SECURITIES AND EXCHANGE COMMISSION
-----------------------------------
Washington, D.C. 20549
FORM 10-Q
----------
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
- -- OF THE SECURITIES EXCHANGE ACT OF 1934
X FOR THE QUARTERLY PERIOD ENDED JULY 31, 1998
- -- --------------
OR
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 Incorporation) (I.R.S. Employer
Identification No.)
3600 South Lake Drive, St. Francis, Wisconsin
- ---------------------------------------------
(Address of principal executive offices)
53235-3716
- ----------------------------
(Zip Code)
(414)486-6400
- -----------------------------------------------
(Registrant's Telephone Number, Including Area
Code)
Indicate by checkmark 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 the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practicable date.
Class Outstanding at September 11, 1998
- ----------- ----------------------------------
Common Stock, 47,798,668 shares
$1 par value<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
------------------------------
FORM 10-Q
---------
July 31, 1998
--------------
INDEX
------
Page No.
--------
PART I. Financial Information:
Consolidated Statement
of Income - 1
Three and Nine Months Ended
July 31, 1998 and 1997
Consolidated Balance Sheet - 2-3
July 31, 1998 and
October 31, 1997
Consolidated Statement
of Cash Flows - 4
Nine Months Ended
July 31, 1998 and 1997
Consolidated Statement
of Shareholders' Equity - 5
Nine Months Ended
July 31, 1998 and 1997
Notes to Consolidated
Financial Statements 6-12
Management's Discussion
and Analysis
of Results of Operations
and Financial
Condition 13-20
PART II. Other Information 21-22
Signatures 23
PART I. FINANCIAL INFORMATION
- -------------------------------
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF INCOME
- --------------------------------
(Dollar amounts in thousands except per share amounts)
(Unaudited)
Three Months Ended
July 31,
-----------------------
1998 1997
---------- --------
<S> <C> <C>
Revenues
Net Sales $503,169 $704,212
Other Income 475 5,417
--------- --------
503,644 709,629
Cost of Sales, including anticipated
losses on contracts 443,996 540,222
Product Development, Selling
and Administrative Expenses 113,959 102,821
Restructuring Charge - -
------- -------
Operating Income (Loss) (54,311) 66,586
Interest Expense - Net (20,539) (18,444)
-------- --------
Income (Loss) Before (Provision)
Benefit For Income Taxes and
Minority Interest (74,850) 48,142
(Provision) Benefit for Income Taxes 25,450 (15,315)
Minority Interest 10,796 (2,755)
-------- --------
Income (Loss) from Continuing
Operations (38,604) 30,072
Income from Discontinued
Operation,
net of applicable income taxes - 5,818
Gain on Sale of Discontinued
Operation,
net of applicable income taxes - -
---------- ---------
Net Income (Loss) $ (38,604)$ 35,890
========== =========
Earnings Per Share-Basic
Income (loss) from
continuing operations $ (0.83)$ 0.63
Income from and net gain
on sale of
discontinued operation - 0.12
---------- ---------
Net income (loss) per
common share $ (0.83)$ 0.75
========== ========
Earnings Per Share-Diluted
Income (loss) from
continuing operations $ (0.83)$ 0.62
Income from and net
gain on sale of
discontinued operation - 0.12
---------- ---------
Net income (loss) per common share $ (0.83)$ 0.74
=========== =========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF INCOME
- --------------------------------
(Dollar amounts in thousands except per share amounts)
Nine Months Ended
July 31,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenues
Net Sales $1,538,852 $2,021,147
Other Income 11,235 24,991
---------- ----------
1,550,087 2,046,138
Cost of Sales, including
anticipated
losses on contracts 1,383,450 1,539,049
Product Development, Selling
and Administrative Expenses 326,969 299,281
Restructuring Charge 65,000 -
--------- ---------
Operating Income (Loss) (225,332) 207,808
Interest Expense - Net (58,636) (52,456)
---------- ---------
Income (Loss) Before
(Provision) Benefit For
Income Taxes and
Minority Interest (283,968) 155,352
(Provision) Benefit
for Income Taxes 107,150 (52,817)
Minority Interest 40,417 (8,003)
--------- ---------
Income (Loss) from Continuing
Operations (136,401) 94,532
Income from Discontinued
Operation,
net of applicable
income taxes 4,376 17,187
Gain on Sale of Discontinued
Operation,
net of applicable
income taxes 151,500 -
-------- --------
Net Income (Loss) $ 19,475 $ 111,719
Earnings Per Share-Basic
Income (loss) from
continuing operations $ (2.93) $ 1.98
Income from and net
gain on sale of
discontinued operation 3.35 0.36
----------- ---------
Net income (loss) per
common share $ 0.42 $ 2.34
=========== =========
Earnings Per Share-Diluted
Income (loss) from
continuing operations $ (2.93) $ 1.96
Income from and
net gain on sale of
discontinued operation 3.35 0.35
--------- --------
Net income (loss)
per common share $ 0.42 $ 2.31
========= ========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
July 31, October 31,
1998 1997
-------- -----------
(Unaudited)
Assets
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 48,579 $ 29,383
Accounts receivable-net 697,298 836,169
Inventories 590,766 594,761
Other current assets 152,859 119,076
Businesses held for sale - 9,323
------------ -----------
1,489,502 1,588,712
Property, Plant and Equipment:
Land and improvements 61,622 60,724
Buildings 270,690 293,501
Machinery and equipment 795,014 821,479
----------- ----------
1,127,326 1,175,704
Accumulated depreciation (513,077) (518,604)
----------- ----------
614,249 657,100
Investments and Other Assets:
Goodwill 473,737 508,634
Intangible assets 28,054 33,027
Other assets 140,858 137,062
------------ ----------
642,649 678,723
----------- ----------
$2,746,400 $2,924,535
=========== ==========
</TABLE>
See accompanying notes to financial statements.<PAGE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- -------------------------------
CONSOLIDATED BALANCE SHEET
- --------------------------
(Dollar amounts in thousands)
July 31, October 31,
1998 1997
--------- -----------
(Unaudited)
Liabilities and
Shareholders' Equity
<S> <C> <C>
Current Liabilities:
Short-term notes payable,
including current
portion of long-term
obligations $ 121,931 $ 225,853
Trade accounts payable 313,026 460,689
Employee compensation
and benefits 107,053 132,268
Advance payments and
progress billings 96,626 85,680
Accrued warranties 56,197 47,753
Other current liabilities 291,471 228,254
----------- ---------
986,304 1,180,497
Long-term Obligations 881,835 713,466
Other Liabilities:
Liability for postretirement
benefits 32,030 56,202
Accrued pension costs 37,769 36,707
Other liabilities 17,282 11,608
Deferred income taxes 33,666 78,671
---------- ---------
120,747 183,188
Minority Interest 55,431 97,724
Shareholders' Equity:
Common stock (51,668,939 and
51,607,172 shares issued,
respectively) 51,669 51,607
Capital in excess of par value 608,714 625,358
Retained earnings 258,852 253,727
Cumulative translation
adjustments (71,749) (41,440)
Less: Stock Employee
Compensation
Trust (1,433,147
and 1,433,147
shares, respectively)
at market (35,650) (56,430)
Treasury stock (3,870,271 and
3,127,697 shares,
respectively)
at cost (109,753) (83,162)
--------- ---------
702,083 749,660
--------- ---------
$2,746,400 $2,924,535
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
- ------------------------------------
(Dollar amounts in thousands)
(Unaudited) Nine Months Ended
July 31,
---------------------
1998 1997
----------- ----------
<S> <C> <C>
Operating Activities
Net income $ 19,475 $ 111,719
Add (deduct) - Items
not affecting cash:
Income from and gain
on sale of
discontinued
operation (155,876) (17,187)
Restructuring charge 65,000 -
Depreciation and
amortization 65,614 67,208
Minority interest,
net of dividends paid (40,417) 7,792
Prepaid/deferred
income taxes -net (130,055) 18,064
Other - net (15,090) (9,742)
Changes in working capital,
exclusive of acquisitions
and divestitures
Decrease (increase) in
accounts receivable - net 40,727 (180,426)
(Increase) in inventories (56,900) (44,346)
(Increase) in other
current assets (6,640) (10,300)
(Decrease) increase in
trade accounts payable (114,629) 130,324
(Decrease) in employee
compensation and benefits (22,971) (33,855)
Increase (decrease) in
advance payments
and progress billings 21,559 (30,978)
(Decrease) in other
current liabilities (27,995) (63,785)
--------- ---------
Net cash applied to
operating activities (358,198) (55,512)
========= =========
Investment and Other Transactions
Acquisitions, net
of cash acquired (40,192) (5,325)
Proceeds from sale
of Material Handling 341,000 -
Proceeds from sale of
J&L Fiber Services 109,445 -
Net proceeds from sale
of non-core Dobson
Park businesses 9,323 10,572
Net proceeds from sale
of New Philadelphia Fan Co. - 18,051
Net proceeds from sale
of Castings Division - 7,229
Property, plant and
equipment acquired (90,851) (98,444)
Property, plant and
equipment retired 17,045 21,563
Other - net (6,336) (20,005)
Net cash provided by
(applied to) investment
and other transactions 339,434 (66,359)
--------- ----------
Financing Activities
Dividends paid (13,920) (14,374)
Exercise of stock options 1,318 5,148
Purchase of treasury stock (30,086) (3,138)
Issuance of long-term
obligations less discount 177,332 149,989
Redemption of long-term
obligations (1,423) (55,381)
(Decrease) increase in
short-term notes payable (93,583) 28,154
--------- ----------
Net cash provided by
financing activities 39,638 110,398
--------- ----------
Effect of Exchange Rate
Changes on Cash and
Cash Equivalents (1,678) 829
Increase (decrease) in
Cash and Cash Equivalents 19,196 (10,644)
Cash and Cash Equivalents
at Beginning of Period 29,383 36,936
---------- ----------
Cash and Cash Equivalents
at End of Period $ 48,579 $ 26,292
=========== ===========
</TABLE>
See accompanying notes to financial statements.<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- ---------------------------------------------
(Dollar amounts in thousands)
(Unaudited)
Capital in
Common Excess of
Stock Par Value
-------- ----------
<S> <C> <C>
Nine Months Ended July 31, 1998
- -------------------------------
Balance at October 31, 1997 $51,607 $625,358
Net income
Translation adjustments
Exercise of 61,767 stock options 62 1,256
Dividends paid ($.30 per share)
Dividends on shares held by SECT 430
Adjust SECT shares to
market value (20,780)
123,926 shares purchased
by employee
and director benefit plans 1,926
866,500 shares acquired
as treasury stock
Amortization of
unearned compensation
on restricted stock 524
------- --------
Balance at July 31, 1998 $51,669 608,714
======= ========
Nine Months Ended July 31, 1997
- -------------------------------
Balance at October 31, 1996 $51,407 $615,089
Net income
Translation adjustments
Exercise of 236,273 stock options 135 3,033
Dividends paid ($.30 per share)
Dividends on shares held by SECT 435
Adjust SECT shares to market value 2,424
209,373 shares purchased
by employee
and director benefit plans 4,582
Purchase of treasury stock
Amortization of
unearned compensation
on restricted stock 1,184
------- ---------
Balance at July 31, 1997 $51,542 $626,747
======= =========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- ----------------------------------------------
(Dollar amounts in thousands)
(Unaudited)
Cumulative
Retained Translation
Earnings Adjustments
--------- -----------
<S> <C> <C>
Nine Months Ended July 31, 1998
- -------------------------------
Balance at October 31, 1997 $253,727 $(41,440)
Net income 19,475
Translation adjustments (30,309)
Exercise of 61,767 stock
options
Dividends paid ($.30 per share) (14,350)
Dividends on shares held
by SECT
Adjust SECT shares to market value
123,926 shares purchased
by employee
and director benefit plans
866,500 shares acquired
as treasury stock
Amortization of
unearned compensation
on restricted stock -------- ---------
Balance at July 31, 1998 $258,852 $(71,749)
======== =========
Nine Months Ended July 31, 1997
- -------------------------------
Balance at October 31, 1996 $148,175 $(37,584)
Net income 111,719
Translation adjustments 11,159
Exercise of 236,273
stock options
Dividends paid ($.30 per share) (14,809)
Dividends on shares held by SECT
Adjust SECT shares
to market value
209,373 shares purchased
by employee
and director benefit plans
Purchase of treasury stock
Amortization of
unearned compensation
on restricted stock -------- --------
Balance at July 31, 1997 $245,085 $(26,425)
========= =========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- ----------------------------------------------
(Dollar amounts in thousands)
(Unaudited)
Treasury
SECT Stock
-------- ----------
Nine Months Ended July 31, 1998
- -------------------------------
<S> <C> <C>
Balance at October 31, 1997 $(56,430) $(83,162)
Net income
Translation adjustments
Exercise of 61,767 stock options
Dividends paid ($.30 per share)
Dividends on shares held by SECT
Adjust SECT shares
to market value 20,780
123,926 shares purchased
by employee
and director benefit plans 3,495
866,500 shares acquired
as treasury stock (30,086)
Amortization of
unearned compensation
on restricted stock --------- ---------
Balance at July 31, 1998 $(35,650) $(109,753)
========= =========
Nine Months Ended July 31, 1997
- -------------------------------
Balance at October 31, 1996 $(61,360) $(42,242)
Net income
Translation adjustments
Exercise of 236,273
stock options 1,980
Dividends paid ($.30 per share)
Dividends on shares
held by SECT
Adjust SECT shares
to market value (2,424)
209,373 shares purchased
by employee
and director benefit plans 3,888
Purchase of treasury stock (3,138)
Amortization of
unearned compensation
on restricted stock -------- --------
Balance at July 31, 1997 $(61,804) $(41,492)
========= =========
</TABLE>
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
- ----------------------------------------------
(Dollar amounts in thousands)
(Unaudited)
Total
---------
<S> <C>
Nine Months Ended July 31, 1998
- -------------------------------
Balance at October 31, 1997 $749,660
Net income 19,475
Translation adjustments (30,309)
Exercise of 61,767 stock options 1,318
Dividends paid ($.30 per share) (14,350)
Dividends on shares held by SECT 430
Adjust SECT shares to market value -
123,926 shares purchased by employee
and director benefit plans 5,421
866,500 shares acquired as treasury stock (30,086)
Amortization of unearned compensation
on restricted stock 524
--------
Balance at July 31, 1998 $702,083
========
Nine Months Ended July 31, 1997
- -------------------------------
Balance at October 31, 1996 $673,485
Net income 111,719
Translation adjustments 11,159
Exercise of 236,273 stock options 5,148
Dividends paid ($.30 per share) (14,809)
Dividends on shares held by SECT 435
Adjust SECT shares to market value -
209,373 shares purchased by employee
and director benefit plans 8,470
Purchase of treasury stock (3,138)
Amortization of unearned compensation
on restricted stock 1,184
--------
Balance at July 31, 1997 $793,653
========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
July 31, 1998
- -------------
(Dollar amounts in thousands except per share amounts)
(a) Basis of Presentation
----------------------
In the opinion of management, all adjustments necessary
for the fair presentation of the results of operations for
the three and nine months ended July 31, 1998 and 1997,
cash flows for the nine months ended July 31, 1998 and
1997, and financial position at July 31, 1998 have been
made. All adjustments made are of a normal recurring
nature except for the Company's Beloit Corporation
("Beloit") anticipated losses associated with Indonesian
contracts discussed in note (k) Beloit Anticipated Losses
----------------------------
on Contracts and restructuring charges. See note (b)
------------
Acquisitions/Divestitures for discussions regarding
-------------------------
acquisitions/divestitures. The results of operations
reflect Material Handling as a discontinued operation.
These financial statements should be read in conjunction
with the financial statements and the notes thereto
included in the Harnischfeger Industries, Inc. Annual
Report on Form 10-K/A for the year ended October 31, 1997.
The results of operations for any interim period are not
necessarily indicative of the results to be expected for
the full year.
(b) Acquisitions/Divestitures
-------------------------
On March 30, 1998, the Company completed the sale of
approximately 80% of the common stock of the Company's P&H
Material Handling ("Material Handling") segment to
Chartwell Investments, Inc. in a leveraged
recapitalization transaction. As such, the accompanying
financial statements have been reclassified to reflect
Material Handling as a discontinued operation. The
Company retained approximately 20% of the outstanding
common stock and 11% of the outstanding voting securities
of Material Handling and will hold one Board of Director
seat for Material Handling. In addition, the Company has
licensed Material Handling to use the "P&H" trademark on
existing Material Handling-produced products on a
worldwide basis for periods specified in the agreement for
a royalty fee payable over a ten year period. The Company
reported a $151,500 after-tax gain on the sale of this
discontinued operation in the second quarter of fiscal
1998. Proceeds consisted of $341,000 in cash and $4,800
in preferred stock with a 12.25% PIK dividend; $7,200 in
common stock was not reflected in the Company's balance
sheet or gain calculations due to the nature of the
leveraged recapitalization transaction. Taxes on the sale
amounted to $45,000. Net assets disposed of in the sale
aggregated $139,300. Sales and operating profit of
Material Handling for the five months ended March 30, 1998
were $130,546 and $7,447, respectively. Sales and
operating profit for the nine months ended July 31, 1997
were $258,871 and $26,335, respectively.
On March 19, 1998, the Company completed the acquisition
of Horsburgh & Scott ("H&S") for a purchase price of
$40,192. H&S is a manufacturer of gears and gear cases,
and is also involved in the distribution of parts and
service to the mining industry. 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.
In 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 Company is fully integrating Longwall's (the main
subsidiary of Dobson) operations into its wholly owned
subsidiary, Joy Technologies Inc. ("Joy"), thus enabling
Joy to offer integrated underground longwall mining
systems to the worldwide mining industry. As a result of
this integration, the Company 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 approximated $71,000. As
of July 31, 1998, approximately $60,400 of these reserves
had been used.
(c) Restructuring Charge
--------------------
In the second quarter of fiscal 1998, the Company's Beloit
Corporation subsidiary recorded a $65,000 restructuring
charge ($31,900 after tax and minority interest). The
charge includes costs related to severance for
approximately 1,000 people worldwide, facility closures,
and disposal of machinery and equipment. Closure of a
pulping-related manufacturing facility in Sherbrooke,
Quebec, Canada, has been completed, and closure of a
similar facility in Dalton, Massachusetts has been
announced. The paper-related manufacturing facility in
the United Kingdom is being converted to a center of
excellence responsible for rolls, while the Italian
operation is being converted from a full-line
manufacturing operation to a Millpro(R) aftermarket center
for central and southern Europe. The cash and noncash
elements of the restructuring charge approximated $32,500
and $32,500, respectively. Management anticipates that
the reserves will be substantially utilized within the
next year. As of July 31, 1998, approximately 600
employees have been terminated in accordance with the
plan. Details of this restructuring charge are as
follows:
<TABLE>
<CAPTION>
Original Reserve 7/31/98
Reserve Utilized Reserve
--------- -------- --------
<S> <C> <C> <C>
Employee severance $25,800 $ (6,008) $19,792
Facility closures 33,300 (10,000) 23,300
Machinery and
equipment dispositions 5,900 (1,602) 4,298
------- ---------- -------
Pre-tax charge $65,000 $(17,610) $47,390
======= ========= =======
</TABLE>
In the fourth quarter of fiscal 1996, the Company's Beloit
Corporation subsidiary recorded a restructuring charge of
$43,000. 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. As of July
31, 1998, approximately $38,700 had been charged against
the reserve and approximately 500 employees had been
terminated in accordance with the plan. The restructuring
initiatives in both 1996 and 1998 involve organizing
engineering and manufacturing operations into center of
excellence and expanding the aftermarket capabilities of
the subsidiary, as well as sizing the organization to
current sales levels and market conditions.
(d) Inventories
-----------
<TABLE>
<CAPTION>
July 31, October 31,
1998 1997
--------- -----------
<S> <C> <C>
Finished goods $266,879 $ 274,391
Work in process
and purchased parts 268,909 247,568
Raw materials 105,339 132,980
--------- ---------
641,127 654,939
Less excess of current
cost over stated
LIFO value (50,361) (60,178)
---------- ----------
$590,766 $594,761
========== ==========
</TABLE>
Inventories valued using the LIFO method represented
approximately 58% and 54% of consolidated inventories at
July 31, 1998 and October 31, 1997, respectively.
(e) Research and Development Expense
---------------------------------
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
$11,974 and $12,210 for the three months and $36,198 and
$32,674 for the nine months ended July 31, 1998 and 1997,
respectively. Certain capital expenditures used in
research activities are capitalized and depreciated over
their expected useful lives.
(f) Interest Expense - Net
----------------------
Net interest expense consisted of the following:
<TABLE>
<CAPTION>
Three Months Ended
July 31,
------------------
1998 1997
<S> <C> <C>
Interest income $ 1,305 $ 440
Interest expense (21,844) (18,884)
---------- ---------
Interest expense - net $(20,539) $(18,444)
========== =========
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
------------------
July 31, July 31,
-------- --------
1998 1997
-------- -------
<S> <C> <C>
Interest income $ 5,258 $ 1,981
Interest expense (63,894) (54,437)
--------- ---------
Interest expense - net $(58,636) $(52,456)
========= =========
</TABLE>
g) Long-Term Obligations
----------------------
Long-term obligations at July 31, 1998 and October 31,
1997 consisted of the following:
<TABLE>
<CAPTION>
July 31, October 31,
1998 1997
---------- ----------
<S> <C> <C>
10 1/4% Senior Notes due 2003 $ 7,730 $ 7,730
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 $1,237
and $1,247, respectively ) 148,763 148,753
6 7/8% Debentures, due 2027
(net of discount of $107
and $111) 149,893 149,889
Senior Notes, Series A
through D, at
interest rates of between
8.9% and
9.1%, due 1998 to 2006 71,364 71,364
Australian Term Loan Facility,
due 2000 55,569 -
Revolving Credit Facility 260,000 150,000
Industrial Revenue Bonds,
at interest
rates of between 5.9% and 8.8%,
due 1998 to 2017 32,820 33,400
Other 16,974 14,057
-------- -------
893,113 725,193
Less: Amounts payable
within one year 11,278 11,727
-------- -------
$881,835 $713,466
</TABLE>
The 10 1/4% Notes are callable on or after September 1,
1998 at 105.125%. The Company decided to call the
remaining notes on September 1, 1998, for $7,730 plus
interest and premium of $792.
On February 17, 1998, the Company filed a shelf
registration with the Securities and Exchange Commission
for $200,000 of debt securities. To date, no securities
have been issued under this registration. The Company
also has $50,000 of debt securities remaining from a shelf
registration filed in 1996.
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. On February 25, 1997,
$150,000 of 6 7/8% debentures were issued at 99.925%.
Proceeds were used for repayment of short-term
indebtedness. The debentures will mature on February 15,
2027, are not redeemable by the Company prior to maturity
and are not subject to any sinking fund requirements.
Each holder of the debentures has the right to require the
Company to repay the holders, in whole or in part, on
February 15, 2007, at a repayment price equal to 100% of
the aggregate principal amount thereof plus accrued and
unpaid interest.
One of the Company's Australian subsidiaries maintains a
committed three-year $90,000 Australian dollar ($55,569
U.S. dollar) term loan facility with a group of four banks
at rates expressed in relation to Australian dollar-denominated
Bank Bills of Exchange. A commitment fee is
payable on any unused portions of the loan. As of July
31, 1998, the loan was fully utilized. Proceeds were used
to repay short-term debt.
The Company maintains a committed Revolving Credit
Facility Agreement with certain domestic and foreign
financial institutions that allows for borrowings of up to
$500,000 at rates expressed in relation to LIBOR and other
rates and which expires in October, 2002. A facility fee
is payable on the Revolving Credit Facility. At July 31,
1998, direct outstanding borrowings under the facility
were $260,000 and commercial paper borrowings, considered
a utilization of the facility, were $80,709.
(h) Contingent Liabilities
----------------------
At July 31, 1998, the Company was contingently liable to
banks, financial institutions, and others for
approximately $464,000 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. backup bonding guarantee facility.
The Company may also guarantee performance of its
equipment at levels specified in sales contracts without
the requirement for letters of credit.
On October 29, 1993, the Company completed the sale of
H-K Systems, Inc. to that unit's senior management and
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 $14,700 at
July 31, 1998. Under the terms of the facility, no new
bonds can be issued.
The Company is a 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. Although the outcome of these
matters cannot be predicted with certainty and favorable
or unfavorable resolution 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. Beloit may on occasion
enter into arrangements to participate in the ownership of
or operate pulp or papermaking facilities in order to
satisfy contractual undertakings or resolve disputes.
One of the claims against Beloit involves a lawsuit
brought by Potlatch Corporation that alleges pulp line
washers supplied by Beloit for less than $15,000 failed to
perform satisfactorily. In June, 1997, a Lewiston, Idaho
jury awarded Potlatch damages in the case which, together
with fees, costs and interest to date, approximate
$115,000. Beloit has appealed this award to the Idaho
Supreme Court. The appeal was heard by the Court on
September 10, 1998 with a decision anticipated by the end
of the first quarter of fiscal 1999. The Company
considers the eventual outcome of the Potlatch case not to
be estimable. Reserves in the July 31, 1998 Consolidated
Balance Sheet are less than the sales price of the
washers. The possible ultimate cost to the Company of this
case could be materially higher than the reserves.
The Company and its senior executives have been named as
defendants in three purported class actions, entitled
Great Neck Capital Appreciation Investment Partnership,
------------------------------------------------------
L.P. v. Jeffery T. Grade, et al., C. William Carter v.
-------------------------------- --------------------
Harnischfeger Industries, Inc. et al, and Norman Ellison
------------------------------------ --------------
v. Jeffery T. Grade, et al, filed on June 5, 1998, June
--------------------------
11, 1998 and July 21, 1998, respectively, in the United
States District Court for the Eastern District of
Wisconsin. These actions seek damages in an unspecified
amount on behalf of an alleged class of purchasers of the
Company's common stock, based principally on allegations
that the Company's disclosures with respect to the
Indonesian contracts of Beloit discussed in note (k)
Beloit Anticipated Losses on Contracts to the financial
--------------------------------------
statements violated the federal securities laws.
The Company's ability to realize the unbilled receivables
discussed in note (k) Beloit Anticipated Losses on
----------------------------
Contracts could materially affect income on a quarter-to-
---------
quarter basis.
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.
(i) Earnings Per Share
-------------------
In the first quarter of fiscal 1998, the Company adopted
Statement of Financial Accounting Standard ("SFAS") No.
128, " Earnings Per Share". Following is the
reconciliation of the numerators and denominators used to
calculate the basic and diluted earnings per share:
<TABLE>
<CAPTION>
For the Three Months Ended
July 31,
--------------------------
1998 1997
---------- --------
<S> <C> <C>
Basic Earnings Per Share
------------------------
Income (loss) from continuing
operations, after the 1998
restructuring charge and
losses on contracts $(38,604) $30,072
Income from
discontinued operation - 5,818
Gain on sale of
discontinued operation - -
--------- -------
Net income (loss) $(38,604) $35,890
========== =======
Average common shares
outstanding 46,339 47,972
Income (loss) from
continuing operations $ (0.83) $ 0.63
Income from and net gain
on sale of
discontinued operation - 0.12
---------- -------
Net income (loss) $ (0.83) $ 0.75
========== =======
Diluted Earnings Per Share
--------------------------
Income (loss) from continuing
operations, after the 1998
restructuring charge and
losses on contracts $(38,604) $30,072
Income from discontinued
operation - 5,818
Gain on sale of
discontinued operation - -
--------- -------
Net income (loss) $(38,604) $35,890
========= =======
Average common shares outstanding:
Common stock 46,339 47,972
Assumed exercise of
stock options - 405
------- ------
46,339 48,377
Income (loss) from
continuing operations $ (0.83) $ 0.62
Income from and net gain
on sale of
discontinued operation - 0.12
-------- ------
Net income (loss) $ (0.83) $ 0.74
========== ======
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended
July 31,
----------------------------
1998 1997
--------- ----------
<S> <C> <C>
Basic Earnings Per Share
------------------------
Income (loss) from
continuing operations,
after the 1998
restructuring charge and
losses on contracts $(136,401) $ 94,532
Income from discontinued
operation 4,376 17,187
Gain on sale of
discontinued operation 151,500 -
----------- ---------
Net income (loss) $ 19,475 $111,719
=========== =========
Average common
shares outstanding 46,499 47,876
Income (loss) from
continuing operations $ (2.93) $ 1.98
Income from and net gain
on sale of
discontinued operation 3.35 0.36
----------- --------
Net income (loss) $ 0.42 $ 2.34
=========== ========
Diluted Earnings Per Share
--------------------------
Income (loss) from
continuing operations,
after the 1998
restructuring charge and
losses on contracts $(136,401) $ 94,532
Income from discontinued
operation 4,376 17,187
Gain on sale of
discontinued operation 151,500 -
---------- ---------
Net income (loss) $ 19,475 $111,719
========== =========
Average common shares
outstanding:
Common stock 46,499 47,876
Assumed exercise
of stock options - 471
-------- --------
46,499 48,347
======== ========
Income (loss) from
continuing operations $ (2.93) $ 1.96
Income from and net gain
on sale of
discontinued operation 3.35 0.35
--------- --------
Net income (loss) $ 0.42 $ 2.31
========= ========
</TABLE>
(j) Common Stock
------------
In September, 1997, the Company announced that the board
of directors had authorized the purchase of up to ten
million shares of the Company's common stock. As of
September 14, 1998, the Company had repurchased 1,772,900
shares through open-market transactions at a cost of
approximately $68,263. No shares were repurchased during
the third quarter.
(k) Beloit Anticipated Losses on Contracts
---------------------------------------
The Company identified $155,000 of additional estimated
contract costs at Beloit related to certain contracts in
Indonesia, with total contract values aggregating
approximately $600,000. The additional costs primarily
relate to non-proprietary equipment, installation and
erection, freight and other site construction costs, and
overruns due to changes in estimates of costs to complete
relating to these complex, large-scale projects.
Based on its review of the $155,000 charge relating to
these Indonesian contracts, Harnischfeger, with the
assistance of its outside auditors, determined that
$27,600 of this charge was properly allocated to the
fourth quarter of fiscal 1997 and related to isolated
costs for piping which were inadvertently overlooked.
Income for that period and the full fiscal year of 1997
has been restated to reflect this charge.
A detailed review ordered by the Company's Board of
Directors, assisted by the Company's outside experts,
confirmed the reasonableness of the $155,000 additional
cost overrun estimate relating to the Indonesian projects.
The actual costs may vary significantly from the
estimates, up or down, based upon numerous factors
including the volatility of the Indonesian political and
economic situation and delivery, performance and other
risks and uncertainties inherent in executing these large,
complex projects. These factors cannot be predicted with
certainty and may affect income on a quarter-to-quarter
basis.
The detailed review did not reveal the existence of any
accounting irregularities.
Substantially all of the receivables have been collected
on the first two machines. As of July 31, 1998, billed
but not collected receivables amounted to $9,600 and
unbilled receivables were $195,900 related to these
Indonesian contracts. Shipment of the second two of the
four paper machines (the primary component of the unbilled
receivables) is awaiting payment by the customer or
adequate assurance that the customer has attained
financing for these machines. Although this customer has
paid in the past, given the Indonesian economic situation
and the worldwide downturn in the paper industry, there
can be no assurance that payment will be timely. However,
the Company has valid contracts and will seek to use every
effort to protect its rights. Since these are unique,
special order machines, there can be no assurance as to
the amount realizable from other than the intended
customer.
Included in the second quarter of 1998 was a charge of
$37,000 related to the resolution of a long-standing
dispute involving a contract unrelated to the Indonesian
contracts.
(l) Other
-----
In its August 26, 1998 third quarter press release, the
Company reported that its results for the third quarter
reflected the ongoing weakness affecting all of its
businesses which the Company believes will continue into
1999. The Company also reported that it is reducing its
rate of spending and aligning expenses with the current
low sales levels. Most of the expense reductions will be
permanent. Cost-reduction initiatives encompass $110,000
in expected savings, including the previously announced
Beloit restructuring efforts. The Company is planning to
reduce headcount by nearly 3,100 employees since the
beginning of fiscal 1998.
The Company also reported on the process announced in June
1998 of exploring whether long-term shareholder value
could be enhanced through the possible sale of Beloit
Corporation. At this time the Company has not received an
acceptable offer to purchase Beloit Corporation, therefore
no assurance can be made at this point of whether or when
any such transaction will take place.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE AND NINE MONTHS ENDED JULY 31, 1998 AND 1997
- ---------------------------------------------------
(Dollar amounts in thousands except per share amounts)
The commentary 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, including
those described in Item 5. Other Information - "Cautionary
Factors" in Part II of this report.
Net income (loss) for the three months and nine months ended
July 31, 1998 amounted to $(38,604), or $(0.83) per basic
share, and $19,475, or $0.42 per basic share, as compared to
net income of $35,890, or $0.75 per basic share, and $111,719,
or $2.34 per basic share for the three and nine months ended
July 31, 1997. Net results for the nine months ended July 31,
1998 included a $127,400 charge for anticipated losses
associated with certain Beloit Corporation contracts in
Indonesia, a $37,000 charge for settlement of a contract
dispute, and a $65,000 restructuring charge for Beloit, offset
by the income from and net gain on sale of discontinued
operation of $155,876 or $3.35 per share.
Basic earnings per share calculations for the first nine
months of 1998 and 1997 were based on 46,499 and 47,876
average shares outstanding, respectively, and diluted earnings
per share for the first nine months of 1998 and 1997 were
based on 46,499 and 48,347 average shares outstanding.
Significant factors contributing to the $230,933 change in
income from continuing operations for the first nine months of
1998 as compared to 1997 included: (1) a $164,400 decrease
related to the anticipated losses on contracts, (2) a $65,000
restructuring charge, (3) a $203,740 decrease in operating
income as described in the Segment Information section which
-------------------
follows, and (4) a $6,180 increase in interest expense-net
offset by (5) a $159,967 decrease in the provision for income
taxes due to reduced pre-tax income and (6) a $48,420 decrease
in minority interest.
<PAGE>
Segment Information
- -------------------
Operating results of the Company's business segments for the
third quarter and first nine months of 1998 and 1997 are
summarized as follows:
<TABLE>
<CAPTION>
Third Quarter Net Sales Operating Income
- -------------- ------------------ -----------------
1998 1997 1998 1997
- --------- -------- ------- -------
<S> <C> <C> <C> <C>
Mining Equipment $338,727 $329,204 $ 16,252 $44,260
Pulp and Paper
Machinery 164,442 375,008 (65,383) 28,005
- --------- ----------------- -------
Total Business
Segments $503,169 $704,212 (49,131) 72,265
======== ========
Corporate
Administration (5,180) (5,679)
---------------
Operating Income
(Loss) $(54,311) $66,586
Nine Months Net Sales Operating Income
- ---------------- ------------------ -----------------
1998 1997 1998 1997
------- -------- ------- -------
Mining Equipment $ 940,595 $1,045,050 $ 78,322 $146,395
Pulp and Paper
Machinery 598,257 976,097 (58,531) 78,340
Anticipated Losses
on Contracts (164,400)
Restructuring Charge (65,000)
- --------- ---------- --------- -------
Total Business
Segments $1,538,852 $2,021,147 (209,609)224,735
========== ==========
Corporate Administration (15,723) (16,927)
-----------------
Operating Income (Loss) $(225,332) $207,808
========= =======
</TABLE>
(A) Bookings include Horsburgh & Scott backlog of $27,714 at
the time of acquisition and bookings related to repair and
maintenance contracts of $70,191.
(B) Backlog has been reduced by $2,703 due to sale of J&L
Fiber Services in November, 1997 and cancellation of two
orders totaling $64,000 in July, 1998: a pulping system in
Thailand and equipment for a U.S. mill that is now scheduled
to be closed.
<TABLE>
<CAPTION>
Third Quarter Orders Booked Backlog at
- -------------- ------------- --------------
1998 1997 7/98 4/98
----- ------ ----- ------
<S> <C> <C> <C> <C>
Mining Equipment $295,049 $292,210 $ 347,137 $ 390,815
Pulp and Paper
Machinery 131,745 292,703 720,737(B) 817,434
--------- -------- -------- ----------
Total Business
Segments $426,794 $584,913 $1,067,874 $1,208,249
========= ======== ========== ==========
Nine Months Orders Booked Backlog at
- ------------ -------------------- -------------------------
1998 1997 7/98 10/97
-------- ------ ---------------
Mining Equipment $ 929,392(A) $1,036,599 $ 347,137 $ 358,340
Pulp and Paper
Machinery 609,079 1,097,794 720,737(B) 776,618
========== ========== ======== ==========
Total Business
Segments $1,538,471 $2,134,393 $1,067,874 $1,134,958
========== ========== ========== ==========
</TABLE>
(A) Bookings include Horsburgh & Scott backlog of $27,714 at
the time of acquisition and bookings related to repair and
maintenance contracts of $70,191.
(B) Backlog has been reduced by $2,703 due to sale of J&L
Fiber Services in November, 1997 and cancellation of two
orders totaling $64,000 in July, 1998: a pulping system in
Thailand and equipment for a U.S. mill that is now scheduled
to be closed.
Segment Information - Continuing Operations
- -------------------------------------------
Net sales of the Mining Equipment segment amounted to $940,595
and $1,045,050 for the first nine months of 1998 and 1997,
respectively. Operating profit decreased to $78,322 for the
first nine months of 1998 compared to $146,395 in 1997. The
decrease in sales and operating profit is primarily due to
lower original equipment sales resulting from ongoing weakness
in the coal and copper mining markets. Reduced operating
profits also reflected decreases in absorption of
manufacturing costs related to lower sales and spending levels
that were based on expectations of a faster market rebound.
Bookings for the first nine months of 1998 amounted to
$929,392 as compared to $1,036,599 for the same period in
1997.
The Pulp and Paper Machinery segment contributed sales and
operating loss of $598,257 and $58,531 before restructuring
charge of $65,000 and anticipated losses on contracts of
$164,400 ($127,600 related to Indonesian contracts and $37,000
related to the resolution of a long-standing contract
dispute), respectively, for the first nine months of 1998, as
compared to net sales of $976,097 and operating profit of
$78,340 for the corresponding period in 1997. Sales decreased
39% in 1998 over 1997, due primarily to a decrease in sales of
original equipment caused by the weak global pulp and paper
markets. Operating results were adversely impacted by the
lower sales levels, a decrease in absorption of manufacturing
costs and settlement of a subcontractor claim receivable
impacting operating results by $11,000. Results in the first
quarter of 1998 benefited from a $15,000 settlement of certain
patent litigation, and the gain on the sale of J&L, both of
which were largely offset by the write-off of previously
capitalized expenses related to the litigation, contract
losses, and additions to warranty reserves. Bookings for the
first nine months of 1998 amounted to $609,079 as compared to
$1,097,794 for the same period in 1997.
In the second quarter of fiscal 1998, the Company's Beloit
Corporation subsidiary ("Beloit") recorded a $65,000
restructuring charge ($31,900 after tax and minority
interest). The charge includes costs related to severance for
approximately 1,000 people worldwide, facility closures, and
disposal of machinery and equipment. The restructuring plans
call for the closure of a pulping-related manufacturing
facility in Sherbrooke, Quebec, Canada and closure of a
similar facility in Dalton, Massachusetts has been announced.
The paper-related manufacturing facility in the United Kingdom
is being converted to a center of excellence responsible for
rolls, while the Italian operation is being converted from a
full-line manufacturing operation to a Millpro(R) aftermarket
center for central and southern Europe. The cash and non-cash
elements of the restructuring charge approximated $32,500 and
$32,500, respectively. Management anticipates that the
reserves will be substantially utilized within the next year.
As of July 31, 1998, approximately 600 employees have been
terminated in accordance with the plan. Details of this
restructuring charge are as follows:
<TABLE>
<CAPTION>
Original Reserve 7/31/98
Reserve Utilized Reserve
-------------------------
<S> <C> <C> <C>
Employee severance $25,800 $ (6,008) $19,792
Facility closures 33,300 (10,000) 23,300
Machinery and
equipment dispositions 5,900 (1,602) 4,298
------- ---------- -------
Pre-tax charge $65,000 $(17,610) $47,390
======= ========= =======
</TABLE>
The Company recorded several unusual charges in the
consolidated statement of income for the six months ended
April 30, 1998. The restructuring charge of $65,000 pre-tax
is described above and in note (c) Restructuring Charge. In
--------------------
addition, $155,000 of additional estimated contract costs
were identified at Beloit related to certain contracts in
Indonesia. The additional costs primarily relate to non-proprietary equipment,
installation and erection, freight and
other site construction costs, and overruns due to changes in
estimates of costs to complete relating to these complex,
large-scale projects. See note (k) Beloit Anticipated Losses
on Contracts. --------------------------------------
Income Taxes
- ------------
The Company's estimated annual effective tax rate for
continuing operations for the first nine months of 1998 was
37.7% compared to a 35% federal statutory tax rate. The
higher rate reflected the resolution of various tax audits
resulting in an increase to the Company's income tax benefit
during the second quarter.
Liquidity and Cash Flows
- ------------------------
The Company's capital structure at July 31, 1998 and October
31, 1997 was as follows:
<TABLE>
<CAPTION>
July 31, October 31,
1998 1997
-------------- ------------
<S> <C> <C>
Short-term notes payable $ 110,653 $ 214,126
Long-term obligations,
including current portion 893,113 725,193
- ------------- ------------
1,003,766 939,319
Minority interest 55,431 97,724
Shareholders' equity 702,083 749,660
- ------------- ------------
Total capitalization $1,761,280 $1,786,703
=========== ===========
Debt to capitalization ratio 57.0% 52.6%
====== ======
</TABLE>
Cash Flow from Operating Activities
- -----------------------------------
Cash flow used by operating activities was $358,198 for the
nine months ended July 31, 1998 compared to cash flows used by
operating activities of $55,512 for the comparable period in
1997. The decrease in cash flows between periods is primarily
the result of a decrease in operating profit and trade
accounts payable offset by a decrease in accounts receivable.
Cash Flow from Investment Activities
- ------------------------------------
Cash flow provided by investment activities was $339,434 for
the nine months ended July 31, 1998 compared to cash flow used
for investment activities of $66,359 for the comparable period
in 1997. The change is primarily due to proceeds from the
sale of Material Handling during the second quarter of fiscal
1998 and the sale of J&L Fiber Services in the first quarter
of 1998. See "Acquisitions/Divestitures" below for further
discussion.
Cash Flow for Financing Activities
- ----------------------------------
Cash provided by financing activities in the first nine months
of fiscal 1998 was $39,638 compared to cash flow provided by
financing activities of $110,398 in 1997. The change was
primarily due to lack of redemption of long-term obligations
in 1998 as compared to the $55,381 redeemed in 1997 and a
decrease in short-term notes payable.
The Company maintains the following borrowing facilities:
(1) A Revolving Credit Financing Facility Agreement, expiring
in October, 2002, between the Company and certain
domestic and foreign financial institutions that allows
for borrowings of up to $500,000 at rates expressed in
relation to LIBOR and other rates. At July 31, 1998,
there were direct outstanding borrowings of $260,000
under the facility. Commercial paper borrowings,
considered a utilization of the facility, were $80,709.
(2) Various uncommitted domestic credit facilities of
approximately $75,000 to further supplement short-term
working capital requirements. At July 31, 1998, there
were no borrowings being utilized under this facility.
Short-term bank credit lines of foreign subsidiaries were
approximately $157,000, of which approximately $29,500
was outstanding at July 31, 1998.
(3) In February 1998, the Company filed a shelf registration
with the Securities and Exchange Commission for $200,000
of debt securities. To date, no securities have been
issued under this registration. The Company also has
$50,000 of debt securities remaining from a shelf
registration filed in 1996.
The 10 1/4 % Senior Notes were callable on or after September
1, 1998 at 105.125%. The Company evaluated decided to call
the remaining notes on September 1, 1998, for $7,730 plus
interest and premium of $792.
The Company believes that its available cash, cash flow
provided by operating activities and committed credit lines
provide adequate liquidity on both a short- and long-term
basis. However, increases in receivables and inventories have
reduced the Company's cash reserves and available credit
lines. Subject to market conditions, the Company currently
expects to increase liquidity through the issuance of an
additional short-term credit facility or additional long-term
debt. An adverse outcome of the Potlatch matter discussed in
note (h) Contingent Liabilities or some other currently
unanticipated
- ----------------------
requirement for a significant amount of cash may require the
Company to further increase borrowing facilities.
The Company has no significant capital commitments as of July
31, 1998; any future capital commitments are expected to be
funded through cash flow from operations and, if necessary,
available lines of credit.
Acquisitions/Divestitures
- -------------------------
On March 30, 1998, the Company completed the sale of
approximately 80% of the common stock of the Company's P&H
Material Handling ("Material Handling") segment to Chartwell
Investments, Inc. in a leveraged recapitalization transaction.
As such, the accompanying financial statements have been
reclassified to reflect Material Handling as a discontinued
operation. The Company retained approximately 20% of the
outstanding common stock and 11% of the outstanding voting
securities of Material Handling and will hold one Board of
Director seat for Material Handling. In addition, the Company
has licensed Material Handling to use the "P&H" trademark on
existing Material Handling-produced products on a worldwide
basis for periods specified in the agreement for a royalty fee
payable over a ten year period. The Company reported a
$151,500 after-tax gain on the sale of this discontinued
operation in the second quarter of fiscal 1998. Proceeds
consisted of $341,000 in cash and $4,800 in preferred stock
with a 12.25% PIK dividend; $7,200 in common stock was not
reflected in the Company's balance sheet or gain calculations
due to the nature of the leveraged recapitalization
transaction. Taxes on the sale amounted to $45,000. Net
assets disposed of in the sale aggregated $139,300. Sales and
operating profit of Material Handling for the five months
ended March 30, 1998 were $130,546 and $7,447, respectively.
Sales and operating profit for the nine months ended July 31,
1997 were $258,871 and $26,335, respectively.
On March 19, 1998, the Company completed the acquisition of
Horsburgh & Scott ("H&S") for a purchase price of $40,192.
H&S is a manufacturer of gears and gear cases, and is also
involved in the distribution of parts and service to the
mining industry. 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.
In 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 Company is fully integrating Longwall's (the main
subsidiary of Dobson) operations into its wholly owned
subsidiary, Joy Technologies Inc. ("Joy"), thus enabling Joy
to offer integrated underground longwall mining systems to the
worldwide mining industry. As a result of this integration,
the Company 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
approximated $71,000. As of July 31, 1998, approximately
$60,400 of these reserves had been used.
Beloit Anticipated Losses on Contracts
- --------------------------------------
The Company identified $155,000 of additional estimated
contract costs at Beloit related to certain contracts in
Indonesia, with total contract values aggregating
approximately $600,000. The additional costs primarily relate
to non-proprietary equipment, installation and erection,
freight and other site construction costs, and overruns due to
changes in estimates of costs to complete relating to these
complex, large-scale projects.
Based on its review of the $155,000 charge relating to these
Indonesian contracts, the Company, with the assistance of its
outside auditors, determined that $27,600 of this charge was
properly allocated to the fourth quarter of fiscal 1997 and
related to isolated costs for piping which were inadvertently
overlooked. Income for that period and the full fiscal year
of 1997 has been restated to reflect this charge.
A detailed review ordered by the Company's Board of Directors,
assisted by the Company's outside experts, confirmed the
reasonableness of the $155,000 additional cost overrun
estimate relating to the Indonesian projects. The actual
costs may vary significantly from the estimates, up or down,
based upon numerous factors including the volatility of the
Indonesian political and economic situation and delivery,
performance and other risks and uncertainties inherent in
executing these large, complex projects. These factors cannot
be predicted with certainty and may affect income on a
quarter-to-quarter basis.
The detailed review did not reveal the existence of any
accounting irregularities.
Substantially all of the receivables have been collected on
the first two machines. As of July 31, 1998, billed but not
collected receivables amounted to $9,600 and unbilled
receivables were $195,900 related to these Indonesian
contracts. Shipment of the second two of the four paper
machines (the primary component of the unbilled receivables)
is awaiting payment by the customer or adequate assurance that
the customer has attained financing for these machines.
Although this customer has paid in the past, given the
Indonesian economic situation and the worldwide downturn in
the paper industry, there can be no assurance that payment
will be timely. However, the Company has valid contracts and
will seek to use every effort to protect its rights. Since
these are unique, special order machines, there can be no
assurance as to the amount realizable from other than the
intended customer.
Included in the second quarter of 1998 was a charge of $37,000
related to the resolution of a long-standing dispute involving
a contract unrelated to the Indonesian contracts.
Year 2000
- ---------
The Company is in process of implementing its plan for year
2000 compliance for information technology ("IT") systems and
non-IT issues. This IT plan targets the successful
implementation of transaction processing software no later
than the second quarter of fiscal 1999 (SAP in the Mining
groups, MAPICS at Beloit) and the evaluation of computer
hardware and office equipment/software by December 1998. The
transaction processing software is being installed to meet
strategic needs of the businesses. Incremental costs related
to year 2000 beyond the installation of the software are not
expected to be material.
Non-IT evaluations related to facilities, vendors and products
are in process and expected to be completed by the middle of
1999.
Contingency plans will be developed as final evaluations of
risks are completed.
Labor Contract
- --------------
On September 10, 1998, employees represented by the United
Steel Workers at the Company's P&H Mining Equipment facilities
in Milwaukee, Wisconsin voted to reject the unit's offer for
a five year labor contract and initiated a strike. P&H Mining
Equipment and union representatives met briefly with a federal
mediator on September 11, 1998.
Euro Conversion
- ---------------
The Company is addressing the issues related to the conversion
to the Euro on January 1, 1999 and does not anticipate
significant issues.
Russia
- ------
The Company does not have any significant activity currently
in Russia, although there are several large mining projects
that could materialize in the future.
Other
- -----
In its August 26, 1998 third quarter press release, the
Company reported that its results for the third quarter
reflected the ongoing weakness affecting all of its businesses
which the Company believes will continue into 1999. The
Company also reported that it is reducing its rate of spending
and aligning expenses with the current low sales levels. Most
of the expense reductions will be permanent. Cost-reduction
initiatives encompass $110,000 in expected savings, including
the previously announced Beloit restructuring efforts. The
Company is planning to reduce headcount by nearly 3,100
employees since the beginning of fiscal 1998.
The Company also reported on the process announced in June
1998, of exploring whether long-term shareholder value could
be enhanced through the possible sale of Beloit Corporation.
At this time the Company has not received an acceptable offer
to purchase Beloit Corporation, therefore no assurance can be
made at this point of whether or when any such transaction
will take place.
<PAGE>
PART II. OTHER INFORMATION
----------------------------
Item 5 Other Information - "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 and papermaking 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 and paper mills that use
these machines. The Company's success in obtaining
and managing a relatively small number of sales
opportunities, including the Company's success in
securing payment for such sales and meeting the
requirements of warranties and guarantees associated
with such sales, 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 customers' 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 quality of financing to
customers and the ability of customers to obtain
regulatory approval for investments in mining and
papermaking projects; consolidations among
customers; work stoppages at customers or
providers of transportation; and the timing,
severity and duration of customer buying cycles,
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; whether the Company has
successful reference installations to show
customers; customers' perceptions of the health
and stability of the Company as compared to its
competitors; the Company's ability to assist with
competitive financing programs and the
availability of manufacturing capacity at the
Company's factories.
- 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 adequacy of the
Company's systems to manage major projects and
its 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 and other special 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 turmoil in
major markets such as the United States, Canada,
Europe, Asia and the Pacific Rim, South Africa,
Australia and Chile; environmental and trade
regulations; and the stability and ease of
exchange of currencies.
Item 6 Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
3 Bylaws of Harnischfeger Industries, Inc.
dated August 24, 1998.
11 Statement re: Calculation of Earnings Per
Share
(b) Reports on Form 8-K
None<PAGE>
FORM 10-Q
- ---------
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
HARNISCHFEGER INDUSTRIES, INC.
-----------------------------
(Registrant)
/s/Francis M. Corby, Jr.
------------------------
Francis M. Corby, Jr.
Executive Vice President for Finance
and Administration and Chief Financial
Officer
Date September 14, 1998
------------------------
/s/James C. Benjamin
---------------------
James C. Benjamin
Vice President and Controller
and Chief Accounting Officer
Date September 14, 1998
-----------------------
Exhibit 3
8/24/98
B Y L A W S
OF
HARNISCHFEGER INDUSTRIES, INC.
ARTICLE I
----------
OFFICES
The initial registered office of the corporation
required by the Delaware General Corporation Law shall be 100
West Tenth Street, City of Wilmington, County of New Castle,
State of Delaware, and the address of the registered office
may be changed from time to time by the Board of Directors.
The principal business office of the corporation
shall be located in the City of St. Francis, County of
Milwaukee, State of Wisconsin. The corporation may have such
other offices, either within or without the State of
Wisconsin, as the Board of Directors may designate or as the
business of the corporation may require from time to time.
The registered office of the corporation
required by the Wisconsin Business Corporation Law may be, but
need not be, the same as its place of business in the State of
Wisconsin, and the address of the registered office may be
changed from time to time by the Board of Directors.
ARTICLE II
STOCKHOLDERS
-------------
SECTION 1. Annual Meeting. The annual
--------------
meeting of stockholders shall be held at a time and on a date
in the month of February designated by resolution adopted by
the Board of Directors for the purpose of electing directors
and for the transaction of such other business as may come
before the meeting. If the day fixed for the annual meeting
shall be a legal holiday in the state where the meeting is to
be held, such meeting shall be held on the next succeeding
business day. If the election of directors shall not be held
on the day designated herein for the annual meeting of the
stockholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special
meeting of the stockholders as soon thereafter as is
convenient.
SECTION 2. Special Meeting. Special
---------------
meetings of the stockholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the
Chief Executive Officer or by the Board of Directors.
SECTION 3. Place of Meeting. The Board
---------------
of Directors may designate any place, either within or without
the State of Delaware, as the place of meeting for any annual
meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting
be otherwise called, the place of meeting shall be the
principal business office of the corporation in the State of
Wisconsin.
SECTION 4. Notice of Meeting. Written
-----------------
notice stating the place, day and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be delivered not less than
ten days nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction
of the Chief Executive Officer, or the Secretary, or the
officer or persons calling the meeting, to each stockholder of
record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be given when deposited in the
United States mail, addressed to the stockholder at the
stockholder's address as it appears on the records of the
corporation, with postage thereon prepaid. Any previously
scheduled meeting of the stockholders may be postponed, and
any special meeting of the stockholders may be cancelled, by
resolution of the Board of Directors upon public notice given
prior to the date previously scheduled for such meeting of
stockholders.
SECTION 5. Fixing of Record Date. For
---------------------
the purpose of determining stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend, or in
order to make a determination of stockholders for any other
proper purpose, the Board of Directors of the corporation may
fix in advance a date as the record date for any such
determination of stockholders, such date in any case to be not
more than sixty days and, in case of a meeting of
stockholders, not less than ten days prior to the date on
which the particular action, requiring such determination of
stockholders, is to be taken. If no record date is fixed for
the determination of stockholders entitled to notice of or to
vote at a meeting of stockholders, or stockholders entitled to
receive payment of a dividend, the close of business on the
date next preceding the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may
be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled
to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to
any adjournment thereof; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 6. Voting Lists. The officer
------------
or agent having charge of the stock ledger of the corporation
shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to
vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of
shares held by each; which list, for a period of ten days
prior to such meeting, shall be kept at the place where the
meeting is to be held, or at another place within the city
where the meeting is to be held, which other place shall be
specified in the notice of meeting and the list shall be
subject to inspection by any stockholder for any purpose
germane to the meeting, at any time during usual business
hours. Such list shall also be produced and kept open at the
time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the
meeting. The original stock ledger shall be prima facie
evidence as to who are the stockholders entitled to examine
such list or ledger or to vote at any meeting of stockholders.
Failure to comply with the requirements of this section will
not affect the validity of any action taken at such meeting.
SECTION 7. Quorum. A majority of the
------
shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. If a
quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders, unless
the vote of a greater number or voting by classes is required
by Delaware law, the Articles of Incorporation, or these
Bylaws. If less than a majority of the outstanding shares are
represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without
further notice. Any stockholders' meeting, annual or special,
whether or not a quorum is present, may be adjourned from time
to time by the Chairman of the meeting without further notice.
At such adjourned meeting at which a quorum shall be present
or represented, any business may be transacted which might
have been transacted at the meeting as originally called.
SECTION 8. Proxies. At all meetings of
-------
stockholders, a stockholder may vote by proxy executed in
writing by the stockholder or by the stockholder's duly
authorized attorney in fact. Such proxy shall be filed with
the Secretary of the corporation before or at the time of the
meeting. No proxy shall be valid after three years from the
date of its execution, unless otherwise provided in the proxy.
SECTION 9. Voting of Shares. Each
----------------
outstanding share, regardless of class, shall be entitled to
one vote on each matter submitted to a vote at a meeting of
stockholders, except to the extent that the voting rights of
any class or classes are enlarged, limited or denied by the
Articles of Incorporation or in the manner therein provided.
SECTION 10. Voting of Shares by Certain
--------------------------
Holders. Neither treasury shares nor shares of the
- -------
corporation held by another corporation, if a majority of the
shares entitled to vote in the election of directors of such
other corporation is held, directly or indirectly, by the
corporation, shall be entitled to vote or to be counted for
quorum purposes. Nothing in this paragraph shall be construed
as limiting the right of the corporation to vote its own stock
held by it in a fiduciary capacity.
Shares standing in the name of another
corporation, domestic or foreign, may be voted in the name of
such corporation by its President or such other officer as the
President may appoint or pursuant to any proxy executed in the
name of such corporation by its President or such other
officer as the President may appoint in the absence of express
written notice filed with the Secretary that such President or
other officer has no authority to vote such shares.
Shares held by an administrator, executor,
guardian, conservator, trustee in bankruptcy, receiver or
assignee for creditors may be voted by such administrator,
executor, guardian, conservator, trustee in bankruptcy,
receiver or assignee for creditors, either in person or by
proxy, without a transfer of such shares into the name of such
administrator, executor, guardian, conservator, trustee in
bankruptcy, receiver or assignee for creditors. Shares
standing in the name of a fiduciary may be voted by such
fiduciary, either in person or by proxy.
A stockholder whose shares are pledged shall be
entitled to vote such shares unless in the transfer by the
pledgor on the books of the corporation the pledgor has
expressly empowered the pledgee to vote thereon, in which case
only the pledgee, or the pledgee's proxy, may represent such
stock and vote thereon.
SECTION 11. Stockholder Proposals. No
---------------------
proposal for a stockholder vote shall be submitted by a
stockholder (a "Stockholder Proposal") to the corporation's
stockholders unless the stockholder submitting such proposal
(the "Proponent") shall have filed a written notice setting
forth with particularity (i) the names and business addresses
of the Proponent and all Persons acting in concert with the
Proponent (ii) the name and address of the Proponent and the
Persons identified in clause (i), as they appear on the
corporation's books (if they so appear), (iii) the class and
number of shares of the corporation beneficially owned by the
Proponent and the Persons identified in clause (i); (iv) a
description of the Stockholder Proposal containing all
material information relating thereto; and (v) whether the
Proponent or any Person identified in clause (i) intends to
solicit proxies from holders of a majority of shares of the
corporation entitled to vote on the Stockholder Proposal. The
Proponent shall also submit such other information as the
Board of Directors reasonably determines is necessary or
appropriate to enable the Board of Directors and stockholders
to consider the Stockholder Proposal. As used in this
Section, the term "Person" means any individual, partnership,
firm, corporation, association, trust, unincorporated
organization or other entity.
The presiding officer at any stockholders'
meeting may determine that any Stockholder Proposal was not
made in accordance with the procedures prescribed in these
Bylaws or is otherwise not in accordance with law, and if it
is so determined, such officer shall so declare at the meeting
and the Stockholder Proposal shall be disregarded.
The notice required by these Bylaws to be
delivered by the Proponent shall be delivered to the Secretary
at the principal executive office of the corporation (i) not
less than ninety (90) days before nor more than one hundred
twenty (120) days before the first anniversary of the
preceding date of the previous year's annual meeting of
stockholders if such Stockholder Proposal is to be submitted
at an annual stockholders' meeting (provided, however, that in
the event that the date of the annual meeting is more than
thirty (30) days before or more than sixty (60) days after
such anniversary date, notice by the stockholder to be timely
must be so delivered not earlier than the close of business on
the one hundred twentieth (120th) day prior to such annual
meeting and not later than the close of business on the later
of the ninetieth (90th) day prior to such annual meeting or
the tenth (10th) day following the day on which public
announcement of the date of such annual meeting is first made
by the corporation) and (ii) no later than the close of
business on the fifteenth (15th) day following the day on
which notice of the date of a special meeting of stockholders
was given if the Stockholder Proposal is to be submitted at a
special stockholders' meeting (provided, however, if notice of
the date of the special meeting of stockholders was given less
than twenty (20) days before the date of the special meeting
of stockholders, the notice required by these Bylaws to be
given by the Proponent shall be delivered no later than the
close of business on the fifth (5th) day following the day on
which notice of the special stockholder's meeting was given).
In no event shall the public announcement of an adjournment of
an annual or special meeting commence a new time period forthe
giving of a stockholder's notice as described above.
SECTION 12. Inspectors of Election;
----------------------
Opening and Closing the Polls. The Board of
- -----------------------------
Directors by resolution shall appoint one or more inspectors,
which inspector or inspectors may include individuals who
serve the corporation in other capacities, including without
limitation, as officers, employees, agents or representatives,
to act at the meetings of stockholders and make a written
report thereof. One or more persons may be designated as
alternate inspectors to replace any inspector who fails to
act. If no inspector or alternate has been appointed to act
or is able to act at a meeting of stockholders, the Chairman
of the meeting shall appoint one or more inspectors to act at
the meeting. Each inspector, before discharging his or her
duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to
the best of his or her ability. The inspector shall have the
duties prescribed by law.
The Chairman of the meeting shall fix and
announce at the meeting the date and time of the opening and
closing of the polls for each matter upon which the
stockholders will vote at a meeting.
SECTION 13. Stockholder Consent
-------------------
Procedures. (a) Record Date for Action by Written
- ----------
Consent. In order that the corporation may determine the
stockholders entitled to consent to corporate action in
writing without a meeting, the Board of Directors may fix a
record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the
Board of Directors, and which date shall not be more than 10
days after the date upon which the resolution fixing the
record date is adopted by the Board of Directors. Any
stockholder of record seeking to have the stockholders
authorize or take corporate action by written consent shall,
by written notice to the Secretary, request the Board of
Directors to fix a record date. The Board of Directors shall
promptly, but in all events within 10 days after the date on
which such a request is received, adopt a resolution fixing
the record date. If no record date has been fixed by the
Board of Directors within 10 days after the date on which such
a request is received, the record date for determining
stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first
date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in Delaware,
its principal place of business or to any officer or agent of
the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be
by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is
required by applicable law, the record date for determining
stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on
the date on which the Board of Directors adopts the resolution
taking such prior action.
<PAGE>
(b) Inspectors of Written Consent. In the event
of the delivery, in the manner provided by Section 13(a), to
the corporation of the requisite written consent or consents
to take corporate action and/or any related revocation or
revocations, the corporation shall engage nationally
recognized independent inspectors of elections for the purpose
of promptly performing a ministerial review of the validity of
the consents and revocations. For the purpose of permitting
the inspectors to perform such review, no action by written
consent without a meeting shall be effective until such date
as the independent inspectors certify to the corporation that
the consents delivered to the corporation in accordance with
Section 13(a) represent at least the minimum number of votes
that would be necessary to take the corporate action. Nothing
contained in this paragraph shall in any way be construed to
suggest or imply that the Board of Directors or any
stockholder shall not be entitled to test the validity of any
consent or revocation thereof, whether before or after such
certification by the independent inspectors, or to take any
other action (including, without limitation, the commencement,
prosecution or defense of any litigation with respect thereto,
and the seeking of injunctive relief in such litigation).
(c) Effectiveness of Written Consent. Every
written consent shall bear the signature of each stockholder
who signs the consent and no written consent shall be
effective to take the corporate action referred to therein
unless, within 60 days of the date the earliest dated written
consent was received in accordance with Section 13(a), a
written consent or consents signed by a sufficient number of
holders to take such action are delivered to the Corporation
in the manner prescribed in Section 13(a).
<PAGE>
ARTICLE III
BOARD OF DIRECTORS
------------------
SECTION 1. General Powers. The
--------------
business and affairs of the corporation shall be managed by
its Board of Directors.
SECTION 2. Number. Tenure and
------------------
Qualifications. The number of directors of the
- --------------
corporation shall be thirteen. Two of the three classes of
Directors established by the corporation's Certificate of
Incorporation shall consist of four members and the third
class shall consist of five members. Each director shall hold
office for the term provided in the Certificate of
Incorporation and until such director's successor shall have
been elected and qualified, or until such director's earlier
death or resignation. No director shall be or be deemed to be
removed from office prior to the expiration of such director's
term in office by virtue of a reduction in the number of
directors. Directors need not be residents of the State of
Delaware or stockholders of the corporation.
SECTION 3. Annual Meetings. An annual
---------------
meeting of the Board of Directors shall be held without other
notice than this Bylaw immediately after, and at the same
place as, the Annual Meeting of Stockholders.
SECTION 4. Special Meetings. Special
----------------
meetings of the Board of Directors may be called by or at the
request of the Chairman or any two directors. The person or
persons authorized to call special meetings of the Board of
Directors may fix any place, either within or without the
State of Delaware, as the place for holding any special
meeting of the Board of Directors called by them.
SECTION 5. Notice. Notice of any
------
special meeting shall be given at least 48 hours previous
thereto by written notice delivered personally or mailed to
each director at such director's business address, or by
telegram. If mailed, such notice shall be deemed to be given
when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be given when the telegram is
delivered to the telegraph company. Any director may waive
notice of any meeting. The attendance of a director at a
meeting shall constitute a waiver of notice of such meeting,
except where a director attends a meeting and objects thereat
to the transaction of any business because of the meeting is
not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special
meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
SECTION 6. Quorum. A majority of the
------
number of directors fixed by Section 2 of this Article III
shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without
further notice.
SECTION 7. Manner of Acting. The act
----------------
of the majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of
Directors.
SECTION 8. Nomination of Directors;
-----------------------
Vacancies. Candidates for director shall be
- ---------
nominated either (i) by the Board of Directors or a committee
appointed by the Board of Directors or (ii) by nomination at
any stockholders' meeting by or on behalf of any stockholder
entitled to vote at such meeting provided that written notice
of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the secretary of the
corporation not later than (1) with respect to an election to
be held at an annual meeting of stockholders, ninety (90) days
in advance of such meeting, and (2) with respect to an
election to be held at a special meeting of stockholders for
the election of directors, the close of business on the tenth
(10th) day following the date on which notice of such meeting
is first given to stockholders. Each such notice shall set
forth: (a) the name and address of the stockholder who intends
to make the nomination and of the person or persons to be
nominated; (b) a representation that the stockholder is a
holder of record of stock of the corporation entitled to vote
at such meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made
by the stockholder; (d) such other information regarding each
nominee proposed by such stockholder as would be required to
be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had the
nominee been nominated, or intended to be nominated, by the
Board of Directors; and (e) the consent of each nominee to
serve as a director of the corporation if so elected. The
presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the
foregoing procedure.
Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of
directors, may be filled for the remainder of the unexpired
term by the affirmative vote of a majority of the directors
then in office although less than a quorum.
SECTION 9. Action by Directors Without
---------------------------
a Meeting. Any action required to be taken at a
- ---------
meeting of directors, or at a meeting of a committee of
directors, or any other action which may be taken at a
meeting, may be taken without a meeting if a consent in
writing setting forth the action so taken shall be signed by
all of the directors or members of the committee thereof
entitled to vote with respect to the subject matter thereof
and such consent shall have the same force and effect as a
unanimous vote.
SECTION 10. Participation in a Meeting
--------------------------
by Telephone. Members of the Board of Directors
- ------------
or any committee of directors may participate in a meeting of
such Board or committee by means of conference telephone or
similar communication equipment by means of which all persons
participating in the meeting can hear each other, and
participating in a meeting pursuant to this section 10 shall
constitute presence in person at such meeting.
SECTION 11. Compensation. The Board of
------------
Directors, by majority vote of the directors then in office
and irrespective of any personal interest of any of its
members, shall have authority to establish reasonable
compensation of all directors for services to the corporation
as directors, officers or otherwise, or to delegate such
authority to an appropriate committee. The Board of Directors
also shall have authority to provide for reasonable pensions,
disability or death benefits, and other benefits or payments,
to directors, officers and employees and to their estates,
families, dependents and beneficiaries on account of prior
services rendered by such directors, officers and employees to
the corporation. The Board of Directors may be paid their
expenses, if any, of attendance at each such meeting of the
Board.
SECTION 12. Presumption of Assent. A
---------------------
director of the corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is
taken shall be presumed to have assented to the action taken
unless such director's dissent is entered in the minutes of
the meeting or unless such director files a written dissent to
such action with the person acting as the Secretary of the
meeting before the adjournment thereof or forwards such
dissent by registered mail to the Secretary of the corporation
immediately after the adjournment of the meeting. Such right
to dissent shall not apply to a director who voted in favor of
such action.
SECTION 13. Validity of Contracts. No
---------------------
contract or other transaction entered into by the corporation
shall be affected by the fact that a director or officer of
the corporation is in any way interested in or connected with
any party to such contract or transaction, or is a party to
such contract or transaction, even though in the case of a
director the vote of the director having such interest or
connection shall have been necessary to obligate the
corporation upon such contract or transaction; provided,
however, that in any such case (i) the material facts of such
interest are known or disclosed to the directors or
stockholders and the contract or transaction is authorized or
approved in good faith by the stockholders or by the Board of
Directors or a committee thereof through the affirmative vote
of a majority of the disinterested directors (even though not
a quorum), or (ii) the contract or transaction is fair to the
corporation as of the time it is authorized, approved or
ratified by the stockholders, or by the Board of Directors, or
by a committee thereof.
SECTION 14. Indemnification and
-------------------
Insurance. Each person who was or is made a
- ---------
party or is threatened to be made a party to or is involved in
any action, suit, arbitration, mediation or proceeding,
whether civil, criminal, administrative or investigative,
whether domestic or foreign (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or
she is the legal representative, is or was a director or
officer of the corporation or is or was serving at the request
of the corporation as a director, officer, employee or agent
of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding
is alleged action or inaction in an official capacity as a
director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee or agent, shall
be indemnified and held harmless by the corporation to the
fullest extent not prohibited by the General Corporation Law
of the State of Delaware, as the same exists or may hereafter
be amended (but, in the case of any such amendment, with
respect to alleged action or inaction occurring prior to such
amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than
said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including
without limitation attorneys' fees and expenses, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such
person in connection therewith. Such indemnification as to
such alleged action or inaction shall continue as to a person
who has ceased after such alleged action or inaction to be a
director, officer, employee or agent and shall inure to the
benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in the
- -------- -------
following paragraph, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding
(or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board
unless such proceeding (or part thereof) is a counter claim,
cross-claim, third party claim or appeal brought by such
person in any proceeding. The right to indemnification
conferred in this Section shall be a contract right and shall
include the right to be paid by the corporation the expenses
incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if the General
- -------- -------
Corporation law of the State of Delaware requires, the payment
of such expenses incurred by a director or officer in his or
her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person
while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery
to the corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it
shall ultimately be determined by final judicial decision from
which there is no further appeal that such director or officer
is not entitled to be indemnified for such expenses under this
Section or otherwise. The corporation may, by action of the
Board, provide indemnification to an employee or agent of the
corporation or to a director, trustee, officer, employee or
agent of another corporation or of a partnership, joint
venture, trust or other enterprise of which the corporation
owns fifty percent or more with the same scope and effect as
the foregoing indemnification of directors and officers or
such lesser scope and effect as shall be determined by action
of the Board.
If a claim under the preceding paragraph is not paid
in full by the corporation within thirty days after a written
claim has been received by the corporation, the claimant may
at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and, if successful in
whole or in part in any such claim or suit, or in a claim or
suit brought by the corporation to recover an advancement of
expenses under this paragraph, the claimant shall be entitled
to be paid also the expense of prosecuting or defending any
such claim or suit. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is
required, has been tendered to the corporation) that the
claimant has not met the applicable standard of conduct which
make it permissible under the General Corporation Law of the
State of Delaware for the corporation to indemnify the
claimant for the amount claimed, but the burden of proving
such defense shall be on the corporation. Neither the failure
of the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct
set forth in the General Corporation Law of the State of
Delaware, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel,
or its stockholders) that the claimant has not met such
applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, shall be a defense
to the action or create a presumption that the claimant has
not met the applicable standard of conduct. In any suit
brought by such person to enforce a right to indemnification
or to an advancement of expenses hereunder, or by the
corporation to recover an advancement of expenses hereunder,
the burden of proving that such person is not entitled to be
indemnified, or to have or retain such advancement of
expenses, shall be on the corporation.
The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be
exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested directors or otherwise.
The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee
or agent of the corporation or another corporation,
partnership, joint venture, trust or other enterprise against
any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person
against such expense, liability or loss under the General
Corporation Law of the State of Delaware.
In the event that any of the provisions of this
Section 14 (including any provision within a single section,
paragraph or sentence) is held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable,
the remaining provisions are severable and shall remain
enforceable to the full extent permitted by law.
SECTION 15. Committees of Directors.
-----------------------
The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the
corporation. The Board may designate one or more directors as
alternate committee members, who may replace any absent or
disqualified member at any committee meeting. In the absence
or disqualification of a committee member, the member or
members present at any meeting and not disqualified from
voting, whether such member or members constitute a quorum,
may unanimously appoint another director to act at the meeting
in place of the absent or disqualified member. Any such
committee shall have and may exercise all the powers and
authority of the Board of Directors in the management of the
business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or
authority in reference to amending the Certificate of
Incorporation (except that a committee may, to the extent
authorized in the resolution(s) providing for the issuance of
shares of stock adopted by the Board, fix any of the
preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of
the corporation), adopting an agreement of merger or
consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation
of a dissolution, or amending the Bylaws of the corporation;
and, unless the resolution expressly so provides, no such
committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock, or to adopt a
certificate of ownership and merger.
ARTICLE IV
OFFICERS
--------
SECTION 1. Number. The officers of the
------
corporation shall be a Chairman of the Board (who must be a
member of the Board of Directors and who also may be an
employee of the corporation), a Chief Executive Officer, a
President, one or more Vice Presidents (the number thereof to
be determined by the Board of Directors), a Secretary, a
Treasurer and a Controller, each of whom shall be elected by
the Board of Directors. The Board of Directors may also elect
a Chief Operating Officer and one or more Group Presidents and
may designate one or more of the Vice Presidents as Executive
Vice Presidents or Senior Vice Presidents. Such other
officers and assistant officers and agents as may be deemed
necessary may be elected or appointed by the Board of
Directors. Any two or more offices may be held by the same
person, except the offices of President and Secretary, and the
offices of President and Vice President.
SECTION 2. Election and Term of Office.
--------------------------
The officers of the corporation shall be elected annually by
the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the stockholders.
If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as convenient.
Each officer shall hold office until such officer's successor
shall have been duly elected or until such officer's death or
until such officer shall resign or shall have been removed in
the manner hereinafter provided.
SECTION 3. Removal. Any officer or
-------
agent elected or appointed by the Board of Directors may be
removed by the Board of Directors whenever in its judgment the
best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or
appointment shall not of itself create contract rights.
SECTION 4. Vacancies. A vacancy in any
---------
office because of death, resignation, removal,
disqualification or otherwise, may be filled by the Board of
Directors for the unexpired portion of the term.
SECTION 5. Chairman of the Board. The
---------------------
Chairman of the Board shall preside at all meetings of the
Board of Directors and stockholders.
SECTION 6. Chief Executive Officer.
-----------------------
The Chief Executive Officer shall be the principal executive
officer of the corporation and, subject to the control of the
Board of Directors, shall supervise and control all of the
business and affairs of the corporation, and establish current
and long-range objectives, plans and policies. The Chief
Executive Officer shall have authority, subject to such rules
as may be prescribed by the Board of Directors, to appoint
such agents and employees of the corporation as the Chief
Executive Officer shall deem necessary, to prescribe their
powers, duties and compensation, and to delegate authority to
them. Such agents and employees shall hold office at the
discretion of the Chief Executive Officer. The Chief
Executive Officer shall have authority to sign, execute and
acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or
proper to be executed in the course of the corporation's
regular business or which shall be authorized by resolution of
the Board of Directors; and, except as otherwise provided by
law or the Board of Directors, the Chief Executive Officer may
authorize the President, an Executive Vice President, Senior
Vice President, or other officer or agent of the corporation
to sign, execute and acknowledge such documents or instruments
in the Chief Executive Officer's place and stead. In general,
the Chief Executive Officer shall perform all duties incident
to the office of Chief Executive Officer and such other duties
as may be prescribed by the Board of Directors from time to
time. In the absence of the Chairman of the Board, the Chief
Executive Officer shall, when present, preside at all meetings
of the stockholders and the Board of Directors.
SECTION 7. President. The President
---------
shall direct, administer and coordinate the activities of the
corporation in accordance with policies, goals and objectives
established by the Chief Executive Officer and the Board of
Directors. The President shall also assist the Chief
Executive Officer in the development of corporate policies and
goals. In the absence of both the Chairman of the Board and
the Chief Executive Officer, the President shall, when
present, preside at all meetings of the stockholders and the
Board of Directors.
SECTION 8. The Chief Operating Officer,
--------------------------
Group Presidents and the Vice Presidents. In the
- ----------------------------------------
absence of the President or in the event of the President's
death, inability or refusal to act, the Chief Operating
Officer, the Group Presidents and the Executive Vice
Presidents in the order designated at the time of their
election, or, in the absence of any designation, then in the
order of their election (or in the event there be no Chief
Operating Officer, Group Presidents or Executive Vice
Presidents or they are incapable of acting, the Senior Vice
Presidents in the order designated at the time of their
election, or, in the absence of any designation, then in the
order of their election) shall perform the duties of the
President, and when so acting shall have all the powers of and
be subject to all the restrictions upon the President. The
Board of Directors may designate certain Vice Presidents as
being in charge of designated divisions, plants, or functions
of the corporation's business and add appropriate description
to their title. Any Chief Operating Officer, Group President
or Vice President may sign, with the Secretary or an Assistant
Secretary, certificates for shares of the corporation; and
shall perform such other duties as from time to time may be
assigned to such Chief Operating Officer, Group President or
Vice President by the Chief Executive Officer or by the Board
of Directors.
SECTION 9. The Secretary. The
-------------
Secretary shall: (a) keep the minutes of the stockholders'
and of the Board of Directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these Bylaws or as
required by law; (c) be custodian of the corporate records and
of the seal of the corporation and see that the seal of the
corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly
authorized; (d) keep or cause to be kept a register of the
post office address of each stockholder which shall be
furnished to the Secretary by such stockholder; (e) sign with
the Chief Executive Officer, President, or any Vice President,
certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board of
Directors; (f) have general charge of the stock transfer books
of the corporation; and (g) in general, perform all duties
incident to the office of Secretary and such other duties as
from time to time may be assigned to the Secretary by the
Chief Executive Officer or by the Board of Directors.
SECTION 10. The Treasurer. The
-------------
Treasurer shall give a bond for the faithful discharge of the
Treasurer's duties in such sum and with such surety or
sureties as the Board of Directors shall determine. The
Treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation;
receive and give receipts for monies due and payable to the
corporation from any source whatsoever, and deposit all such
monies in the name of the corporation in such banks, trust
companies or other depositories as shall be selected in
accordance with the provisions of Article VI of these Bylaws;
and (b) in general, perform all of the duties incident to the
office of Treasurer and such other duties as from time to time
may be assigned to the Treasurer by the Chief Executive
Officer or by the Board of Directors.
SECTION 11. The Controller. The
--------------
Controller shall: (a) keep, or cause to be kept, correct and
complete books and records of account, including full and
accurate accounts of receipts and disbursements in books
belonging to the corporation; and (b) in general, perform all
duties incident to the office of Controller and such other
duties as from time to time may be assigned to the Controller
by the Chief Executive Officer or by the Board of Directors.
SECTION 12. Assistant Secretaries and
-------------------------
AssistantTreasurers. The Assistant Secretaries
- -------------------
may sign with the President, or any Vice President,
certificates for shares of the corporation, the issuance of
which shall have been authorized by a resolution of the Board
of Directors. Assistant Treasurers shall respectively give
bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall
determine. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties as shall be
assigned to them by the Secretary or the Treasurer,
respectively, or by the Chief Executive Officer or the Board
of Directors.
SECTION 13. Salaries. The salaries of
--------
the officers shall be fixed from time to time by the Board of
Directors and no officer shall be prevented from receiving
such salary by reason of the fact that such officer is also a
director of the corporation.
ARTICLE V
APPOINTED EXECUTIVES
---------------------
SECTION 1. Vice Presidents. The Chief
---------------
Executive Officer may appoint, from time to time, as the Chief
Executive Officer may see fit, and fix the compensation of,
one or more Vice Presidents whose title will include words
describing the function of such Vice President's office and
the group, division or other unit of the Company in which such
Vice President's office is located. Each of such appointed
Vice Presidents shall hold office during the pleasure of the
Chief Executive Officer, shall perform such duties as the
Chief Executive Officer may assign, and shall exercise the
authority set forth in the Chief Executive Officer's letter
appointing such Vice President.
SECTION 2. Assistants. The Chief
----------
Executive Officer may appoint, from time to time, as the Chief
Executive Officer may see fit, and fix the compensation of,
one or more Assistants to the Chairman, one or more Assistants
to the President, and one or more Assistants
to the Vice Presidents, each of whom shall hold office during
the pleasure of the Chief Executive Officer, and shall perform
such duties as the Chief Executive Officer may assign.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
-------------------------------------
SECTION 1. Contracts. The Board of
---------
Directors may authorize any officer or officers, agent or
agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation,
and such authority may be general or confined to specific
instances.
SECTION 2. Loans. No loans shall be
-----
contracted on behalf of the corporation and no evidences of
indebtedness shall be issued in its name unless authorized by
a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks, Drafts, etc. All
-------------------
checks, drafts or other orders for the payment of money, notes
or other evidences of indebtedness issued in the name of the
corporation, shall be signed by such officer or officers,
agent or agents, of the corporation and in such manner as
shall from time to time be determined by resolution of the
Board of Directors.
SECTION 4. Deposits. All funds of the
--------
corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks,
trust companies or other depositories as the Board of
Directors may select.
<PAGE>
ARTICLE VII
CERTIFICATE FOR SHARES AND THEIR TRANSFER
-----------------------------------------
SECTION 1. Certificates for Shares.
-----------------------
Certificates representing shares of the corporation shall be
in such form as shall be determined by the Board of Directors.
Such certificates shall be signed by the Chief Executive
Officer, President, or any Vice President and by the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant
Secretary. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the corporation with the same
effect as if such person were such officer, transfer agent, or
registrar at the date of issue. All certificates for shares
shall be consecutively numbered or otherwise identified. The
name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of
issue, shall be entered on the stock ledger of the
corporation.
All certificates surrendered to the corporation
for transfer shall be canceled and no new certificate shall be
issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that
in the case of a lost, destroyed or mutilated certificate, a
new one may be issued therefor upon such terms and indemnity
to the corporation as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares.
------------------
Transfer of shares of the corporation shall be made only on
the stock ledger of the corporation by the holder of record
thereof or by such person's legal representative, who shall,
if so required, furnish proper evidence of authority to
transfer, or by such person's attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary
of the corporation, and on surrender for cancellation of the
certificate for such shares. The person in whose name shares
stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
ARTICLE VIII
FISCAL YEAR
-----------
The fiscal year of the corporation shall begin
on the first day of November and end on the thirty-first day
of October in each year.
ARTICLE IX
DIVIDENDS
----------
The Board of Directors may from time to time
declare, and the corporation may pay, dividends on its
outstanding shares in the manner and upon the terms and
conditions provided by law and by the Articles of
Incorporation.
ARTICLE X
SEAL
----
The Board of Directors shall provide a corporate
seal which shall be circular in form and shall have inscribed
thereon the name of the corporation and the state of
incorporation and the words "Corporate Seal".
ARTICLE XI
WAIVER OF NOTICE
----------------
Whenever any notice is required to be given to
any stockholder or director of the corporation under the
provisions of these Bylaws or under the provisions of the
Articles of Incorporation or under the provisions of the
Delaware General Corporation Law, a waiver thereof in writing,
signed at any time by the person or persons entitled to such
notice of the meeting, shall be deemed equivalent to the
giving of such notice.
ARTICLE XII
AMENDMENTS
----------
These Bylaws may be amended or repealed and new
Bylaws may be adopted by the Board of Directors at any regular
or special meeting thereof only with the affirmative vote of
at least 80% of the total number of Directors.<PAGE>
Exhibit 11
- ----------
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CALCULATION OF EARNINGS PER SHARE
- ---------------------------------
(Dollar amounts in thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended July
July 31,
---------------------
1998 1997
-------- -------
<S> <C> <C>
Average Shares Outstanding
Basic 46,339 47,972
====== ======
Diluted 46,339 48,377
====== ======
Income (Loss) from
Continuing Operations,
after the 1998 restructuring
and unusual charges $(38,604) $30,072
Income from Discontinued Operation,
net of applicable income taxes - 5,818
Gain on Sale of
Discontinued Operation,
net of applicable
income taxes - -
--------- -------
Net Income (Loss) $(38,604) $35,890
========= =======
Earnings Per Share-Basic
Income (loss) from
continuing operations $ (0.83) $ 0.63
Income from and net
gain on sale of
discontinued operation - 0.12
-------- ---------
Net Income (Loss) $ (0.83) $ 0.75
Earnings Per Share-Diluted ==================
Income (loss) from
continuing operations $ (0.83) $ 0.62
Income from and net
gain on sale of
discontinued operation - 0.12
-------- -------
Net Income (Loss) $ (0.83)$ 0.74
========= =========
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
- ------------------------------
CALCULATION OF EARNINGS PER SHARE
- ---------------------------------
(Dollar amounts in thousands except per share amounts)
Nine Months Ended July 31,
--------------------
1998 1997
-------- -------
<S> <C> <C>
Average Shares Outstanding
Basic 46,499 47,876
====== ========
Diluted 46,499 48,347
====== ========
Income (Loss) from
Continuing Operations,
after the 1998 restructuring
and unusual charges $(136,401) $ 94,532
Income from Discontinued Operation,
net of applicable income taxes 4,376 17,187
Gain on Sale of Discontinued
Operation,
net of applicable
income taxes 151,500 -
---------- ---------
Net Income (Loss) $ 19,475 $111,719
========== =========
Earnings Per Share-Basic
Income (loss) from
continuing operations $ (2.93) $ 1.98
Income from and net
gain on sale of
discontinued operation 3.35 0.36
--------- ---------
Net Income (Loss) $ 0.42 $ 2.34
========== =========
Earnings Per Share-Diluted
Income (loss) from
continuing operations $ (2.93) $ 1.96
Income from and net
gain on sale of
discontinued operation 3.35 0.35
--------- ---------
Net Income (Loss) $ 0 .42 $ 2.31
========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> JUL-31-1998
<CASH> 48,579
<SECURITIES> 0
<RECEIVABLES> 703,812
<ALLOWANCES> 6,514
<INVENTORY> 590,766
<CURRENT-ASSETS> 1,489,502
<PP&E> 1,127,326
<DEPRECIATION> 513,077
<TOTAL-ASSETS> 2,746,400
<CURRENT-LIABILITIES> 986,304
<BONDS> 881,835
0
0
<COMMON> 51,669
<OTHER-SE> 650,414
<TOTAL-LIABILITY-AND-EQUITY> 2,746,400
<SALES> 1,538,852
<TOTAL-REVENUES> 1,550,087
<CGS> 1,383,450
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 65,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,636
<INCOME-PRETAX> (283,968)
<INCOME-TAX> (107,150)
<INCOME-CONTINUING> (136,401)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,475
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
