SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
_X_ OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1999
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 53235-3716
(Address of principal executive offices) (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 March 15, 1999
Common Stock, $1 par value 47,941,690 shares
HARNISCHFEGER INDUSTRIES, INC.
FORM 10-Q
January 31, 1999
INDEX
PART I.
Financial Information:
Consolidated Statement of Income -
Three Months Ended
January 31, 1999 and 1998
Consolidated Balance Sheet -
January 31, 1999 and October 31, 1998
Consolidated Statement of Cash Flows -
Three Months Ended January 31, 1999 and 1998
Consolidated Statement of Shareholders' Equity -
Three Months Ended January 31, 1999 and 1998
Notes to Consolidated Financial Statements
Management's Discussion and Analysis
of Results of Operations and Financial Condition
PART II.
Other Information
Signatures
PART I. FINANCIAL INFORMATION
HARNISCHFEGER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(Dollar amounts in thousands except per share amounts)
(Unaudited)
Three Months Ended
January 31,
---------------------------
1999 1998
---------------------------
Revenues
Net Sales $ 456,250 $ 557,844
Other Income 8,662 10,010
---------- ----------
464,912 567,854
Cost of Sales, including anticipated
losses on contracts 373,223 504,600
Product Development, Selling
and Administrative Expenses 102,235 97,837
---------- -----------
Operating (Loss) (10,546) (34,583)
Interest Expense - Net (22,918) (18,295)
---------- -----------
(Loss) before Benefit for Income
Taxes and Minority Interest (33,464) (52,878)
Benefit for Income Taxes 11,375 17,983
Minority Interest 5,690 9,924
---------- -----------
Net (Loss) From Continuing Operations (16,399) (24,971)
Income From Discontinued Operation,
net of applicable income taxes - 3,404
---------- ----------
Net (Loss) $(16,399) $(21,567)
========== ==========
Basic Earnings Per Share
(Loss) from continuing operations $( 0.36) $(0.53)
Income from discontinued operation - 0.07
---------- ----------
Net Income (loss) $(0.36) (0.46)
========== ==========
Diluted Earnings Per Share
(Loss) from continuing operations $ (0.36) $ (0.53)
Income from discontinued operation - 0.07
---------- ----------
Net Income (loss) $ (0.36) $ (0.46)
========== ==========
See accompanying notes to financial statements
HARNISCHFEGER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
January 31, October 31,
1999 1998
--------------- --------------
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 43,973 $ 30,012
Accounts receivable-net 706,353 692,326
Inventories 613,991 610,478
Other current assets 142,972 130,328
--------------- --------------
1,507,289 1,463,144
Property, Plant and Equipment:
Land and improvements 61,805 61,454
Buildings 280,220 289,789
Machinery and equipment 800,696 809,969
--------------- --------------
1,142,721 1,161,212
Accumulated depreciation (521,277) (529,884)
--------------- --------------
621,444 631,328
Investments and Other Assets:
Goodwill 472,347 480,625
Intangible assets 69,862 31,343
Other assets 196,231 180,819
--------------- --------------
738,440 692,787
=============== ==============
$2,867,173 $2,787,259
=============== ==============
See accompanying notes to financial statements
HARNISCHFEGER INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
January 31, October 31,
1999 1998
---------------- -------------
(Unaudited)
Liabilities and Shareholders' Equity
Current Liabilities:
Short-term notes payable, including current
portion of long-term obligations $ 174,548 $ 156,383
Trade accounts payable 331,813 333,624
Employee compensation and benefits 72,340 73,334
Advance payments and progress billings 137,205 115,320
Accrued warranties 61,693 58,053
Other current liabilities 248,270 289,566
---------------- ------------
1,025,869 1,026,280
Long-term Obligations 1,047,273 962,797
Other Liabilities:
Liability for postretirement benefits 31,698 34,187
Accrued pension costs 78,125 40,812
Other liabilities 9,721 12,495
---------------- ------------
119,544 87,494
Minority Interest 38,951 43,838
Shareholders' Equity:
Common stock (51,668,939 and
51,668,939 shares issued, respectively) 51,669 51,669
Capital in excess of par value 585,394 586,509
Retained earnings 194,931 216,065
Accumulated other comprehensive (loss) (70,787) (60,289)
Less:
Stock Employee Compensation
Trust (1,433,147 and 1,433,147
shares, respectively) at market (12,092) (13,525)
Treasury stock (4,465,101 and
4,465,101 shares, respectively)
at cost (113,579) (113,579)
---------------- -------------
635,536 666,850
---------------- -------------
$2,867,173 $2,787,259
================ =============
See accompanying notes to financial statements.
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollar amounts in thousands)
(Unaudited)
Three Months Ended
January 31,
-----------------------------
Operating Activities 1999 1998
-------------- -------------
<S> <C> <C>
Net income $(16,399) $(21,567)
Add (deduct) - Items not affecting cash:
Income from discontinued operation, net of income taxes - (3,404)
Minority interest, net of dividends paid (5,690) (9,924)
Depreciation and amortization 21,100 22,226
Prepaid/deferred income taxes -net (7,318) 5,635
Other - net (3,997) (2,084)
Changes in working capital, exclusive of acquisitions and divestitures
(Increase) in accounts receivable - net (18,215) (71,839)
(Increase) in inventories (9,220) (42,923)
(Increase) in other current assets (5,604) (26,222)
Increase (decrease) in trade accounts payable 410 (37,929)
Increase (decrease) in employee compensation and benefits 3,234 (13,532)
Increase in advance payments and progress billings 23,616 36,931
(Decrease) increase in other current liabilities (31,881) 3,072
-------------- -------------
Net cash used by operating activities (49,964) (161,560)
-------------- -------------
Investment and Other Transactions
Proceeds from sale of J&L Fiber Services - 108,995
Property, plant and equipment acquired (21,505) (29,399)
Property, plant and equipment retired 2,555 312
Other - net (17,473) 4,161
-------------- -------------
Net cash (used by)provided by investment
and other transactions (36,423) 84,069
-------------- -------------
Financing Activities
Dividends paid (4,592) (4,646)
Exercise of stock options - 63
Purchase of treasury stock - (23,878)
Issuance of long-term obligations less discount 86,026 181,771
Redemption of long-term obligations (441) (352)
Increase (decrease) in short-term notes payable 19,275 (86,388)
-------------- -------------
Net cash provided by financing activities 100,268 66,570
-------------- -------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 80 (397)
-------------- -------------
Increase (Decrease) in Cash and Cash Equivalents 13,961 (11,318)
Cash and Cash Equivalents at Beginning of Period 30,012 29,383
============== =============
Cash and Cash Equivalents at End of Period $ 43,973 $ 18,065
============== =============
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
HARNISCHFEGER INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Dollar amounts in thousands)
(Unaudited)
Accumulated
Capital in Compreh- Other
Common Excess of sive Retained Comprehen- Treasury
Stock Par Value (Loss) Earnings sive (Loss) SECT Stock Total
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Three Months Ended January 31, 1999
Balance at October 31, 1998 $51,669 $586,509 $216,065 $(60,289) $(13,525) $(113,579) $666,850
Net (loss) (16,399) (16,399) (16,399)
Other Comprehensive (loss):
Currency translation adjustment (10,498) (10,498) (10,498)
--------
Total Comprehensive (loss) (26,897)
========
Dividends paid ($.10 per share) (4,735) (4,735)
Dividends on shares held by SECT 143 143
Adjust SECT shares to market value (1,433) 1,433 -
Amortization of unearned compensation
on restricted stock 175 175
==================== =====================================================
Balance at January 31, 1999 $51,669 $585,394 $194,931 $(70,787) $(12,092) $(113,579) $635,536
==================== =====================================================
Three Months Ended January 31, 1998
Balance at October 31, 1997 $51,607 $625,358 $253,727 $(41,440) $(56,430) $(83,162) $749,660
Comprehensive income (loss):
Net (loss) (21,567) (21,567) (21,567)
Other Comprehensive (loss):
Currency translation adjustment (15,937) (15,937) (15,937)
--------
Total Comprehensive (loss) (37,504)
========
Exercise of 2,819 stock options 3 60 63
Dividends paid ($.10 per share) (4,789) (4,789)
Dividends on shares held by SECT 143 143
Adjust SECT shares to market value (6,270) 6,270 -
83,043 shares purchased by employee
and director benefit plans 1,739 2,342 4,081
670,000 shares acquired as treasury
stock (23,878) (23,878)
Amortization of unearned compensation
on restricted stock 175 175
==================== ====================================================
Balance at January 31, 1998 $51,610 $621,205 $227,371 $(57,377) $(50,160) $(104,698) $687,951
==================== ====================================================
See accompanying notes to financial statements
</TABLE>
HARNISCHFEGER INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 31, 1999
(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 months ended
January 31, 1999 and 1998, cash flows for the three months ended January
31, 1999 and 1998, and financial position at January 31, 1999 have been
made. All adjustments made are of a normal recurring nature. The results
of operations in 1998 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 for the year ended October 31,
1998.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for the full year.
(b) Restructuring Charge
In the second quarter of fiscal 1998, Beloit Corporation, a subsidiary
of the Company ("Beloit"), recorded a $65,000 restructuring charge
($31,900
after tax and minority interest). The charge included costs related to
severance for approximately 1,000 employees worldwide, facility closures,
and the disposal of machinery and equipment. Closures have been
completed of
pulping-related manufacturing facilities in Sherbrooke, Quebec, Canada and
Dalton, Massachusetts. Conversion of a paper-related manufacturing
facility in the United Kingdom into a roll center of excellence is
substantially complete. The Italian operation is expected to be converted
in fiscal 1999 from a full-line manufacturing operation to a Millprosm
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 before the end of the fiscal year. As of January
31, 1999, approximately 771 employees have been terminated in accordance
with the plan. Details of this restructuring charge are as follows:
Original Reserve 1/31/99
Reserve Utilized Reserve
---------- ---------- ---------
Employee severance $ 25,800 $(13,791) $ 12,009
Facility closures 33,300 (21,700) 11,600
Machinery and equipment dispositions 5,900 (3,752) 2,148
--------- --------- ---------
Pre-tax charge $ 65,000 $(39,243) $ 25,757
========== ========= =========
(c) Inventories
Consolidated inventories consisted of the following:
January 31, October 31,
1999 1998
-------------- --------------
Finished goods $ 328,240 $ 366,346
Work in process and purchased parts 234,877 198,765
Raw materials 102,456 96,920
-------------- --------------
665,573 662,031
Less excess of current cost over stated
LIFO value (51,582) (51,553)
============== ==============
$ 613,991 $ 610,478
============== ==============
Inventories valued using the LIFO method represented
approximately 66% of consolidated inventories at January 31, 1999 and
October 31, 1998, respectively.
(d) 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 $7,402 and $10,105 for the three months
ended January 31, 1999 and 1998, respectively. Certain capital
expenditures used in research activities are capitalized and depreciated
over their expected useful lives.
(e) Interest Expense - Net
Net interest expense consists of the following:
Three Months Ended
January 31,
-------------------------------
1999 1998
-------------- --------------
Interest income $ 1,555 $ 1,524
Interest expense (24,473) (19,819)
============== ==============
Interest expense - net $ (22,918) $ (18,295)
============== ==============
<TABLE>
<CAPTION>
(f) Long-Term Obligations
Long-term obligations at January 31, 1999 and October 31, 1998 consisted
of the following:
January 31, October 31,
1999 1998
----------------------------------
<S> <C> <C>
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 $1,229 and $1,233, respectively ) 148,771 148,767
6 7/8% Debentures, due 2027 (net of discount of $105
and $106, respectively) 149,895 149,894
Senior Notes, Series A through D, at
interest rates of between 8.9% and
9.1%, due 1999 to 2006 69,546 69,546
Australian Term Loan Facility, due 2000 55,656 56,169
Revolving Credit Facility 460,000 375,000
Industrial Revenue Bonds, at interest
rates of between 5.9% and 8.8%,
due 1999 to 2017 32,620 32,820
Other 20,183 19,377
----------------------------------
1,086,671 1,001,573
Less: Amounts payable within one year (39,398) (38,776)
==================================
$ 1,047,273 $ 962,797
==================================
</TABLE>
The 7 1/4% debentures were issued on December 19, 1995 at a price of
99.153%. The debentures mature on December 15, 2025, are not redeemable
prior to maturity and are not subject to any sinking fund requirements.
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 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.
On February 17, 1998, the Company filed a shelf registration with the
Securities and Exchange Commission for $200,000 of debt securities. To
date, none of these securities have been issued. The Company
also has $50,000 of debt securities remaining under a shelf registration
filed in 1996.
The Senior Notes, Series A through D, were issued in private placements
and are unsecured.
The Series D Notes provide for eleven equal annual repayments of principal
plus accrued interest beginning in 1996; Series A through C Notes are due
at maturity in 1999, 1999, and 2001, respectively.
One of the Company's Australian subsidiaries maintains a committed
three-year $90,000 Australian dollar ($55,656 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 January 31, 1999, the
loan was fully utilized.
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 January 31, 1999, outstanding
borrowings under the facility were $460,000 and commercial paper
borrowings, considered a utilization of the facility, were $0. Such
borrowings bore interest at LIBOR plus 0.325% prior to March 1, 1999 and
LIBOR plus 0.5% thereafter.
On February 9, 1999, the Company announced that it signed a commitment
letter with
The Chase Manhattan Bank relating to a proposed $225,000 secured term
loan. The term loan and amendments to the current Revolving Credit
Facility will provide lenders with collateral and are subject to
syndicate participation and to the negotiation of definitive agreements.
The term loan facility is intended to provide working capital
and assure that the Company can meet possible future obligations with
respect to Potlatch and APP. Closing on the financing is expected in the
second fiscal quarter. Following the closing of the term loan, the
Company expects to pursue a fixed rate bond offering to establish a more
permanent level of financing. Pending the closing of the term loan, the
Company has extended the normal time of payment of certain accounts
payable.
(g) Contingent Liabilities
At January 31, 1999, the Company was contingently liable to banks,
financial institutions, and others for approximately $466,000 for
outstanding letters of credit securing performance of sales contracts and
other guarantees in the ordinary course of business. The Company may also
guarantee performance of its equipment at levels specified in sales
contracts without the requirement of a letter of credit.
The Company is 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 failed to
perform satisfactorily. (See note (k)- Potlatch for additional
information.) --------
The Company and certain of its senior executives have been named as
defendants in a purported class action, entitled In re Harnischfeger
Industries, Inc. Securities Litigation, in the United States District
Court for the Eastern District of Wisconsin. This action seeks 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 (j) - Beloit APP Contracts violated the federal
securities laws. The action is in the early stages of discovery.
The Company's ability to realize the unbilled receivables is discussed in
note (j) - Beloit APP Contracts.
-----------------------
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 the resolution of these
matters will not
have a materially adverse effect on its consolidated financial position or
results of operations.
(h) 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:
Three Months Ended
January 31,
--------------------------------
1999 1998
Basic Earnings Per Share
-----------------------------------------
(Loss) from continuing operations $ (16,399) $ (24,971)
Income from discontinued operation - 3,404
------------- -------------
Net Income (loss) $ (16,399) $ (21,567)
============= =============
Average common shares outstanding 45,916 46,742
(Loss) from continuing operations $ (0.36) $ (0.53)
Income from discontinued operation - 0.07
============= =============
Net Income (loss) $ (0.36) $ (0.46)
============= =============
Diluted Earnings Per Share
-----------------------------------------
(Loss) from continuing operations $ (16,399) $ (24,971)
Income from discontinued operation - 3,404
============= =============
Net Income (loss) $ (16,399) $ (21,567)
============= =============
Average common shares outstanding 45,916 46,742
Assumed exercise of stock options - -
------------- -------------
45,916 46,742
(Loss) from continuing operations $ (0.36) $ (0.53)
Income from discontinued operation - 0.07
============= =============
Net Income (loss) $ (0.36) $ (0.46)
============= =============
(i) Common Stock
In September, 1997, the Company announced that the board of directors had
authorized the repurchase of up to ten million shares of the Company's
common stock. As of January 31, 1999, 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 first quarter
of fiscal 1999.
(j) Beloit APP Contracts
In fiscal 1996 and 1997, Beloit's Asian subsidiaries received orders
for four fine paper
machines from Asia Pulp & Paper Co. Ltd. ("APP") for a total of
approximately $600,000. During the second quarter of fiscal 1998, the
Company identified $155,000 of additional estimated contract costs at
Beloit related to these contracts. The additional costs primarily related
to non-proprietary equipment, installation and erection, freight and other
site construction costs, and overruns resulting from changes in estimates
of costs to complete related to these complex, large-scale projects.
The first two machines have been substantially paid for and installed at
APP facilities in Indonesia. The Company sold approximately
$44,000 of receivables from APP on these first two machines to a
financial institution. The machines are currently in the
start-up/optimization phase and are required to meet certain contractual
performance tests. The contracts provide for potential liquidated
damages, including performance damages, in certain circumstances. The
Company has begun discussions with APP on certain claims and back charges
on the first two machines.
The two remaining machines have been substantially manufactured, are in
the Company's possession and are carried on the Consolidated Balance Sheet
at January 31, 1999 as unbilled receivables of approximately $180,000.
This
amount is net of a $46,000 down payment received from APP, a $2,770
repurchase on December 31, 1998 of a portion of a note receivable, and
$16,230 of receivables in the form of a note receivable from APP sold to
a financial institution. In February, 1999,
the $16,230 balance of the note receivable sold to a financial
institution was
repurchased. The Company has issued letters-of-credit ("LOCs") in the
amount of the down payment. To date, APP has been unable to secure
financing for these two machines. In addition, Beloit is working with
vendors which supplied material and parts on these machines to extend
payment terms.
On December 15, 1998, Beloit's Asian subsidiaries declared APP in default
on the contracts
for the two remaining machines, concluding that APP has not acted in good
faith and is unwilling to pay its obligations or is incapable of securing
financing for these two paper machines. Consequently, on December 15,
1998, Beloit's Asian subsidiaries filed for arbitration in Singapore for
the full payment
from APP for the second two machines as well as at least $125,000 in
damages and delay costs.
On December 16, 1998, APP filed a notice of arbitration in Singapore
against Beloit's Asian subsidiaries seeking a full refund of approximately
$46,000 paid to
the Company for the second two machines and claiming that Beloit's Asian
subsidiaries had
an obligation under the purchase contracts to secure financing. APP also
seeks recovery of other damages it alleges were caused by Beloit's Asian
subsidiaries
claimed breaches. In addition, APP seeks a declaration in the arbitration
that it has no liability under certain promissory notes. The Company will
vigorously defend against all of APP's assertions and also will proceed
without delay to mitigate APP's obligations for damages by seeking other
customers for these world-class machines. APP has attempted to draw on
approximately $15,900 of existing LOCs issued by Banca Nazionale del
Lavaro ("BNL") in connection with the contracts for the second two
machines. The Company has filed for and received a temporary restraining
order which prohibits BNL from executing payment under the drawing. The
final disposition of the Company's request for a permanent injunction
remains pending with the United States District Court for the Eastern
District of Wisconsin. On January 4, 1999, the Company placed funds on
deposit with BNL to provide for payment under the LOCs should the
permanent injunction not be granted.
The Company intends to vigorously pursue its rights under the contracts
and expects to be fully compensated for these two machines from APP.
However, in the event that the Company is unsuccessful and
to mitigate APP's damages, the Company is seeking to sell these two
machines to other customers.
Proceeds from the ultimate sale of these paper machines are expected to be
sufficient to substantially recover the carrying value of the
receivables.
In the event APP does not pay for these machines and the Company is unable
to sell these paper machines to another customer, it may have a materially
adverse effect on its consolidated financial position or results of
operations.
(k) Potlatch
In 1995, Potlatch Corporation filed a claim against Beloit in the Second
Judicial District of the State of Idaho, County of Nez Perce,
that alleged pulp line washers supplied by Beloit for less than $15,000
failed to perform satisfactorily. In June, 1997, a Lewiston, Idaho jury
awarded Potlatch $95,000 in damages in the case which, together with fees,
costs and interest to January 31, 1999, approximate $119,000. 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 in the first
half of calender 1999. The Company considers the eventual outcome of the
Potlatch case not to be estimable. Reserves in the January 31, 1999
Consolidated Balance Sheet are less than the sales price of the washers.
The ultimate resolution of this case could involve costs to the Company
that are materially higher than the reserves. In the event the Company is
unsuccessful in its
request for a new trial in this matter, it may have a material adverse
effect on its consolidated financial position or results of operations.
(l) Other Comprehensive Income
In the first quarter of fiscal 1999, the Company adopted SFAS No.130,
Reporting Comprehensive Income, which established standards for reporting
and displaying comprehensive income and its components in a financial
statement that is displayed with the same prominence as other financial
statements.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
THREE MONTHS ENDED JANUARY 31, 1999
AND 1998 (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 loss for the three months ended January 31, 1999 amounted to ($16,399), or
($0.36) per basic share, as compared to net loss of ($21,567), or ($0.46) per
basic share for the three months ended January 31, 1998. The net loss in 1998
included the income from the discontinued operation of $3,404.
Basic and diluted earnings per share calculations for the first three months
of 1999 and 1998 were based on 45,916 and 46,742 average shares outstanding,
respectively.
Significant factors contributing to the $8,572 improvement in loss from
continuing operations for the first three months of 1999 as compared to 1998
included: (1) a $24,037 decrease in operating losses as described in the Segment
Information section which follows, offset by (2) a $4,623 increase in interest
expense, (3) a $6,608 decrease in the income tax benefit due to lower pre-tax
losses and (4) a $4,234 decrease in minority interest.
<TABLE>
<CAPTION>
Segment Information
Operating results of the Company's business segments for the first quarter
of 1999 and 1998 are summarized as follows:
Backlog at
Net Sales Operating Profit Orders Booked End of Period
----------------------- ----------------------- -------------------- ------------------------
1999 1998 1999 1998 1999 1998 1999 1098
------------ ---------- ----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mining Equipment Group $264,437 $321,122 $ 15,097 $ 38,527 $300,987 $303,340 $422,556 $ 386,006
Pulp and Paper Machinery 191,813 236,722 (21,330) (67,493)(1) 124,585 303,376 569,996 637,224
---------- ---------- ----------- --------- -------- --------- -------- ---------
Total Business Segments 456,250 557,844 (6,233) (28,966) 425,572 606,716 992,552 1,023,230
========== ========== ======== ========= ========= =========
Corporate Administration (4,313) (5,617)
--------- ---------
Operating (Loss) (10,546) (34,583)
========== =========
(1) Includes anticipated losses on contracts of $82,000.
</TABLE>
Segment Information - Continuing Operations
Net sales of the Mining Equipment segment were $264,437 and $321,122 for the
first three months of 1999 and 1998, respectively. Operating profit decreased to
$15,097 for the first three months of 1999 compared to $38,527 in 1998. 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, partially offset through improved aftermarket sales. Reduced operating
profits also reflected decreases in absorption of manufacturing costs related to
lower sales and manufacturing direct labor hours. Cost reduction efforts
initiated in the latter part of fiscal 1998 improved operating profit by
$11,900. Bookings for the first three months of 1999 amounted to $300,987 as
compared to $303,340 for the same period in 1998.
The Pulp and Paper Machinery segment contributed sales and an operating loss of
$191,813 and ($21,330) for the first three months of 1999. This compared to net
sales of $236,722 and an operating loss of ($67,493) in 1998 which included
anticipated losses on contracts of ($82,000). Sales decreased 19% in 1999 over
1998, 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 and a decrease in absorption of manufacturing costs
related to lower sales and reduced manufacturing direct labor hours. The first
quarter 1999 results were also impacted by two unusual items: $6,000 of income
from the final agreement with Precision Castparts Corp., purchasers of J&L Fiber
Services, Inc., related to disputed items and future royalties, offset by
start-up costs and initial operating losses at Princeton Paper of $6,100.
Operating results in the first quarter of 1998 included income from a $15,000
settlement of certain patent litigation and the gain on sale of J&L, both of
which were largely offset by previously capitalized expenses related to the
patent litigation, several contract losses, and additions to warranty reserves.
Cost reduction efforts initiated in the latter part of fiscal 1998 and first
part of fiscal 1999 reduced the operating loss in the first quarter of 1999 by
$10,600. Bookings for the first three months of 1999 amounted to $124,585 as
compared to $303,376 for the same period in 1998. The first quarter of 1998
included three larger orders, each over $40,000. Orders for the last several
quarters have reflected the severe downturn in capital spending in the pulp and
paper markets.
In the second quarter of fiscal 1998, Beloit Corporation, a subsidiary of the
Company ("Beloit"), recorded a $65,000 restructuring charge ($31,900 after tax
and minority interest). The charge included costs related to severance for
approximately 1,000 employees worldwide, facility closures, and the disposal of
machinery and equipment. Closures have been completed of pulping-related
manufacturing facilities in Sherbrooke, Quebec, Canada and Dalton,
Massachusetts. Conversion of a paper-related manufacturing facility in the
United Kingdom into a roll center of excellence is substantially complete. The
Italian operation is expected to be converted in fiscal 1999 from a full-line
manufacturing operation to a Millprosm 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 before the end of the fiscal year. As of
January 31, 1999, approximately 771 employees have been terminated in accordance
with the plan.
Details of this restructuring charge are as follows:
Original Reserve 1/31/99
Reserve Utilized Reserve
---------- ---------- ---------
Employee severance $ 25,800 $(13,791) $ 12,009
Facility closures 33,300 (21,700) 11,600
Machinery and equipment dispositions 5,900 (3,752) 2,148
--------- --------- ---------
Pre-tax charge $ 65,000 $(39,243) $ 25,757
========== ========= =========
Income Taxes
The Company's estimated annual effective tax rate for continuing operations for
the first three months of 1999 was 34% compared to a 35% federal statutory tax
rate. The effective rate differs from the statutory rate because of tax credits,
state taxes and differences in foreign and U.S. tax rates.
Liquidity and Cash Flows
The Company's capital structure at January 31, 1999 and October 31, 1998 were as
follows:
January 31, October 31,
1999 1998
------------ --------------
Short-term notes payable $135,150 $117,607
Long-term obligations, including current portion 1,086,671 1,001,573
------------ --------------
1,221,821 1,119,180
Minority interest 38,951 43,838
Shareholders' equity 635,536 666,850
------------ --------------
Total capitalization $1,896,308 $1,829,868
============ ==============
Debt to capitalization ratio 64.4% 61.2%
============ ==============
Cash flow used by operating activities was $49,964 for the three months ended
January 31, 1999 compared to cash flow used by operating activities of $161,560
for the comparable period in 1998. The difference in cash flow between periods
is primarily the result of lower increases in accounts receivable and
inventories in the first quarter of fiscal 1999, and a minimal increase in
accounts payable of fiscal 1999.
Cash flow used by investment activities was $36,423 for the three months ended
January 31, 1999 compared to cash flow provided by investment activities of
$84,069 for the comparable period in 1998. The change is primarily due to
proceeds from the sale of J&L Fiber Services during the first quarter of fiscal
1998.
Cash provided by financing activities in the first three months of fiscal 1999
was $100,268 compared to cash flow provided by financing activities of $66,570
in 1998. The difference was primarily due to treasury stock purchases in the
first quarter of 1998.
The Company maintains the following borrowing facilities:
(1) A Revolving Credit Facility which expires in October 2002, between the
Company and certain domestic and foreign financial institutions allows
for borrowings of up to $500,000 at rates expressed in relation to
LIBOR and other rates. At January 31, 1999, there were direct
outstanding borrowings of $460,000 under the facility. Commercial
paper borrowings, considered a utilization of the facility, was $0.
Such borrowings bore interest at LIBOR plus 0.325% prior to March 1,
1999 and LIBOR plus 0.5% thereafter.
(2) Various uncommitted domestic credit facilities of approximately
$20,000 to further supplement short-term working capital requirements.
At January 31, 1999, there were $11,000 in borrowings outstanding
under these facilities. Short-term bank credit lines of foreign
subsidiaries were approximately $155,000, of which approximately
$95,000 was outstanding at January 31, 1999.
(3) In February 1998, the Company filed a shelf registration with the
Securities and Exchange Commission for $200,000 of debt securities. To
date, none of these securities have been issued. The Company also has
$50,000 of debt securities remaining under a shelf registration filed
in 1996.
On February 9, 1999, the Company announced that it signed a commitment letter
with The Chase Manhattan Bank relating to a proposed $225,000 secured
term loan. The term loan and amendments to the current Revolving Credit Facility
will provide lenders with collateral and are subject to syndicate participation
and to the negotiation of definitive agreements. The term loan facility is
intended to provide working capital and assure that the Company can meet
possible future obligations with respect to Potlatch and APP. Closing on the
financing is expected in the second fiscal quarter. Following the closing of the
term loan, the Company expects to pursue a fixed rate bond offering to establish
a more permanent level of financing. Pending the closing of the term loan, the
Company has extended the normal time of payment of certain accounts
payable.
Discontinued Operations
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 holds one seat on the
Board of Director of the new company. 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; $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. Net assets disposed of in the sale aggregated
$139,300. Sales and operating profit of Material Handling for the three months
ended January 31, 1998 was $76,483 and $5,634, respectively.
Beloit APP Contracts
In fiscal 1996 and 1997, Beloit's Asian subsidiaries received orders for four
fine paper machines from Asia Pulp & Paper Co. Ltd. ("APP") for a total of
approximately $600,000. During the second quarter of fiscal 1998, the Company
identified $155,000 of additional estimated contract costs at Beloit related to
these contracts. The additional costs primarily related to non-proprietary
equipment, installation and erection, freight and other site construction costs,
and overruns resulting from changes in estimates of costs to complete related to
these complex, large-scale projects.
The first two machines have been substantially paid for and installed at APP
facilities in Indonesia. The Company sold approximately $44,000 of receivables
from APP on these first two machines to a financial institution. The machines
are currently in the start-up/optimization phase and are required to meet
certain contractual performance tests. The contracts provide for potential
liquidated damages, including performance damages, in certain circumstances. The
Company has begun discussions with APP on certain claims and back charges on the
first two machines.
The two remaining machines have been substantially manufactured, are in the
Company's possession and are carried on the Consolidated Balance Sheet at
January 31, 1999 as unbilled receivables of approximately $180,000. This amount
is net of a $46,000 down payment received from APP, a $2,770 repurchase on
December 31, 1998 of a portion of a note receivable, and $16,230 of receivables
in the form of a note receivable from APP sold to a financial institution. In
February, 1999, the $16,230 balance of the note receivable sold to a financial
institution was repurchased. The Company has issued letters-of-credit ("LOCs")
in the amount of the down payment. To date, APP has been unable to secure
financing for these two machines. In addition, Beloit is working with vendors
which supplied material and parts on these machines to extend payment terms.
On December 15, 1998, Beloit's Asian subsidiaries declared APP in default on the
contracts for the two remaining machines, concluding that APP has not acted in
good faith and is unwilling to pay its obligations or is incapable of securing
financing for these two paper machines. Consequently, on December 15, 1998,
Beloit's Asian subsidiaries filed for arbitration in Singapore for the full
payment from APP for the second two machines as well as at least $125,000 in
damages and delay costs.
On December 16, 1998, APP filed a notice of arbitration in Singapore against
Beloit's Asian subsidiaries seeking a full refund of approximately $46,000 paid
to the Company for the second two machines and claiming that Beloit's Asian
subsidiaries had an obligation under the purchase contracts to secure financing.
APP also seeks recovery of other damages it alleges were caused by Beloit's
Asian subsidiaries claimed breaches. In addition, APP seeks a declaration in the
arbitration that it has no liability under certain promissory notes. The Company
will vigorously defend against all of APP's assertions and also will proceed
without delay to mitigate APP's obligations for damages by seeking other
customers for these world-class machines. APP has attempted to draw on
approximately $15,900 of existing LOCs issued by Banca Nazionale del Lavaro
("BNL") in connection with the contracts for the second two machines. The
Company has filed for and received a temporary restraining order which prohibits
BNL from executing payment under the drawing. The final disposition of the
Company's request for a permanent injunction remains pending with the United
States District Court for the Eastern District of Wisconsin. On January 4, 1999,
the Company placed funds on deposit with BNL to provide for payment under the
LOCs should the permanent injunction not be granted.
The Company intends to vigorously pursue its rights under the contracts and
expects to be fully compensated for these two machines from APP. However, in the
event that the Company is unsuccessful and to mitigate APP's damages, the
Company is seeking to sell these two machines to other customers.
Proceeds from the ultimate sale of these paper machines are expected to be
sufficient to substantially recover the carrying value of the receivables. In
the event APP does not pay for these machines and the Company is unable to sell
these paper machines to another customer, it may have a materially adverse
effect on its consolidated financial position or results of operations.
Potlatch
In 1995, Potlatch Corporation filed a claim against Beloit in the Second
Judicial District of the State of Idaho, County of Nez Perce, that alleged pulp
line washers supplied by Beloit for less than $15,000 failed to perform
satisfactorily. In June, 1997, a Lewiston, Idaho jury awarded Potlatch $95,000
in damages in the case which, together with fees, costs and interest to January
31, 1999, approximate $119,000. 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 in the first half of calender 1999. The Company considers
the eventual outcome of the Potlatch case not to be estimable. Reserves in the
January 31, 1999 Consolidated Balance Sheet are less than the sales price of the
washers. The ultimate resolution of this case could involve costs to the Company
that are materially higher than the reserves. In the event the Company is
unsuccessful in its request for a new trial in this matter, it may have a
material adverse effect on its consolidated financial position or results of
operations.
Year 2000 Readiness Disclosure
The Year 2000 issue focuses on the ability of information systems to properly
recognize and process date-sensitive information beyond December 31, 1999. To
address this problem, the Company is in the process of implementing its Year
2000 readiness plan for information technology systems ("IT") and non-IT
equipment, facilities and systems.
The primary IT strategy for attaining Year 2000 readiness within the operating
units is the successful implementation of Year 2000-ready business processing
software. Joy has implemented SAP R/3. P&H Mining Equipment is in the process of
various remediation efforts and system upgrades. Beloit is in the process of a
worldwide implementation of MAPICS. All business segments anticipate their Year
2000 IT efforts to be substantially completed during the third quarter of fiscal
1999.
The Company relies on third-party suppliers for key materials and services.
Efforts have been initiated to evaluate the status of suppliers' efforts and to
determine alternatives and contingency plan requirements. These activities are
intended to provide a means of managing risk, but cannot eliminate the potential
for disruption due to third-party failure.
Facilities and office equipment such as machine tools, material distribution
equipment, telephone switches, and other common devices may be affected by the
Year 2000 problem. Mission-critical systems are scheduled to be Year 2000
compliant by June 1999.
The Company is in the process of identifying product-related Year 2000 problems
and is working with customers to assist in their Year 2000 readiness efforts. It
is not possible to determine with complete certainty that all Year 2000 problems
have been identified or corrected due to testing limitations, complexity and
application of these products. However, to provide greater focus on the
Company's readiness efforts, an independent consultant is performing a best
practice review of current and planned Year 2000 remediation efforts.
Total expenses on the project through January 31, 1999 were approximately $3,700
and were related to expenses for repair or replacement of software and hardware,
expenses associated with facilities, products and supplier reviews and project
management expenses. Expected incremental expenses related to Year 2000 are not
expected to be material to the Company's financial position. The costs of
implementing SAP and MAPICS are excluded as these system implementations were
undertaken primarily to improve business processes.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Contingency plans will be developed as final evaluations of risks
are completed.
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of third-party suppliers
and customers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company.
The Company believes that the implementation of new business systems and the
completion of the readiness plan as scheduled will reduce the possibility of
significant interruptions of normal operations.
Market Risk
Volatility in interest rates and foreign exchange rates can impact the Company's
earnings, equity, and cash flow. From time to time the Company will undertake
transactions to hedge this impact. The instrument will be effective if it
offsets partially or completely the impact on earnings, equity, and cash flow of
this rate volatility on the Company's underlying interest rate and foreign
exchange rate exposures. In accordance with the Company's policy, at no time
will the Company execute derivatives that are speculative or that increase the
Company's risk from interest rate or foreign exchange rate fluctuations. At
January 31, 1999, there were no interest rate derivatives. Foreign exchange
derivatives at that date were exclusively in the form of forward exchange
contracts executed over-the-counter with several commercial banks, all of which
held investment grade credit ratings. The outstanding value of these forward
contracts at January 31, 1999, in absolute dollar terms for all currencies, was
$234,963.
The Company's accounting policy for recording gains and losses from forward
exchange contracts complies with Statement of Financial Accounting Standard
("SFAS") No. 52. In addition, the Company has adopted a Foreign Exchange Risk
Management Policy. It is a risk-averse policy in which most of the foreign
exchange exposures that impact earnings and cash flow are fully hedged, subject
to a net $5,000 self-insurance threshold of permitted exposures per currency.
Exposures that impact only equity or that do not have a cash flow impact are
generally not hedged with derivatives. There are two categories of foreign
exchange exposure that are hedged: assets and liabilities denominated in a
foreign currency and future receipts or payments denominated in a foreign
currency. These exposures normally arise from imports and exports of goods and
from intercompany lending activity.
The fair value of the Company's forward exchange contracts at January 31, 1999
is presented in the following table by country currency converted to U.S.
dollars:
Maturing in Maturing in
1999 2000
Contracts (Dollar Amounts in Thousands)
- --------------------------------------------------------------------------
Australian Dollar $ 15,398 $ 670
Austrian Schilling 1,830 -
Canadian Dollar 323 -
Italian Lira 41,526 -
So. African Rand 31,598 -
U.K. Pound 91,273 -
U.S. Dollar 51,985 -
- --------------------------------------------------------------------------
Other
The Company announced in August 1998 that it was planning to reduce the number
of its employees by 20 percent or 3,100 employees worldwide. As of January 31,
1999, 90 percent of the originally planned reductions are complete, with the
remaining actions identified and in process. Additional cost reductions have
also been identified and are underway. When fully in place, all of these
reductions are expected to deliver annual savings in excess of $110,000. In
total, cost reductions of $23,800 were achieved in the first quarter of 1999 and
an additional $90,000 to $100,000 of savings are expected by the end of 1999.
- -----
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
At the Annual Shareholders' Meeting held February 23, 1999, the
following nominees were elected as directors to terms ending in
2002. The number of shares of Common Stock voted for each nominee
were:
For Withheld
Robert M. Gerrity 37,692,510 3,485,632
Jeffery T. Grade 33,543,281 7,634,861
L. Donald LaTorre 37,691,393 3,486,749
Leonard E. Redon 37,694,229 3,483,913
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 realization of anticipated cost savings is subject to certain risks
including, among other things, the risks that expected cost reductions have been
overestimated, unexpected costs will be incurred and anticipated operating
efficiencies will not be achieved.
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:
o 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, particularly in the paper and
mining businesses.
o 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.
o 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.
o 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. o 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
February 22, 1999.
10(a) Harnischfeger Industries, Inc. Supplemental
Retirement and Stock Funding Plan, as amended and
restated December 6, 1998.
(b) Harnischfeger Industries, Inc. Long-Term Plan
for Key Executives, as amended and restated
December 17, 1998.
11 Statement re: Calculation of Earnings Per Share
(b) Reports on Form 8-K
None
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
Date March 17, 1999 and Administration and Chief Financial Officer
/s/ James C. Benjamin
James C. Benjamin
Vice President and Controller
Date March 17, 1999 and Chief Accounting Officer
Exhibit 3
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 pledge 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.
(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).
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 Vice
Chairman of the Board, 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. Vice Chairman of the Board. The Vice Chairman of the Board shall
preside at all meetings of the Board of Directors and stockholders in the
absence of the Chairman of the Board.
SECTION 7. 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 and, if
any, the Vice Chairman of the Board, the Chief Executive Officer shall, when
present, preside at all meetings of the stockholders and the Board of Directors.
SECTION 8. 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, the Vice Chairman of the Board, if any, and the Chief Executive
Officer, the President shall, when present, preside at all meetings of the
stockholders and the Board of Directors.
SECTION 9. 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 10. 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 11. 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 12. 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 13. Assistant Secretaries and Assistant Treasurers. 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 14. 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.
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.
Exhibit 10(a)
HARNISCHFEGER INDUSTRIES, INC.
SUPPLEMENTAL RETIREMENT AND STOCK FUNDING PLAN
(as amended and restated December 6, 1998)
SECTION 1: Introduction
1.1 The Plan and its Effective Date. The Harnischfeger Industries, Inc.
Supplemental Retirement and Stock Funding Plan (the "Supplemental Plan") is the
amendment and restatement effective as of October 1, 1990 of the plan that was
originally established by Harnischfeger Industries, Inc., a Delaware corporation
(the "Company"), effective March 1, 1987 as the Harnischfeger Industries, Inc.
Supplemental Retirement Plan.
1.2 Purpose. The Company maintains a Harnischfeger Salaried Employees'
Retirement Plan (the "Retirement Plan") which is intended to meet the
requirements of a "qualified plan" under the Internal Revenue Code of 1986, as
amended (the "Code"). While the Code and the Employee Retirement Income Security
Act of 1974, as amended (the "Act"), place limitations on the benefits which may
be paid from a qualified plan, the Code and the Act permit the payment under a
non-qualified supplemental retirement plan of the benefits which may not be paid
under the qualified plan because of such limitations. The purposes of this
Supplemental Plan are (i) to provide benefits which may not be provided under
the Retirement Plan because of limitations imposed by the Code or the Act,
including those relating to nondiscrimination and maximum benefit limitations,
elections to defer compensation made by the participants, and the granting of
past service credits, and (ii) to provide the opportunity for qualified
executives to have their supplemental benefits converted into shares of the
Company's common stock upon the terms hereinafter set forth.
SECTION 2: Participation and Benefits
2.1 Eligibility for Benefits Related to Retirement Plan. Subject to the
conditions and limitations hereof, if a participant in the Retirement Plan (i)
has been granted credit for prior service or elected to defer compensation which
may not be taken into account under the Retirement Plan because of applicable
nondiscrimination or other rules, or (ii) has accrued a vested pension benefit
under the Retirement Plan (or would have accrued a vested benefit if his prior
service were taken into account), and such benefit has been limited as a result
of the maximum benefit limitations imposed by Sections 401(a)(17) and 415 of the
Code, he shall be a participant ("Participant") in this Supplemental Plan and
shall be entitled to receive under this Supplemental Plan the portion of his
benefits under the Retirement Plan, determined without regard to the limitations
on the inclusions of prior service or deferred compensation or the maximum
benefit limitations therein, which exceeds the benefits payable to him under the
Retirement Plan after applying such limitations. If a Participant was employed
by another "Harnischfeger Company", as defined in the Retirement Plan, and such
other company also maintains a supplemental plan covering the Participant, the
benefits hereunder and under such other plan shall be limited so as to not be
duplicative and the Participant's benefits hereunder and under such other plan
shall be paid by the Company and such other Harnischfeger Company in such
proportions as the Company shall determine. The term "Company" as hereinafter
used shall be deemed to include a reference to each such other Harnischfeger
Company.
2.2 Payment of Benefits. Unless a Participant is a AStock Participant@ (as
defined below) who becomes entitled to receive Company common stock ("Stock") as
provided in Section 3, his benefits under this Supplemental Plan shall be paid
to him, or in the event of his death to his beneficiary, at the same time and in
the same manner as his pension benefits under the Retirement Plan.
2.3 Funding. Benefits payable under this Supplemental Plan to a Participant or
his beneficiary shall be paid directly by the Company or at its discretion
through the Harnischfeger Industries Deferred Compensation Trust ("Rabbi
Trust"), a grantor trust established by the Company. Prior to a "Change in
Control" of the Company (as defined below), the Company shall not be required
(but may do so in its discretion) to place assets in the Rabbi Trust that may be
used to provide any benefits under this Supplemental Plan, except that shares of
Stock shall be issued and transferred to the Rabbi Trust as provided in Section
3.2. Notwithstanding the above, the Company intends for this Supplemental Plan
to constitute an unfunded, unsecured promise to pay future benefits.
SECTION 3: Conversion of Benefits into Stock
3.1 Stock Participant. As used herein, the term "Stock Participant" means (i)
each Participant who was an active senior executive of the Company as of October
1, 1990 whose accrued benefits as of October 1, 1990 under this Supplemental
Plan equals or exceeds a monthly normal retirement annuity of $1,000 per month
and (ii) each Participant from time to time designated a Stock Participant by
the Committee (as defined in Section 4.1 hereof).
3.2 Stock Funding. As soon as practicable after February 1st of each year, the
present value of each Stock Participant's prospective supplemental pension
benefits payable hereunder shall be calculated as of such February 1st using the
then current assumptions adopted by the Company for purposes of calculating the
actuarial present value of the Company's pension obligations, provided that the
discount rate used for purposes of such calculation shall be one half percent
less than the rate used in such assumptions. Each bookkeeping account maintained
in a Stock Participant=s name (the AAccount@) shall be credited with a number of
shares of Stock (rounded to the nearest integer) derived by dividing the average
closing price of the Stock on the New York Stock Exchange Composite Tape for the
immediately preceding month of December into the amount, if any, by which the
aforesaid present value is greater than the sum of (i) the Market Value (as
defined below) of the shares of Stock, if any, reflected in such Stock
Participant=s Account as of such date and (ii) the Market Value as of such date
of the shares of Stock, if any, listed for such Stock Participant in Schedule A.
A number of shares of Stock equal to the amount reflected in all Stock
Participant=s Accounts shall be registered by the Company in the name of the
trustee of the Rabbi Trust (the "Trustee") and delivered to the Rabbi Trust (if
adequate shares have not theretofore been delivered by the Company to the Rabbi
Trust). Stock transferred by the Company to the Rabbi Trust pursuant hereto may
at the Company's option be acquired through open market purchases or may be
either treasury shares or newly issued shares provided that any treasury or
newly issued shares are duly registered pursuant to applicable federal and state
securities laws and stock exchange regulations. Although the Company intends to
exert its best efforts so that the shares transferred to the Rabbi Trust or
distributed to Stock Participants hereunder will be registered under, or exempt
from the registration requirements of, the Securities Act of 1933 (the
"Securities Act") and any applicable state securities laws, if the allocation or
distribution would otherwise result in the violation by the Company of any
provision of the Securities Act or of any state securities law, the Company may
require that such transfer or distribution be deferred until the Company has
taken appropriate action to avoid any such violation.
3.3 Stock Participants' Accounts. Each Stock Participant's Account shall be
credited to reflect all dividends, stock splits and other distributions with
respect to shares of Stock reflected in his Account, and all non-stock
distributions with respect to Stock shall be reflected as shares of the Stock
(for purposes of crediting the Participant=s Account) using the last closing
price for the Stock on the New York Stock Exchange Composite Tape immediately
preceding such non-stock distribution. Each Account shall be charged with any
distribution made to a Stock Participant when made.
3.4 Payment of Stock Benefits and Stock Benefit Supplements.
3.4.1 Certain Definitions.
3.4.1.1 The term "Stock Benefits" shall mean all shares of Stock reflected in a
Stock Participant's Account as of the date of such determination.
3.4.1.2 The term AChange in Control@ shall mean a Change in Control of the
Company as defined in the Rabbi Trust.
3.4.1.3 The term AMarket Value@ shall mean, as of any date and as to any number
of shares of Stock, the number of shares of Stock multiplied by the average
closing price of the Stock on the New York Stock Exchange Composite Tape for the
thirty calendar day period immediately preceding such date.
3.4.1.4 The term AStock Benefit Supplement@ shall mean, as to any Stock
Participant, the amount, if any, by which (i) the Market Value of any shares of
Stock reflected in such Stock Participant=s Account as of the date of a
termination of employment under Section 3.4.2.1 or 3.4.2.2 or as of the date of
a Change in Control plus the Market Value as of such date of the Stock, if any,
listed for such Stock Participant on Schedule A to this Supplemental Plan is
less than (ii) the present value of such Stock Participant=s prospective
supplemental pension benefits payable hereunder as of such date.
3.4.1.5 The term ACause@ shall mean termination upon (a) Participant's willful
and continued failure to perform substantially the reasonably assigned duties
with the Company consistent with those duties prior to a Change in Control
(other than any such failure resulting from incapacity due to physical or mental
illness) after a demand for substantial performance is delivered to the
Participant by the Chairman of the Board or Chief Executive Officer of the
Company which specifically identifies the manner in which such person believes
that the Participant has not substantially performed such assigned duties, or
(b) Participant's willful engagement in illegal conduct which is materially and
demonstrably injurious to the Company. For purposes of this Section, no act or
failure to act on Participant's part shall be considered "willful" unless done,
or omitted to be done, in knowing bad faith and without reasonable belief that
the action or omission was in, or not opposed to, the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, in
good faith and in the best interests of the Company. Notwithstanding the
foregoing, a Participant shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to him a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice to Participant and an opportunity for
Participant, together with his counsel, to be heard before the Board), finding
that in the good faith opinion of the Board the Participant was guilty of the
conduct set forth above in (a) or (b) of this Section and specifying the
particulars thereof in detail.
3.4.1.6 The term AGood Reason@ shall mean, with respect to a Participant,
without the Participant's express written consent: (a) the assignment to the
Participant of any duties inconsistent in any material and adverse respect with
the duties assigned to the Participant by the Company as of December 6, 1998, or
any other action by the Company that results in a material diminution in the
Participant's position, authority, duties or responsibilities from those held,
exercised and/or assigned to the Participant as of December 6, 1998, other than
an isolated, insubstantial and inadvertent action that is not taken in bad faith
and is remedied by the Company promptly after receipt of notice thereof from the
Participant; or (b) any reduction in the Participant's base salary or a material
reduction in the Participant's bonus opportunity or other material employee
benefits from the levels in effect as of December 6, 1998, other than (i) an
isolated, insubstantial and inadvertent action that is not taken in bad faith
and is remedied by the Company promptly after receipt of notice thereof from the
Participant, (ii) any modification to the Company's employee benefits in
conjunction with establishment of a substitute or replacement employee benefit
plan providing substantially similar employee benefits, or (iii) the Company's
modifications to its retiree medical programs; or (c) any requirement by the
Company that the Participant's services be rendered primarily at a location or
locations more than 35 miles from the Participant's employment location as of
December 6, 1998, other than for reasonable travel obligations in connection
with the Participant's duties of employment.
3.4.2 Stock Benefit and Stock Benefit Supplement Payments. Stock Benefits shall
be paid from the Rabbi Trust in shares of Stock. Stock Benefit Supplements shall
be paid in cash and shall, at the Company=s discretion, be paid from the Rabbi
Trust or paid directly by the Company from other assets.
3.4.2.1 Subject to the Committee's sole discretion to waive the provisions of
this Section, if a Stock Participant's employment is voluntarily terminated
after the attainment of age 55 and prior to attainment of age 62, his Stock
Benefits and any Stock Benefit Supplement shall be reduced in accordance with
the early retirement reduction factors under the Retirement Plan based upon his
attained age at his termination of employment and paid to him in a lump sum;
that portion of his Stock Benefits and Stock Benefit Supplement not paid to him
due to such reduction shall be forfeited.
3.4.2.2 If a Stock Participant's employment is (a)
voluntarily terminated following attainment of age 62
(55 in the event the Committee elects to waive the provisions of Section 3.4.2.1
hereof), (b) involuntarily terminated at any age without Cause, including
termination due to death or disability, or (c) terminated by the Stock
Participant for Good Reason, all of his Stock Benefits and any Stock Benefit
Supplement shall be distributed (without reduction for any early retirement
reduction factors under the Retirement Plan) to him (or to his beneficiary in
the event of his death) promptly (but not sooner than fifteen (15) days)
following his termination of employment with the Company or its subsidiaries;
provided, however, that a Stock Participant may upon written notice to the
Committee given at least one year prior to his termination, elect an annual
distribution of such Stock Benefits and any Stock Benefit Supplement over a
period of time of up to ten (10) years (e.g. if a ten year election, one tenth
of the balance at the time of the first distribution, one ninth of the balance
at the time of the second distribution, etc.) and provided further that a Stock
Participant may upon written notice to the Committee given at least one year
prior to his termination of employment elect to delay until the next calendar
year following his termination of employment either the distribution of or, if
the Stock Participant has elected annual distributions over a period of time,
the initial distribution of his benefit.
3.4.3 Change In Control. Notwithstanding anything else in this
Supplemental Plan to the contrary, promptly (but not later than fifteen (15)
days) following Change in Control, (A) shares of Stock equal in number to the
shares credited to a Stock Participant=s Account shall be distributed to such
Stock Participant, and (B) cash equal to any Stock Benefit Supplement as of such
date shall to paid to such Stock Participant. Distributions and payments
pursuant to the immediately preceding sentence shall be in lieu of any
distributions and payments described in Section 3.4.2.
SECTION 4: General Provisions
4.1 Committee. This Supplemental Plan shall be administered by a
committee of two or more directors constituted to comply with the Non-Employee
Director requirements of Rule 16b-3 promulgated pursuant to the Securities
Exchange Act of 1934 as amended and Securities Exchange Commission
interpretations thereunder (the "Committee"), disregarding any changes in the
members of the Committee following a Change in Control. The Company shall pay
the cost of administration of the Supplemental Plan. The Committee shall have
the power, right and duty to interpret the provisions of the Supplemental Plan
and may from time to time adopt rules with respect to the administration of the
Supplemental Plan and the determination and distribution of benefits under the
Supplemental Plan, and may amend any and all rules previously established. Any
decision made by the Committee in good faith in connection with its
administration of or responsibilities under the Supplemental Plan, including the
interpretation of any provision of the Supplemental Plan, the application of any
rule established under the Supplemental Plan, any determination as to the
officers eligible to participate in the Supplemental Plan, the amount allocated
to each and the manner, conditions and terms of payment of such amount, shall be
conclusive on all persons.
4.2 Beneficiary. A Participant's "beneficiary" under this Supplemental
Plan means any person who becomes entitled to benefits under the Retirement Plan
because of the Participant's death; provided that, if a Participant dies while
his benefits under this Supplemental Plan are payable to him in installments,
his beneficiary under this Supplemental Plan shall be either (i) the person or
persons designated by him by signing and filing with the Committee a form
furnished by the Committee, or (ii) if the Participant failed to designate a
beneficiary in (i) above, or if the beneficiary designated in (i) above dies
before the date of the Participant's death, the Participant's estate.
4.3 Discretion. Notwithstanding any provisions in this Supplemental
Plan to the contrary, the Committee shall have the discretion to allow any
benefits to be paid that would otherwise be forfeited.
4.4 Employment Rights. Establishment of the Supplemental Plan shall not
be construed to give any Participant the right to be retained in the Company's
service or to any benefits not specifically provided by the Supplemental Plan.
4.5 Interests Not Transferable. Except as to withholding of any tax
under the laws of the United States or any state, the interests of the
Participants and their beneficiaries under the Supplemental Plan are not subject
to the claims of their creditors and may not be voluntarily or involuntarily
transferred, assigned, alienated or encumbered, provided, however, that the
Committee shall have discretion to waive this restriction, in whole or in part.
No Participant shall have any right to any benefit payments hereunder prior to
his termination of employment with the Company other than pursuant to Section
3.4.3.
4.6 Payment with Respect to Incapacitated Participants or
Beneficiaries. If any person entitled to benefits under the Supplemental Plan is
under a legal disability or in the Committee's opinion is incapacitated in any
way so as to be unable to manage his financial affairs, the Committee may direct
the payment of all or a portion of such benefits to such person's legal
representative or to a relative or friend of such person for such person's
benefit, or the Committee may direct the application of such benefits for the
benefit of such person in any manner which the Committee may elect that is
consistent with the Supplemental Plan. Any payments made in accordance with the
foregoing provisions of this section shall be a full and complete discharge of
any liability for such payments.
4.7 Limitation of Liability. To the extent permitted by law, no person
(including the Company, its Board of Directors, the Committee, any present or
former member of the Company's Board of Directors or the Committee, and any
present or former officer of the Company) shall be personally liable for any act
done or omitted to be done in good faith in the administration of the
Supplemental Plan.
4.8 Controlling Law. The laws of Wisconsin shall be controlling in
all matters relating to the Supplemental Plan.
4.9 Gender and Number. Where the context admits, words in the masculine
gender shall include the feminine and neuter genders, the plural shall include
the singular and the singular shall include the plural.
4.10 Successor to the Company. The term "Company" as used in the
Supplemental Plan shall include any successor to the Company by reason of
merger, consolidation, the purchase of all or substantially all of the Company's
assets or otherwise.
4.11 Withholding for Taxes. Notwithstanding any other provision of this
Supplemental Plan, the Committee may on behalf of the Participant withhold or
direct the Trustee to withhold from any payment to be made under this
Supplemental Plan, whether in the form of cash or shares of stock, such amount
or amounts as may be required for purposes of complying with appropriate
federal, state or foreign tax withholding provisions. Subject to the discretion
of the Committee, no distribution will be made to the Participant until all tax
withholding obligations have been satisfied.
SECTION 5: Amendment and Termination
5.1 Amendment and Termination. The Committee reserves the right to
amend the Supplemental Plan from time to time or to terminate the Supplemental
Plan at any time, provided that no amendment of the Supplemental Plan nor the
termination of the Supplemental Plan may cause the reduction, forfeiture or
cessation of any benefits that were accrued as of the date of such amendment or
termination and which would otherwise be payable under this Supplemental Plan,
but for such amendment or termination.
Exhibit 10(b)
HARNISCHFEGER INDUSTRIES, INC.
LONG-TERM COMPENSATION PLAN FOR KEY EXECUTIVES
(as amended and restated December 17, 1998)
1. Purpose. The Harnischfeger Industries, Inc. Long-Term Compensation Plan for
Key Executives (the "Plan"), established effective as of September 8, 1997 by
Harnischfeger Industries, Inc. (the "Company"), is intended to provide certain
key officers of the Company a one-time grant of long-term compensation
incentives linked to achieving high performance for Company shareholders.
2. Administration. The Plan will be administered by the Human Resources
Committee of the Board of Directors of the Company or such other committee of
two or more directors constituted to comply with the Non-Employee Director
requirements of Rule 16b-3 promulgated pursuant to the Securities Exchange Act
of 1934 as amended and Securities Exchange Commission interpretations thereunder
as the Board of Directors may designate from time to time (the "Committee"),
which Committee from time to time may delegate the performance of certain of its
ministerial duties under the Plan, such as the keeping of records and
participants' accounts, to such person or persons as it may select. Awards under
the Plan shall be earned on the basis of performance during each of three
consecutive 12-month periods beginning on November 1, 1998 and ending on October
31, 2001 (each a "Plan Year"). The Company shall pay the cost of Plan
administration. The Committee shall have the power, right and duty to interpret
the provisions of the Plan and may from time to time adopt procedures with
respect to the administration of the Plan. Any decision made by the Committee in
good faith in connection with its administration of or responsibilities under
the Plan shall be conclusive on all persons.
3. Participation. Each executive of the Company listed on
Schedule I shall be a participant in the Plan (a "Participant").
4. Shares. The total number of shares of the Company's common stock, par value
$1.00 per share ("Stock"), (other than Dividend Shares (as defined below) and
amounts awarded through dividends, stock splits and other distributions and the
reinvestment of cash distributions as provided in paragraph 6(b) hereof) on
which the value of a Participant's benefits under the Plan are based (the
"Shares") is listed on Schedule I. As Shares are earned by a Participant
pursuant to Section 6, a bookkeeping account maintained on behalf of the
Participant (the "Account") shall be credited to reflect the earned Shares.
5. Total Business Return. The Total Business Return shall be based on the
Company's net operating profit after taxes, as determined by the Committee in
accordance with the guidelines set forth on Schedule III hereto. The Total
Business Return shall be measured by the Committee as of the last day of such
Plan Year (the "Measurement Date") and shall be determined within sixty (60)
days following each applicable Measurement Date. Notwithstanding the foregoing,
in the event of a Trigger Event with respect to a Participant, the Measurement
Date for such Participant(s) shall be the last day of the fiscal quarter
immediately preceding such Trigger Date.
6. Awards. Shares shall be earned as of each Measurement Date based on the Total
Business Return for each of the completed Plan Years as of each such Measurement
Date and the corresponding percentage of Shares set forth on Schedule II (the
"Total Stock Award"). Upon each applicable Measurement Date, each Participant
who is then employed by the Company shall earn for purposes of crediting the
Participant's Account (i) an amount measured by the number of Shares (a "Stock
Award") which together with all previous Stock Awards equals the Total Stock
Award for such Participant and (ii) an additional amount (the "Dividend Shares")
measured by the number of shares of Stock (rounded to the nearest whole number
of shares) that would have been credited to the Participant's Account as the
result of dividends, stock splits and other distributions and the reinvestment
of cash distributions in the manner and at the prices specified in paragraph
6(b) below had such Stock Award been made on September 8, 1997. In the event of
a Participant's death, Disability or Retirement during a Plan Year, such
Participant shall earn a Stock Award equal to the product of (i) the Stock Award
based on the Total Business Return as of the Measurement Date next following the
date of death, Disability or Retirement and (ii) a fraction, the numerator of
which is the number of completed and partial months of service during such Plan
Year prior to termination of employment and the denominator of which is twelve
(12) (the "Pro-Rata Award"), provided, that, in the event a Change in Control
occurs prior to the end of such Plan Year, such Participant's Stock Award shall
be based on the Total Business Return measured as of the last day of the fiscal
quarter immediately preceding such Change in Control. Notwithstanding the
foregoing, in the event of a Trigger Event with respect to a Participant, such
Participant shall earn a Trigger Event Award. Except as provided herein, any
Participant whose employment with the Company terminates for any reason prior to
October 31, 2001 shall not be eligible for additional Stock Awards under the
Plan following the date of such termination of employment. Except as provided
herein, on the date a Participant earns a Stock Award, the Company shall deliver
into the Harnischfeger Industries Deferred Compensation Trust ("Rabbi Trust") a
number of shares of Stock equal to the Stock Award and Dividend Shares
corresponding to such Stock Award to be held under the terms of the Rabbi Trust
subject to the terms hereinafter set forth:
(a) Shares of Stock required to be delivered to the Rabbi Trust by the Company
shall be registered by the Company in the name of the Rabbi Trust;
provided, however, that the Company may direct the trustee of the Rabbi
Trust (the -------- ------- "Trustee") to use for this purpose shares of
Stock previously delivered by the Company to the Rabbi Trust to the extent
shares held in the Rabbi Trust exceed the Company's aggregate obligations
under all plans covered by the Rabbi Trust. The Stock transferred to the
Rabbi Trust hereunder may at the Company's option be acquired through open
market purchases or may be treasury shares provided that any such shares
are duly registered or exempted from registration pursuant to applicable
federal and state securities laws. Although the Company intends to exert
its best efforts so that the shares transferred to the Rabbi Trust or
distributed to Participants or their beneficiaries hereunder will be
registered under, or exempt from the registration requirements of, the
Securities Act of 1933 (the "Securities Act") and any applicable state
securities laws, if the allocation or distribution would otherwise result
in the violation by the Company of any provision of the Securities Act or
of any state securities law, the Company may require that such transfer or
distribution be deferred until the Company has taken appropriate action to
avoid any such violation.
(b) Each Participant's Account shall be credited to reflect all dividends,
stock splits and other distributions with respect to shares of Stock
reflected by such Account. The amount (expressed as a number of shares)
credited to each Participant's Account in respect of each cash distribution
with respect to Stock transferred to the Rabbi Trust hereunder will be the
same as if the cash distribution were used to purchase shares of Stock at
75% of the average price paid by the Trustee for Stock purchased when it
reinvests such cash dividends in Stock as provided in Paragraph 4.1 of the
Rabbi Trust. The Company shall from time to time as needed make available
to the Trustee sufficient shares of Stock in connection with such
discounted purchase of Stock with cash dividends. Each Participant's
Account shall be debited to reflect any distributions made to a Participant
when made.
(c) Stock equal to the number of shares credited to a Participant's Account
shall be distributed to him (or to his beneficiary in the event of his
death) promptly (but not sooner than fifteen (15) days) following his
termination of employment with the Company and its subsidiaries; provided,
however, that a Participant may upon written notice to -------- ------- the
Committee given at least one year prior to his termination of employment,
elect an annual distribution of such Stock over a period of time of up to
ten (10) years (e.g. if a ten year election, one tenth of the balance at
the time of the first distribution, one ninth of the balance at the time of
the second distribution, etc.); and provided, further that a Participant
may, upon written notice to the Committee given at least one year prior to
his ------- termination of employment, elect to delay until the next
calendar year following his termination of employment either the
distribution of or, if the Participant has elected annual distributions
over a period of time, the initial distribution from his Account.
7. Gross-Up Payments. Subject to Participants complying with the requirements of
this Section 7 in the event it shall be determined that any payment or
distribution under the Plan to or for the benefit of a Participant, determined
without regard to any additional payments required by this first paragraph of
this Section 7 (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by a Participant with respect to such
excise tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Participant
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Participant of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest or penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment, the Participant
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
Subject to the provisions of the third paragraph of this Section 7, all
determinations required to be made under this Section 7, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by PricewaterhouseCoopers LLP or any successor thereto (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company and
Participants within thirty (30) business days of the receipt of notice from a
Participant that there has been a Payment, or such earlier time as is requested
by the Company. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payments, as determined pursuant to this
Section 7, shall be paid by the Company to Participants within five days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and Participants. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to the
third paragraph of this Section 7 and the Participant thereafter is required to
make a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Participant.
Participants shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
a Gross-Up Payment. Such notification shall be given as soon as practicable but
no later than thirty (30) business days after the Participant is informed in
writing of such claim and shall apprise the Company of the nature of such claim
and the date on which such claim is requested to be paid. The Participant shall
not pay such claim prior to the expiration of the thirty (30)-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Participant in writing prior to the
expiration of such period that it desires to contest such claim, the Participant
shall: (i) give the Company any information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Company; (iii) cooperate
with the Company in good faith in order effectively to contest such claim; and
(iv) permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Participant
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this third paragraph of Section 7, the Company shall
control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and
may, at its sole option, either direct the Participant to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and the
Participant shall prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Participant to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Participant, on an
interest-free basis and shall indemnify and hold the Participant harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Participant with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Participant shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
If, after the receipt by the Participant of an amount advanced by the Company
pursuant to the third paragraph of this Section 7, the Participant becomes
entitled to receive any refund with respect to such claim, the Participant shall
(subject to the Company's complying with the requirements of the third paragraph
of this Section 7) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Participant of an amount advanced by the
Company pursuant to the third paragraph of this Section 7, a determination is
made that the Participant shall not be entitled to any refund with respect to
such claim and the Company does not notify the Participant in writing of its
intent to contest such denial of refund prior to the expiration of thirty (30)
days after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
8. Capitalization Adjustment. In the event of any change in corporate
capitalization, such as a stock split or a corporate transaction, such as any
merger, consolidation, separation, including a spin-off, or other distribution
of stock or property (without regard to the payment of any cash dividends by the
Company in the ordinary course) of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee shall make such substitution or adjustments in the aggregate number
and kind of Total Stock Awards under the Plan, and in the number and kind of
shares subject to Stock Awards under the Plan, and such other equitable
substitution or adjustments as is appropriate to preserve the value of the
Shares or the Total Stock Awards; provided, however, that the number of shares
subject to any award shall always be a whole number.
9. Trigger Event Payments. Notwithstanding anything in this Plan to the
contrary, in the event of a Trigger Event with respect to a Participant on or
prior to October 31, 2001, a Participant will receive a distribution of the
Stock reflected by such Participant's Account and an amount of cash equal to (A)
the sum of the Trigger Event Award and the Trigger Event Dividend Award,
multiplied by (B) the greatest of (1) the Change in Control Price, if
applicable, (2) the closing price of the Stock on the New York Stock Exchange
Composite Tape on the last trading date for the Stock immediately preceding the
date on which the Trigger Event occurs and (3) $25.00. Amounts payable pursuant
to this Section 9 shall be paid to the Participant (or to his beneficiary in the
event of his death following the Trigger Event) promptly (but no later than five
(5) days) following any Termination or any Change in Control and shall be in
lieu of any payments in cash or stock pursuant to Section 6 hereof; provided,
that, with respect to a Termination, in the event of a distribution election
under Section 6(c), such election shall control.
10. Designation of Beneficiaries. Each Participant from time to time may name
any person or persons (who may be named concurrently, contingently or
successively) to whom his benefits under the Plan are to be paid if he dies
before he receives his full benefits hereunder. Each such beneficiary
designation will revoke all prior designations by the Participant, shall not
require the consent of any previously named beneficiary, shall be in a form
prescribed by the Committee, and will be effective only when filed with the
Committee during the Participant's lifetime. If a Participant fails to designate
a beneficiary before his death, the beneficiary shall be the Participant's
estate.
11. General. No Participant or other person shall have any right, title or
interest in any property of the Company as a result of an award under the Plan.
No rights or interests of Participants under this Plan shall be assignable
either voluntarily or involuntarily nor shall the establishment nor continuance
of this Plan affect or enlarge the employment rights of any Participant or
constitute a contract of employment with any Participant. No Committee member
shall be personally liable for any act done or omitted to be done in good faith
in the administration of the Plan. Except as provided in Section 6 hereof,
nothing herein shall require the Company to segregate or set aside any funds or
other property for the purpose of paying any amounts, the payment of which has
been deferred under the Plan.
12. Facility of Payment. When a person entitled to benefits under the Plan is
under legal disability, or, in the Committee's opinion, is in any way
incapacitated so as to be unable to manage his affairs, the Committee may direct
the payment of benefits to such person's legal representative, or to a relative
or friend of such person for such person's benefit, or the Committee may direct
the application of such benefits for the benefit of such person. Any payments
made in accordance with the preceding sentence shall be a full and complete
discharge of any liability for such payment under the Plan.
13. Withholding for Taxes. Notwithstanding any other provision of the Plan, the
Committee may on behalf of the Participant withhold or direct the Trustee to
withhold from any payment to be made under the Plan, whether in the form of cash
or shares of Stock, such amount or amounts as may be required for purposes of
complying with appropriate federal, state or foreign tax withholding provisions.
Subject to the discretion of the Committee, no distribution will be made to the
Participant until all tax withholding obligations have been satisfied.
14. Benefit Statements. The Company shall provide statements of their Accounts
to Participants on a periodic basis but not less than annually in such form and
at such time as it deems appropriate.
15. Amendment and Termination. The Company may not amend or terminate the Plan
without the express written consent of each Participant who is affected by such
amendment or termination.
16. Controlling Law. The laws of Wisconsin shall be controlling in all matters
relating to the Plan.
---------------
17. Gender and Number. Where the context admits, words in the masculine gender
shall include the feminine and neuter genders, the plural shall include the
singular and the singular shall include the plural.
18. Definitions
(a) "Cause," with respect to a Participant means:
(i) the willful and continued failure of the Participant
substantially to perform the Participant's duties of
employment (other than as a result of physical or mental
illness or injury), after the Board of Directors of the
Company or the Chief Executive Officer of the Company delivers
to the Participant a written demand for substantial
performance that specifically identifies the manner in which
the Board or the Chief Executive Officer believes that the
Participant has not substantially performed the Participant's
duties of employment; or
(ii) willful illegal conduct or gross misconduct by the
Participant, that results in material and demonstrable damage
to the business or reputation of the Company or its
subsidiaries; or
(iii) the Executive's conviction of, or plea of guilty or
nolo contendere to, a felony.
No act or failure to act on the part of the Participant shall
be considered "willful" unless it is done, or omitted to be
done, by the Participant in bad faith or without reasonable
belief that the Participant's action or omission was in the
best interests of the Company. Any act or failure to act that
is based upon authority given pursuant to a resolution duly
adopted by the Board, the instruction of the Chief Executive
Officer or a senior officer of the Company, or the advice of
counsel for the Company, shall be conclusively presumed to be
done, or omitted to be done, by the Participant in good faith
and in the best interests of the Company.
(b) "Change in Control" means:
(i) The acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% or
more of either (A) the then outstanding shares of Stock (the "Outstanding
Company Common Stock") or (B) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the following
acquisitions shall not -------- ------- constitute a Change in Control: (A)
any acquisition directly from the Company, (B) any acquisition by the
Company, (C) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by the Company or (D) any acquisition pursuant to a transaction which
complies with clauses (A), (B) and (C) of subsection (iii) of this Section
18(b); or
(ii) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent -------- ------- to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii)Consummation by the Company of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of
the Company or the acquisition of assets of another entity (a "Business
Combination"), in each case, unless, following such Business Combination,
(A) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly
or through one or more subsidiaries) in substantially the same proportions
as their ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or indirectly, 15% or
more of, respectively, the then outstanding share of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except
to the extent that such ownership existed prior to the Business Combination
and (C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company. (c) "Change in Control Price" means the highest
of (i) the highest reported sales price, regular way, of a share of Stock
in any transaction reported on the New York Stock Exchange Composite Tape
or other national securities exchange on which such shares are listed or on
NASDAQ, as applicable, during the sixty (60)-day period prior to and
including the date of a Change in Control, and (ii) if the Change in
Control is the result of a tender or exchange offer or a Business
Combination (as defined in Section 18(b)), the highest price per share of
Stock paid in such tender or exchange offer or Business Combination. To the
extent that the consideration paid in any such transaction described above
consists all or in part of securities or other non-cash consideration, the
value of such securities or other non-cash consideration shall be
determined by the Incumbent Board (as defined in the Rabbi Trust). (d)
"Disability" with respect to a Participant, means that (i) the Participant
has been unable, for a period of 180 consecutive business days, to perform
the Participant's duties of employment, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company or its
insurers, and acceptable to the Participant or the Participant's legal
representative, has determined that the Participant's incapacity is total
and permanent. A termination of the Participant's employment by the Company
for Disability shall be communicated to the Participant by written notice,
and shall be effective on the 30th day after receipt of such notice by the
Participant (the "Disability Effective Date"), unless the Participant
returns to full-time performance of the Participant's duties before the
Disability Effective Date. (e) "Good Reason" means, with respect to a
Participant, without the Participant's express written consent: (i) the
assignment to the Participant of any duties inconsistent in any material
and adverse respect with the duties assigned to the Participant by the
Company as of July 17, 1998, or any other action by the Company that
results in a material diminution in the Participant's position, authority,
duties or responsibilities from those held, exercised and/or assigned to
the Participant as of July 17, 1998, other than an isolated, insubstantial
and inadvertent action that is not taken in bad faith and is remedied by
the Company promptly after receipt of notice thereof from the Participant;
or
(ii) any reduction in the Participant's base salary or a material
reduction in the Participant's bonus opportunity or other
material employee benefits from the levels in effect as of
July 17, 1998, other than (A) an isolated, insubstantial and
inadvertent action that is not taken in bad faith and is
remedied by the Company promptly after receipt of notice
thereof from the Participant, (B) any modification to the
Company's employee benefits in conjunction with establishment
of a substitute or replacement employee benefit plan providing
substantially similar employee benefits, or (C) the Company's
modifications to its retiree medical programs; or
(iii) any requirement by the Company that the Participant's services
be rendered primarily at a location or locations more than 35
miles from the Participant's employment location as of July
17, 1998, other than for reasonable travel obligations in
connection with the Participant's duties of employment.
(f) "Retirement" of a Participant means (i) retirement from
active employment with the Company at or after age 65, or (ii)
termination of employment with the Company at a time when the
Participant is entitled to early retirement benefits pursuant
to the early retirement provisions of the applicable pension
plan of the Company.
(g) "Trigger Event" shall mean either: (i) with respect to all
Participants, a Change in Control of the Company, or (ii) with
respect to any individual Participant, the involuntary
termination of such Participant's employment by the Company
(other than for "Cause" or "Disability"), or such
Participant's termination of employment for "Good Reason" (in
each case, a "Termination"). Once a Trigger Event occurs with
respect to a Participant, no further Stock Awards may be
earned by such Participant hereunder.
(h) "Trigger Event Award" shall be (i) the greater of (A) the
Total Stock Award as set forth on Schedule II hereto and (B)
50% of the total Shares listed for such Participant on
Schedule I less (ii) all previous Stock Awards.
(i) "Trigger Event Dividend Award" means an amount equal to
the number of additional shares of Stock (rounded to the
nearest whole number of shares) that would have been received
by the Participant as a result of the reinvestment of cash
distributions in the manner and at the prices described in
paragraph 6(b), had the Trigger Event Award been made and the
underlying shares of Stock been held by the Participant from
September 8, 1997.
Exhibit 11
HARNISCHFEGER INDUSTRIES, INC.
CALCULATION OF EARNINGS PER SHARE
(Dollar amounts in thousands except per share amounts)
Three Months Ended
January 31,
---------------------------------
1999 1998
Average common shares outstanding
Basic 45,916 46,742
============== ==============
Diluted 45,916 46,742
============== ==============
Net Income (Loss)
(Loss) from continuing operations $ (16,399) $ (24,971)
Income from discontinued operation - 3,404
-------------- --------------
Net Income (loss) $ (16,399) $ (21,567)
============== ==============
Basic Earnings Per Share
(Loss) from continuing operations $ (0.36) $ (0.53)
Income from discontinued operation - 0.07
-------------- --------------
Net Income (loss) $ (0.36) $ (0.46)
============== ==============
Diluted Earnings Per Share
(Loss) from continuing operations $ (0.36) $ (0.53)
Income from discontinued operation - 0.07
============== ==============
Net Income (loss) $ (0.36) $ (0.46)
============== ==============
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<FISCAL-YEAR-END> Oct-31-1999
<PERIOD-START> Nov-01-1998
<PERIOD-END> Jan-31-1999
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<RECEIVABLES> 715,644
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<PP&E> 1,142,721
<DEPRECIATION> 521,277
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<CURRENT-LIABILITIES> 1,025,869
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0
0
<COMMON> 51,669
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<TOTAL-LIABILITY-AND-EQUITY> 2,867,173
<SALES> 456,250
<TOTAL-REVENUES> 464,912
<CGS> 373,223
<TOTAL-COSTS> 0
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<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,918
<INCOME-PRETAX> (33,464)
<INCOME-TAX> (11,375)
<INCOME-CONTINUING> (16,399)
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