SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
X Annual Report Pursuant to Section 15 (d) of the Securities Exchange Act of
1934 For the Fiscal Year Ended October 31, 1998
Transition Report Pursuant to Section 15 (d) of the Securities Exchange
Act of 1934 For the transition period from to
Commission file number:
Harnischfeger Industries
Employees' Savings Plan 1-9299
A. Full title of the Plan and the address of the Plan, if different from
that of the issuer named below:
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office:
Harnischfeger Industries, Inc.
3600 South Lake Drive
St. Francis, Wisconsin 53235-3716
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the Harnischfeger Industries
Employees' Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Harnischfeger Industries Employees' Savings Plan (the "Plan") at October
31, 1998 and 1997, and the changes in net assets available for benefits for the
years then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Plan's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The additional information included in
Schedules I and II is presented for purposes of additional analysis and is not a
required part of the basic financial statements but is additional information
required by the Employee Retirement Income Security Act of 1974. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/x/ PricewaterhouseCoopers LLP
April 9, 1999
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT OCTOBER 31, 1998
Fidelity Fidelity
Fidelity Equity Fidelity Spartan Harnischfeger Asset PIMCO
Magellan Income Fixed Income Overseas U.S Equity Manager Stock Manager Total Return
Fund Fund Fund Fund Index Fund Fund Fund Fund
------------ --------- --------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments -
Fixed income fund - - 79,944,734 - - - - -
Mutual stock funds - 31,351,186 - 5,928,842 15,767,914 - - -
Balanced funds - - - - - - 4,373,182 4,242,573
Growth funds 62,190,970 - - - - - - -
Harnischfeger common
stock fund - - - - - 14,058,265 - -
Loans to participants - - - - - - - -
----------- ---------- ---------- --------- ---------- ---------- --------- ---------
Total Investments 62,190,970 31,351,186 79,944,734 5,928,842 15,767,914 14,058,265 4,373,182 4,242,573
----------- ---------- ---------- --------- ---------- ---------- --------- ---------
Receivables -
Employee contributions 20,972 8,897 20,972 1,907 3,813 1,907 1,271 1,271
Employer contributions 7,252 4,149 20,166 1,844 2,129 5,458 1,158 2,161
----------- ---------- ---------- --------- --------- ----------- --------- ---------
Total Receivables 28,224 13,046 41,138 3,751 5,942 7,365 2,429 3,432
----------- ---------- ---------- --------- --------- ----------- --------- ---------
Total Assets 62,219,194 31,364,232 79,985,872 5,932,593 15,773,856 14,065,630 4,375,611 4,246,005
----------- ---------- --------- ---------- ---------- ----------- --------- ---------
LIABILITIES:
Accrued expenses - - 16,356 - - - - -
----------- ---------- ----------- ---------- ---------- --------- --------- ---------
NET ASSETS AVAILABLE
----------- ---------- ----------- ---------- ---------- ---------- --------- ---------
FOR BENEFITS 62,219,194 31,364,232 79,969,516 5,932,593 15,773,856 14,065,630 4,375,611 4,246,005
========== ========== ========== ========= ========== ========== ========= =========
PIMCO
PBHG Capital
Growth Appreciation Loans to
Fund Fund Participants Total
- --------- ----------- ----------- ---------
ASSETS:
Investments -
Fixed income fund - - - 79,944,734
Mutual stock funds - - - 53,047,942
Balanced funds - - - 8,615,755
Growth funds 2,189,232 3,646,837 - 68,027,039
Harnischfeger common
stock fund - - - 14,058,265
Loans to participants - - 4,146,036 4,146,036
--------- --------- --------- -----------
Total Investments 2,189,232 3,646,837 4,146,036 227,839,771
--------- --------- --------- -----------
Receivables -
Employee contributions 636 1,907 - 63,553
Employer contributions 1,044 89 - 45,450
--------- --------- --------- -----------
Total Receivables 1,680 1,996 109,003
--------- --------- --------- -----------
Total Assets 2,190,212 3,648,833 4,146,036 227,948,774
--------- --------- --------- -----------
LIABILITIES:
Accrued expenses - - - 16,356
--------- --------- --------- -----------
NET ASSETS AVAILABLE
--------- --------- --------- -----------
FOR BENEFITS 2,190,912 3,648,833 4,146,036 227,932,418
========= ========= ========= ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
AT OCTOBER 31, 1997
Fidelity Fidelity
Fidelity Equity Fidelity Spartan Harnischfeger Asset PIMCO
Magellan Income Fixed Income Overseas U.S Equity Manager Stock Manager Total Return
Fund Fund Fund Fund Index Fund Fund Fund Fund
------------ --------- --------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments -
Fixed income fund - - 90,505,365 - - - - -
Mutual stock funds - 34,474,806 - 7,378,819 14,448,834 - - -
Mutual bond fund - - - - - - - -
Balanced funds - - - - - - 4,227,919 599,249
Growth funds 62,096,161 - - - - - - -
Harnischfeger common
stock fund - - - - - 31,221,844 - -
Loans to participants - - - - - - - -
----------- ---------- ---------- --------- ---------- ---------- --------- ---------
Total Investments 62,096,161 34,474,806 90,505,365 7,378,819 14,448,834 31,221,844 4,227,919 599,249
----------- ---------- ---------- --------- ---------- ---------- --------- ---------
Receivables -
Employee contributions 121,551 80,809 134,593 17,586 35,561 18,483 8,946 18,304
----------- ---------- ---------- --------- ---------- ----------- --------- ---------
Total Assets 62,217,712 34,555,615 90,639,958 7,396,405 14,484,395 31,240,327 4,236,865 617,553
----------- ---------- --------- ---------- ---------- ----------- --------- ---------
LIABILITIES:
Accrued expenses - - 17,951 - - - - -
----------- ---------- ----------- ---------- ---------- --------- --------- ---------
NET ASSETS AVAILABLE
----------- ---------- ----------- ---------- ---------- ---------- --------- ---------
FOR BENEFITS 62,217,712 34,555,615 90,622,007 7,396,405 14,484,395 31,240,327 4,236,865 617,553
========== ========== ========== ========= ========== ========== ========= =========
PIMCO
Fidelity PBHG Capital
Intermediate Growth Appreciation Loans to
Bond Fund Fund Fund Participants Total
-------- - --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments -
Fixed income fund - - - - 90,505,365
Mutual stock funds - - - - 56,302,459
Mutual bond fund 3,078,489 - - - 3,078,489
Balanced funds - - - - 4,827,168
Growth funds - 3,305,139 3,177,390 - 68,578,690
Harnischfeger common
stock fund - - - - 31,221,844
Loans to participants - - - 5,294,933 5,294,933
--------- --------- --------- --------- ----------
Total Investments 3,078,489 3,305,139 3,177,390 5,294,933 259,808,948
--------- --------- --------- --------- ----------
Receivables -
Employee contributions 26,294 10,714 6,210 - 479,051
--------- --------- --------- --------- ----------
Total Assets
3,104,783 3,315,853 3,183,600 5,294,933 260,287,999
--------- --------- --------- --------- -----------
LIABILITIES:
Accrued expenses - - - - 17,951
--------- --------- --------- --------- -----------
NET ASSETS AVAILABLE
--------- --------- --------- --------- -----------
FOR BENEFITS 3,104,783 3,315,853 3,183,600 5,294,933 260,270,048
========= ========= ========= ========= ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEE'S SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1998
Fidelity Fidelity Fixed Fidelity Fidelity Spartan
Magellan Equity Income Intermediate Overseas U.S. Equity
Fund Fund Fund Bond Fund Fund Index Fund
---------- --------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest and dividend income 4,738,519 2,137,399 5,317,995 119,248 372,710 473,286
Realized gains (losses) on
sales of investments 1,432,876 1,060,746 - 1,363 111,050 1,063,917
Unrealized appreciation (depreciation
of investments 4,145,483 741,347 - 329 (74,379) 1,691,521
Employer contributions 7,252 4,149 20,166 - 1,844 2,129
Employee contributions 4,898,430 2,767,831 4,459,802 282,340 923,430 1,700,404
Interfund transfers (3,019,987) (1,727,161) (1,498,049) (3,295,853) (1,146,056) 164,670
Withdrawals and distributions (3,480,746) (1,753,770) (9,811,597) (48,511) (384,758) (1,072,590)
---------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) 8,721,827 3,230,541 (1,511,683) (2,941,084 (196,159) 4,023,337
Castings Division transferred out (673,498) (318,446) (2,030,667) (45,946) (42,156) (257,212)
MHE transferred out (7,090,670) (3,258,639) (5,433,393) - (884,697) (1,587,037)
J&L Fibers transferred out (956,177) (2,844,839) (1,676,748) (117,753) (340,800) (889,627)
Net assets at beginning of year 62,217,712 34,555,615 90,622,007 3,104,783 7,396,405 14,484,395
---------- ---------- ----------- ----------- --------- -----------
Net assets at end of year 62,219,194 31,364,232 79,969,516 - 5,932,593 15,773,856
========== ========== ========== =========== ========== ===========
PIMCO
Harnischfeger Fidelity PIMCO PBHG Capital
Common Stock Asset Manager Total Return Growth Appreciation Loans to
Fund Fund Fund Fund Fund Participants Total
----------- ------------- ----------- ---------- --------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and dividend income 313,108 411,479 148,499 9,687 267,847 - 14,309,777
Realized gains (losses) on
sales of investments (4,001,481) 22,409 (98) (159,613) 42,834 - (425,997)
Unrealized appreciation (depreciation
of investments (16,842,270) 20,546 98,179 (483,011) (20,604) - (10,722,859)
Employer contributions 5,458 1,158 2,161 1,044 89 - 45,450
Employee contributions 792,068 523,007 396,627 602,374 538,151 - 17,884,464
Interfund transfers 6,729,625 22,402 3,654,931 (253,491) 418,095 (49,126) -
Withdrawals and distributions (1,191,234) (180,747) (213,589) (249,865) (289,212) (217,102) (18,893,721)
------------ ---------- ---------- ---------- --------- ---------- -----------
Net increase (decrease) (14,194,726) 820,254 4,086,710 (532,875) 957,200 (266,228) 2,197,114
Castings Division transferred out (460,445) (41,085) (2,025) (17,072) (102,004) (3,990,556)
MHE transferred out (2,478,261) (601,870) (456,119) (402,005) (357,715) (439,083) (22,989,489)
J&L Fibers transferred out (41,265) (38,553) (114) (172,989) (134,252) (341,582) (7,554,699)
Net assets at beginning of year 31,240,327 4,236,865 617,553 3,315,853 3,183,600 5,294,933 260,270,048
------------ ---------- ---------- ---------- ---------- ---------- ----------
Net assets at end of year 14,065,630 4,375,611 4,246,005 2,190,912 3,648,833 4,146,036 227,932,418
============ ========== ========== ========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES EMPLOYEE'S SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED OCTOBER 31, 1997
Fidelity Fidelity Fixed Fidelity Fidelity Spartan
Magellan Equity Income Intermediate Overseas U.S. Equity
Fund Fund Fund Bond Fund Fund Index Fund
---------- --------- ---------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest and dividend income 1,890,719 1,773,793 5,651,815 203,214 365,990 296,287
Realized gains (losses) on
sales of investments 1,191,213 640,409 - (6,189) 78,021 648,925
Unrealized appreciation (depreciation
of investments 10,796,938 4,988,690 - 26,180 483,022 1,938,067
Employee contributions 5,324,170 3,110,603 6,242,818 514,953 1,064,395 1,698,361
Interfund transfers (5,253,098) 1,194,213 (2,609,515) (441,997) 1,179 2,995,229
Withdrawals and distributions (3,845,042) (1,861,799)(11,562,833) (283,615) (244,533) (747,306)
---------- ---------- ---------- ----------- ----------- -----------
Net increase (decrease) 10,104,900 9,845,909 (2,277,715) 12,546 1,748,074) 6,829,563
IMPCO Assets transferred in 30,825 9,549 8,595 898 (567) 8,161
MPH Assets transferred in - - 166,169 - 199,201 270,805
Morris Assets transferred in - 51,666 - 19,319 - -
Net assets at beginning of year 52,081,987 24,648,491 92,724,958 3,072,020 5,449,697 7,375,866
---------- ---------- ----------- ----------- --------- -----------
Net assets at end of year 62,217,712 34,555,615 90,622,007 3,104,783 7,396,405 14,484,395
========== ========== ========== =========== ========== ===========
Harnischfeger Fidelity PIMCO PBHG PIMCO
Common Stock Asset Manager Total Return Growth Cadence Cap Loans to
Fund Fund Fund Fund Fund Participants Total
----------- ------------- ----------- ---------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and dividend income 333,816 276,991 16,984 6,692 118,330 - 10,934,631
Realized gains (losses) on
sales of investments 408,434 26,655 (290) (36,676) 884 - 2,951,386
Unrealized appreciation (depreciation
of investments (691,257) 342,372 11,169 97,735 402,632 - 18,395,548
Employee contributions 1,058,709 507,962 87,408 515,917 315,039 - 20,440,335
Interfund transfers (1,410,417) (1,305) 470,368 2,577,616 2,310,121 167,606 -
Withdrawals and distributions (1,600,993) (212,181) (5,628) (17,816) (25,828) (134,659) (20,542,233)
------------ ---------- ---------- ---------- ----------- ---------- ------------
Net increase (decrease) (1,901,708) 940,494 580,011 3,143,468 3,121,178 (32,947) 32,179,667
IMPCO Assets transferred in 7,983 3,042 - 378 - 10,000 78,864
MPH Assets transferred in - - 21,025 131,423 62,422 41,705 892,750
Morris Assets transferred in - 207,280 16,517 40,584 - 19,458 354,824
Net assets at beginning of year 33,134,052 3,086,049 - - - 5,190,823 226,763,943
------------ ---------- ---------- ---------- ---------- ---------- ------------
Net assets at end of year 31,240,327 4,236,865 617,553 3,315,853 3,183,600 5,294,933 260,270,048
============ ========== ========== ========== ========== ========== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
HARNISCHFEGER INDUSTRIES EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1998 AND 1997
(1) PLAN HISTORY
Harnischfeger Corporation established the Harnischfeger Corporation
Employee Savings and Protection Plan effective April 1, 1984 (the
"Harnischfeger Plan"). Effective March 2, 1987, sponsorship of the
Harnischfeger Plan was assumed by Harnischfeger Industries, Inc. (the
"Company") and the Plan was renamed the Harnischfeger Industries
Employees' Savings Plan (the "Plan"). The Plan was amended and restated
July 1, 1995 to incorporate all previous Plan amendments. The term
"Company" as used in these financial statements refers to Harnischfeger
Industries, Inc. and its subsidiaries excluding Joy Technologies Inc.
and Dobson Park Industries plc.
On March 30, 1998, Harnischfeger Industries, Inc. announced the sale of
approximately 80 percent of the Company's P&H Material Handling unit
("MHE") to Chartwell Investments, Inc. The final employee contribution
to the Plan for these participants was completed on March 31, 1998.
Morris Material Handling (formerly P&H Material Handling) immediately
established its own plan "Morris Material Handling, Inc. Employee
Savings Plan". All asset balances were transferred to this new plan on
June 1, 1998.
Harnischfeger Industries, Inc. sold J&L Fiber Services, Inc. ("J&L"),
a subsidiary of Beloit Corporation. The final employee contribution to
the Plan for these participants was completed on October 31, 1997. All
employee funds associated with J&L were transferred out of the plan
effective March 10, 1998.
On July 1, 1997, Harnischfeger Industries, Inc. sold the Castings
division of Beloit Corporation. The final employee contribution to the
Plan for these participants was completed on July 1, 1997. The
transferring out of employee funds from the fund for the Casting
division was completed on September 3, 1998.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The accompanying financial statements have been prepared on the accrual
basis.
Use of Estimates
----------------
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements. Actual results could differ from
those estimates.
Investments
-----------
Investments are stated at fair market value except the Fixed Income
Fund which has guaranteed investment contracts that are stated at
contract value. Contract value represents contributions made under the
contract, plus interest at the contract rate, less participant
withdrawals. Unrealized gains and losses on investments are computed
based upon market values at the beginning of the year, or acquisition
cost if acquired during the year, and market values at the end of the
year. Realized gains and losses are recorded based upon market values
at the time of sale.
(3) PLAN PROVISIONS
The following description of the Plan provides only general
information. Participants should refer to the Plan Document for a more
complete description of the Plan's provisions.
Plan Purpose
------------
The purposes of the Plan are to encourage savings by employees and to
assist them in meeting major financial needs, supplementing retirement
benefits and acquiring an equity interest in the Company.
Plan Administration
-------------------
A seven-member Pension and Investment Committee ("the Committee")
administers the Plan.
The assets of the Plan are trusteed by Fidelity Management Trust
Company ("Fidelity") and detailed records of participants' accounts are
maintained by Fidelity Institutional Retirement Services Company.
Substantially all administrative expenses of the Plan are paid or
accrued for by the Company.
Eligibility
-----------
Substantially every U.S. employee of the Company (except any employee
who is covered by a collective bargaining agreement which does not
provide for such employee's participation in the Plan) is eligible to
participate in the Plan. An eligible employee may become an active
participant in the Plan on the first day of any month in which he meets
all of the requirements for eligibility. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
Contributions
-------------
Participants may elect to make regular contributions to the Plan of up
to ten percent of their pre-tax earnings ("salary reduction
contributions"). If an election is not made, an automatic salary
reduction contribution of 1% will be made to the Plan on the
participant's behalf in the established default fund. Currently, the
fixed income fund has been established by the Committee as the default
fund. Participants may also make additional contributions of up to ten
percent of after-tax earnings. Pre-tax contributions are subject to
Internal Revenue Service guidelines.
The Company may, at its discretion, make a profit sharing contribution
as determined by the Company. The Company profit sharing contributions
are allocated to each active participant on a pro rata basis based on
such employee's base earnings, up to $100,000, for the fiscal year
ended October 31. The Company profit sharing contributions are invested
100 percent in the Harnischfeger Common Stock Fund. There were no
Company profit sharing contributions made to the Plan for fiscal years
ended 1998 and 1997.
On July 1, 1998, an amendment was made to the Plan that applies to
employees of Princeton Paper, LLC ("Princeton"). For each month after
July 1, 1998, the Company will make contributions for each participant
employed by Princeton during that month in an amount equal to three
percent of the participant's earnings for the month. A participant must
be fully vested to be eligible for the employer contributions. The
participant shall become fully vested upon the earlier of the
participant's attainment of age 65, death or completion of three years
of service.
Participants Who Have Withdrawn From The Plan
---------------------------------------------
Approximately $15 million of plan assets relate to accounts of persons
no longer active in the Plan as of October 31, 1998. These individuals
are former participants who have not yet elected to receive a
distribution within the guidelines of the Plan.
Investment Options
------------------
Each participant elects to invest his contribution in one or more of
the investment funds offered under the Plan. Such elections are made
directly to Fidelity at the discretion of the participant. The
investment funds currently available to plan participants are as
follows:
Fidelity Magellan Fund
----------------------
This is a capital appreciation mutual fund which invests primarily
in common stocks of companies which are expected to demonstrate
long-term earnings growth greater than the economy as a whole.
Investment securities may be of foreign, domestic, and
multinational companies. This fund had 2,923 and 3,181
participants at October 31, 1998 and 1997, respectively.
Fidelity Equity Income Fund
---------------------------
This stock fund is a growth and income fund which had 1,927 and
2,156 participants as of October 31, 1998 and 1997, respectively.
The fund invests in income-producing common stocks or preferred
stocks whose prospects for appreciation in both value and dividend
income are deemed favorable. The fund looks for a dividend yield
that exceeds the average yield of the "Standard & Poor's 500".
Fixed Income Fund
-----------------
This fund invests primarily (i) in government obligations,
treasury bills, certificates of deposit, commercial paper, bonds,
notes and other evidences of indebtedness and other obligations of
a similar nature expected to produce a fixed income, (ii) in a
deposit account, deposit administration fund, guaranteed
investment contract ("GIC") or similar fund or contract maintained
by a legal reserve life insurance company pursuant to an agreement
with or a group annuity contract issued by such insurance company,
or (iii) in a combination of investments permitted under (i) and
(ii) above. This fund had 2,788 and 3,444 participants as of
October 31, 1998 and 1997, respectively.
Fidelity Overseas Fund
----------------------
This fund seeks long-term capital appreciation primarily through
investments in foreign securities. There were 896 participants at
October 31, 1998 and 1,077 participants at October 31, 1997.
Spartan U.S. Equity Index Fund
------------------------------
This fund seeks investment results that correspond to the total
return performance of the Standard & Poor's 500 Stock Index. The
total return performance is the combination of capital changes and
income. At October 31, 1998 and 1997, this fund had 1,152 and
1,221 participants, respectively.
PIMCO Total Return Fund
-----------------------
This fund invests 65% of its assets in a diversified portfolio of
fixed income securities of varying maturities averaging three to
six years, up to 10% may be invested in fixed income securities
that are rated below investment grade but rated B or better by
Moody's or S&P and also may invest up to 20% of its assets in
foreign denominated securities and an additional 5% beyond that
limit in U.S. dollar-denominated securities of foreign issuers. As
of October 31, 1998 and 1997, there were participants of 638 and
104, respectively.
PBHG Growth Fund
----------------
This fund seeks capital appreciation by investing in small and
medium sized company common stocks and securities convertible into
common shares, but also may invest up to 5% of its assets in
warrants and rights to purchase common stock. This fund had 508
and 457 participants at October 31, 1998 and 1997, respectively.
PIMCO Capital Appreciation Fund
-------------------------------
This fund seeks growth of capital and invests primarily in common
stocks of the 1,000 largest companies, by market capitalization,
that have improving factors such as growth of earnings and
dividends. This fund had 419 and 328 participants at October 31,
1998 and 1997, respectively.
Harnischfeger Common Stock Fund
-------------------------------
This fund invests exclusively in the common stock of Harnischfeger
Industries, Inc. The fund encourages employee ownership while
seeking long-term capital appreciation. At October 31, 1998 and
1997, this fund had 3,135 and 3,541 participants, respectively.
Fidelity Asset Manager Fund
---------------------------
This mutual fund maintains a mix of investments in domestic and
foreign stocks, bonds, and short-term instruments with the
expectation of achieving a long-term high total return. The fund
can allocate its assets within the following investment
parameters: 30-70% in stocks, 20-60% in bonds, and 0-50% in
short-term/money market class investments. This fund had 472
participants at October 31, 1998 and 503 participants at October
31, 1997.
Vesting of Participant Accounts
-------------------------------
Participants vest in accordance with the plan provisions defined in the
Plan Document.
Participant Loans
-----------------
Participants are allowed to obtain loans from the Plan which are drawn
against their investment accounts, subject to limitations of the Plan,
and bear interest rates of 2% over prime as of the date of the loan.
Distributions
-------------
Upon termination of employment with the Company for any reason,
including resignation, retirement, dismissal, long-term disability or
death, participants (or designated beneficiaries) are paid the vested
amounts due them by payment in: (1) a lump sum, or (2) substantially
equal quarterly or annual installments over a period not to exceed the
lesser of (a) 10 years or (b) the life expectancy of the participant
or, if the participant has designated a beneficiary who is an
individual, the joint and last survivor expectancy of the participant
and his designated beneficiary or (3) a combination of lump sum and
installment payments. Payment may be made in cash or property (fair
market value at date of distribution as determined by the trustee).
Participants may request that distribution of their accounts be
invested in the Harnischfeger Common Stock Fund.
In the event of financial hardship, a participant may apply for a
withdrawal of all or any portion of the salary reduction contributions
credited to his account. Withdrawals during employment of salary
reduction contributions may be granted by the Committee only if the
participant can demonstrate to the satisfaction of the Committee that a
financial hardship exists within the definitions of the Internal
Revenue Code.
(4) PLAN TERMINATION
The Company has the right under the Plan to discontinue its
contributions at any time and to terminate the Plan subject to the
provisions of ERISA. In the event of Plan termination, participants
will become 100% vested in their accounts.
(5) FEDERAL INCOME TAXES
The Internal Revenue Service has determined and informed the Company by
a letter dated January 8, 1996 that the Plan is designed in accordance
with applicable sections of the Internal Revenue Code ("IRC"). The Plan
has been amended since receiving the determination letter. However, the
plan administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the
applicable provisions of the IRC.
With respect to participants, pre-tax contributions to the Plan are
excluded from wages subject to federal and most state income taxes.
Earnings on contributions are not taxable until distributed.
<TABLE>
<CAPTION>
(6) INVESTMENTS
The following relates to investment shares, net asset values and market value at October 31.
1998 1997
---------------------------------- ------------------------------------
Net Net
Number Asset Fair Market Number Asset Fair Market
Funds of Shares Value Value of Shares Value Value
-------- ----------
--------------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investments at Fair Value as Determined
by Quoted Market Price:
Fidelity Magellan Fund 592,126 $105.03 $62,190,970 643,817 $ 96.45 $62,096,161
Fidelity Equity Income Fund 587,431 53.37 31,351,186 673,599 51.18 34,474,806
Fidelity Intermediate Bond Fund 0 10.31 0 302,406 10.18 3,078,489
Fidelity Overseas Fund 174,583 33.96 5,928,842 216,261 34.12 7,378,819
Spartan U.S. Equity Index Fund 401,423 39.28 15,767,914 435,600 33.17 14,448,834
Fidelity Asset Manager Fund 230,652 18.96 4,373,182 225,249 18.77 4,227,919
Harnischfeger Common Stock Fund 1,489,223 9.44 14,058,265 792,835 39.38 31,221,844
PBHG Growth Fund 106,844 20.49 2,189,232 126,006 26.23 3,305,139
PIMCO Capital Appreciation Fund 156,382 23.32 3,646,837 135,266 23.49 3,177,390
PIMCO Total Return Fund 387,096 10.96 4,242,573 55,486 10.80 599,249
Investments at Estimated Fair Value:
Loans to Participants 1.00 4,146,036 1.00 5,294,933
Investments at Contract Value:
Fixed Income Fund 1.00 79,944,734 1.00 90,505,365
-----------
-----------
$227,839,771 $259,808,948
=========== ===========
The following information relates to investment gain (loss) activity during the periods.
Change in Unrealized
Realized Gains (Losses) Appreciation(Depreciation)
----------------------------- ------------------------------
Fund 1998 1997 1998 1997
---------------------------------------------- ----------- ----------- ----------- -----------
Fidelity Magellan Fund $ 1,432,876 $ 1,191,213 $ 4,145,483 $10,796,938
Fidelity Equity Income Fund 1,060,746 640,409 741,347 4,988,690
Fidelity Intermediate Bond Fund 1,363 (6,189) 329 26,180
Fidelity Overseas Fund 111,050 78,021 (74,379) 483,022
Spartan U.S. Equity Index Fund 1,063,917 648,925 1,691,521 1,938,067
Fidelity Asset Manager Fund 22,409 26,655 20,546 342,372
Harnischfeger Common Stock Fund (4,001,481) 408,434 (16,842,270) (691,257)
PBHG Growth Fund (159,613) (36,676) (483,011) 97,735
PIMCO Capital Appreciation Fund 42,834 884 (20,604) 402,632
PIMCO Total Return Fund (98) (290) 98,179 11,169
----------- ----------- ----------- -----------
$ (425,997) $ 2,951,386 $ (10,722,859) $18,395,548
=========== =========== ============== ===========
</TABLE>
<TABLE>
<CAPTION>
Schedule I
HARNISCHFEGER INDUSTRIES, INC. EMPLOYEES' SAVINGS PLAN Additional
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES Information
OCTOBER 31, 1998
Description of Cost Fair Market
Identity of Issue Investment of Asset Value
- ------------------------------------------------------------ ------------------------ -------------- --------------
<S> <C> <C> <C>
Employer's Stock Fund:
Harnischfeger Industries, Inc. Common Stock Common Stock $ 22,552,624 $ 14,058,265
Mutual Stock Funds:
Fidelity Equity Income Fund Open-end 23,383,158 31,351,186
Fidelity Overseas Fund Mutual 5,466,212 5,928,842
Spartan U.S. Equity Index Fund Funds 11,605,635 15,767,914
-------------- --------------
40,455,005 53,047,942
Balanced Funds:
Fidelity Asset Manager Fund Open-end Fund 3,944,750 4,373,182
PIMCO Total Return Fund Funds 4,138,510 4,242,573
-------------- --------------
8,083,260 8,615,755
Growth Funds:
Fidelity Magellan Fund Open-end Funds 46,165,892 62,190,970
PBHG Growth Fund 2,643,152 2,189,232
PIMCO Capital Appreciation Fund 3,408,148 3,646,837
-------------- --------------
52,217,192 68,027,039
Fixed Income Securities:
FMTC Insti Money MKT, at 5.30% Open-end 3,258,184 3,258,184
AIG Financial Products, at 5.90% November 16, 1998 3,017,160 3,017,160
Connecticut General Guaranteed
Investment Contract, at 7.68% December 31, 1998 6,930,766 6,930,766
Chase Manhattan Bank, at 5.94% November 16, 1998 1,508,934 1,508,934
Deutsche Bank AG, at rates ranging
from 5.69% to 6.12% November 16, 1998 2,565,414 2,565,414
Monumental Life Insurance Co., at Nov.16, 1998 thru
rates ranging from 5.21% to 6.15% Aug. 30, 2001 11,602,490 11,602,490
New England Mutual Guaranteed Investment Contract,
at rates ranging from 4.55% to 6.00% Dec.31, 1998 thru Dec. 31, 2001 120,063 120,063
Ohio National Life Insurance Company, at 5.90% September 30, 1999 4,702,344 4,702,344
Provident Life & Accident Guaranteed
Investment Contract, at 5.85% December 31, 1998 4,931,864 4,931,864
Principal Life Insurance, at 7.20% May 31, 2001 4,643,377 4,643,377
Rabo Bank Nederland ABS Guaranteed
Investment Contract, at 6.69% November 16, 1998 2,003,500 2,003,500
Safeco Life Insurance, at 7.14% September 9, 1999 4,041,471 4,041,471
Security Life of Denver, at 6.07% March 1, 1999 4,784,827 4,784,827
SunAmerica Life Insurance Guaranteed
Investment Contract, at 6.02% December 31, 1998 4,682,136 4,682,136
State Street Bank Guaranteed Investment Contract, at
rates ranging from 5.21% to 5.93% Nov.6, 1998 thru Nov. 25, 2001 9,106,109 9,106,109
Sun Life of Canada Guaranteed Investment Contract, at
rates ranging from 6.74% to 6.99% Mar.31, 2000 thru June 30, 2000 11,043,263 11,043,263
UBS AG, at 6.25% November 16, 1998 1,002,832 1,002,832
-------------- --------------
79,944,734 79,944,734
Outstanding Loan Balance with
interest rates ranging from 8% to 11% Maturity dates ranging from current to 15 years - 4,146,036
============== ==============
Total Assets Held For Investment $ 203,252,815 $ 227,839,771
============== ==============
</TABLE>
<TABLE>
<CAPTION>
Additional
Information
Schedule II
HARNISCHFEGER INDUSTRIES, INC. EMPLOYEES' SAVINGS PLAN
5500-ITEM 27(d)
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
EXPENSE
IDENTITY OF DESCRIPTION PURCHASE SELLING LEASE INCURRED WITH
PARTY INVOLVED OF ASSET PRICE PRICE RENTAL TRANSACTION
- -------------------------------- -------------- --------------- --------------- -------------- ---------------------
<S> <C> <C> <C> <C> <C>
FMTC Inst. Money Market Money Market
412 Purchases Securities $49,105,791
490 Sales $ 51,009,309 N/A None
Harnischfeger Ind Common
241 Purchases Stock $11,122,553
223 Sales $ 7,446,247 N/A None
Fidelity Magellan Growth Fund
241 Purchases $16,775,566
223 Sales $ 22,288,715 N/A None
Fidelity Equity Income Stock Fund
241 Purchases $11,195,022
216 Sales $ 16,110,687 N/A None
Spartan U.S. Equity Index Stock Fund
232 Purchases $6,938,452
183 Sales $ 8,374,658 N/A None
CURRENT VALUE
OF ASSET ON
COST OF TRANSACTION NET
ASSET DATE GAIN/(LOSS)
------------ --------------- --------------
FMTC Inst. Money Market
412 Purchases $49,105,791
490 Sales $51,009,309 $51,009,309 None
Harnischfeger Ind
241 Purchases $11,122,553
223 Sales $ 6,641,132 $7,446,247 $ 805,115
Fidelity Magellan
241 Purchases $16,775,566
223 Sales $17,490,430 $22,288,715 $ 4,798,284
Fidelity Equity Income
241 Purchases $11,195,022
216 Sales $12,715,266 $16,110,687 $ 3,395,421
Spartan U.S. Equity Index
232 Purchases $6,938,452
183 Sales $ 6,662,330 $8,374,658 $ 1,712,328
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed by the undersigned thereunto duly
authorized.
HARNISCHFEGER INDUSTRIES
EMPLOYEES' SAVINGS PLAN
(Name of Plan)
Date: April 22, 1999 By: /s/ Francis M. Corby, Jr.
--------------------------
Executive Vice President For
Finance and Administration
and Chief Financial Officer
Harnischfeger Industries, Inc.
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-23985) of Harnischfeger Industries, Inc. of our
report dated April 9, 1999 appearing on page 1 of this Annual Report on
Form 11-K.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
April 22, 1999
