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 APRIL 30, 2000
--------------
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 June 14, 2000
-------------------------------------------- -----------------------------
Common Stock, $1 par value 48,249,089 shares
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
FORM 10-Q -- INDEX
April 30, 2000
PART I. - FINANCIAL INFORMATION Page No.
--------
Item 1 - Financial Statements:
Consolidated Statement of Operations -
Three and Six Months Ended April 30, 2000 and 1999 4
Consolidated Balance Sheet -
April 30, 2000 and October 31, 1999 5
Consolidated Statement of Cash Flow -
Six Months Ended April 30, 2000 and 1999 7
Consolidated Statement of Shareholders' Equity (Deficit) -
Six Months Ended April 30, 2000 and 1999 8
Notes to Consolidated Financial Statements 9
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of Operations 24
Item 3 - Quantitative and Qualitative Disclosures About
Market Risk 32
PART II. - OTHER INFORMATION
Item 1 - Legal Proceedings 33
Item 2 - Changes in Securities 33
Item 3 - Defaults Upon Senior Securities 33
Item 4 - Submission of Matters to a Vote of Security Holders 34
Item 5 - Other Information 34
Item 6 - Exhibits and Reports on Form 8-K 35
Signatures
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30 April 30
--------------------------- ---------------------------
In thousands except per share amounts 2000 1999 2000 1999
------------------------------------------------- ------------ ------------- ------------ ------------
Revenues
<S> <C> <C> <C> <C>
Net sales $ 282,082 $ 294,334 $ 567,369 $ 558,771
Other income 831 636 1,908 2,798
--------- --------- --------- ---------
282,913 294,970 569,277 561,569
Cost of sales 218,033 223,225 434,417 424,635
Product development, selling
and administrative expenses 47,854 55,730 105,729 110,135
Reorganization items 11,462 -- 23,035 --
Restructuring charges 168 -- 6,479 --
--------- --------- --------- ---------
Operating income (loss) 5,396 16,015 (383) 26,799
Interest expense - net (excludes contractual
interest expense of $18,962 and $38,129
for 3 and 6 months ended April 30, 2000) (8,541) (12,854) (17,134) (25,011)
--------- --------- --------- ---------
Income (loss) before benefit (provision) for income
taxes and minority interest (3,145) 3,161 (17,517) 1,788
Benefit (provision) for income taxes (3,000) 1,375 (6,000) 2,481
Minority interest (198) (137) (372) (256)
--------- --------- --------- ---------
Income (loss) from continuing operations (6,343) 4,399 (23,889) 4,013
Loss from Beloit discontinued operations,
net of applicable income taxes -- (78,657) -- (94,670)
--------- --------- --------- ---------
Net loss $ (6,343) $ (74,258) $ (23,889) $ (90,657)
========= ========= ========= =========
Basic Earnings (Loss) Per Share:
Income (loss) from continuing operations $ (0.13) $ 0.09 $ (0.51) $ 0.08
Loss from Beloit discontinued
operations -- (1.69) -- (2.04)
--------- --------- --------- ---------
Net loss per share $ (0.13) $ (1.60) $ (0.51) $ (1.96)
========= ========= ========= =========
Diluted Earnings (Loss) Per Share:
Income (loss) from continuing operations $ (0.13) $ 0.09 $ (0.51) $ 0.08
Loss from Beloit discontinued
operations -- (1.69) -- (2.04)
--------- --------- --------- ---------
Net loss per share $ (0.13) $ (1.60) $ (0.51) $ (1.96)
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED BALANCE SHEET
April 30, October 31,
In thousands 2000 1999
----------------------------------- ---------------- ---------------
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $ 65,898 $ 57,453
Accounts receivable-net 197,747 202,830
Inventories 404,793 447,655
Other 50,046 50,447
----------- -----------
718,484 758,385
----------- -----------
Assets of discontinued Beloit operations 202,000 278,000
Property, Plant and Equipment:
Land and improvements 35,213 38,379
Buildings 136,562 131,961
Machinery and equipment 272,660 274,485
----------- -----------
444,435 444,825
Accumulated depreciation (240,508) (234,078)
----------- -----------
203,927 210,747
----------- -----------
Investments and Other Assets:
Goodwill 339,989 358,191
Intangible assets 35,001 37,693
Other 47,328 68,797
----------- -----------
422,318 464,681
----------- -----------
$ 1,546,729 $ 1,711,813
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
April 30, October 31,
In thousands 2000 1999
-------------------------------------------------------- ---------------- ----------------
(Unaudited)
Liabilities and Shareholders' Deficit
Current Liabilities:
Short-term notes payable, including current
<S> <C> <C>
portion of long-term obligations $ 135,628 $ 144,568
Trade accounts payable 58,783 70,012
Employee compensation and benefits 49,722 43,879
Advance payments and progress billings 23,595 45,340
Accrued warranties 36,144 39,866
Income taxes payable 104,381 101,832
Accrued restructuring charges and other liabilities 116,106 125,719
----------- -----------
524,359 571,216
Long-term Obligations 188,013 168,097
Other Non-current Liabilities:
Liability for postretirement benefits 32,137 31,990
Accrued pension costs 17,750 15,465
Other 7,849 7,855
----------- -----------
57,736 55,310
Liabilities Subject to Compromise 1,188,845 1,193,554
Liabilities of discontinued Beloit operations,
including liabilities subject to compromise
of $287,594 and $494,806, respectively 649,259 742,265
Minority Interest 6,321 6,522
Commitments and Contingencies (Note (f)) -- --
Shareholders' Deficit:
Common stock, $1 par value (51,668,939 and
51,668,939 shares issued, respectively) 51,669 51,669
Capital in excess of par value 564,293 572,573
Retained deficit (1,492,827) (1,468,938)
Accumulated comprehensive (loss) (98,724) (79,960)
Less:
Stock Employee Compensation Trust (1,433,147 and
1,433,147 shares, respectively) at market (851) (1,612)
Treasury stock (3,565,101 and 3,865,101 shares,
respectively) at cost (91,364) (98,883)
----------- -----------
(1,067,804) (1,025,151)
----------- -----------
$ 1,546,729 $ 1,711,813
=========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
April 30,
-----------------------------------
In thousands 2000 1999
----------------------------------------------------------- --------------- ---------------
Operating Activities:
<S> <C> <C>
Net loss $ (23,889) $ (90,657)
Add (deduct) -- Items not affecting cash:
Loss from discontinued operation - 94,670
Restructuring charges 6,479 -
Reorganization items 7,899 -
Minority interest, net of dividends paid 372 256
Depreciation and amortization 27,431 21,318
Increase (decrease) in income taxes, net of change
in valuation allowance 1,958 9,904
Other - net 3,222 (5,860)
Changes in working capital items:
(Increase) in accounts receivable - net (215) (3,710)
Decrease (increase) in inventories 31,389 (13,232)
(Increase) in other current assets (1,459) (13,915)
(Decrease) increase in trade accounts payable (9,059) 2,458
Increase in employee compensation and benefits 2,066 3,470
(Decrease) increase in advance payments and progress billings (20,125) 506
(Decrease) in accrued restructuring charges and other liabilities (20,045) (38,907)
--------------- ---------------
Net cash provided by (used by) continuing operating activities 6,024 (33,699)
--------------- ---------------
Investment and Other Transactions:
Property, plant and equipment acquired (14,861) (14,888)
Property, plant and equipment retired 4,278 9,393
Deposit related to APP letters of credit and other 8,916 (15,757)
--------------- ---------------
Net cash used by investment and other transactions (1,667) (21,252)
--------------- ---------------
Financing Activities:
Dividends paid - (4,592)
Borrowings under DIP facility 70,000 -
Repayments of borrowings under DIP facility (51,000) -
Issuance of long term obligations 997 125,812
Repayment of long-term obligations (202) (3,393)
Increase in short-term notes payable- net 1,650 36,123
--------------- ---------------
Net cash provided by financing activities 21,445 153,950
--------------- ---------------
Effect of Exchange Rate Changes on Cash and
Cash Equivalents (1,276) (71)
Cash Used in Discontinued Beloit Operations, net of sales proceeds (16,081) (92,224)
-------------- --------------
Increase in Cash and Cash Equivalents 8,445 6,704
Cash and Cash Equivalents at Beginning of Period 57,453 30,012
-------------- --------------
Cash and Cash Equivalents at End of Period $ 65,898 $36,716
============== ==============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
(Unaudited)
<TABLE>
<CAPTION>
Capital in Compre- Retained Accumulated
Common Excess of hensive Earnings Comprehensive Treasury
In thousands Stock Par Value (Loss) (Deficit) (Loss) SECT Stock Total
-----------------------------------------------------------------------------------------------------------------------------------
Six Months Ended April 30, 2000
<S> <C> <C> <C> <C> C> <C> <C> <C>
Balance at October 31, 1999 $ 51,669 $ 572,573 $(1,468,938) $ (79,960) $ (1,612) $ (98,883) $(1,025,151)
Comprehensive loss:
Net loss $ (23,889) (23,889) (23,889)
Other comprehensive loss:
Currency translation
adjustment (18,764) (18,764) (18,764)
Total comprehensive -----------
loss $ (42,653)
===========
300,000 shares purchased by
employee and director
benefit plans (7,519) 7,519 --
Adjust SECT shares to market
value (761) 761 --
----------------------- -----------------------------------------------------------
Balance at April 30, 2000 $ 51,669 $ 564,293 $(1,492,827) $ (98,724) $ (851) $ (91,364) $(1,067,804)
======================= ============================================================
Six Months Ended April 30, 1999
Balance at October 31, 1998 $ 51,669 $ 586,509 $ 216,065 $ (60,289) $(13,525) $(113,579) $ 666,850
Comprehensive loss:
Net loss $ (90,657) (90,657) (90,657)
Other comprehensive loss:
Currency translation
adjustment (13,250) (13,250) (13,250)
Total comprehensive ----------
loss $ (103,907)
===========
Dividends paid ($.10 per share) (4,735) (4,735)
Dividends on shares held by SECT 143 143
600,000 shares purchased by employee
and director benefit plans (10,035) 15,583 5,548
Adjust SECT shares to market value 448 (448) --
Amortization of unearned compensation
on restricted stock 349 349
----------------------- -----------------------------------------------------------
Balance at April 30, 1999 $ 51,669 $ 577,414 $ 120,673 $ (73,539) $(13,973) $ (97,996) $ 564,248
======================= ===========================================================
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2000
(Unaudited)
(a) Reorganization under Chapter 11
On June 7, 1999, Harnischfeger Industries, Inc. (the "Company") and
substantially all of its domestic operating subsidiaries (collectively,
the "Debtors") filed voluntary petitions for reorganization under Chapter
11 of the U.S. Bankruptcy Code (the "Bankruptcy Code") in the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy
Court") and orders for relief were entered. The Debtors include the
Company's principal domestic operating subsidiaries, P&H Mining Equipment
("P&H") and Joy Mining Machinery ("Joy"), as well as Beloit Corporation
("Beloit"). The Company's Pulp and Paper Machinery segment owned by Beloit
and its subsidiaries (the "Beloit Segment") is presented as a discontinued
operation as is more fully discussed in Note (c) - Discontinued
Operations. The Debtors' Chapter 11 cases are being jointly administered
for procedural purposes only under case number 99-2171. The issue of
substantive consolidation of the Debtors has not been addressed. Unless
Debtors are substantively consolidated under a confirmed plan of
reorganization, payment of prepetition claims of each Debtor may
substantially differ from payment of prepetition claims of other Debtors.
The Debtors are currently operating their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. Pursuant to the
Bankruptcy Code, actions to collect prepetition indebtedness of the
Debtors and other contractual obligations of the Debtors generally may not
be enforced. In addition, under the Bankruptcy Code, the Debtors may
assume or reject executory contracts and unexpired leases. Additional
prepetition claims may arise from such rejections, and from the
determination by the Bankruptcy Court (or as agreed by the parties in
interest) to allow claims for contingencies and other disputed amounts.
From time to time since the Chapter 11 filing, the Bankruptcy Court has
approved motions allowing the Debtors to reject certain business contracts
that were deemed burdensome or of no value to the respective Debtor. As of
June 14, 2000, the Debtors had not completed their review of all their
prepetition executory contracts and leases for assumption or rejection.
See Note (f) - Liabilities Subject to Compromise.
The Debtors received approval from the Bankruptcy Court to pay or
otherwise honor certain of their prepetition obligations, including
employee wages and product warranties. In addition, the Bankruptcy Court
authorized the Debtors to maintain their employee benefit programs. Funds
of qualified pension plans and savings plans are in trusts and protected
under federal regulations. All required contributions are current in the
respective plans.
The Debtors have the exclusive right, until August 16, 2000 to file a plan
or plans of reorganization. Such period has been extended from time to
time during the pendancy of the Debtors' bankruptcy cases and may be
extended at the discretion of the Bankruptcy Court. Subject to certain
exceptions set forth in the Bankruptcy Code, acceptance of a plan of
reorganization requires approval of the Bankruptcy Court and the
affirmative vote (i.e., more than 50% of the number and at least 66-2/3%
of the dollar amount, both based on claims actually voted) of each class
of creditors and equity holders whose claims are impaired by the plan.
Alternatively, absent the requisite approvals, a Debtor may seek
Bankruptcy Court approval of its reorganization plan under "cramdown"
provisions of the Bankruptcy Code, assuming certain tests are met. If a
Debtor fails to submit a plan of reorganization within the exclusivity
period prescribed or any extensions thereof, any creditor or equity holder
will be free to file a plan of reorganization with the Bankruptcy Court
and solicit acceptances thereof.
February 29, 2000 was set by the Bankruptcy Court as the last date
creditors could file proofs of claim against the Debtors. There may be
differences between the amounts recorded in the Debtors' schedules and
financial statements and the amounts claimed by their respective
creditors. Litigation may be required to resolve such disputes.
The Debtors will continue to incur significant costs associated with the
reorganizations. The amount of these expenses, which are being expensed as
incurred, is expected to significantly affect results while the Debtors
operate under Chapter 11. See Note (d) - Reorganization Items.
Currently, it is not possible to predict the length of time the Debtors
will operate under the protection of Chapter 11, the outcome of the
Chapter 11 proceedings in general, or the effect of the proceedings on the
business of the Company or on the interests of the various creditors and
security holders.
Under the Bankruptcy Code, postpetition liabilities and prepetition
liabilities (i.e., liabilities subject to compromise) of the Company must
be satisfied before shareholders of the Company can receive any
distribution. The ultimate recovery to the Company's shareholders, if any,
will not be determined until the end of the case when the fair value of the
Company's assets is compared to the liabilities and claims against the
Company. The Company and the other Debtors are currently engaged in a
comprehensive analysis and reconciliation of claims filed by creditors.
Based on the Company's analysis to date of (a) scheduled and filed claims,
(b) any potential recovery from the sale of Beloit assets and (c) the
valuation of the Company, P&H and Joy as going concerns, there appears to
be sufficient value to pay in full all claims against P&H and Joy. However,
there appears to be insufficient value to pay in full all claims against
the Company. Accordingly, it appears unlikely that any value will be
distributed to the Company's shareholders. There also appears to be
insufficient value to pay in full all claims against Beloit. The U.S.
Trustee for the District of Delaware has appointed an Official Committee of
Equity Holders to represent the Company's shareholders in the proceedings
before the Bankruptcy Court.
(b) Basis of Presentation
The accompanying consolidated financial statements of the Company and its
consolidated subsidiaries have been prepared on a going concern basis which
contemplates continuity of operations, realization of assets, and
liquidation of liabilities in the ordinary course of business and does not
reflect adjustments that might result if the Debtors (other than Beloit and
Beloit's Debtor subsidiaries) are unable to continue as going concerns. As
a result of the Debtors' Chapter 11 filings, such matters are subject to
significant uncertainty. The Debtors intend to file a plan or plans of
reorganization with the Bankruptcy Court. Continuing on a going concern
basis is dependent upon, among other things, the Debtors' formulation of an
acceptable plan or plans of reorganization, the success of future business
operations, and the generation of sufficient cash from operations and
financing sources to meet the Debtors' obligations. Other than recording
the estimated loss on the disposal of the Beloit discontinued operations in
the fourth quarter of fiscal 1999, the consolidated financial statements do
not reflect: (a) the realizable value of assets on a liquidation basis or
their availability to satisfy liabilities; (b) aggregate prepetition
liability amounts that may be allowed for claims or contingencies, or their
status or priority; (c) the effect of any changes to the Debtors' capital
structures or in the Debtors' business operations as the result of a
confirmed plan or plans of reorganization; or (d) adjustments to the
carrying value of assets (including goodwill and other intangibles) or
liability amounts that may be necessary as the result of actions by the
Bankruptcy Court.
The Company's consolidated financial statements have been presented in
conformity with the AICPA's Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under the Bankruptcy Code," issued
November 19, 1990 ("SOP 90-7"). SOP 90-7 requires a segregation of
liabilities subject to compromise by the Bankruptcy Court as of the
bankruptcy filing date and identification of all transactions and events
that are directly associated with the reorganization of the Debtors.
In the opinion of management, all adjustments necessary for the fair
presentation on a going concern basis of the results of operations for the
three and six months ended April 30, 2000 and 1999, cash flows for the six
months ended April 30, 2000 and 1999, and financial position at April 30,
2000 have been made. All adjustments made are of a normal recurring nature,
except for those more fully discussed in these notes.
These financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 1999.
The results of operations for any interim period are not necessarily
indicative of the results to be expected for the full year.
(c) Discontinued Operations
In light of continuing losses at Beloit and following an evaluation of the
prospects of reorganizing the Beloit Segment, on October 8, 1999 the Company
announced its plan to dispose of this segment. Subsequently, Beloit notified
certain of its foreign subsidiaries that they could no longer expect funding of
their operations to be provided by either Beloit or the Company. Certain of the
notified subsidiaries have since filed for or were placed into receivership or
other applicable forms of judicial supervision in their respective countries. On
May 12, 2000 the U.S. Trustee for the District of Delaware appointed an Official
Committee of Unsecured Creditors of Beloit Corporation to represent the
creditors of Beloit in proceedings before the Bankruptcy Court.
On November 7, 1999, the Bankruptcy Court approved procedures and an
implementation schedule for the divestiture plan (the "Court Sales Procedures")
for the Beloit Segment. Between February and May 2000, sales agreements were
approved under the Court Sales Procedures with respect to the sale of
substantially all of the segment's domestic operating assets and the stock of
three of its foreign subsidiaries. As of June 14, 2000, all approved sales of
domestic assets had taken place. Beloit expects that closings on the sales of
its foreign subsidiaries will occur by the end of the third quarter of fiscal
2000.
The Company classified the Beloit Segment as a discontinued operation in its
consolidated financial statements as of October 31, 1999 and has accordingly
restated the Company's consolidated statements of operations and statements of
cash flow for prior periods. Revenues for the Beloit Segment were $158.2 million
for the six months ended April 30, 2000 and $392.8 million for the comparable
period in 1999. Loss from discontinued operations was $94.7 million for the six
months ended April 30, 1999. During fiscal 1999, the Company recorded an
estimated loss of $529.0 million on the disposal of the Beloit Segment including
an accrual for estimated operating losses to be incurred by the Beloit Segment
subsequent to October 31, 1999. Based on the actual results during the six-month
period ended April 30, 2000 and consideration of the current estimates
associated with the Beloit wind-down expenses to be incurred, the Company
believes that no adjustment to the original reserve is warranted as of April 30,
2000. (See Note (f) -- Liabilities Subject to Compromise for a discussion of the
APP settlement).
The Company, Beloit and certain of their officers and employees have been named
as defendants in an action in the Bankruptcy Court in which Omega Papier
Wernhausen GmbH ("Omega") is the plaintiff. This action concerns prepetition and
postpetition commitments allegedly made by the Company, Beloit and the officers
and employees named in the action with respect to a prepetition contract between
Omega and Beloit's Austrian subsidiary under which Beloit's Austrian subsidiary
agreed to supply a tissue paper making machine for Omega's factory in
Wernshausen, Germany. The action makes claims of breach of guarantee, tortuous
interference with business, breach of covenant of good faith, fraud in the
inducement and negligent misrepresentation and seeks damages of $12 million for
each of nine counts plus punitive damages of $24 million for four of the nine
counts. No discovery proceedings have taken place in this matter. As of June 14,
2000, the Company was not able to assess its ultimate liability, if any, in the
matter.
(d) Reorganization Items
Reorganization expenses are comprised of items of income, expense and loss that
were realized or incurred by the Debtors as a result of their decision to
reorganize under Chapter 11 of the Bankruptcy Code. During the three and six
months ended April 30, 2000, reorganization expenses related to continuing
operations were as follows:
Three months Six months
ended ended
In thousands April 30, 2000 April 30, 2000
--------------------------------------------------------------------------------
Professional fees directly related to the filing $ 9,437 $ 17,247
Amortization of DIP financing costs 1,875 3,750
Accrued retention plan costs 489 2,679
Interest earned on DIP proceeds (339) (641)
-------- --------
$ 11,462 $ 23,035
======== ========
(e) Restructuring Charges
In the third quarter of fiscal 1999 Joy announced and implemented a
restructuring plan. An initial reserve of $7.3 million was established in
the third quarter of fiscal 1999, primarily for the impairment of certain
assets related to a facility rationalization. In addition, charges
amounting to $4.7 million were made in the third and fourth quarter of
fiscal 1999 upon the announcement of the severance of approximately 240
employees. Of the amount reserved in fiscal 1999, $0.7 million had been
utilized by the end of the fiscal year. During the first six months of
fiscal 2000 a further $6.5 million restructuring charge was recorded under
the plan primarily for rationalization of certain of Joy's original
equipment manufacturing capacity in the United Kingdom, and to a lesser
extent for the initial stage of headcount reductions in South Africa
associated with a reorganization of Joy's business in that market. These
charges were made primarily for severance of approximately 195 employees in
the United Kingdom and approximately 20 employees in South Africa.
Additional future cash charges of $1.4 million in connection with
continuing cost reduction initiatives are expected to be incurred in fiscal
2000.
Details of these restructuring charges are as follows:
In thousands
-----------------------------------------------------------------------
Reserve at Additional Reserve Reserve at
10/31/99 Reserve Utilized 4/30/00
--------- ------- -------- ---------
Employee severance $ 4,009 $ 5,916 $ 4,924 $ 5,001
Facility closures 7,270 563 379 7,454
------- ------- ------- -------
Total $11,279 $ 6,479 $ 5,303 $12,455
======= ======= ======= =======
(f) Liabilities Subject to Compromise
The principal categories of claims classified as liabilities subject to
compromise under reorganization proceedings are identified below. All amounts
below may be subject to future adjustment depending on Bankruptcy Court action,
further developments with respect to disputed claims, or other events.
Additional prepetition claims may arise from rejection of additional executory
contracts or unexpired leases by the Debtors. Under a confirmed plan of
reorganization, prepetition claims may be paid and discharged at amounts
substantially less than their allowed amounts. The issue of substantive
consolidation of the Debtors has not been addressed. Unless Debtors are
substantively consolidated under a confirmed plan or plans of reorganization,
payment of prepetition claims of each Debtor may substantially differ from
payment of prepetition claims of other Debtors.
Recorded liabilities:
On a consolidated basis, recorded liabilities subject to compromise under
Chapter 11 proceedings consisted of the following:
<TABLE>
<CAPTION>
April 30, 2000 October 31, 1999
----------------------------------- --------------------------------------
Continuing Discontinued Continuing Discontinued
In thousands Operations Operations Total Operations Operations Total
-------------------------------------------------------------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Trade accounts payable $ 91,299 $ 94,759 $ 186,058 $ 95,950 $ 106,729 $ 202,679
Accrued interest expense, as of June 6, 1999 17,315 15 17,330 17,315 15 17,330
Accrued executive changes expense 8,518 -- 8,518 8,518 -- 8,518
Accrued project costs -- 12,514 12,514 -- 39,226 39,226
Put obligation to preferred shareholders of subsidiary 5,457 -- 5,457 5,457 -- 5,457
8.9% Debentures, due 2022 75,000 -- 75,000 75,000 -- 75,000
8.7% Debentures, due 2022 75,000 -- 75,000 75,000 -- 75,000
7 1/4% Debentures, due 2025
(net of discount of $1,209 and $1,218) 148,791 -- 148,791 148,782 -- 148,782
6 7/8% Debentures, due 2027
(net of discount of $98 and $100) 149,902 -- 149,902 149,900 -- 149,900
Senior Notes, Series A through D, at interest rates of
between 8.9% and 9.1%, due 1999 to 2006 69,546 -- 69,546 69,546 -- 69,546
Revolving credit facility 500,000 -- 500,000 500,000 -- 500,000
IRC lease (Princeton Paper) -- 54,000 54,000 -- 54,000 54,000
APP claims -- -- -- -- 46,000 46,000
Industrial Revenue Bonds, at interest rates of between
5.9% and 8.8%, due 1999 to 2017 18,615 14,128 32,743 18,615 14,128 32,743
Notes payable 20,000 -- 20,000 20,000 -- 20,000
Other 9,402 -- 9,402 9,471 -- 9,471
Advance payments and progress billing -- 16,505 16,505 -- 125,696 125,696
Accrued warranties -- 24,318 24,318 -- 34,054 34,054
Minority interest -- 18,099 18,099 -- 21,536 21,536
Pension and other -- 53,256 53,256 -- 53,422 53,422
---------- --------- ---------- ---------- ---------- ----------
$1,188,845 $ 287,594 $1,476,439 $1,193,554 $ 494,806 $1,688,360
========== ========= ========== ========== ========== ==========
</TABLE>
As a result of the bankruptcy filings, principal and interest payments
maynot be made on prepetition debt without Bankruptcy Court approval or
until a reorganization plan or plans defining the repayment terms have been
confirmed. The total interest on prepetition debt that was not paid or
charged to earnings for the period from June 7, 1999 to April 30, 2000 was
$69.3 million, of which $38.1 million relates to the first six months of
fiscal 2000. Such interest is not being accrued since it is not probable
that it will be treated as an allowed claim. The Bankruptcy Code generally
disallows the payment of interest that accrues postpetition with respect to
unsecured claims.
Contingent liabilities:
At April 30, 2000, the Company was contingently liable to banks, financial
institutions and others for approximately $278.7 million ($311.2 million as
of October 31, 1999) for outstanding letters of credit, bank guarantees,
surety bonds and other guarantees securing performance of sales contracts
and other obligations in the ordinary course of business. Of the $278.7
million: approximately $136.0 million ($168.7 million as of October 31,
1999) was issued at the request of the Company on behalf of Beloit;
approximately $152.7 million was issued at the request of Debtor entities
prior to the bankruptcy filing; and $47.8 million (October 31, 1999 $48.8
million) was issued under the DIP Facility (See Note (g) - Borrowings and
Credit Facilities). Contingent liabilities of the Debtors outstanding as of
the bankruptcy filing date may also be subject to compromise. Additionally,
there were $59.6 million (October 31, 1999 $48.5 million) of outstanding
letters of credit or other guarantees issued by non-US banks for non-US
subsidiaries. Approximately $15.2 million of the approximately $278.7
million was accrued in fiscal 1999 as part of the loss on Beloit
discontinued operations.
The Company and its subsidiaries are party to litigation matters and claims
that are normal in the course of their 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 the results of operations 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. Generally, litigation related to
"claims", as defined by the Bankruptcy Code, against Debtors is stayed.
The Potlatch lawsuit, filed originally in 1995, related to a 1989 purchase
of pulp line washers supplied by Beloit for less than $15.0 million. In
June 1997, a Lewiston, Idaho jury awarded Potlatch $95.0 million in damages
in the case which, together with fees, costs and interest to April 2, 1999,
approximated $120.0 million. On April 2, 1999 the Supreme Court of Idaho
vacated the judgement of the Idaho District Court in the Potlatch lawsuit
and remanded the case for a new trial. This litigation has been stayed as a
result of the bankruptcy filings.
In fiscal 1996 and 1997, Beloit's Asian subsidiaries received orders for
four fine papermaking machines from Asia Pulp & Paper Co. Ltd. ("APP") for
a total of approximately $600.0 million. The first two machines were
substantially paid for and installed at APP facilities in Indonesia. Beloit
sold approximately $44.0 million of receivables from APP on these first two
machines to a financial institution. Beloit agreed to repurchase the
receivables in the event APP defaulted on the receivables and the Company
guaranteed this repurchase obligation. As of June 14, 2000, the Company
believes APP was not in default with respect to the receivables. 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. Beloit has had discussions with APP on certain claims and
back charges on the first two machines.
Disputes arose between Beloit and APP regarding the two remaining machines.
On March 3, 2000, the Company announced the signing of a definitive
agreement to settle the disputes and related arbitration and legal
proceedings. Under the settlement, APP paid $135.0 million to Beloit on
April 6, 2000 and $15.9 million the Company had deposited with a bank with
respect to related letters of credit was released to the Company on April
11, 2000. The $15.9 million was classified as other assets in the Company's
consolidated financial statements as of October 31, 1999. The $135.0
million was paid $25.0 million in cash and $110.0 million in a three-year
note issued by an APP subsidiary and guaranteed by APP. The note is
governed by an indenture and bears a fixed interest rate of 15%. Beloit
intends to sell the note to a third party for fair market value. In view of
the intention to sell the note and current volatility in the applicable
capital markets for the note, no value for the note has been recognized in
the financial statements as of April 30, 2000. The value for the note and
its effect on the financial statements will be recognized in the period
that the note is sold. As part of the settlement, Beloit retained a $46.0
million down payment it received from APP for the second two papermaking
machines and APP released all rights with respect to letters of credit
issued for the aggregate amount of the down payment for the second two
papermaking machines. APP acquired certain components and spare parts
produced or acquired by Beloit in connection with the two papermaking
machines on an as is, where is basis. In addition, Beloit returned to APP
certain promissory notes given to Beloit by APP. The notes were initially
issued in the amount of $59.0 million and had an aggregate principal
balance of $19.0 million when they were returned to APP.
The Company and certain of its present and former senior executives have
been named as defendants in a class action, captioned 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 APP contracts of Beloit discussed above
violated the federal securities laws. As regards the Company, this matter
is stayed by the automatic stay imposed by the Bankruptcy Code. On May 2,
2000 the Bankruptcy Court permitted the plaintiffs to seek class
certification during the stay but otherwise stayed the litigation with
respect to the other defendants in the litigation until August 15, 2000.
The Company may seek to further extend the stay with respect to the other
defendants.
The Company and certain of its current and former directors have been named
defendants in a purported class action, entitled Brickell Partners, Ltd.,
Plaintiff vs. Jeffery T. Grade et. al., in the Court of Chancery of the
State of Delaware. This action seeks damages of an unspecified amount on
behalf of shareholders based on allegations that the defendants failed to
explore all reasonable alternatives to maximize shareholder value.
The Company and its consolidated subsidiaries are 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.
(g) Borrowings and Credit Facilities
Borrowings of the Company and its consolidated subsidiaries consisted of
the following:
April 30, October 31,
In thousands 2000 1999
--------------------------------------------- ------------ ------------
Domestic:
DIP Facility $ 186,000 $ 167,000
Other 223 227
Foreign:
Australian Term Loan, due 2000 52,515 57,734
Short term notes payable and bank overdrafts 82,840 86,539
Other 2,063 1,165
--------- ---------
323,641 312,665
Less: Amounts due within one year (135,628) (144,568)
--------- ---------
Long-term Obligations $ 188,013 $ 168,097
========= =========
Debtor-in-Possession Financing
On July 8, 1999 the Bankruptcy Court approved a two-year, $750 million
Revolving Credit, Term Loan and Guaranty Agreement underwritten by The
Chase Manhattan Bank (the "DIP Facility") consisting of three tranches: (i)
Tranche A is a $350 million revolving credit facility with sublimits for
import documentary letters of credit of $20 million and standby letters of
credit of $300 million; (ii) Tranche B is a $200 million term loan
facility; and (iii) Tranche C is a $200 million standby letter of credit
facility. Effective May 30, 2000, the Company voluntarily reduced the size
of the DIP Facility to $350 million by terminating Tranches B and C. The
reduced size of the DIP Facility is more in line with the Company's
expected borrowing needs in light of the exit from the Pulp and Paper
Machinery business and the receipt of proceeds from the sale of Beloit
assets. The reduction in the size of the DIP Facility will save the Company
approximately $170,000 per month in loan commitment fees.
Proceeds from the DIP Facility may be used to fund postpetition working
capital and for other general corporate purposes during the term of the DIP
Facility and to pay up to $35 million of prepetition claims of critical
vendors. The Debtors are permitted to make loans and provide letters of
credit in an aggregate amount not to exceed $240 million to foreign
subsidiaries for specified limited purposes, including up to $90 million
for working capital needs of foreign subsidiaries and $110 million of loans
and $110 million of letters of credit for support or repayment of existing
credit facilities. The Debtors may use up to $40 million (of the $240
million) to issue stand-by letters of credit to support foreign business
opportunities. Beginning August 1, 1999, the DIP Facility imposes monthly
minimum EBITDA tests and quarterly limits on capital expenditures. At April
30, 2000, $186 million in direct borrowings had been drawn under the DIP
Facility and classified as a long-term obligation and letters of credit in
the face amount of $47.8 million had been issued under the DIP Facility.
The Debtors are jointly and severally liable under the DIP Facility.
The DIP Facility benefits from superpriority administrative claim status as
provided for under the Bankruptcy Code. Under the Bankruptcy Code, a
superpriority claim is senior to unsecured prepetition claims and all other
administrative expenses incurred in the Chapter 11 case. Direct borrowings
under the DIP Facility are priced at LIBOR + 2.75% per annum on the
outstanding borrowings. Letters of credit are priced at 2.75% per annum
(plus a fronting fee of 0.25% to the Agent) on the outstanding face amount
of each letter of credit. In addition, the Company pays a commitment fee of
0.50% per annum on the unused amount of the commitment payable monthly in
arrears. The DIP Facility matures on the earlier of the substantial
consummation of a plan of reorganization of the Company or June 6, 2001.
In proceedings filed with the Bankruptcy Court, the Debtors agreed with the
Official Committee of Unsecured Creditors appointed by the U.S. Trustee
(the "Creditors Committee") and with MFS Municipal Income Trust and MFS
Series Trust III (collectively, the "MFS Funds"), holders of certain debt
issued by Joy, to a number of restrictions regarding transactions with
foreign subsidiaries and Beloit:
o The Debtors agreed to give at least five days prior written notice to
the Creditors Committee and to the MFS Funds of the Debtors' intention
to (a) make loans or advances to, or investments in, any foreign
subsidiary for working capital purposes in an aggregate amount in
excess of $90 million; (b) make loans or advances to, or investments
in, any foreign subsidiary to repay the existing indebtedness or cause
letters of credit to be issued in favor of a creditor of a foreign
subsidiary in an aggregate amount, cumulatively, in excess of $30
million; or (c) make postpetition loans or advances to, or investments
in, Beloit or any of Beloit's subsidiaries in excess of $115 million.
In September 1999, the Company notified the Creditors Committee and
MFS Funds that it intended to exceed the $115 million amount. The
Company subsequently agreed, with the approval of the Bankruptcy
Court, to provide the Creditors Committee with weekly cash requirement
forecasts for Beloit, to restrict funding of Beloit to forecasted
amounts, to provide the Creditors Committee access to information
about the Beloit divestiture and liquidation process, and to consult
with the Creditors Committee regarding the Beloit divestiture and
liquidation process.
o In addition, the Debtors agreed to give notice to the Creditors
Committee and to the MFS Funds with respect to any liens created by or
on a foreign subsidiary or on any of its assets to secure any
indebtedness.
o The Debtors agreed to notify the MFS Funds of any reduction in the net
book value of Joy of ten percent or more from $364 million, after
which MFS would be entitled to receive periodic financial statements
for Joy. During fiscal 1999, MFS Funds became entitled to receive
periodic financial statements for Joy.
The plan to dispose of the Beloit Segment necessitated obtaining a waiver
under the DIP Facility from The Chase Manhattan Bank. In light of the
Company's plan in October 1999 to dispose of this segment, the minimum
EBITDA tests were no longer consistent with the Company's continuing
operations. As of January 31, 2000, the Company and The Chase Manhattan
Bank entered into a Waiver and Amendment Letter which waives compliance
with certain negative covenants of the DIP Facility as they relate to the
sale of the assets of Beloit and amends the EBITDA tests in the DIP
Facility to levels that are appropriate for the Company's continuing
businesses on a consolidated basis. Continuation of unfavorable business
conditions or other events could require the Debtors to seek further
modifications or waivers of certain covenants of the DIP Facility. In such
event, there is no certainty that the Debtors would obtain such
modifications or waivers to avoid default under the DIP Facility.
In light of the decision to dispose of the Beloit Segment, the Company and
The Chase Manhattan Bank began negotiations to restructure the DIP Facility
to further align the provisions of the DIP Facility with the Company's
continuing businesses. There can be no assurance that such negotiations
will result in modifications to the DIP Facility.
The principal sources of liquidity for the Company's operating requirements
have been cash flows from operations and borrowings under the DIP Facility.
While the Company expects that such sources will provide sufficient working
capital to operate its businesses, there can be no assurances that such
sources will prove to be sufficient.
Foreign Credit Facilities
Prior to the bankruptcy filings, one of the Company's Australian
subsidiaries maintained a A$90.0 million (US$52.5 million) long-term loan
facility with a group of four banks at a floating interest rate expressed
in relation to Australian dollar denominated Bank Bills of Exchange. The
Company's bankruptcy filing caused the Australian subsidiary to be in
default of certain covenants of the loan facility, a notice of default was
issued to the subsidiary by the banks and the loan became repayable on
demand. As of April 30, 2000, the loan was fully drawn. The balance
outstanding is classified as a current liability. This loan facility is
being renegotiated to cure the default and extend its term.
As of April 30, 2000, short-term bank credit lines of foreign subsidiaries
amounted to $115.6 million. Outstanding borrowings against these credit
lines, principally in the form of demand notes, were $82.8 million as of
April 30, 2000 compared with $86.5 million as at October 31, 1999. The
short-term bank credit lines in the United Kingdom and South Africa are
being renegotiated by the Company's foreign subsidiaries with the objective
of converting the credit lines to long-term credit facilities.
(h) Income Taxes
The income tax provision (benefit) recognized in the Company's consolidated
statement of operations differs from the income tax provision (benefit)
computed by applying the statutory federal income tax rate to the income or
loss from continuing operations for the six months ended April 30, 2000 due
to an additional valuation allowance on deferred tax benefits, state taxes
and differences in foreign and U.S. tax rates.
The Company believes that realization of net operating loss and tax credit
benefits in the near term is unlikely. Should the Company's plan of
reorganization result in a significantly modified capital structure, the
Company would be required to apply fresh start accounting pursuant to the
requirements of SOP 90-7. Under fresh start accounting, realization of net
operating loss and tax credit benefits will first reduce any reorganization
goodwill until exhausted and thereafter be reported as additional paid in
capital.
(i) Inventories
Consolidated inventories consisted of the following:
April 30, October 31,
In thousands 2000 1999
------------------------------------ --------------- ------------
Finished goods $ 213,908 $ 205,959
Work in process and purchased parts 204,747 256,697
Raw materials 35,304 34,271
--------- ---------
453,959 496,927
Less excess of current cost over stated
LIFO value (49,166) (49,272)
--------- ---------
$ 404,793 $ 447,655
========= =========
Inventories valued using the LIFO method represented approximately 69% and
71% of consolidated inventories at April 30, 2000 and October 31, 1999,
respectively.
(j) Earnings Per Share
The following table sets forth the reconciliation of the numerators and
denominators used to calculate the basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
------------ ------------- ----------- ----------
In thousands except per share amounts 2000 1999 (1) 2000 1999 (1)
-------------------------------------------------- ------------ ------------- ----------- -----------
Basic Earnings (Loss):
--------------------------------------------------
<S> <C> <C> <C> <C>
Income (loss) from continuing operations $ (6,343) $ 4,399 $(23,889) $ 4,013
Loss from Beloit discontinued operations -- (78,657) -- (94,670)
-------- ---------- --------- ---------
Net loss $ (6,343) $ (74,258) $(23,889) $(90,657)
======== ========== ======== ========
Basic weighted average common shares outstanding 46,719 46,369 46,618 46,143
======== ========= ======== ========
Basic Earnings (Loss) Per Share:
--------------------------------------------------
Income (loss) from continuing operations $ (0.13) $ 0.09 $ (0.51) $ 0.08
Loss from Beloit discontinued operations -- (1.69) -- (2.04)
-------- --------- -------- --------
Net loss $ (0.13) $ (1.60) $ (0.51) $ (1.96)
======== ========= ======== ========
Diluted Earnings (Loss):
--------------------------------------------------
Income (loss) from continuing operations $ (6,343) $ 4,399 $(23,889) $ 4,013
Loss from Beloit discontinued operations -- (78,657) -- (94,670)
-------- --------- -------- ---------
Net loss $ (6,343) $(74,258) $(23,889) $(90,657)
======== ======== ======== ========
Basic weighted average common shares outstanding 46,719 46,369 46,618 46,143
Assumed exercise of stock options -- -- -- --
-------- -------- -------- --------
Diluted weighted average common shares outstanding 46,719 46,369 46,618 46,143
======== ======== ======== ========
Diluted Earnings (Loss) Per Share:
-------------------------------------------------
Income (loss) from continuing operations $ (0.13) $ 0.09 $ (0.51) $ 0.08
Loss from Beloit discontinued operations -- (1.69) -- (2.04)
-------- ------- -------- --------
Net loss $ (0.13) $ (1.60) $ (0.51) $ (1.96)
======== ======== ======== ========
_______________
(1) Amounts for the three and six months ended April 30, 1999 have been
restated to reflect Beloit as a discontinued operation.
</TABLE>
Options to purchase common stock were not included in the computation of
diluted earnings per share because the additional shares would reduce the
loss per share amount and, therefore, the effect would be anti-dilutive.
(k) Segment Information
Business Segment Information
At April 30, 2000, the Company had two reportable segments, Surface Mining
Equipment and Underground Mining Machinery. Operating income (loss) of
segments does not include interest income or expense and provision
(benefit) for income taxes. There are no significant intersegment sales.
Identifiable assets are those used in the operations of each segment.
Corporate assets consist primarily of property, deferred financing costs,
pension assets and cash.
<TABLE>
<CAPTION>
In thousands
----------------------------------------------------------------------------------------------------------
Depreciation
Net Operating and Capital Identifiable
Sales Income (Loss) Amortization Expenditures Assets
---------- ------------- ------------- ------------ -------------
Three months ended April 30, 2000
<S> <C> <C> <C> <C> <C>
Surface Mining $ 134,368 $ 15,711 $ 4,209 $ 6,019 $ 403,062
Underground Mining 147,714 5,078(1) 7,410 2,694 874,315
---------- ---------- ---------- ---------- ----------
Total continuing operations 282,082 20,789 11,619 8,713 1,277,377
Beloit discontinued operations -- -- -- -- 202,000
Reorganization items -- (11,462) -- -- --
Corporate -- (3,931) 2,167 -- 67,352
---------- ---------- ---------- ---------- ----------
Consolidated Total $ 282,082 $ 5,396 $ 13,786 $ 8,713 $1,546,729
========== ========== ========== ========== ==========
Three months ended April 30, 1999
Surface Mining $ 125,456 $ 13,348 $ 4,355 $ 1,082 $ 430,202
Underground Mining 168,878 7,617 5,776 3,755 1,006,620
---------- ---------- ---------- ---------- ----------
Total continuing operations 294,334 20,965 10,131 4,837 1,436,822
Beloit discontinued operations -- -- -- -- 1,299,359
Corporate -- (4,950) 353 18 139,448
---------- ---------- ---------- ---------- ----------
Consolidated Total $ 294,334 $ 16,015 $ 10,484 $ 4,855 $2,875,629
========== ========== ========== ========== ==========
Six months ended April 30, 2000
Surface Mining $ 255,501 $ 25,168 $ 8,239 $ 10,723 $ 403,062
Underground Mining 311,868 5,719(1) 14,840 4,138 874,315
---------- ---------- ---------- ---------- ----------
Total continuing operations 567,369 30,887 23,079 14,861 1,277,377
Beloit discontinued operations -- -- -- -- 202,000
Reorganization items -- (23,035) -- -- --
Corporate -- (8,235) 4,352 -- 67,352
---------- ---------- ---------- ---------- ----------
Consolidated Total $ 567,369 $ (383) $ 27,431 $ 14,861 $1,546,729
========== ========== ========== ========== ==========
Six months ended April 30, 1999
Surface Mining $ 236,018 $ 24,355 $ 8,650 $ 2,458 $ 430,202
Underground Mining 322,753 11,707 11,956 12,412 1,006,620
---------- ---------- ---------- ---------- ----------
Total continuing operations 558,771 36,062 20,606 14,870 1,436,822
Beloit discontinued operations -- -- -- -- 1,299,359
Corporate -- (9,263) 712 18 139,448
---------- ---------- ---------- ---------- ----------
Consolidated Total $ 558,771 $ 26,799 $ 21,318 $ 14,888 $2,875,629
========== ========== ========== ========== ==========
(1) After restructuring charges of $168 and $6,479 for the three and six months
ended April 30, 2000 respectively - see Note (e) - Restructuring Charges.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Geographical Segment Information
In thousands
----------------------------------------------------------------------------------------------------------------------
Sales to
Total Interarea Unaffiliated Operating Identifiable
Sales Sales Customers Income (Loss) Assets
----------- --------------- --------------- --------------- --------------
Three months ended April 30, 2000
<S> <C> <C> <C> <C> <C>
United States $ 216,697 $ (27,063) $ 189,634 $ 20,156 $ 1,307,070
Europe 27,609 (8,993) 18,616 610 325,891
Other Foreign 76,023 (2,191) 73,832 6,146 272,970
Interarea Eliminations (38,247) 38,247 -- (6,123) (628,554)
----------- ----------- ----------- ----------- -----------
$ 282,082 $ -- $ 282,082 $ 20,789 $ 1,277,377
=========== =========== =========== =========== ===========
Three months ended April 30, 1999
United States $ 206,413 $ (38,060) $ 168,353 $ 24,112 $ 1,287,062
Europe 59,642 (19,923) 39,719 7,102 369,542
Other Foreign 91,193 (4,931) 86,262 1,760 356,529
Interarea Eliminations (62,914) 62,914 -- (12,009) (576,311)
----------- ----------- ----------- ----------- -----------
$ 294,334 $ -- $ 294,334 $ 20,965 $ 1,436,822
=========== =========== =========== =========== ===========
Six months ended April 30, 2000
United States $ 414,891 $ (51,255) $ 363,636 $ 30,664 $ 1,307,070
Europe 77,331 (28,380) 48,951 (1,452) 325,891
Other Foreign 163,826 (9,044) 154,782 13,642 272,970
Interarea Eliminations (88,679) 88,679 -- (11,967) (628,554)
----------- ----------- ----------- ----------- -----------
$ 567,369 $ -- $ 567,369 $ 30,887 $ 1,277,377
=========== =========== =========== =========== ===========
Six months ended April 30, 1999
United States $ 383,582 $ (68,678) $ 314,904 $ 38,336 $ 1,287,062
Europe 113,089 (35,627) 77,462 11,306 369,542
Other Foreign 174,694 (8,289) 166,405 4,757 356,529
Interarea Eliminations (112,594) 112,594 -- (18,337) (576,311)
----------- ----------- ----------- ----------- -----------
$ 558,771 $ -- $ 558,771 $ 36,062 $ 1,436,822
=========== =========== =========== =========== ===========
</TABLE>
<PAGE>
(l) Condensed Combined Financial Statements
The following condensed combined financial statements are presented in
accordance with SOP 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code:
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONDENSED COMBINED CONSOLIDATING
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
APRIL 30, 2000
<TABLE>
<CAPTION>
Entities in Entities not in
Reorganization Reorganization Combined
In thousands Proceedings Proceedings Eliminations Consolidated
-------------------------------------- --------------- --------------- ----------- -------------
Revenues
<S> <C> <C> <C> <C>
Net Sales $ 414,891 $ 241,157 $ (88,679) $ 567,369
Other Income (6,838) (11,056) 19,802 1,908
--------- --------- --------- ---------
408,053 230,101 (68,877) 569,277
Cost of Sales, including anticipated
losses on contracts 314,722 196,407 (76,712) 434,417
Product Development, Selling
and Administrative Expenses 79,383 26,346 -- 105,729
Reorganization Items 23,035 -- -- 23,035
Restructuring Charge -- 6,479 -- 6,479
--------- --------- --------- ---------
Operating Loss (9,087) 869 7,835 (383)
Interest Expense - Net (11,184) (5,950) -- (17,134)
--------- --------- --------- ---------
Loss before Benefit (Provision) for Income
Taxes and Minority Interest (20,271) (5,081) 7,835 (17,517)
Benefit (Provision) for Income Taxes (5,605) (395) -- (6,000)
Minority Interest -- -- (372) (372)
Equity in Income of Subsidiaries 28,117 389 (28,506) --
--------- --------- --------- ---------
Net Income (Loss) 2,241 (5,087) (21,043) (23,889)
========= ========= ========= =========
</TABLE>
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONDENSED COMBINED CONSOLIDATING
BALANCE SHEET
AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Entities in Entities not in
Reorganization Reorganization Combined
In thousands Proceedings Proceedings Eliminations Consolidated
---------------------------------------- -------------- ----------------- -------------- -----------------
ASSETS
Current Assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 25,239 $ 40,659 $ -- $ 65,898
Accounts receivable-net 122,085 79,262 (3,600) 197,747
Intercompany receivables 1,562,309 272,740 (1,835,049) --
Inventories 266,349 160,672 (22,228) 404,793
Prepaid income taxes (3,881) 3,881 -- --
Other current assets 9,068 40,885 93 50,046
----------- ----------- ----------- -----------
1,981,169 598,099 (1,860,784) 718,484
Assets of discontinued Beloit operations 202,000 -- -- 202,000
Property, Plant and Equipment-Net 144,239 59,688 -- 203,927
Intangible assets 149,983 225,173 (166) 374,990
Deferred income taxes -- -- -- --
Investment in subsidiaries 759,482 986,268 (1,743,529) 2,221
Other assets 167,417 2,488 (124,798) 45,107
----------- ----------- ----------- -----------
$ 3,404,290 $ 1,871,716 $(3,729,277) $ 1,546,729
=========== =========== =========== ===========
</TABLE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONDENSED COMBINED CONSOLIDATING
BALANCE SHEET
AS OF APRIL 30, 2000
<TABLE>
<CAPTION>
Entities in Entities not in
Reorganization Reorganization Combined
In thousands Proceedings Proceedings Eliminations Consolidated
-------------------------------------------- ---------------- -------------------- --------------- ------------------
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Short-term notes payable, including current
<S> <C> <C> <C> <C>
portion of long-term obligations $ 6 $ 135,622 $ -- $ 135,628
Trade accounts payable 30,793 27,990 -- 58,783
Intercompany accounts payable 1,547,916 508,352 (2,056,268) --
Employee compensation and benefits 37,119 7,304 5,299 49,722
Advance payments and progress billings 2,103 21,492 -- 23,595
Accrued warranties 23,811 12,333 -- 36,144
Other current liabilities 180,239 55,385 (15,137) 220,487
----------- ----------- ----------- -----------
1,821,987 768,478 (2,066,106) 524,359
Long-term Obligations 186,217 1,796 -- 188,013
Other non-current liabilities
Liability for post-retirement benefits and
accrued pension costs 52,146 3,040 (5,299) 49,887
Deferred income taxes (2,062) 2,062 -- --
Other liabilities 132,624 25 (124,800) 7,849
----------- ----------- ----------- -----------
182,708 5,127 (130,099) 57,736
Liabilities Subject to Compromise 1,188,845 -- -- 1,188,845
Liabilities of discontinued Beloit operations 475,605 173,654 -- 649,259
Minority Interest -- -- 6,321 6,321
Shareholders' Deficit:
Common stock 55,191 691,953 (695,475) 51,669
Capital in excess of par value 2,366,797 (78,160) (1,724,344) 564,293
Retained earnings (2,637,060) 404,092 740,141 (1,492,827)
Accumulated comprehensive loss (143,785) (95,224) 140,285 (98,724)
Less:
Stock Employee Compensation Trust (851) -- -- (851)
Treasury stock (91,364) -- -- (91,364)
----------- ----------- ----------- -----------
(451,072) 922,661 (1,539,393) (1,067,804)
----------- ----------- ----------- -----------
$ 3,404,290 $ 1,871,716 $(3,729,277) $ 1,546,729
=========== =========== =========== ===========
</TABLE>
<PAGE>
HARNISCHFEGER INDUSTRIES, INC.
(Debtor-in-Possession as of June 7, 1999)
CONDENSED COMBINED CONSOLIDATING
STATEMENT OF CASH FLOW
FOR THE SIX MONTHS ENDED
APRIL 30, 2000
<TABLE>
<CAPTION>
Entities in Entities not in
Reorganization Reorganization Combined
In thousands Proceedings Proceedings Consolidated
--------------------------------------------- ------------------- --------------- -------------
Net cash provided (used) by continuing
<S> <C> <C> <C>
operating activities $(19,273) $ 25,297 $ 6,024
Investment and Other Transactions:
Cash transferred to entities not in reorganization
proceedings (17,660) 17,660 -
Property, plant and equipment acquired (13,099) (1,762) (14,861)
Property, plant and equipment retired 2,797 1,481 4,278
Other - net 13,633 (4,717) 8,916
-------- --------- --------
Net cash used by investment and other transactions (14,329) 12,662 (1,667)
Financing Activities:
Borrowings under DIP Facility 70,000 - 70,000
Repayment of borrowing under DIP Facility (51,000) - (51,000)
Issuance (repayments) of long-term obligations - net 1,555 (760) 795
Decrease in short-term notes payable- net - 1,650 1,650
-------- -------- -------
Net cash provided by financing activities 20,555 890 21,445
Effect of Exchange Rate Changes on Cash and
Cash Equivalents - (1,276) (1,276)
Cash Used in Discontinued Operations 8,111 (24,192) (16,081)
-------- -------- -------
Increase (Decrease) in Cash and Cash Equivalents (4,936) 13,381 8,445
Cash and Cash Equivalents at Beginning of Period 30,175 27,278 57,453
-------- -------- -------
Cash and Cash Equivalents at End of Period $ 25,239 $ 40,659 $ 65,898
======== ======== ========
</TABLE>
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
On June 7, 1999, Harnischfeger Industries, Inc. (the "Company") and
substantially all of its domestic operating subsidiaries (collectively, the
"Debtors") filed voluntary petitions for reorganization under Chapter 11 of
the U.S. Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") and
orders for relief were entered. The Debtors include the Company's principal
domestic operating subsidiaries, P&H Mining Equipment ("P&H") and Joy
Mining Machinery ("Joy"), as well as Beloit Corporation ("Beloit"). The
Company's Pulp and Paper Machinery segment owned by Beloit and its
subsidiaries (the "Beloit Segment") is presented as a discontinued
operation as is more fully discussed in Note (c) - Discontinued Operations.
The Debtors' Chapter 11 cases are being jointly administered for procedural
purposes only under case number 99-2171. The issue of substantive
consolidation of the Debtors has not been addressed. Unless Debtors are
substantively consolidated under a confirmed plan of reorganization,
payment of prepetition claims of each Debtor may substantially differ from
payment of prepetition claims of other Debtors.
The Debtors are currently operating their businesses as
debtors-in-possession pursuant to the Bankruptcy Code. Pursuant to the
Bankruptcy Code, actions to collect prepetition indebtedness of the Debtors
and other contractual obligations of the Debtors generally may not be
enforced. In addition, under the Bankruptcy Code, the Debtors may assume or
reject executory contracts and unexpired leases. Additional prepetition
claims may arise from such rejections, and from the determination by the
Bankruptcy Court (or as agreed by the parties in interest) to allow claims
for contingencies and other disputed amounts. From time to time since the
Chapter 11 filing, the Bankruptcy Court has approved motions allowing the
Debtors to reject certain business contracts that were deemed burdensome or
of no value to the respective Debtor. As of June 14, 2000, the Debtors had
not completed their review of all their prepetition executory contracts and
leases for assumption or rejection. See Note (f) - Liabilities Subject to
Compromise included in Item 1 - Financial Statements.
The Debtors received approval from the Bankruptcy Court to pay or otherwise
honor certain of their prepetition obligations, including employee wages
and product warranties. In addition, the Bankruptcy Court authorized the
Debtors to maintain their employee benefit programs. Funds of qualified
pension plans and savings plans are in trusts and protected under federal
regulations. All required contributions are current in the respective
plans.
The Debtors have the exclusive right, until August 16, 2000 to file a plan
or plans of reorganization. Such period has been extended from time to time
during the pendancy of the Debtors' bankruptcy cases and may be extended at
the discretion of the Bankruptcy Court. Subject to certain exceptions set
forth in the Bankruptcy Code, acceptance of a plan of reorganization
requires approval of the Bankruptcy Court and the affirmative vote (i.e.,
more than 50% of the number and at least 66-2/3% of the dollar amount, both
based on claims actually voted) of each class of creditors and equity
holders whose claims are impaired by the plan. Alternatively, absent the
requisite approvals, a Debtor may seek Bankruptcy Court approval of its
reorganization plan under "cramdown" provisions of the Bankruptcy Code,
assuming certain tests are met. If a Debtor fails to submit a plan of
reorganization within the exclusivity period prescribed or any extensions
thereof, any creditor or equity holder will be free to file a plan of
reorganization with the Bankruptcy Court and solicit acceptances thereof.
February 29, 2000 was set by the Bankruptcy Court as the last date
creditors could file proofs of claim against the Debtors. There may be
differences between the amounts recorded in the Debtors' schedules and
financial statements and the amounts claimed by their respective creditors.
Litigation may be required to resolve such disputes.
The Debtors will continue to incur significant costs associated with the
reorganizations. The amount of these expenses, which are being expensed as
incurred, is expected to significantly affect results while the Debtors
operate under Chapter 11. See Note (d) - Reorganization Items included in
Item 1 - Financial Statements.
Currently, it is not possible to predict the length of time the Debtors
will operate under the protection of Chapter 11, the outcome of the Chapter
11 proceedings in general, or the effect of the proceedings on the business
of the Company or on the interests of the various creditors and security
holders.
Under the Bankruptcy Code, postpetition liabilities and prepetition
liabilities (i.e., liabilities subject to compromise) of the Company must
be satisfied before shareholders of the Company can receive any
distribution. The ultimate recovery to the Company's shareholders, if any,
will not be determined until the end of the case when the fair value of the
Company's assets is compared to the liabilities and claims against the
Company. The Company and the other Debtors are currently engaged in a
comprehensive analysis and reconciliation of claims filed by creditors.
Based on the Company's analysis to date of (a) scheduled and filed claims,
(b) any potential recovery from the sale of Beloit assets and (c) the
valuation of the Company, P&H and Joy as going concerns, there appears to
be sufficient value to pay in full all claims against P&H and Joy. However,
there appears to be insufficient value to pay in full all claims against
the Company. Accordingly, it appears unlikely that any value will be
distributed to the Company's shareholders. There also appears to be
insufficient value to pay in full all claims against Beloit. The U.S.
Trustee for the District of Delaware has appointed an Official Committee of
Equity Holders to represent the Company's shareholders in the proceedings
before the Bankruptcy Court.
The accompanying consolidated financial statements of the Company and its
consolidated subsidiaries have been prepared on a going concern basis which
contemplates continuity of operations, realization of assets, and
liquidation of liabilities in the ordinary course of business and does not
reflect adjustments that might result if the Debtors (other than Beloit and
Beloit's Debtor subsidiaries) are unable to continue as going concerns. As
a result of the Debtors' Chapter 11 filings, such matters are subject to
significant uncertainty. The Debtors intend to file a plan or plans of
reorganization with the Bankruptcy Court. Continuing on a going concern
basis is dependent upon, among other things, the Debtors' formulation of an
acceptable plan or plans of reorganization, the success of future business
operations, and the generation of sufficient cash from operations and
financing sources to meet the Debtors' obligations. Other than recording
the estimated loss on the disposal of the Beloit discontinued operations in
the fourth quarter of fiscal 1999 and the subsequent adjustment to this
loss in the second quarter of fiscal 2000, the consolidated financial
statements do not reflect: (a) the realizable value of assets on a
liquidation basis or their availability to satisfy liabilities; (b)
aggregate prepetition liability amounts that may be allowed for claims or
contingencies, or their status or priority; (c) the effect of any changes
to the Debtors' capital structures or in the Debtors' business operations
as the result of a confirmed plan or plans of reorganization; or (d)
adjustments to the carrying value of assets (including goodwill and other
intangibles) or liability amounts that may be necessary as the result of
actions by the Bankruptcy Court.
The Company's consolidated financial statements have been presented in
conformity with the AICPA's Statement of Position 90-7, "Financial
Reporting By Entities In Reorganization Under the Bankruptcy Code", issued.
November 19, 1990 ("SOP 90-7"). SOP 90-7 requires a segregation of
liabilities subject to compromise by the Bankruptcy Court as of the
bankruptcy filing date and identification of all transactions and events
that are directly associated with the reorganization of the Debtors.
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, without limitation,
described in Item 5. Other Information - "Cautionary Factors" in Part II of
this report.
Surface Mining Equipment
Three Months Ended April 30, 2000 as Compared to 1999
The following table sets forth certain data with respect to the Surface Mining
Equipment segment from the consolidated statement of operations of the Company
for the three months ended April 30:
In thousands 2000 1999
--------------------------------------------------------------------
Net Sales $ 134,368 $ 125,456
Operating Profit $ 15,711 $ 13,348
Bookings $ 110,032 $ 105,784
Sales of the Surface Mining Equipment segment were $134.4 million for the three
months ended April 30, 2000, a 7% increase from sales of $125.5 million during
the same period of fiscal 1999. Original equipment sales increased by 18%,
driven by an increase in sales of electric mining shovels. The increase in
electric mining shovel sales was partially offset by a decrease in sales related
to draglines. Aftermarket sales increased 1% for the three months ended April
30, 2000 due to increased service sales.
Operating profit was $15.7 million or 11.7% of sales in the three months ended
April 30, 2000, compared to operating profit of $13.3 million and 10.6% for the
corresponding period in 1999. The higher operating profit in the three months of
2000 as compared to the three months of 1999 was due primarily to higher volume.
Bookings were $110.0 million in the three months ended April 30, 2000 compared
to $105.8 million during the equivalent period in 1999. The increase is
primarily due to higher aftermarket bookings. The P&H order backlog was $75.3
million as of April 30, 2000 compared with $93.8 million at October 31, 1999.
These booking and backlog figures exclude customer arrangements under long-term
repair and maintenance contracts. In financial reports prior to fiscal 2000 it
was the policy of the Company to include two years of estimated value of such
arrangements as part of its reported backlog. The total estimated value of
long-term repair and maintenance arrangements with P&H customers, which extend
for periods of up to thirteen years, amounted to approximately $220 million as
of April 30, 2000.
Six Months Ended April 30, 2000 as compared to 1999
The following table sets forth certain data with respect to the Surface Mining
Equipment segment from the consolidated statement of operations of the Company
for the six months ended April 30:
In thousands 2000 1999
--------------------------------------------------------------------
Net Sales $ 255,501 $ 236,018
Operating Profit $ 25,168 $ 24,355
Bookings $ 237,013 $ 208,610
Sales of the Surface Mining Equipment segment were $255.5 million in the first
six months of fiscal 2000, an 8% increase from sales of $236.0 million during
the same period of fiscal 1999. Original equipment sales increased 27%, driven
by an increase in sales of electric mining shovels. The increase in electric
mining shovels was partially offset by a decrease in sales related to draglines.
Aftermarket sales decreased 2% in the first six months of 2000 as the first six
months of 1999 benefited from carryover parts shipments that were deferred due
to the United Steelworkers' strike in Milwaukee during the fourth fiscal quarter
of 1998.
Operating profit was $25.2 million or 9.9% of sales in the six months ended
April 30, 2000, compared to operating profit of $24.4 million and 10.3% for the
corresponding period in 1999. The higher operating profit in the first six
months of 2000 as compared to the first six months of 1999 was due primarily to
higher volume. The decreased operating profit margin reflects the
proportionately lower aftermarket sales which typically yield higher margins.
Bookings were $237.0 million in the first six months of fiscal 2000 compared to
$208.6 million during the equivalent period in 1999. The increase is primarily
due to higher demand for P&H's original equipment resulting from product
innovation and expanded product support for customers. Order backlog was $75.3
million as of April 30, 2000 compared with $93.8 million at October 31, 1999.
These booking and backlog figures exclude customer arrangements under long-term
repair and maintenance contracts.
<PAGE>
Underground Mining Machinery
Three Months Ended April 30, 2000 as Compared to 1999
The following table sets forth certain data with respect to the Underground
Mining Machinery segment from the consolidated statement of operations of the
Company for the three months ended April 30:
In thousands 2000 1999
------------------------------------------------------------------------------
Net Sales $ 147,714 $ 168,878
Operating Profit $ 5,078 * $ 7,617
Bookings $ 142,805 $ 134,713
-------------
* after restructuring charges of $168.
Net sales for the second quarter of fiscal 2000 were $21.2 million lower than
during the second quarter of the prior year, primarily because there were no
shipments of roof supports in the current quarter compared to approximately
$20.0 million of roof support sales in the second quarter a year ago. This
decline in roof support sales reflects softness in the markets served by the
company for that product. In the United States, there was an increase in sales
of new continuous miners and face conveyors which more than offset a decline in
the shipment of shuttle cars and longwall shearing machines. In Australia and
South Africa, the market for new equipment sales continued to be weak, with
South Africa's new machine sales being flat compared to the prior year and
Australia reporting a decrease. In the aftermarket, the sales of repair parts,
components repairs and machine rebuilds in total were approximately the same in
the current quarter as the same period last year. A slight increase in
aftermarket sales in the United States was offset by a decline in aftermarket
sales in the markets outside of the United States.
Operating profit for the second quarter of fiscal 2000 was $2.5 million less
than for the same period last year. This decrease resulted from the decline in
net sales and a loss of manufacturing burden absorption in excess of the
reduction in manufacturing burden spending due in part to the decline in the
current quarter's shipments. These items were partially offset by the benefits
of Joy's cost reduction program which, in addition to the reduction of
manufacturing burden spending, reduced selling, product development and
administrative expenses. In the current quarter, these expenses were $1.9
million less than they were in the second quarter last year.
New order bookings in the current quarter were $8.1 million more than they were
in the same quarter a year ago. New orders received in the United States were
$18.4 million higher than last year with orders increasing for new continuous
miners and face conveyors. Outside of the United States the market for new
machines continued to be weak and bookings were less than they were in the
previous year. In the aftermarket, new orders in the non-U.S. markets were at
approximately the same level as they were in the second quarter of the fiscal
1999. The Joy order backlog was $139.1 million as of April 30, 2000 compared
with $190.7 million at October 31, 1999. These bookings and backlog figures
exclude customer arrangements under long-term repair and maintenance contracts.
In financial reports prior to fiscal 2000 it was the policy of the Company to
include two years of estimated value of such arrangements as part of its
reported backlog. The total estimated value of long-term repair and maintenance
arrangements with Joy customers, which extend for periods of up to eight years,
amounted to approximately $77.5 million as of April 30, 2000.
Six Months Ended April 30, 2000 as compared to 1999
The following table sets forth certain data with respect to the Underground
Mining Machinery segment from the consolidated statement of operations of the
Company for the six months ended April 30:
In thousands 2000 1999
------------------------------------------------------------------------------
Net Sales $ 311,868 $ 322,753
Operating Profit $ 5,719 * $ 11,707
Bookings $ 260,266 $ 332,874
-------------
* after restructuring charge of $6,479.
Net sales for the first six months of fiscal 2000 for the Underground Mining
Machinery segment were $10.9 million less than in the same period of fiscal
1999. Small decreases in sales of new machines, repair parts and machine
rebuilds were recorded, with component repair sales equaling those for 1999. An
increase in new machine, component repair and machine rebuild sales in the
United States was more than offset by a decrease in sales of those products in
markets served out of the United Kingdom. In the U.S., new machine sales were
helped by the sale of a roof support and face conveyor system for approximately
$25.0 million in the first quarter. In the United Kingdom, sales of new roof
support and face conveyor systems in fiscal 2000 were lower than in the first
six months of fiscal 1999. An increase of repair part sales out of the UK into
China was more than offset by continued softness in the aftermarket for
component repairs and machine rebuilds. In both South Africa and Australia, with
the exception of new machine sales in South Africa, net sales were approximately
the same as in the first six months of 1999. New machine sales in South Africa
continued to be extremely soft as customers managed production capacity.
Operating profit for the six months ended April 30, 2000, before the
restructuring charge of $6.5 million, was $12.2 million compared to $11.7
million for the same period of fiscal 1999. Gross profit that was lost on the
decrease in net sales was more than offset by reductions in selling, engineering
and administrative expenses.
New order bookings in the first six months of fiscal 2000 were $72.6 million
less than in the first six months of the prior year. The decrease in new orders
was primarily the result of a $58.0 million decline in roof support bookings
(with no roof support orders being recorded to date in fiscal 2000), fewer
shuttle car and longwall shearer orders and a $9.0 million decline in machine
rebuild orders. On the positive side, orders for both continuous miners and face
conveyors increased from a year ago.
In the third quarter of fiscal 1999 Joy announced and implemented a
restructuring plan. An initial reserve of $7.3 million was established in the
third quarter of fiscal 1999, primarily for the impairment of certain assets
related to a facility rationalization. In addition, charges amounting to $4.7
million were made in the third and fourth quarter of fiscal 1999 upon the
announcement of the severance of approximately 240 employees. Of the amount
reserved in fiscal 1999, $0.7 million had been utilized by the end of the fiscal
year. During the first six months of fiscal 2000 a further $6.5 million
restructuring charge was recorded under the plan primarily for rationalization
of certain of Joy's original equipment manufacturing capacity in the United
Kingdom, and to a lesser extent for the initial stage of headcount reductions in
South Africa associated with a reorganization of Joy's business in that market.
These charges were made primarily for severance of approximately 195 employees
in the United Kingdom and approximately 20 employees in South Africa. Additional
future cash charges of $1.4 million in connection with continuing cost reduction
initiatives are expected to be incurred in fiscal 2000.
Details of these restructuring charges are as follows:
In thousands
-----------------------------------------------------------------------------
Reserve at Additional Reserve Reserve at
10/31/99 Reserve Utilized 4/30/00
-------------- ------------ ------------ -----------
Employee severance $ 4,009 $5,916 $4,924 $ 5,001
Facility closures 7,270 563 379 7,454
------- ----- ------ -------
Total $11,279 $6,479 $5,303 $12,455
======= ====== ====== =======
Discontinued Operations
In light of continuing losses at Beloit and following an evaluation of the
prospects of reorganizing the Beloit Segment, on October 8, 1999 the Company
announced its plan to dispose of this segment. Subsequently, Beloit notified
certain of its foreign subsidiaries that they could no longer expect funding of
their operations to be provided by either Beloit or the Company. Certain of the
notified subsidiaries have since filed for or were placed into receivership or
other applicable forms of judicial supervision in their respective countries. On
May 12, 2000 the U.S. Trustee for the District of Delaware appointed an Official
Committee of Unsecured Creditors of Beloit Corporation to represent the
creditors of Beloit in proceedings before the Bankruptcy Court.
On November 7, 1999, the Bankruptcy Court approved procedures and an
implementation schedule for the divestiture plan (the "Court Sales Procedures")
for the Pulp and Paper Machinery segment. Between February and May, 2000, sales
agreements were approved under the Court Sales Procedures with respect to the
sale of substantially all of the segment's domestic operating assets and the
stock of three of its foreign subsidiaries. As of June 14, 2000, all approved
sales of domestic assets had taken place. Beloit expects that closings on the
sales of its foreign subsidiaries will occur by the end of the third quarter of
fiscal 2000.
The Company classified the Beloit Segment as a discontinued operation in its
consolidated financial statements as of October 31, 1999 and has accordingly
restated the Company's consolidated statements of operations and statements of
cash flow for prior periods. Revenues for the Beloit Segment were $158.2 million
for the six months ended April 30, 2000 and $392.8 million for the comparable
period in 1999. Loss from discontinued operations was $94.7 million for the six
months ended April 30, 1999. During fiscal 1999, the Company recorded an
estimated loss of $529.0 million on the disposal of the Beloit Segment including
an accrual for estimated operating losses to be incurred by the Beloit Segment
subsequent to October 31, 1999. Based on the actual results during the six-month
period ended April 30, 2000 and consideration of the current estimates
associated with the Beloit winddown expenses to be incurred, the Company
believes that no adjustment to the original reserve is warranted as of April 30,
2000. (See Note (f) -- Liabilities Subject to Compromise in Item 1 -- Financial
Statements for a discussion of the APP settlement).
Income Taxes
The income tax provision (benefit) recognized in the Company's consolidated
statement of operations differs from the income tax provision (benefit) computed
by applying the statutory federal income tax rate to the income or loss from
continuing operations for the six months ended April 30, 2000 due to an
additional valuation allowance on deferred tax benefits, state taxes and
differences in foreign and U.S. tax rates.
The Company believes that realization of net operating loss and tax credit
benefits in the near term is unlikely. Should the Company's plan of
reorganization result in a significantly modified capital structure, the Company
would be required to apply fresh start accounting pursuant to the requirements
of SOP 90-7. Under fresh start accounting, realization of net operating loss and
tax credit benefits will first reduce any reorganization goodwill until
exhausted and thereafter be reported as additional paid in capital.
Liquidity and Capital Resources
Chapter 11 Proceedings
The matters described under this caption "Liquidity and Capital Resources", to
the extent that they relate to future events or expectations, may be
significantly affected by the Chapter 11 proceedings. Those proceedings will
involve, or result in, various restrictions on the Debtors' activities,
limitations on financing, the need to obtain Bankruptcy Court approval for
various matters and uncertainty as to relationships with vendors, suppliers,
customers and others with whom the Debtors may conduct or seek to conduct
business. In addition, the recorded amounts of: (i) the estimated cash proceeds
to be realized upon the disposal of Beloit's assets to be sold or liquidated,
and (ii) the estimated cash requirements to fund Beloit's remaining costs and
claims, could be materially different from the actual amounts.
Under the Bankruptcy Code, postpetition liabilities and prepetition liabilities
(i.e., liabilities subject to compromise) must be satisfied before shareholders
can receive any distribution. The ultimate recovery to shareholders, if any,
will not be determined until the end of the case when the fair value of the
Company's assets is compared to the liabilities and claims against the Company.
The Company and the other Debtors are currently engaged in a comprehensive
analysis and reconciliation of claims filed by creditors. Based on the Company's
analysis to date of (a) scheduled and filed claims, (b) any potential recovery
from the sale of Beloit assets and (c) the valuation of the Company, P&H and Joy
as going concerns, there appears to be sufficient value to pay in full all
claims against P&H and Joy. However, there appears to be insufficient value to
pay in full all claims against the Company. Accordingly, it appears unlikely
that any value will be distributed to the Company's shareholders. There also
appears to be insufficient value to pay in full all claims against Beloit. The
U.S. Trustee for the District of Delaware has appointed an Official Committee of
Equity Holders to represent the Company's shareholders in the proceedings before
the Bankruptcy Court.
Working Capital
Working capital of continuing operations, excluding liabilities subject to
compromise, as of April 30, 2000, was $194.1 million including $65.9 million of
cash and cash equivalents, as compared to working capital of $187.2 million
including $57.5 million of cash and cash equivalents as of October 31, 1999. The
ongoing inventory reduction program at Joy resulted in a $35.3 million decline
in Joy's inventory during the first six months of fiscal 2000. However, this was
more than offset by changes in other categories of working capital. Most
significantly, there was an $11.2 million reduction in trade accounts payable
and a $21.7 million reduction in advance payments and progress billings,
reflecting a smaller number of major capital orders, particularly at P&H, in the
second quarter of fiscal 2000 as compared with the final quarter of fiscal 1999.
There was also an $8.9 million decline in short-term borrowings by foreign
subsidiaries. This resulted mainly from the decline in the value of the British
Pound, Australian Dollar and other major currencies against the U.S. Dollar
during fiscal 2000, which reduced the U.S. dollar value of these local currency
borrowings.
Cash Flow from Continuing Operations
Although the Company recorded a loss from continuing operations of $23.9 million
in the first six months of fiscal 2000 as compared with income from continuing
operations of $4.0 million for the same period in 1999, cash generated by
continuing operations was $6.0 million for the six months ended April 30, 2000
compared with cash used by continuing operations of $33.7 million for the
comparable period in 1999.
The improvement in operating cash flow in 2000 resulted from several factors,
primarily: (i) the inclusion of non-cash Joy restructuring charges of $6.5
million and non-cash reorganization items of $7.9 million in the first six
months of fiscal 2000; and (ii) an inventory build-up of $13.2 million in the
first six months of 1999 compared with an inventory reduction of $31.4 million
in 2000.
Cash flow used by investment and other transactions was $1.7 million for the six
months ended April 30, 2000 compared to $21.3 million during the corresponding
period in 1999. The difference between periods is primarily due to the inclusion
in the first six months of fiscal 1999 of a deposit of $15.9 million placed with
a bank in connection with certain APP letters of credit.
<PAGE>
DIP Facility
On July 8, 1999 the Bankruptcy Court approved a two-year, $750 million Revolving
Credit, Term Loan and Guaranty Agreement underwritten by The Chase Manhattan
Bank (the "DIP Facility") consisting of three tranches: (i) Tranche A is a $350
million revolving credit facility with sublimits for import documentary letters
of credit of $20 million and standby letters of credit of $300 million; (ii)
Tranche B is a $200 million term loan facility; and (iii) Tranche C is a $200
million standby letter of credit facility. Effective May 30, 2000, the Company
voluntarily reduced the size of the DIP facility to $350 million by terminating
Tranches B and C. The reduced size of the DIP Facility is more in line with the
Company's expected borrowing needs in light of the exit from the Pulp and Paper
Machinery business and the receipt of proceeds from the sale of Beloit assets.
The reduction in the size of the DIP Facility will save the Company
approximately $170,000 a month in loan commitment fees.
Proceeds from the DIP Facility may be used to fund postpetition working capital
and for other general corporate purposes during the term of the DIP Facility and
to pay up to $35 million of prepetition claims of critical vendors. The Debtors
are permitted to make loans and provide letters of credit in an aggregate amount
not to exceed $240 million to foreign subsidiaries for specified limited
purposes, including up to $90 million for working capital needs of foreign
subsidiaries and $110 million of loans and $110 million of letters of credit for
support or repayment of existing credit facilities. The Debtors may use up to
$40 million (of the $240 million) to issue stand-by letters of credit to support
foreign business opportunities. Beginning August 1, 1999, the DIP Facility
imposes monthly minimum EBITDA tests and quarterly limits on capital
expenditures. At April 30, 2000, $186 million in direct borrowings had been
drawn under the DIP Facility and classified as a long-term obligation and
letters of credit in the face amount of $47.8 million had been issued under the
DIP Facility. The Debtors are jointly and severally liable under the DIP
Facility.
The DIP Facility benefits from superpriority administrative claim status as
provided for under the Bankruptcy Code. Under the Bankruptcy Code, a
superpriority claim is senior to unsecured prepetition claims and all other
administrative expenses incurred in the Chapter 11 case. Direct borrowings under
the DIP Facility are priced at LIBOR + 2.75% per annum on the outstanding
borrowings. Letters of credit are priced at 2.75% per annum (plus a fronting fee
of 0.25% to the Agent) on the outstanding face amount of each letter of credit.
In addition, the Company pays a commitment fee of 0.50% per annum on the unused
amount of the commitment payable monthly in arrears. The DIP Facility matures on
the earlier of the substantial consummation of a plan of reorganization of the
Company or June 6, 2001.
In proceedings filed with the Bankruptcy Court, the Debtors agreed with the
Official Committee of Unsecured Creditors appointed by the U.S. Trustee (the
"Creditors Committee") and with MFS Municipal Income Trust and MFS Series Trust
III (collectively, the "MFS Funds"), holders of certain debt issued by Joy, to a
number of restrictions regarding transactions with foreign subsidiaries and
Beloit:
o The Debtor agreed to give at least five days prior written notice to
the Creditors Committee and to the MFS Funds of the Debtors' intention
to (a) make loans or advances to, or investments in, any foreign
subsidiary for working capital purposes in an aggregate amount in
excess of $90 million; (b) make loans or advances to, or investments
in, any foreign subsidiary to repay the existing indebtedness or cause
letters of credit to be issued in favor of a creditor of a foreign
subsidiary in an aggregate amount, cumulatively, in excess of $30
million; or (c) make postpetition loans or advances to, or investments
in, Beloit or any of Beloit's subsidiaries in excess of $115 million.
In September 1999, the Company notified the Creditors Committee and
MFS Funds that it intended to exceed the $115 million amount. The
Company subsequently agreed, with the approval of the Bankruptcy
Court, to provide the Creditors Committee with weekly cash requirement
forecasts for Beloit, to restrict funding of Beloit to forecasted
amounts, to provide the Creditors Committee access to information
about the Beloit divestiture and liquidation process, and to consult
with the Creditors Committee regarding the Beloit divestiture and
liquidation process.
o In addition, the Debtors agreed to give notice to the Creditors
Committee and to the MFS Funds with respect to any liens created by or
on a foreign subsidiary or on any of its assets to secure any
indebtedness.
o The Debtors agreed to notify the MFS Funds of any reduction in the net
book value of Joy of ten percent or more from $364 million, after
which MFS would be entitled to receive periodic financial statements
for Joy. During fiscal 1999, MFS Funds became entitled to receive
periodic financial statements for Joy.
The plan to dispose of the Beloit Segment necessitated obtaining a waiver under
the DIP Facility from The Chase Manhattan Bank. In light of the Company's plan
in October 1999 to dispose of this segment, the minimum EBITDA tests were no
longer consistent with the Company's continuing operations. As of January 31,
2000, the Company and The Chase Manhattan Bank entered into a Waiver and
Amendment Letter which waives compliance with certain negative covenants of the
DIP Facility as they relate to the sale of the assets of Beloit and amends the
EBITDA tests in the DIP Facility to levels that are appropriate for the
Company's continuing businesses on a consolidated basis. Continuation of
unfavorable business conditions or other events could require the Debtors to
seek further modifications or waivers of certain covenants of the DIP Facility.
In such event, there is no certainty that the Debtors would obtain such
modifications or waivers to avoid default under the DIP Facility.
In light of the decision to dispose of the Beloit Segment, the Company and The
Chase Manhattan Bank began negotiations to restructure the DIP Facility to
further align the provisions of the DIP Facility with the Company's continuing
businesses. There can be no assurance that such negotiations will result in
modifications to the DIP Facility.
The principal sources of liquidity for the Company's operating requirements have
been cash flows from operations and borrowings under the DIP Facility. While the
Company expects that such sources will provide sufficient working capital to
operate its businesses, there can be no assurances that such sources will prove
to be sufficient.
Year 2000 Readiness Disclosure
The year 2000 ("Y2K") 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 implemented a Y2K readiness plan for
information technology systems ("IT") and non-IT equipment, facilities and
systems. All material IT and non-IT equipment, processes and software were
compliant and resulted in no material Y2K issues through June 14, 2000. While no
material Y2K problems have been encountered to date and none are expected, it is
possible that such problems could arise as the year progresses.
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 undertakes
transactions to hedge this impact. The hedge instrument is considered effective
if it offsets partially or completely the negative impact on earnings, equity
and cash flow due to fluctuations in interest and foreign exchange rates. In
accordance with the Company's policy, the Company does not execute derivatives
that are speculative or that increase the Company's risk from interest rate or
foreign exchange rate fluctuations. At April 30, 2000 the Company was not party
to any interest rate derivative contracts. Foreign exchange derivatives at that
date were exclusively in the form of forward exchange contracts executed over
the counter. The counterparties to these contracts are several commercial banks,
all of which hold investment grade ratings. There is a concentration of these
contracts at The Chase Manhattan Bank which is currently the only institution
entering into forward foreign exchange contracts with the Company and the other
Debtors.
The Company has adopted a Foreign Exchange Risk Management Policy. It is a
risk-averse policy under which most exposures that impact earnings and cash flow
are fully hedged, subject to a net $5 million equivalent of permitted exposures
per currency. Exposures that impact only equity or do not have a cash flow
impact are generally not hedged with derivatives. There are two categories of
foreign exchange exposures that are hedged: assets and liabilities denominated
in a foreign currency and future committed receipts or payments denominated in a
foreign currency. These exposures normally arise from imports and exports of
goods and from intercompany trade and lending activity.
As of April 30, 2000, the nominal or face value of forward foreign exchange
contracts to which the Company and its subsidiaries were parties was $69.2
million in absolute U.S. dollar equivalent terms.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
See "Market Risk" in Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.
<PAGE>
PART II. OTHER INFORMATION
Item 1- Legal Proceedings
The following should be read in conjunction with Item 3 - Legal
Proceedings, of Part I of the Company's annual report on Form 10-K for the
year ended October 31, 1999 and Item 1 - Legal Proceedings, of Part II of
the Company's quarterly report on Form 10-Q for the quarter ended January
31, 2000.
In fiscal 1996 and 1997, Beloit's Asian subsidiaries received orders for
four fine papermaking machines from Asia Pulp & Paper Co. Ltd. ("APP") for
a total of approximately $600.0 million. The first two machines were
substantially paid for and installed at APP facilities in Indonesia. Beloit
sold approximately $44.0 million of receivables from APP on these first two
machines to a financial institution. Beloit agreed to repurchase the
receivables in the event APP defaulted on the receivables and the Company
guaranteed this repurchase obligation. As of June 14, 2000, the Company
believes APP was not in default with respect to the receivables. 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. Beloit has had discussions with APP on certain claims and
back charges on the first two machines.
Disputes arose between Beloit and APP regarding the two remaining machines.
On March 3, 2000, the Company announced the signing of a definitive
agreement to settle the disputes and related arbitration and legal
proceedings. Under the settlement, APP paid $135.0 million to Beloit on
April 6, 2000 and $15.9 million the Company had deposited with a bank with
respect to related letters of credit was released to the Company on April
11, 2000. The $15.9 million was classified as other assets in the Company's
consolidated financial statements as of October 31, 1999. The $135.0
million was paid $25.0 million in cash and $110.0 million in a three-year
note issued by an APP subsidiary and guaranteed by APP. The note is
governed by an indenture and bears a fixed interest rate of 15%. Beloit
intends to sell the note to a third party for fair market value. In view of
the intention to sell the note and current volatility in the applicable
capital markets for the note, no value for the note has been recognized in
the financial statements as of April 30, 2000. The value for the note and
its effect on the financial statements will be recognized in the period
that the note is sold. As part of the settlement, Beloit retained a $46.0
million down payment it received from APP for the second two papermaking
machines and APP released all rights with respect to letters of credit
issued for the aggregate amount of the down payment for the second two
papermaking machines. APP acquired certain components and spare parts
produced or acquired by Beloit in connection with the two papermaking
machines on an as is, where is basis. In addition, Beloit returned to APP
certain promissory notes given to Beloit by APP. The notes were initially
issued in the amount of $59.0 million and had an aggregate principal
balance of $19.0 million when they were returned to APP.
The Company and certain of its present and former senior executives have
been named as defendants in a class action, captioned 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 APP contracts of Beloit discussed above
violated the federal securities laws. As regards the Company, this matter
is stayed by the automatic stay imposed by the Bankruptcy Code. On May 2,
2000 the Bankruptcy Court permitted the plaintiffs to seek class
certification during the stay but otherwise stayed the litigation with
respect to the other defendants in the litigation until August 15, 2000.
The Company may seek to further extend the stay with respect to the other
defendants.
Item 2 - Changes in Securities
Not applicable.
Item 3 - Defaults upon Senior Securities
In connection with the Chapter 11 bankruptcy filings described in Item
2--Management's Discussion and Analysis of Financial Condition and Results
of Operations of Part I, the Debtors discontinued the payment of principal
and interest on all prepetition indebtedness. See Note (f)- Liabilities
Subject to Compromise and Note (g)- Borrowings and Credit Facilities of
Item 1 - Financial Statements of Part I, which are incorporated herein by
reference.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the first
six months of fiscal 2000.
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. Actual results may
differ materially. In addition to the assumptions and other factors
referred to specifically in connection with such statements, the following
factors, among others, could cause actual results to differ materially from
those contemplated.
The Company's principal businesses involve designing, manufacturing,
marketing and servicing large, complex machines. Significant periods of
time are necessary to plan, design and build these machines. 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 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,
between 25% and 65% 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 relating to the Company's Chapter 11 filing, such as: the
possible disruption of relationships with creditors, customers,
suppliers and employees; the Company's degree of success in executing
its plan of disposition of Beloit; the ability to successfully
prepare, have confirmed and implement a plan of reorganization; the
availability of financing and refinancing; and the Company's ability
to comply with covenants in its DIP Facility. As a result of the
Company's Chapter 11 filing, the continuation of the Company, or
segments of the Company, on a going concern basis is subject to
significant uncertainty.
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 and other
ores and minerals; the cash flows of customers; the cost and
availability of financing to customers and the ability of customers to
obtain regulatory approval for investments in mining projects;
consolidations among customers; work stoppages at customers or
providers of transportation; and the timing, severity and duration of
customer buying cycles.
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 customers 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 sales; the adequacy of the Company's systems to
manage major sales and its success in completing sales 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; non-recurring restructuring and other special
charges; changes in accounting or tax rules or regulations;
reassessments of asset valuations for such assets as receivables,
inventories, fixed assets and intangible assets; and leverage and debt
service.
o Factors affecting general business levels, such as: political 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:
11 Statement re: Calculation of Earnings Per Share
(b) Reports on Form 8-K
None.
(c) Financial data schedules
<PAGE>
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARNISCHFEGER INDUSTRIES, INC.
------------------------------
(Registrant)
/s/ Kenneth A. Hiltz
------------------------------
Kenneth A. Hiltz
Senior Vice President and
Date June 14, 2000 Chief Financial Officer
/s/ Herbert S. Cohen
------------------------------
Herbert S. Cohen
Vice President, Controller and
Date June 14, 2000 Chief Accounting Officer
<PAGE>
Exhibit 11
HARNISCHFEGER INDUSTRIES, INC.
CALCULATION OF EARNINGS PER SHARE
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
-------------------------------------- -----------------------------------
----------------- ----------------- ---------------- --------------
2000 1999 2000 1999
----------------- ----------------- ---------------- --------------
Average common shares outstanding
<S> <C> <C> <C> <C>
Basic 46,719 46,369 46,618 46,143
================== ================== ================ ==============
Diluted 46,719 46,369 46,618 46,143
================== ================== ================ ==============
Income (loss) from continuing operations $ (6,343) $ 4,399 $ (23,889) $ 4,013
Loss from discontinued Beloit operations -- (78,657) -- (94,670)
------------------ ------------------ --------------- -------------
Net loss $ (6,343) $ (74,258) $ (23,889) $ (90,657)
================== ================== =============== =============
Basic Earnings Per Share
Income (loss) from continuing operations $ (0.13) $ 0.09 $ (0.51) $ 0.08
Loss from discontined Beloit operations -- (1.69) -- (2.04)
----------------- ------------------ --------------- -------------
Net loss $ (0.13) $ (1.60) $ (0.51) $ (1.96)
================= ================== =============== =============
Diluted Earnings Per Share
Income (loss) from continuing operations $ (0.13) $ 0.09 $ (0.51) $ 0.08
Loss from discontinued Beloit operations -- (1.69) -- (2.04)
---------------- ------------------ --------------- -------------
Net loss $ (0.13) $ (1.60) $ (0.51) $ (1.96)
================ ================== =============== =============
</TABLE>
