund Index Fund
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - -
Mutual stock funds - 5,418,419 7,332,578
Mutual bond fund 3,055,470 - -
Diversification fund - - -
Harnischfeger common
stock fund - - -
Growth fund - - -
Loans to participants - - -
--------- --------- ---------
Total Investments 3,055,470 5,418,419 7,332,578
--------- --------- ---------
RECEIVABLES:
Receivables -
Employee contributions 16,550 31,278 43,288
--------- --------- ---------
Total Assets 3,072,020 5,449,697 7,375,866
LIABILITIES:
Payables -
Accrued expenses - - -
--------- --------- ---------
Total Liabilities - - -
--------- --------- ---------
NET ASSETS AVAILABLE
FOR BENEFITS 3,072,020 5,449,697 7,375,866
========= ========= =========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1996
Harnischfeger Fidelity
Common Stock Asset Manager Loans To
Fund Fund Participants
------------------- ------------ ------------
<C> <C> <C> <C>
ASSETS: $ $ $
Investments -
Fixed income fund - - -
Mutual stock funds - - -
Mutual bond fund - - -
Diversification fund - 3,072,206 -
Harnischfeger common
stock fund 33,100,688 - -
Growth fund - - -
Loans to participants - - 5,190,823
---------- ---------- ---------
Total Investments 33,100,688 3,072,206 5,190,823
---------- ---------- ---------
RECEIVABLES:
Receivables -
Employee contributions 33,364 13,843 -
---------- ---------- ---------
Total Assets 33,134,052 3,086,049 5,190,823
LIABILITIES:
Payables -
Accrued expenses - - -
---------- --------- ---------
Total Liabilities - - -
---------- --------- ---------
NET ASSETS AVAILABLE
FOR BENEFITS 33,134,052 3,086,049 5,190,823
========== ========= =========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
OCTOBER 31, 1996
Total
----------
<S> <C>
ASSETS: $
Investments -
Fixed income fund 92,577,208
Mutual stock funds 37,305,014
Mutual bond fund 3,055,470
Diversification fund 3,072,206
Harnischfeger common
stock fund 33,100,688
Growth fund 51,848,938
Loans to participants 5,190,823
-----------
Total Investments 226,150,347
-----------
RECEIVABLES:
Receivables -
Employee contributions 723,199
-----------
Total Assets 226,873,546
LIABILITIES:
Payables -
Accrued expenses 109,603
-----------
Total Liabilities 109,603
-----------
NET ASSETS AVAILABLE FOR BENEFITS 226,763,943
===========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1997
Fidelity Fidelity
Magellan Equity Income Fixed Income
Fund Fund Fund
-------- ------------- ------------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 1,890,719 1,773,793 5,651,815
Realized gains (losses)on
sales of investments 1,191,213 640,409 -
Unrealized appreciation
(depreciation) of investments 10,796,938 4,988,690 -
Employee contributions 5,324,170 3,110,603 6,242,818
Interfund transfers (5,253,098) 1,194,213 (2,609,515)
Withdrawals and distributions (3,845,042) (1,861,799) (11,562,833)
------------- ------------ ------------
Net Increase (Decrease) 10,104,900 9,845,909 (2,277,715)
IMPCO Assets
Transferred In 30,825 9,549 8,595
MPH Assets
Transferred In - - 166,169
Morris Assets
Transferred In - 51,666 -
Net assets at
beginning of year 52,081,987 24,648,491 92,724,958
----------- ----------- -----------
Net assets at
end of year 62,217,712 34,555,615 90,622,007
=========== =========== ===========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1997
Fidelity Fidelity Spartan
Intermediate Overseas U.S. Equity
Bond Fund Fund Index Fund
------------ --------- -----------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 203,214 365,990 296,287
Realized gains (losses)on
sales of investments (6,189) 78,021 648,925
Unrealized appreciation
(depreciation) of investments 26,180 483,022 1,938,067
Employee contributions 514,953 1,064,395 1,698,361
Interfund transfers (441,997) 1,179 2,995,229
Withdrawals and distributions (283,615) (244,533) (747,306)
---------- ---------- ----------
Net Increase (Decrease) 12,546 1,748,074 6,829,563
IMPCO Assets
Transferred In 898 (567) 8,161
MPH Assets
Transferred In - 199,201 270,805
Morris Assets
Transferred In 19,319 - -
Net assets at
beginning of year 3,072,020 5,449,697 7,375,866
----------- ---------- -----------
Net assets at
end of year 3,104,783 7,396,405 14,484,395
========== ========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1997
Harnischfeger Fidelity PIMCO
Common Stock Asset Manager Total Return
Fund Fund Fund
------------- ------------- ------------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 333,816 276,991 16,984
Realized gains (losses)on
sales of investments 408,434 26,655 (290)
Unrealized appreciation
(depreciation) of
investments (691,257) 342,372 11,169
Employee contributions 1,058,709 507,962 87,408
Interfund transfers (1,410,417) (1,305) 470,368
Withdrawals and
distributions (1,600,993) (212,181) (5,628)
----------- ---------- ---------
Net Increase (Decrease) (1,901,708) 940,494 580,011
IMPCO Assets
Transferred In 7,983 3,042 -
MPH Assets
Transferred In - - 21,025
Morris Assets
Transferred In - 207,280 16,517
Net assets at
beginning
of year 33,134,052 3,086,049 -
----------- ---------- --------
Net assets at
end of year 31,240,327 4,236,865 617,553
=========== ========== ========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1997
PBHG Capital
Growth Appreciation Loans to
Fund Fund Participants
------ ------------ ------------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 6,692 118,330 -
Realized gains (losses)on
sales of investments (36,676) 884 -
Unrealized appreciation
(depreciation) of investments 97,735 402,632 -
Employee contributions 515,917 315,039 -
Interfund transfers 2,577,616 2,310,121 167,606
Withdrawals and distributions (17,816) (25,828) (134,659)
---------- ----------- ---------
Net Increase (Decrease) 3,143,468 3,121,178 32,947
IMPCO Assets
Transferred In 378 - 10,000
MPH Assets
Transferred In 131,423 62,422 41,705
Morris Assets
Transferred In 40,584 - 19,458
Net assets at
beginning of year - - 5,190,823
---------- ---------- ----------
Net assets at
end of year 3,315,853 3,183,600 5,294,933
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1997
Total
-----------
<S> <C>
$
Interest and dividend income 10,934,631
Realized gains (losses)on
sales of investments 2,951,386
Unrealized appreciation
(depreciation) of investments 18,395,548
Employee contributions 20,440,335
Interfund transfers -
Withdrawals and distributions (20,542,233)
------------
Net Increase (Decrease) 32,179,667
IMPCO Assets Transferred In 68,864
MPH Assets Transferred In 851,045
Morris Assets Transferred In - 406,529
Net assets at beginning of year 226,763,943
------------
Net assets at end of year 260,270,048
============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1996
Fidelity Fidelity
Magellan Equity Income Fixed Income
Fund Fund Fund
-------- ------------- ------------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 9,567,460 1,092,686 5,237,385
Realized gains (losses)on
sales of investments (1,185,031) 208,911 -
Unrealized appreciation
(depreciation) investments (4,375,827) 2,446,087 -
Employee contributions 5,857,238 2,284,947 6,726,138
Interfund transfers 27,400 3,575,755 (9,605,706)
Withdrawals and distributions (2,505,748) (904,764) (9,580,024)
------------ ---------- ------------
Net Increase (Decrease) 7,385,492 8,703,622 (7,222,207)
J&L Assets
Transferred In 741,074 2,347,611 1,632,164
BCH Assets
Transferred In - - 136,680
IMPCO Assets
Transferred In 1,400,938 1,197,649 11,761,015
Net assets at
beginning of year 42,554,483 12,399,609 86,417,306
----------- ----------- -----------
Net assets at
end of year 52,081,987 24,648,491 92,724,958
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1996
Fidelity Fidelity Fidelity
Intermediate Overseas U.S. Equity
Bond Fund Fund Index Fund
------------ --------- -----------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 187,310 80,809 97,745
Realized gains (losses)on
sales of investments (10,405) 73,233 190,533
Unrealized appreciation
(depreciation) investments (34,199) 247,328 590,256
Employee contributions 497,222 909,160 963,562
Interfund transfers 361,060 1,399,953 1,611,709
Withdrawals and distributions (493,049) (352,891) (113,688)
--------- ----------- -----------
Net Increase (Decrease) 507,939 2,357,592 3,340,117
J&L Assets
Transferred In 151,003 250,037 328,673
BCH Assets
Transferred In - - -
IMPCO Assets
Transferred In - - 2,165,556
Net assets at
beginning of year 2,413,078 2,842,068 1,541,520
---------- ----------- ----------
Net assets at
end of year 3,072,020 5,449,697 7,375,866
========== =========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1996
Harnischfeger Fidelity
Common Stock Asset Manager Loans to
Fund Fund Participants
------------- ------------- ------------
<S> <C> <C> <C>
$ $ $
Interest and dividend income 172,015 77,738 -
Realized gains (losses)on
sales of investments 1,924,433 25,267 -
Unrealized appreciation
(depreciation) investments 5,050,261 176,633 -
Employee contributions 713,045 465,975 -
Interfund transfers 1,421,263 969,476 239,090
Withdrawals and distributions (1,150,085) (70,185) (117,679)
----------- -------- ---------
Net Increase (Decrease) 8,130,932 1,644,904 121,411
J&L Assets
Transferred In - - 168,604
BCH Assets
Transferred In - - -
IMPCO Assets
Transferred In - - 477,078
Net assets at
beginning of year 25,003,120 1,441,145 4,423,730
----------- ---------- ----------
Net assets at
end of year 33,134,052 3,086,049 5,190,823
=========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1996
Total
-----------
<S> <C>
$
Interest and dividend income 16,513,148
Realized gains (losses)on
sales of investments 1,226,941
Unrealized appreciation
(depreciation) investments 4,100,539
Employee contributions 18,417,287
Interfund transfers -
Withdrawals and distributions (15,288,113)
-------------
Net Increase (Decrease) 24,969,802
J&L Assets Transferred In 5,619,166
BCH Assets Transferred In 136,680
IMPCO Assets Transferred In 17,002,236
Net assets at beginning of year 179,036,059
------------
Net assets at end of year 226,763,943
============
The accompanying notes are an integral part of these financial statements.
</TABLE>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
- ------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
OCTOBER 31, 1997 AND 1996
- --------------------------
(1) PLAN HISTORY
Harnischfeger Corporation established the
Harnischfeger Corporation Employee Savings
and Protection Plan effective April 1, 1984
(the "Harnischfeger Plan"). Effective
March 2, 1987, sponsorship of the
Harnischfeger Plan was assumed by
Harnischfeger Industries, Inc. (the
"Company") and the Plan was renamed the
Harnischfeger Industries Employees' Savings
Plan (the "Plan"). The Plan was amended
and restated July 1, 1995 to incorporate
all previous Plan amendments. The term
"Company" as used in these financial
statements refers to Harnischfeger
Industries, Inc. and its subsidiaries
excluding Joy Technologies Inc. and Dobson
Park Industries plc.
Plans merged into the Plan during 1997 were
MPH Crane, Inc. ("MPH") on March 7, 1997
and Morris Mechanical Handling, Inc.
("Morris") on July 16, 1997. As of June 1,
1997, employees of Mondel Engineering Ltd.
became eligible to participate in the Plan.
Plan assets merged into the Plan during
1996 were J&L Fiber Services, Inc. ("J&L")
on February 1, 1996 and Birmingham Crane &
Hoist, Inc. ("BCH") on April 15, 1996. Plan
assets were merged into the Plan for the
Pulp Machinery Division purchased from
Ingersoll-Rand Company ("IMPCO") on July
15, 1996 and on December 12, 1996.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The accompanying financial statements have
been prepared on the accrual basis.
Use of Estimates
----------------
The preparation of financial statements
requires management to make estimates and
assumptions that affect the reported
amounts of assets and liabilities and
disclosure of contingent assets and
liabilities at the date of the financial
statements. Actual results could differ
from those estimates.
Investments
-----------
Investments are stated at fair market value
except guaranteed investment contracts
which are stated at contract value.
Contract value represents contributions
made under the contract, plus interest at
the contract rate, less participant
withdrawals. Unrealized gains and losses
on investments are computed based upon
market values at the beginning of the year,
or acquisition cost if acquired during the
year, and market values at the end of the
year. Realized gains and losses are
recorded based upon market values at the
time of sale.
(3) PLAN PROVISIONS
The following description of the Plan
provides only general information.
Participants should refer to the Plan
Document for a more complete description of
the Plan's provisions.
Plan Purpose
------------
The purposes of the Plan are to encourage
savings by employees and to assist them in
meeting major financial needs,
supplementing retirement benefits and
acquiring an equity interest in the
Company.
Plan Administration
-------------------
The Plan is administered by a seven-member
Pension and Investment Committee (the
"Committee").
The assets of the Plan are trusteed by
Fidelity Management Trust Company
("Fidelity") and detailed records of
participants' accounts are maintained by
Fidelity Institutional Retirement Services
Company.
Substantially all administrative expenses
of the Plan are paid or accrued for by the
Company.
Eligibility
-----------
Substantially every U.S. employee of the
Company (except any employee who is covered
by a collective bargaining agreement which
does not provide for such employee's
participation in the Plan) is eligible to
participate in the Plan. An eligible
employee may become an active participant
in the Plan on the first day of any month
in which he meets all of the requirements
for eligibility. The Plan is subject to
the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
Contributions
-------------
Participants may elect to make regular
contributions to the Plan of up to ten
percent of their pre-tax earnings ("salary
reduction contributions"). Participants
may also make additional contributions of
up to ten percent of after-tax earnings.
Pre-tax contributions are subject to
Internal Revenue Service guidelines.
The Company may, at its discretion, make a
profit sharing contribution as determined
by the Company. There were no Company
contributions made to the Plan for fiscal
years ended 1997 and 1996. The Company
profit sharing contributions are allocated
to each active participant on a pro rata
basis on such employee's base earnings, up
to $100,000, for the fiscal year ended
October 31. The Company profit sharing
contributions are invested 100 percent in
the Harnischfeger Common Stock Fund.
Investment Options
------------------
Each participant elects to invest his
contribution in one or more of the
investment funds offered under the Plan.
Such elections are made directly to
Fidelity at the discretion of the
participant. The investment funds
currently available to Plan participants
are as follows:
Fidelity Magellan Fund
----------------------
This is a capital appreciation mutual
fund which invests primarily in
common stocks of companies which are
expected to demonstrate long-term
earnings growth greater than the
economy as a whole. This fund had
3,181 and 2,934 participants at
October 31, 1997 and 1996,
respectively.
Fidelity Equity Income Fund
---------------------------
This stock fund, which had 2,156 and
1,732 participants as of October 31,
1997 and 1996, respectively, invests
in income-producing common stocks or
preferred stocks whose prospects for
appreciation in both value and
dividend income are deemed favorable.
The fund looks for a dividend yield
that exceeds the average yield of the
"Standard & Poor's 500".
Fixed Income Fund
-----------------
This fund invests primarily (i) in
government obligations, treasury
bills, certificates of deposit,
commercial paper, bonds, notes and
other evidences of indebtedness and
other obligations of a similar nature
expected to produce a fixed income,
(ii) in a deposit account, deposit
administration fund, guaranteed
investment contract ("GIC") or
similar fund or contract maintained
by a legal reserve life insurance
company pursuant to an agreement with
or a group annuity contract issued by
such insurance company, or (iii) in a
combination of investments permitted
under (i) and (ii) above. This fund
had 3,444 and 3,503 participants as
of October 31, 1997 and 1996,
respectively.
Fidelity Intermediate Bond Fund
-------------------------------
This fund invests in high and upper
medium grade fixed-income obligations
with an average maturity of three to
ten years. Investments include
obligations (i) of U.S. and foreign
corporations, (ii) issued or
guaranteed by the U.S. government or
any of its agencies, (iii) of U.S.
banks, including certificates of
deposit and bankers' acceptances, and
(iv) other instruments of comparable
quality to those mentioned above,
which are expected to produce
attractive levels of current income.
There were 631 and 606 participants
as of October 31, 1997 and 1996,
respectively.
Fidelity Overseas Fund
----------------------
The Overseas fund seeks long-term
capital appreciation primarily
through investments in foreign
securities. There were 1,077
participants at October 31, 1997 and
818 participants at October 31, 1996.
Spartan U.S. Equity Index Fund
------------------------------
(formerly the Fidelity U.S. Equity
----------------------------------
Index Fund)
------------
This fund seeks investment results
that correspond to the total return
performance of the Standard & Poor's
500 Stock Index. The total return
performance is the combination of
capital changes and income. At
October 31, 1997 and 1996, this fund
had 1,221 and 761 participants,
respectively.
PIMCO Total Return Fund
-----------------------
This fund invests 65% of its assets
in a diversified portfolio of fixed
income securities of varying
maturities averaging three to six
years, up to 10% may be invested in
fixed income securities that are
rated below investment grade but
rated B or better by Moody's or S&P
and also may invest up to 20% of its
assets in foreign denominated
securities and an additional 5%
beyond that limit in U.S. dollar-denominated securities of foreign
issuers. As of October 31, 1997,
there were 104 participants in this
fund.
PBHG Growth Fund
----------------
This fund seeks capital appreciation
by investing in small and medium
sized company common stocks and
securities convertible into common
shares, but also may invest up to 5%
of its assets in warrants and rights
to purchase common stock. There were
457 participants as of October 31,
1997.
PIMCO Capital Appreciation Fund
-------------------------------
This fund seeks growth of capital and
invests primarily in common stocks of
the 1,000 largest companies, by
market capitalization, that have
improving factors such as growth of
earnings and dividends. There were
328 participants in the fund as of
October 31, 1997.
Harnischfeger Common Stock Fund
-------------------------------
This fund invests exclusively in the
common stock of Harnischfeger
Industries, Inc. The fund encourages
employee ownership while seeking
long-term capital appreciation. At
October 31, 1997 and 1996, this fund
had 3,541 and 3,504 participants,
respectively.
Fidelity Asset Manager Fund
---------------------------
This mutual fund maintains a mix of
investments in domestic and foreign
stocks, bonds, and short-term
instruments with the expectation of
achieving a long-term high total
return. This fund had 503
participants at October 31, 1997 and
360 participants at October 31, 1996.
Vesting of Participant Accounts
-------------------------------
Participants vest in accordance with the
plan provisions defined in the Plan
Document.
Participant Loans
------------------
Participants are allowed to obtain loans
from the Plan which are drawn against their
investment accounts, subject to limitations
of the Plan, and bear interest rates of 2%
over prime as of the date of the loan.
Distributions
--------------
Upon termination of employment with the
Company for any reason, including
resignation, retirement, dismissal, long-term
disability or death, participants (or
designated beneficiaries) are paid the
vested amounts due them by payment in: (1)
a lump sum, or (2) substantially equal
quarterly or annual installments over a
period not to exceed the lesser of (a) 10
years or (b) the life expectancy of the
participant or, if the participant has
designated a beneficiary who is an
individual, the joint and last survivor
expectancy of the participant and his
designated beneficiary or (3) a combination
of a lump sum and installment payments.
Payment may be made in cash or property
(fair market value at date of distribution
as determined by the trustee).
Participants may request that distribution
of their accounts be invested in the
Harnischfeger Common Stock Fund.
In the event of financial hardship, a
participant may apply for a withdrawal of
all or any portion of the salary reduction
contributions credited to his account.
Withdrawals during employment of salary
reduction contributions may be granted by
the Committee only if the participant can
demonstrate to the satisfaction of the
Committee that a financial hardship exists
within the definitions of the Internal
Revenue Code.
(4) PLAN TERMINATION
The Company has the right under the Plan to
discontinue its contributions at any time
and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan
termination, participants will become 100%
vested in their accounts.
(5) FEDERAL INCOME TAXES
The Internal Revenue Service has determined
and informed the Company by a letter dated
January 8, 1996 that the Plan and related
trust are designed in accordance with
applicable sections of the Internal Revenue
Code ("IRC"). The Plan has been amended
since receiving the determination letter.
However, the plan administrator and the
Plan's tax counsel believe that the Plan is
designed and is currently being operated in
compliance with the applicable provisions
of the IRC. As the Plan is qualified under
the provisions of Section 401(a) of the
IRC, it is exempted from federal income
taxes. Therefore, no provision for income
taxes has been included in the Plan's
financial statements.
With respect to participants, pre-tax
contributions to the Plan are excluded from
wages subject to federal and most state
income taxes. Earnings on contributions
are not taxable until distributed.
(6) OTHER
On March 30, 1998, Harnischfeger
Industries, Inc. announced the sale of
approximately 80 percent of the Company's
P&H Material Handling unit to Chartwell
Investments, Inc. The final contribution
to the 401k plan for these participants was
completed on March 31, 1998. Morris
Material Handling (formerly P&H Material
Handling) immediately established its own
401k plan "Morris Material Handling, Inc.
Employee Savings Plan". Asset balances
will be transferred to this new plan on
June 1, 1998. <PAGE>
(7) INVESTMENTS
The following relates to investment shares,
net asset values and market value at October 31.
<TABLE>
<CAPTION>
1997
-------------------------------------------
Net
Number Asset Fair Market
Funds of Shares Value Value
- --------------------------- ------------- -------------- ----------------
<S> <C> <C> <C>
Investments at
Fair Value as Determined
by Quoted Market Price:
Fidelity Magellan Fund 643,817.1 $96.45 $ 62,096,161
Fidelity Equity
Income Fund 673,599.2 51.18 34,474,806
Fidelity Intermediate
Bond Fund 302,405.7 10.18 3,078,489
Fidelity Overseas Fund 216,260.8 34.12 7,378,819
Spartan U.S. Equity
Index Fund 435,599.5 33.17 14,448,834
Fidelity Asset
Manager Fund 225,248.7 18.77 4,227,919
Harnischfeger Common
Stock Fund 792,835.0 39.38 31,221,844
PBHG Growth Fund 126,006.0 26.23 3,305,139
PIMCO Capital
Appreciation Fund 135,265.6 23.49 3,177,390
PIMCO Total Return Fund 55,486.0 10.80 599,249
Investments at
Estimated Fair Value:
Loans to Participants - 1.00 5,294,933
Investments at Contract Value:
Fixed Income Fund - 1.00 90,505,365
------------
$259,808,948
============
</TABLE>
<TABLE>
<CAPTION>
The following information relates to
investment gain (loss) activity during the periods.
Realized Gains (Losses)
-------------------------------------------------
Fund 1997 1996
- ---------------------------- ------- ------------
<S> <C> <C>
Fidelity Magellan Fund $1,191,213 $(1,185,031)
Fidelity Equity Income Fund 640,409 208,911
Fidelity Intermediate
Bond Fund (6,189) (10,405)
Fidelity Overseas Fund 78,021 73,233
Spartan U.S. Equity
Index Fund 648,925 190,533
Fidelity Asset Manager Fund 26,655 25,267
Harnischfeger Common
Stock Fund 408,434 1,924,433
PBHG Growth Fund (36,676) -
PIMCO Capital
Appreciation Fund 884 -
PIMCO Total Return Fund (290) -
----------- -----------
$2,951,386 $1,226,941
=========== ===========
</TABLE>
(7) INVESTMENTS
The following relates to investment shares, net asset values
and market value at October 31.
<TABLE>
<CAPTION>
1996
----------------------------------
Net
Number Asset Fair Market
Funds of Shares Value Value
- --------------------- -------------------------- --------- ------ ------------
<S> <C> <C> <C>
Investments at Fair
Value as Determined
by Quoted Market Price:
Fidelity Magellan Fund 666,010.8 $77.85 $51,848,938
Fidelity Equity
Income Fund 580,885.2 42.27 24,554,017
Fidelity Intermediate
Bond Fund 302,222.5 10.11 3,055,470
Fidelity Overseas Fund 174,337.8 31.08 5,418,419
Spartan U.S. Equity
Index Fund 283,768.5 25.84 7,332,578
Fidelity Asset
Manager Fund 181,679.8 16.91 3,072,206
Harnischfeger Common
Stock Fund 827,517.2 40.00 33,100,688
PBHG Growth Fund - - -
PIMCO Capital
Appreciation Fund - - -
PIMCO Total Return Fund - - -
Investments at Estimated
Fair Value:
Loans to Participants - 1.00 5,190,823
Investments at Contract Value:
Fixed Income Fund - 1.00 92,577,208
------------
$226,150,347
============
</TABLE>
<TABLE>
<CAPTION>
The following information relates to investment
gain (loss) activity during the periods.
Change in Unrealized
Appreciation (Depreciation)
------------------------------
Fund 1997 1996
- ----------------------- ----------- --------------
<S> <C> <C>
Fidelity Magellan Fund $10,796,938 $ (4,375,827)
Fidelity Equity Income Fund 4,988,690 2,446,087
Fidelity Intermediate Bond Fund 26,180 (34,199)
Fidelity Overseas Fund 483,022 247,328
Spartan U.S. Equity Index Fund 1,938,067 590,256
Fidelity Asset Manager Fund 342,372 176,633
Harnischfeger Common Stock Fund (691,257) 5,050,261
PBHG Growth Fund 97,735 -
PIMCO Capital Appreciation Fund 402,632 -
PIMCO Total Return Fund 11,169 -
------------- -----------
$ 18,395,548 $ 4,100,539
============= ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC. EMPLOYEES' SAVINGS PLAN Additional
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Information
OCTOBER 31, 1997 Schedule I
Description of Cost
Identity of Issue Investment of Asset
- ---------------------------------- ------------ --------------
<S> <C> <C>
Employer's Stock Fund:
Harnischfeger Industries, Inc.
Common Stock Common Stock $18,071,203
Mutual Stock Funds:
Fidelity Equity Income Fund Open-end 24,903,402
Fidelity Overseas Fund Mutual 6,582,959
Spartan U.S. Equity Index Fund Funds 11,329,513
----------
42,815,874
Mutual Bond Funds:
Fidelity Intermediate Bond Fund Open-end Mutual 3,075,831
PIMCO Total Return Fund Funds 588,387
----------
3,664,218
Diversification Fund:
Fidelity Asset Manager Fund Open-end Fund 3,695,525
Growth Funds:
Fidelity Magellan Fund Open-end 46,880,757
PBHG Growth Fund Funds 3,234,104
PIMCO Capital Appreciation Fund 2,789,723
----------
52,904,584
Fixed Income Securities:
Fidelity Cash Portfolio, at 5.53% Open-end 4,786,091
Lincoln National Guaranteed
Investment Contract, at 6.08% June 30, 1999 5,406,420
Prudential Insurance Company
of America Guaranteed
Investment Contract, at rates Dec., 97
ranging from 2.46% to 4.51% thru Sept. 98 5,841,862
CDC Capital Guaranteed Investment
Contract, at 6.15% March 31, 1998 2,010,164
Provident Life & Accident Guaranteed
Investment Contract, at 5.85% December 31, 1998 4,659,296
Sun Life of Canada Guaranteed
Investment Contract, at Mar., 2000
rates ranging from 6.74% to 6.99% thru June, 2000 10,338,099
Connecticut General Guaranteed
Investment Contract, at 7.35% December 31, 1997 7,469,389
Deutsche Bank Guaranteed Investment
Contract, at rates ranging
from 5.66% to 6.13% November, 1997 8,014,075
New England Mutual Guaranteed
Investment Contract,
at rates ranging from Dec., 1998
4.55% to 6.0% thru Dec., 2001 114,273
New York Life Guaranteed
Investment Contract, at 6.05% September 30, 1998 4,585,625
Ohio National Life Insurance
Company at 5.90% September 30, 1999 4,440,362
Peoples Security Life, at 7.31% Dec., 1997
thru Aug., 2001 4,335,999
Principal Mutual at 7.20% May 31, 2001 4,331,509
Protective Life Guaranteed
Investment, at 6.05% June 30, 1998 3,439,219
Safeco Life Insurance at 7.14% September 9, 1998 4,041,471
Security Life of Denver at 6.07% March 2, 1998 4,786,372
SunAmerica Life Insurance
Guaranteed Investment Contract,
at 6.02% December 31, 1998 4,416,276
Rabo Bank Nederland ABS Guaranteed
Investment Contract, at 6.69% November 17, 1997 2,003,116
State Street Bank Guaranteed
Investment Contract at 6.44% November 25, 1997 2,986,487
Union Bank of Switzerland Guaranteed
Investment Contract at 5.94% Dec., 1997
thru Apr., 1998 2,499,260
------------
90,505,365
Outstanding Loan Balance 5,294,933
------------
Total Assets Held For Investment $216,951,702
============
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC. EMPLOYEES' SAVINGS PLAN Additional
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Information
OCTOBER 31, 1997 Schedule I
Fair Market
Identity of Issue Value
- ------------------------------------------- --------------
<S> <C>
Employer's Stock Fund:
Harnischfeger Industries, Inc. Common Stock $31,221,844
Mutual Stock Funds:
Fidelity Equity Income Fund 34,474,806
Fidelity Overseas Fund 7,378,819
Spartan U.S. Equity Index Fund 14,448,834
-----------
56,302,459
Mutual Bond Funds:
Fidelity Intermediate Bond Fund 3,078,489
PIMCO Total Return Fund 599,249
-----------
3,677,738
Diversification Fund:
Fidelity Asset Manager Fund 4,227,919
Growth Funds:
Fidelity Magellan Fund 62,096,161
PBHG Growth Fund 3,305,139
PIMCO Capital Appreciation Fund 3,177,390
------------
68,578,690
Fixed Income Securities:
Fidelity Cash Portfolio, at 5.53% 4,786,091
Lincoln National Guaranteed
Investment Contract, at 6.08% 5,406,420
Prudential Insurance Company
of America Guaranteed
Investment Contract, at rates
ranging from 2.46% to 4.51% 5,841,862
CDC Capital Guaranteed
Investment Contract, at 6.15% 2,010,164
Provident Life & Accident Guaranteed
Investment Contract, at 5.85% 4,659,296
Sun Life of Canada Guaranteed
Investment Contract, at
rates ranging from 6.74% to 6.99% 10,338,099
Connecticut General Guaranteed
Investment Contract, at 7.35% 7,469,389
Deutsche Bank Guaranteed Investment
Contract, at rates ranging
from 5.66% to 6.13% 8,014,075
New England Mutual Guaranteed
Investment Contract,
at rates ranging from 4.55% to 6.0% 114,273
New York Life Guaranteed Investment
Contract, at 6.05% 4,585,625
Ohio National Life Insurance
Company at 5.90% 4,440,362
Peoples Security Life, at 7.31% 4,335,999
Principal Mutual at 7.20% 4,331,509
Protective Life Guaranteed
Investment, at 6.05% 3,439,219
Safeco Life Insurance at 7.14% 4,041,471
Security Life of Denver at 6.07% 4,786,372
SunAmerica Life Insurance
Guaranteed Investment Contract,
at 6.02% 4,416,276
Rabo Bank Nederland ABS Guaranteed
Investment Contract, at 6.69% 2,003,116
State Street Bank Guaranteed
Investment Contract at 6.44% 2,986,487
Union Bank of Switzerland Guaranteed
Investment Contract at 5.94% 2,499,260
------------
90,505,365
Outstanding Loan Balance 5,294,933
------------
Total Assets Held For Investment $259,808,948
============
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' Additional
SAVINGS PLAN Information
5500-ITEM 27(d) Schedule II
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
IDENTITY OF DESCRIPTION PURCHASE SELLING LEASE
PARTY INVOLVED OF ASSET PRICE PRICE RENTAL
- -------------- ----------- -------- ------- -------
<S> <C> <C> <C> <C>
FMTC Inst.
Money Market Money Market
Securities
406 Purchases $33,498,860
480 Sales $33,397,531 N/A
Fidelity Magellan Growth Fund
247 Purchases $10,693,838
230 Sales $12,434,766 N/A
Fidelity Equity
Income Income Fund
241 Purchases $10,292,943
197 Sales $6,001,240 N/A
Spartan U.S.
Equity Index
233 Purchases Income Fund $8,042,309
145 Sales $3,513,044 N/A
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' Additional
SAVINGS PLAN Information
5500-ITEM 27(d) Schedule II
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
EXPENSE CURRENT VALUE
IDENTITY OF INCURRED WITH COST OF OF ASSET ON NET
PARTY INVOLVED TRANSACTION ASSET TRANSACTION DATE GAIN(LOSS)
- ---------------- -------------- ------- ---------------- -----------
<S> <C> <C> <C> <C>
FMTC Inst.
Money Market
406 Purchases $33,498,860
480 Sales None $33,397,531 $33,397,531 None.
Fidelity Magellan
247 Purchases $10,693,838
230 Sales None $10,113,176 $12,434,766 $2,321,590
Fidelity Equity
Income
241 Purchases $10,292,943
197 Sales None $4,998,888 $6,001,240 $1,002,352
Spartan U.S.
Equity Index
233 Purchases $8,042,309
145 Sales None $3,147,248 $3,513,044 $365,796
</TABLE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the
employee benefit plan) have duly caused this annual report
to be signed by the undersigned thereunto duly authorized.
HARNISCHFEGER INDUSTRIES
EMPLOYEES' SAVINGS PLAN
(Name of Plan)
Date: April 29, 1998 By: /s/ Francis M. Corby, Jr.
-------------------------
Francis M. Corby, Jr.
Executive Vice President For
Finance and Administration
and Chief Financial Officer
Harnischfeger Industries, Inc.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
------------------------------------
We hereby consent to the incorporation by reference in
the Registration Statement on Form S-8 (No. 333-23985) of
Harnischfeger Industries, Inc. of our report dated April 27,
1998 appearing on page 1 of this Annual Report on Form 11-K.
Price Waterhouse LLP
Milwaukee, Wisconsin
April 29, 1998
