(Exact Name of Registrant as Specified in Its Charter)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED May 1, 2004
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
|
JOY GLOBAL INC. (Exact Name of Registrant as Specified in Its Charter) |
|
Delaware (State of Incorporation) | 39-1566457 (I.R.S. Employer Identification No.) | |
| 100 East Wisconsin Ave, Suite 2780 Milwaukee, Wisconsin 53202 (Address of principal executive offices) (Zip Code) (414) 319-8500 (Registrant’s Telephone Number, Including Area Code) |
Indicate by check mark 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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes [ X ] No [ ]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING
FIVE YEARS.
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. 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
Common Stock, $1 par value | Outstanding at May 18, 2004 51,078,136 shares |
JOY GLOBAL INC.
FORM 10-Q
TABLE OF CONTENTS
May 1, 2004
| PART I. - FINANCIAL INFORMATION | Page No. | |
| Item 1 - Financial Statements (unaudited): | ||
| Condensed Consolidated Statements of Operations - Three and Six Months Ended May 1, 2004 and May 3, 2003 | 3 | |
| Condensed Consolidated Balance Sheets - May 1, 2004 and November 1, 2003 | 4 | |
| Condensed Consolidated Statements of Cash Flows - Six Months Ended May 1, 2004 and May 3, 2003 | 5 | |
| Notes to Condensed Consolidated Financial Statements | 6 - 23 | |
| Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 - 31 | |
| Item 3 - Quantitative and Qualitative Disclosures About Market Risk | 31 | |
| Item 4 - Controls and Procedures | 31 | |
| PART II. - OTHER INFORMATION | ||
| Item 1 - Legal Proceedings | 32 | |
| Item 2 - Changes in Securities and Use of Proceeds | 32 | |
| Item 3 - Defaults Upon Senior Securities | 32 | |
| Item 4 - Submission of Matters to a Vote of Security Holders | 32 | |
| Item 5 - Other Information - Forward-Looking Statements and Cautionary Factors | 32 - 33 | |
| Item 6 - Exhibits and Reports on Form 8-K | 33 - 34 | |
| Signatures | 35 | |
PART I. - FINANCIAL INFORMATION
| Three Months Ended |
Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| May 1, 2004 |
May 3, 2003 |
May 1, 2004 |
May 3, 2003 | ||||||
| Net sales | $ 337,682 | $ 298,888 | $ 621,368 | $ 538,049 | |||||
| Costs and expenses: | |||||||||
| Cost of sales | 246,569 | 226,956 | 460,460 | 412,992 | |||||
| Product development, selling | |||||||||
| and administrative expenses | 69,445 | 60,112 | 132,188 | 115,708 | |||||
| Restructuring charges | 69 | 991 | 502 | 2,168 | |||||
| Other income | (887 | ) | (224 | ) | (1,995 | ) | (590 | ) | |
| Operating income (loss) | 22,486 | 11,053 | 30,213 | 7,771 | |||||
| Interest expense, net | 4,360 | 5,560 | 10,034 | 11,505 | |||||
| Income (loss) before reorganization items | 18,126 | 5,493 | 20,179 | (3,734 | ) | ||||
| Reorganization items - (income) expense | (2,264 | ) | 96 | (1,649 | ) | 96 | |||
| Income (loss) before income taxes | 20,390 | 5,397 | 21,828 | (3,830 | ) | ||||
| Provision (benefit) for income taxes | 1,550 | 3,000 | 2,050 | (700 | ) | ||||
| Net income (loss) | $ 18,840 | $ 2,397 | $ 19,778 | $ (3,130 | ) | ||||
| Net income (loss) per share: | |||||||||
| Basic | $ 0.36 | $ 0.05 | $0.38 | $(0.06) | |||||
| Diluted | $ 0.35 | $ 0.05 | $0.37 | $(0.06) | |||||
| Dividends per share | $ 0.075 | $ -- | $ 0.125 | $ -- | |||||
| Weighted average shares outstanding: | |||||||||
| Basic | 52,179 | 50,228 | 51,566 | 50,228 | |||||
| Diluted | 53,740 | 50,297 | 53,013 | 50,228 | |||||
See accompanying notes to condensed consolidated financial statements
JOY GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(In
thousands)
| May 1, 2004 |
November 1, 2003 | |||||||
|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 208,657 | $ | 148,505 | ||||
| Accounts receivable, net | 209,541 | 193,882 | ||||||
| Inventories | 420,483 | 382,929 | ||||||
| Other current assets | 45,847 | 51,251 | ||||||
| Total current assets | 884,528 | 776,567 | ||||||
Property, plant and equipment, net | 212,717 | 226,101 | ||||||
| Intangible assets, net | 74,270 | 77,709 | ||||||
| Deferred income taxes | 145,652 | 136,192 | ||||||
| Other assets | 67,396 | 70,160 | ||||||
| Total assets | $ | 1,384,563 | $ | 1,286,729 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term notes payable, including current portion | ||||||||
| of long-term debt | $ | 13,177 | $ | 4,767 | ||||
| Trade accounts payable | 99,776 | 89,136 | ||||||
| Income taxes payable | 20,744 | 26,097 | ||||||
| Other accrued liabilities | 248,491 | 205,706 | ||||||
| Total current liabilities | 382,188 | 325,706 | ||||||
Long-term debt | 202,436 | 202,912 | ||||||
| Accrued pension costs | 310,307 | 313,214 | ||||||
| Other | 73,769 | 74,624 | ||||||
| Total liabilities | 968,700 | 916,456 | ||||||
| Shareholders' equity | 415,863 | 370,273 | ||||||
| Total liabilities and shareholders' equity | $ | 1,384,563 | $ | 1,286,729 | ||||
See accompanying notes to condensed consolidated financial statements
JOY GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(In
thousands)
| Six Months Ended | |||||
|---|---|---|---|---|---|
| May 1, 2004 |
May 3, 2003 | ||||
| Net cash provided by operating activities | $ 26,226 | $ 41,811 | |||
Investing activities: | |||||
| Property, plant and equipment acquired | (5,714 | ) | (8,486 | ) | |
| Proceeds from sale of property, plant and equipment | 1,324 | 979 | |||
| Purchase of equity interest in subsidiary | -- | (12,316 | ) | ||
| Other, net | 4,785 | 2,663 | |||
| Net cash provided (used) by investing activities | 395 | (17,160 | ) | ||
| Financing activities: | |||||
| Exercise of stock options | 29,832 | -- | |||
| Dividends paid | (6,316 | ) | -- | ||
| Financing fees | (1,000 | ) | (250 | ) | |
| Net payments of long-term obligations | (761 | ) | (154 | ) | |
| Increase in short-term notes payable, net | 9,230 | 1,221 | |||
| Net cash provided by financing activities | 30,985 | 817 | |||
| Effect of Exchange Rate Changes on Cash and | |||||
| Cash Equivalents | 2,546 | 7,100 | |||
| Increase in Cash and Cash Equivalents | 60,152 | 32,568 | |||
| Cash and Cash Equivalents at Beginning of Period | 148,505 | 70,906 | |||
| Cash and Cash Equivalents at End of Period | $ 208,657 | $ 103,474 | |||
See accompanying notes to condensed consolidated financial statements
JOY GLOBAL INC.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
May 1, 2004
(Unaudited)
| Joy Global Inc. manufactures and markets products classified into two business segments: underground mining machinery (Joy Mining Machinery or “Joy”) and surface mining equipment (P&H Mining Equipment or “P&H”). Joy is a major manufacturer of underground mining equipment for the extraction of coal and other bedded minerals and offers comprehensive service locations near major mining regions worldwide. P&H is a major producer of surface mining equipment for the extraction of ores and minerals and provides extensive operational support for many types of equipment used in surface mining. |
| The Condensed Consolidated Financial Statements presented in this quarterly report on Form 10-Q are unaudited and have been prepared by us in accordance with accounting principles generally accepted in the United States for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. |
| In our opinion, all adjustments necessary for the fair presentation on a going concern basis of the results of operations, cash flows and financial position for all periods presented have been made. All adjustments made are of a normal recurring nature. |
| These financial statements should be read in conjunction with the financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended November 1, 2003. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year. |
| The preparation of the financial statements in conformity with generally accepted accounting principles for interim financial information requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual amounts could differ from the estimates. |
| On January 23, 2004, we entered into a second amended and restated credit agreement (“Credit Agreement”) which consists of a $200 million revolving credit facilty maturing on October 15, 2008. Substantially all of our assets and our domestic subsidiaries’assets, other than real estate, are pledged as collateral under the Credit Agreement. Outstanding borrowings bear interest equal to either LIBOR plus the applicable margin (3.25% to 2.00%) or the Base Rate (defined as the higher of the Prime Rate or the Federal Funds Effective Rate plus 0.50%) plus the applicable margin (2.25% to 1.00%) at our option depending on certain of our financial ratios. We pay a commitment fee ranging from 0.50% to 0.75% on the unused portion of the revolving credit facility. In fiscal 2002, we issued $200 million in 8.75% Senior Subordinated Notes due March 15, 2012. |
| Both the Credit Agreement and Senior Subordinated Note Indenture contain restrictions and financial covenants relating to, among other things, minimum financial performance and limitations on the incurrence of additional indebtedness, liens, asset sales, and capital expenditures. The covenants in the Senior Subordinated Note Indenture are generally less restrictive than the covenants in the Credit Agreement. Interest coverage, leverage and fixed charge coverage covenants in the Credit Agreement generally become more restrictive over the term of the agreement. At May 1, 2004, we were in compliance with financial covenants in the Credit Agreement and the Indenture. |
| At May 1, 2004, there were no outstanding borrowings under the Credit Agreement. Outstanding letters of credit issued under the Credit Agreement, which count toward the $200 million credit limit, totaled $63.6 million. The amount available for borrowings under the Credit Agreement is also limited by a borrowing base calculation. At May 1, 2004, there was $136.4 million available for borrowings under the Credit Agreement. |
| We have 150,000,000 shares of authorized common stock, par value $1.00 per share, 50,000,000 of which will ultimately be distributed in connection with our July 12, 2001 (“Effective Date”) emergence from bankruptcy and are deemed outstanding for accounting purposes at the Effective Date. Under our Plan of Reorganization (“POR”), the 50,000,000 shares are being distributed to holders of allowed claims in the bankruptcy case. As of May 1, 2004, total distributions under the POR were 48,766,577 shares. The remaining 1,233,423 shares are held in a disputed claims equity reserve and will be distributed in accordance with the POR as the two remaining bankruptcy related claims are finally resolved. |
| Our stock incentive plan authorizes the grant of up to 8,056,000 stock options, performance units, restricted stock units and other stock-based awards to officers, employees and directors. As of May 1, 2004, stock option grants aggregating approximately 5.1 million shares of common stock had been made to approximately 250 individuals. Options to purchase 15,000 shares have also been granted to each of our six outside directors. On February 25, 2003, and February 24, 2004, restricted stock unit grants of 5,582 and 2,159, respectively, were made to each of our six outside directors. These restricted stock units vest one year after the grant date and provide that a number of shares of common stock equal to the number of vested units will be delivered one year after the director’s service on the board terminates. On January 21, 2004, grants of 47,465 restricted stock units were made to certain executive officers and key employees. These restricted stock units vest over a five-year period with one-third vesting on the third, fourth and fifth anniversaries of the grant date and provide that a number of shares of common stock equal to the number of vested units will be delivered to the individual as the units vest. Individuals are credited with additional units to reflect cash dividends paid on the underlying common stock. In the event of a change in control, the units will be paid out in cash based on the market price of the common stock as of the date of the change in control. |
| The 2001, 2003 and 2004 Performance Unit Award Programs under our stock incentive plan provide long-term incentive compensation opportunities to certain senior executives. Up to approximately 818,000 shares of common stock may be earned by the senior executives under the 2001, 2003 and 2004 Performance Unit Award Programs if, at the end of a three and one quarter year award cycle, for the 2001 Performance Unit Awards, or at the end of a three year award cycle, for the 2003 and 2004 Performance Unit Awards, cumulative net cash flow, as defined in the performance award agreements, exceeds certain threshold amounts. Each performance unit represents the right to earn one share of common stock. Awards can range from 0% to 150% of the target award opportunities. In the event of a change in control, the performance units are paid out in cash based on the greater of actual performance or target award. |
| As of May 1, 2004, awards under the stock incentive plan, were accounted for under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. The following table illustrates the effect on net income and net income (loss) per share if we had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation. |
| Three Months Ended |
Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| In thousands except per share data |
May 1, 2004 |
May 3, 2003 |
May 1, 2004 |
May 3, 2003 | |||||
| Net income (loss), as reported | $ 18,840 | $ 2,397 | $ 19,778 | $ (3,130 | ) | ||||
| Add: | |||||||||
| Compensation expense included | |||||||||
| in reported net income, net of | |||||||||
| related tax effect | 685 | 943 | 2,235 | 943 | |||||
| Deduct: | |||||||||
| Compensation expense determined | |||||||||
| under SFAS No. 123, net of related taxes | (2,850 | ) | (2,935 | ) | (5,129 | ) | (4,642 | ) | |
| Pro forma net income (loss) | $ 16,675 | $ 405 | $ 16,884 | $ (6,829 | ) | ||||
| Net income (loss) per share | |||||||||
| As reported | |||||||||
| Basic | $ 0.36 | $ 0.05 | $ 0.38 | $ (0.06 | ) | ||||
| Diluted | $ 0.35 | $ 0.05 | $ 0.37 | $ (0.06 | ) | ||||
| Pro forma | |||||||||
| Basic | $ 0.32 | $ 0.01 | $ 0.33 | $ (0.14 | ) | ||||
| Diluted | $ 0.31 | $ 0.01 | $ 0.32 | $ (0.14 | ) | ||||
|
Separate Statements of Shareholders’ Equity are not required to be presented for interim periods. However, comprehensive income consisted of the following: |
| Three Months Ended |
Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| In thousands |
May 1, 2004 |
May 3, 2003 |
May 1, 2004 |
May 3, 2003 | |||||
| Net income (loss) | $ 18,840 | $ 2,397 | $ 19,778 | $(3,130 | ) | ||||
| Comprehensive income: | |||||||||
| Translation adjustment | (11,229 | ) | 9,223 | (3,803 | ) | 17,182 | |||
| Derivative fair value adjustment | (370 | ) | (825 | ) | (604 | ) | 446 | ||
| Total comprehensive income | $ 7,241 | $ 10,795 | $ 15,371 | $ 14,498 | |||||
| Basic net income (loss) per share is computed based on the weighted-average number of ordinary shares outstanding during each period. Diluted net income (loss) per share is computed based on the weighted average number of ordinary shares outstanding during each period, plus dilutive potential ordinary shares considered outstanding during the period in accordance with SFAS No. 128, “Earnings per Share.” |
| The following table sets forth the computation of basic and diluted earnings (loss) per share: |
| Three Months Ended |
Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| In thousands except per share data |
May 1, 2004 |
May 3, 2003 |
May 1, 2003 |
May 3, 2002 | |||||
| Numerator: | |||||||||
| Net income (loss) | $18,840 | $ 2,397 | $19,778 | $(3,130 | ) | ||||
| Denominator: | |||||||||
| Denominator for basic net income per share - | |||||||||
| Weighted average shares | 52,179 | 50,228 | 51,566 | 50,228 | |||||
| Effect of dilutive securities: | |||||||||
| Stock options, restricted stock and | |||||||||
| performance units | 1,561 | 69 | 1,447 | -- | |||||
| Denominator for diluted net income per share - | |||||||||
| Adjusted weighted average shares and | |||||||||
| assumed conversions | 53,740 | 50,297 | 53,013 | 50,228 | |||||
| Basic net income (loss) per share | $ 0.36 | $ 0.05 | $ 0.38 | $ (0.06 | ) | ||||
| Diluted net income (loss) per share | $ 0.35 | $ 0.05 | $ 0.37 | $ (0.06 | ) | ||||
| We and our subsidiaries are involved in various unresolved legal matters that arise in the normal course of their operations, the most prevalent of which relate to product liability (including asbestos-related liability), employment and commercial matters. Also, as a normal part of their operations, our subsidiaries undertake 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 resolutions may affect the results of operations on a quarter-to-quarter basis, we believe that the results of the above noted litigation and other unresolved legal matters will not have a materially adverse effect on our consolidated financial position, results of operations or liquidity. |
| John G. Kling, purportedly on his own behalf and “in a representative capacity for the Harnischfeger Industries Employees’ Savings Plan,” filed suit in the United States District Court for the District of Massachusetts on November 9, 2001, against certain of our present and former employees, officers and directors. This action seeks damages in an unspecified amount based on, among other things, allegations that the members of our Pension Investment Committee, the Pension Committee of the Board of Directors, and Fidelity Management Trust Company failed to properly discharge their fiduciary obligations under ERISA with respect to the “Harnischfeger Common Stock Fund” in the Harnischfeger Industries Employees’ Savings Plan. A motion to dismiss our former directors, the Company and Company plans and committees from this action is pending. |
| On February 27, 2003, Joy Mining Machinery Limited (“Joy MM”), one of our subsidiaries located in the United Kingdom, commenced an arbitration in the International Centre for the Settlement of Investment Disputes against The General Organization for Industrial and Mining Projects (“IMC”), an agency of the government of Egypt, to resolve certain disputes arising under an agreement entered into in 1998 between Joy MM and IMC relating to underground mining equipment for the Abu Tartur project in Egypt. An arbitration panel has been appointed and proceedings before it have begun. Legal proceedings commenced in late 2002 by IMC against Joy MM in Egypt in this matter are also pending. IMC may seek wrongfully to draw on approximately $15 million in bank guarantees established for the benefit of IMC in connection with the agreement. |
| By notice dated May 16, 2003, Sokolovskaya Investment Company (“SIC”), a mining company in Russia, filed a request for arbitration with the ICC International Court of Arbitration against Joy MM to recover damages alleged to have arisen out of contracts entered into by Joy MM and SIC in 1995 and 1996 for the supply of underground mining equipment and related services. SIC seeks damages for loss of profit, delay, repairs, loss of use and other consequential damages of between $89 million and $98 million. An arbitration panel has been selected and proceedings before it have commenced. |
| At May 1, 2004, we were contingently liable to banks, financial institutions and others for approximately $85.9 million for outstanding letters of credit, bank guarantees and surety bonds securing performance of sales contracts and other guarantees in the ordinary course of business. Of the $85.9 million, approximately $6.2 million was issued at our request on behalf of Beloit Corporation. At May 1, 2004, there were $1.2 million of outstanding letters of credit or other guarantees issued by non-U.S. banks for non-U.S. subsidiaries. |
| From time to time we and our subsidiaries become involved in proceedings relating to environmental matters. We believe that the resolution of such environmental matters will not have a materially adverse effect on our consolidated financial position, results of operations or liquidity. |
| We have entered into various forward foreign exchange contracts with major international financial institutions for the purpose of hedging our risk of loss associated with changes in foreign exchange rates. These contracts involve off-balance-sheet market and credit risk. As of May 1, 2004, the nominal or face value of forward foreign exchange contracts to which we are a party, in absolute U.S. dollar equivalent terms, was $92.8 million. |
| Forward exchange contracts are entered into to protect the value of committed future foreign currency receipts and disbursements and net investment hedges and consequently any market related loss on the forward contract would be offset by changes in the value of the hedged item. As a result, we are not exposed to net market risk associated with these instruments. |
| We are exposed to credit-related losses in the event of non-performance by counterparties to our forward exchange contracts, but we do not expect any counterparties to fail to meet their obligations. A contract is generally subject to credit risk only when it has a positive fair value and the maximum exposure is the amount of the positive fair value. |
| Consolidated inventories consisted of the following: |
| In thousands |
May 1, 2004 |
November 1, 2003 | ||||||
|---|---|---|---|---|---|---|---|---|
| Finished goods | $ | 239,448 | $ | 226,758 | ||||
| Work in process and purchased parts | 153,698 | 131,512 | ||||||
| Raw materials | 27,337 | 24,659 | ||||||
| $ | 420,483 | $ | 382,929 | |||||
| We provide a warranty reserve for the estimated costs that may be incurred under product warranties to remedy deficiencies of quality or performance in our products. These product warranties extend over either a specified period of time, units of production or machine hours depending upon the product subject to the warranty. We accrue a provision for estimated future warranty costs based upon the historical relationship of warranty costs to sales. The warranty reserve is included in other accrued liabilities in the Condensed Consolidated Balance Sheet. We periodically review the adequacy of the accrual for product warranties and adjust the warranty percentage and accrued warranty reserve for actual experience as appropriate. The following table reconciles the changes in the Company’s product warranty reserve: |
| Three Months Ended |
Six Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| In thousands |
May 1, 2004 |
May 3, 2003 |
May 1, 2004 |
May 3, 2003 | |||||
| Balance, beginning of period | $ 30,168 | $ 33,677 | $ 30,443 | $ 33,904 | |||||
| Accrual for warranty expensed during | |||||||||
| the three month period | 5,970 | 5,447 | 9,565 | 7,936 | |||||
| Settlements made during the period | (4,425 | ) | (4,582 | ) | (8,481 | ) | (7,423 | ) | |
| Change in liability for pre-existing warranties | |||||||||
| during the period, including expirations | (559 | ) | (331 | ) | (774 | ) | (996 | ) | |
| Effect of foreign currency translation | (22 | ) | (477 | ) | 379 | 313 | |||
| Balance, end of period | $ 31,132 | $ 33,734 | $ 31,132 | $ 33,734 | |||||
| Costs associated with restructuring activities other than those activities covered by SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” or that involve an entity newly acquired in a business combination, are accounted for in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” Costs associated with such activities are recorded as restructuring costs in the consolidated statements of operations when the liability is incurred. |
| During fiscal 2003, we began implementing a manufacturing capacity rationalization at our P&H Mining Equipment Milwaukee location that reduced factory space by 350,000 square feet and resulted in a facility that is more efficient. The rationalization should be completed in fiscal 2004 and is expected to result in savings greater than the cash costs to implement. The total expected costs for this rationalization are estimated at $2.8 million. |
| During fiscal 2003, Joy Mining Machinery began implementing a manufacturing capacity rationalization plan for North America. Total costs for the Joy North American manufacturing capacity rationalization are estimated at $3.9 million. Included in this amount is $2.3 million for one-time termination benefits for an estimated 132 employees, $0.7 million for abandoned assets, and $0.9 million for other associated costs. Also during fiscal 2003, Joy Mining Machinery began implementing a manufacturing capacity rationalization plan for the United Kingdom and Australia. The total costs for the United Kingdom manufacturing capacity rationalization are estimated at $1.6 million, almost entirely for one-time termination benefits for 26 employees. The total costs for the Australian manufacturing capacity rationalization are estimated at $0.2 million, almost entirely for one-time termination benefits for 27 employees. |
| Below is a summary of the activity related to restructuring costs recorded pursuant to SFAS No. 144 and SFAS No.146. |
| In thousands |
One-time Termination Benefits |
Abandoned Assets |
Other Associated Costs |
Total Charges | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months ended May 1, 2004 |
||||||||||||||
| P&H Mining Equipment | $ | -- | $ | -- | $ | 49 | $ | 49 | ||||||
| Joy Mining Machinery | -- | -- | 20 | 20 | ||||||||||
| $ | -- | $ | -- | $ | 69 | $ | 69 | |||||||
| Six Months ended May 1, 2004 |
||||||||||||||
| P&H Mining Equipment | $ | -- | $ | -- | $ | 217 | $ | 217 | ||||||
| Joy Mining Machinery | 200 | -- | 85 | 285 | ||||||||||
| $ | 200 | $ | -- | $ | 302 | $ | 502 | |||||||
| Cummulative Total to date | ||||||||||||||
| P&H Mining Equipment | $ | -- | $ | 1,154 | $ | 829 | $ | 1,983 | ||||||
| Joy Mining Machinery | 3,584 | 715 | 1,135 | 5,434 | ||||||||||
| $ | 3,584 | $ | 1,869 | $ | 1,964 | $ | 7,417 | |||||||
| Reorganization items include income, expense and loss that were realized or incurred as a result of our reorganization under Chapter 11 of the Bankruptcy Code. At May 1, 2004, the $2.3 million of reorganization income represented a cash settlement with the Beloit Liquidating Trust and the elimination of a bankruptcy related liability offset by post emergence professional fees. |
| The components of net periodic benefit costs recognized are as follows: |
| U.S. Pension Benefits |
Postretirement Benefits | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended |
Three Months Ended | ||||||||
| In thousands |
May 1, 2004 |
May 3, 2003 |
May 1, 2004 |
May 3, 2003 | |||||
| Service cost | $ 3,067 | $ 2,611 | $ 41 | $ 35 | |||||
| Interest cost | 10,804 | 10,707 | 863 | 937 | |||||
| Expected return on assets | (9,953 | ) | (9,619 | ) | -- | -- | |||
| Amortization of: | |||||||||
| Prior service cost | 90 | 90 | -- | -- | |||||
| Actuarial (gain) loss | 1,633 | 106 | 99 | 64 | |||||
| Net periodic benefit cost | $ 5,641 | $ 3,895 | $1,003 | $1,036 | |||||
| U.S. Pension Benefits |
Postretirement Benefits | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended |
Six Months Ended | ||||||||
| In thousands |
May 1, 2004 |
May 3, 2003 |
May 1, 2004 |
May 3, 2003 | |||||
| Service cost | $ 6,135 | $ 5,221 | $ 83 | $ 71 | |||||
| Interest cost | 21,609 | 21,413 | 1,725 | 1,874 | |||||
| Expected return on assets | (19,906 | ) | (19,238 | ) | -- | -- | |||
| Amortization of: | |||||||||
| Prior service cost | 181 | 180 | -- | -- | |||||
| Actuarial (gain) loss | 3,265 | 211 | 199 | 199 | |||||
| Net periodic benefit cost | $ 11,284 | $ 7,787 | $2,007 | $2,144 | |||||
|
No contributions are required to be made to our U.S. pension plans in fiscal 2004. |
| At May 1, 2004, we had two reportable segments: Underground Mining Machinery and Surface Mining Equipment. Operating income (loss) of the segments does not include interest income (expense) or provision (benefit) for income taxes. There are no significant intersegment sales. Total operations assets are those used in our operations in each segment. Corporate assets consist primarily of cash and cash equivalents, deferred financing costs and deferred income taxes. |
| In thousands |
Net Sales |
Operating Income (Loss) |
Total Assets | ||||
|---|---|---|---|---|---|---|---|
| 2004 Second Quarter | |||||||
| Underground Mining Machinery | $199,479 | $ 16,874 | $ 600,627 | ||||
| Surface Mining Equipment | 138,203 | 12,072 | 423,389 | ||||
| Total operations | 337,682 | 28,946 | 1,024,016 | ||||
| Corporate | -- | (6,460 | ) | 360,547 | |||
| Consolidated Total | $337,682 | $ 22,486 | $1,384,563 | ||||
| 2003 Second Quarter | |||||||
| Underground Mining Machinery | $177,168 | $ 11,659 | $ 647,040 | ||||
| Surface Mining Equipment | 121,720 | 5,216 | 498,589 | ||||
| Total operations | 298,888 | 16,875 | 1,145,629 | ||||
| Corporate | -- | (5,822 | ) | 157,076 | |||
| Consolidated Total | $298,888 | $ 11,053 | $1,302,705 | ||||
| 2004 Six Months | |||||||
| Underground Mining Machinery | $354,495 | $ 24,442 | $ 600,627 | ||||
| Surface Mining Equipment | 266,873 | 18,959 | 423,389 | ||||
| Total operations | 621,368 | 43,401 | 1,024,016 | ||||
| Corporate | -- | (13,188 | ) | 360,547 | |||
| Consolidated Total | $621,368 | $ 30,213 | $1,384,563 | ||||
| 2003 Six Months | |||||||
| Underground Mining Machinery | $307,653 | $ 11,624 | $ 647,040 | ||||
| Surface Mining Equipment | 230,396 | 6,281 | 498,589 | ||||
| Total operations | 538,049 | 17,905 | 1,145,629 | ||||
| Corporate | -- | (10,134 | ) | 157,076 | |||
| Consolidated Total | $538,049 | $ 7,771 | $1,302,705 | ||||
| In December 2003, Medicare benefits were expanded, primarily by adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. We anticipate that the benefits we pay after 2006 will be lower as a result of the new Medicare provisions. The reported retiree medical obligations and costs do not reflect the impact of this legislation. Deferring the recognition of the new Medicare provisions' impact is permitted by Financial Accounting Standards Board Staff Position 106-1, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003,” because of uncertainty about the effects of some of the new Medicare provisions and a lack of authoritative accounting guidance on the matters. The final accounting guidance could require changes to previously reported information. |
| The following tables present condensed consolidated financial information for the three and six months ended May 1, 2004 and May 3, 2003 for: (a) the Company; (b) on a combined basis, the guarantors of the Credit Agreement and Senior Subordinated Note Indentures, which include substantially all of our domestic subsidiaries (“Subsidiary Guarantors”); and (c) on a combined basis, the non-guarantors, which include all of our foreign subsidiaries (“Non-Guarantor Subsidiaries”). Separate financial statements of the Subsidiary Guarantors are not presented because the guarantors are unconditionally, jointly, and severally liable under the guarantees, and we believe such separate statements or disclosures would not be useful to investors |
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ -- | $ 205,836 | $ 191,941 | $(60,095 | ) | $ 337,682 | |||||
Cost of sales | -- | 147,848 | 151,248 | (52,527 | ) | 246,569 | |||||
Product development, selling | |||||||||||
| and administrative expenses | 6,408 | 38,427 | 24,610 | -- | 69,445 | ||||||
| Restructuring charges | -- | 68 | 1 | -- | 69 | ||||||
| Other (income) expense | -- | (686 | ) | (201 | ) | -- | (887 | ) | |||
| Operating income (loss) | (6,408 | ) | 20,179 | 16,283 | (7,568 | ) | 22,486 | ||||
Intercompany items | 4,756 | (560 | ) | (12,239 | ) | 8,043 | -- | ||||
| Interest income (expense), net | (5,341 | ) | (71 | ) | 1,052 | -- | (4,360 | ) | |||
| Income (loss) before reorganization items | (6,993 | ) | 19,548 | 5,096 | 475 | 18,126 | |||||
| Reorganization items - income (expense) | 2,264 | -- | -- | -- | 2,264 | ||||||
| Income (loss) before income taxes | (4,729 | ) | 19,548 | 5,096 | 475 | 20,390 | |||||
Provision (benefit) for income taxes | (8,212 | ) | 6,707 | 3,055 | -- | 1,550 | |||||
| Equity in income (loss) of subsidiaries | 15,357 | 1,657 | 910 | (17,924 | ) | -- | |||||
| Net income (loss) | $ 18,840 | $ 14,498 | $ 2,951 | $(17,449 | ) | $ 18,840 | |||||
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ -- | $ 201,979 | $ 173,901 | $(76,992 | ) | $ 298,888 | |||||
Cost of sales | -- | 157,627 | 136,696 | (67,367 | ) | 226,956 | |||||
Product development, selling | |||||||||||
| and administrative expenses | 5,174 | 36,857 | 18,081 | -- | 60,112 | ||||||
| Restructuring charges | -- | 991 | -- | -- | 991 | ||||||
| Other (income) expense | 21 | (118 | ) | (127 | ) | -- | (224 | ) | |||
| Operating income (loss) | (5,195 | ) | 6,622 | 19,251 | (9,625 | ) | 11,053 | ||||
Intercompany items | (906 | ) | 3,651 | (12,239 | ) | 9,494 | -- | ||||
| Interest income (expense), net | (5,939 | ) | (224 | ) | 603 | -- | (5,560 | ) | |||
| Income (loss) before reorganization items | (12,040 | ) | 10,049 | 7,615 | (131 | ) | 5,493 | ||||
Reorganization items- income (expense) | (137 | ) | 41 | -- | -- | (96 | ) | ||||
| Income (loss) before income taxes | (12,177 | ) | 10,090 | 7,615 | (131 | ) | 5,397 | ||||
Provision (benefit) for income taxes | (5,750 | ) | 4,743 | 4,007 | -- | 3,000 | |||||
| Equity in income (loss) of subsidiaries | 8,824 | 10,721 | 883 | (20,428 | ) | -- | |||||
| Net income (loss) | $ 2,397 | $ 16,068 | $ 4,491 | $(20,559 | ) | $ 2,397 | |||||
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ -- | $ 368,979 | $ 359,409 | $(107,020 | ) | $ 621,368 | |||||
Cost of sales | -- | 275,158 | 277,922 | (92,620 | ) | 460,460 | |||||
Product development, selling | |||||||||||
| and administrative expenses | 13,097 | 72,419 | 46,672 | -- | 132,188 | ||||||
| Restructuring charges | -- | 295 | 207 | -- | 502 | ||||||
| Other (income) expense | (70 | ) | (1,337 | ) | (588 | ) | -- | (1,995 | ) | ||
| Operating income (loss) | (13,027 | ) | 22,444 | 35,196 | (14,400 | ) | 30,213 | ||||
Intercompany items | 7,139 | 1,109 | (22,536 | ) | 14,288 | -- | |||||
| Interest income (expense), net | (12,354 | ) | (159 | ) | 2,479 | -- | (10,034 | ) | |||
| Income (loss) before reorganization items | (18,242 | ) | 23,394 | 15,139 | (112 | ) | 20,179 | ||||
Reorganization items - income (expense) | 1,649 | -- | -- | -- | 1,649 | ||||||
| Income (loss) before income taxes | (16,593 | ) | 23,394 | 15,139 | (112 | ) | 21,828 | ||||
Provision (benefit) for income taxes | (11,890 | ) | 9,179 | 4,761 | -- | 2,050 | |||||
| Equity in income (loss) of subsidiaries | 24,481 | 18,810 | 1,826 | (45,117 | ) | -- | |||||
| Net income (loss) | $ 19,778 | $ 33,025 | $ 12,204 | $(45,229 | ) | $ 19,778 | |||||
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ -- | $ 345,716 | $ 313,712 | $(121,379 | ) | $ 538,049 | |||||
Cost of sales | -- | 271,616 | 247,070 | (105,694 | ) | 412,992 | |||||
Product development, selling | |||||||||||
| and administrative expenses | 8,714 | 72,955 | 34,039 | -- | 115,708 | ||||||
| Restructuring charges | -- | 2,168 | -- | -- | 2,168 | ||||||
| Other (income) expense | -- | (509 | ) | (81 | ) | -- | (590 | ) | |||
| Operating income (loss) | (8,714 | ) | (514 | ) | 32,684 | (15,685 | ) | 7,771 | |||
Intercompany items | 5,533 | (248 | ) | (21,675 | ) | 16,390 | -- | ||||
| Interest income (expense), net | (11,891 | ) | (530 | ) | 916 | -- | (11,505 | ) | |||
| Income (loss) before reorganization items | (15,072 | ) | (1,292 | ) | 11,925 | 705 | (3,734 | ) | |||
Reorganization items - income (expense) | (137 | ) | 41 | -- | -- | (96 | ) | ||||
| Income (loss) before income taxes | (15,209 | ) | (1,251 | ) | 11,925 | 705 | (3,830 | ) | |||
Provision (benefit) for income taxes | (8,024 | ) | 1,822 | 5,502 | -- | (700 | ) | ||||
| Equity in income (loss) of subsidiaries | 4,055 | 19,501 | 1,760 | (25,316 | ) | -- | |||||
| Net income (loss) | $(3,130 | ) | $ 16,428 | $ 8,183 | $(24,611 | ) | $ (3,130 | ) | |||
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ 167,454 | $ 577 | $ 40,626 | $ -- | $ 208,657 | ||||||
| Accounts receivable-net | -- | 86,254 | 123,443 | (156 | ) | 209,541 | |||||
| Inventories | -- | 248,712 | 205,857 | (34,086 | ) | 420,483 | |||||
| Other current assets | 29,739 | 3,736 | 12,217 | 155 | 45,847 | ||||||
| Total current assets | 197,193 | 339,279 | 382,143 | (34,087 | ) | 884,528 | |||||
Property, plant and equipment-net | 379 | 138,592 | 73,746 | -- | 212,717 | ||||||
| Intangible assets-net | -- | 74,270 | -- | -- | 74,270 | ||||||
| Investment in affiliates | 1,115,056 | 615,437 | 55,695 | (1,786,188 | ) | -- | |||||
| Intercompany accounts receivable-net | (453,103 | ) | 513,235 | (108,010 | ) | 47,878 | -- | ||||
| Deferred income taxes | 145,652 | -- | -- | -- | 145,652 | ||||||
| Other assets | 10,231 | 7,181 | 49,984 | -- | 67,396 | ||||||
| Total assets | $ 1,015,408 | $1,687,994 | $ 453,558 | $(1,772,397 | ) | $1,384,563 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term notes payable, including current portion | |||||||||||
| of long-term debt | $ -- | $ 390 | $ 12,787 | $ -- | $ 13,177 | ||||||
| Trade accounts payable | 96 | 47,783 | 51,897 | -- | 99,776 | ||||||
| Income taxes payable | (9,504 | ) | 2,311 | 27,937 | -- | 20,744 | |||||
| Other accrued liabilities | 42,042 | 117,553 | 105,835 | (16,939 | ) | 248,491 | |||||
| Total current liabilities | 32,634 | 168,037 | 198,456 | (16,939 | ) | 382,188 | |||||
Long-term obligations | 200,000 | -- | 2,436 | -- | 202,436 | ||||||
Other non-current liabilities | 366,911 | 13,092 | 4,073 | -- | 384,076 | ||||||
Shareholders' equity | 415,863 | 1,506,865 | 248,593 | (1,755,458 | ) | 415,863 | |||||
| Total liabilities and shareholders' equity | $ 1,015,408 | $1,687,994 | $ 453,558 | $(1,772,397 | ) | $1,384,563 | |||||
Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Eliminations |
Consolidated | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 57,840 | $ | 16,222 | $ | 74,443 | $ | -- | $ | 148,505 | |||||||
| Accounts receivable, net | -- | 85,849 | 109,312 | (1,279 | ) | 193,882 | |||||||||||
| Inventories | -- | 232,369 | 182,744 | (32,184 | ) | 382,929 | |||||||||||
| Other current assets | 29,942 | 8,558 | 13,232 | (481 | ) | 51,251 | |||||||||||
| Total current assets | 87,782 | 342,998 | 379,731 | (33,944 | ) | 776,567 | |||||||||||
Property, plant and equipment, net | 458 | 150,825 | 74,818 | -- | 226,101 | ||||||||||||
| Intangible assets, net | -- | 77,709 | -- | -- | 77,709 | ||||||||||||
| Investment in affiliates | 1,092,719 | 558,517 | 15,292 | (1,666,528 | ) | -- | |||||||||||
| Intercompany accounts, net | (415,274 | ) | 501,066 | (134,915 | ) | 49,123 | -- | ||||||||||
| Other assets | 147,745 | 8,367 | 50,240 | -- | 206,352 | ||||||||||||
| Total assets | $ | 913,430 | $ | 1,639,482 | $ | 385,166 | $ | (1,651,349 | ) | $ | 1,286,729 | ||||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Short-term notes payable, including current portion | |||||||||||||||||
| of long-term debt | $ | -- | $ | 554 | $ | 4,213 | $ | -- | $ | 4,767 | |||||||
| Trade accounts payable | 269 | 37,094 | 51,773 | -- | 89,136 | ||||||||||||
| Income taxes payable | 188 | 2,550 | 23,359 | -- | 26,097 | ||||||||||||
| Advance payments and progress billings | -- | 14,243 | 24,379 | (1,946 | ) | 36,676 | |||||||||||
| Other accrued liabilities | 17,889 | 89,309 | 77,888 | (16,056 | ) | 169,030 | |||||||||||
| Total current liabilities | 18,346 | 143,750 | 181,612 | (18,002 | ) | 325,706 | |||||||||||
Long-term obligations | 200,000 | 95 | 2,817 | -- | 202,912 | ||||||||||||
Other non-current liabilities | 324,811 | 59,320 | 3,707 | -- | 387,838 | ||||||||||||
Shareholders' equity | 370,273 | 1,436,317 | 197,030 | (1,633,347 | ) | 370,273 | |||||||||||
| Total liabilities and shareholders' equity | $ | 913,430 | $ | 1,639,482 | $ | 385,166 | $ | (1,651,349 | ) | $ | 1,286,729 | ||||||
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net cash provided (used) by operations | $ 83,459 | $(13,228 | ) | $(44,005 | ) | $ 26,226 | |||
Investing Activities: | |||||||||
| Property, plant and equipment acquired | -- | (1,506 | ) | (4,208 | ) | (5,714 | ) | ||
| Proceeds from sale of property, plant and equipment | -- | 598 | 726 | 1,324 | |||||
| Other - net | 3,639 | (1,250 | ) | 2,396 | 4,785 | ||||
| Net cash provided (used) by investing activities | 3,639 | (2,158 | ) | (1,086 | ) | 395 | |||
| Financing Activities: | |||||||||
| Exercise of stock options | 29,832 | -- | -- | 29,832 | |||||
| Dividends paid | (6,316 | ) | -- | -- | (6,316 | ) | |||
| Credit Agreement financing fees | (1,000 | ) | -- | -- | (1,000 | ) | |||
| Issuance (repayment) of long-term obligations | -- | (259 | ) | (502 | ) | (761 | ) | ||
| Increase (decrease) in short-term notes payable- net | -- | -- | 9,230 | 9,230 | |||||
| Net cash provided (used) by financing activities | 22,516 | (259 | ) | 8,728 | 30,985 | ||||
| Effect of Exchange Rate Changes on Cash and | |||||||||
| Cash Equivalents | -- | -- | 2,546 | 2,546 | |||||
| Increase (Decrease) in Cash and Cash Equivalents | 109,614 | (15,645 | ) | (33,817 | ) | 60,152 | |||
| Cash and Cash Equivalents at Beginning of Period | 57,840 | 16,222 | 74,443 | 148,505 | |||||
| Cash and Cash Equivalents at End of Period | $ 167,454 | $ 577 | $ 40,626 | $ 208,657 | |||||
| Parent Company |
Subsidiary Guarantors |
Non-Guarantor Subsidiaries |
Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Net cash provided by operations | $ 16,028 | $ 20,415 | $ 5,368 | $ 41,811 | |||||
Investing activities: | |||||||||
| Property, plant and equipment acquired | -- | (5,272 | ) | (3,214 | ) | (8,486 | ) | ||
| Proceeds from sale of property, plant and equipment | -- | 222 | 757 | 979 | |||||
| Purchase of equity interest in subsidiary | -- | (12,316 | ) | -- | (12,316 | ) | |||
| Other, net | 3,500 | (1,943 | ) | 1,106 | 2,663 | ||||
| Net cash provided (used) by investing activities | 3,500 | (19,309 | ) | (1,351 | ) | (17,160 | ) | ||
| Financing activities: | |||||||||
| Borrowings under Credit Agreement | -- | -- | -- | -- | |||||
| Financing fees | (250 | ) | -- | -- | (250 | ) | |||
| Issuance of 8.75% Senior Subordinated Notes | -- | -- | -- | -- | |||||
| Redemption of 10.75% Senior Notes | -- | -- | -- | -- | |||||
| Payment of Term Note | -- | -- | -- | -- | |||||
| Net issuance (payments) of long-term obligations | -- | (464 | ) | 310 | (154 | ) | |||
| Increase (decrease) in short-term notes payable, net | -- | 4 | 1,217 | 1,221 | |||||
| Net cash provided (used) by financing activities | (250 | ) | (460 | ) | 1,527 | 817 | |||
| Effect of Exchange Rate Changes on Cash and | |||||||||
| Cash Equivalents | -- | -- | 7,100 | 7,100 | |||||
| Increase in Cash and Cash Equivalents | 19,278 | 646 | 12,644 | 32,568 | |||||
| Cash and Cash Equivalents at Beginning of Period | 33,803 | 868 | 36,235 | 70,906 | |||||
| Cash and Cash Equivalents at End of Period | $ 53,081 | $ 1,514 | $ 48,879 | $ 103,474 | |||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. Forward-looking statements are subject to risks, uncertainties and assumptions which could cause actual results to differ materially from those projected, including those risks, uncertainties and assumptions described in Item 5 — Other Information – Forward-Looking Statements and Cautionary Factors in Part II of this report.
The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes to the Condensed Consolidated Financial Statements in Item 1 – Financial Statements in Part I of this report.
Joy Global Inc. is a worldwide leader in high-productivity mining solutions. Joy Global Inc. manufactures, markets and distributes original equipment and aftermarket parts and services both the underground and aboveground mining industries through two business segments, Joy Mining Machinery and P&H Mining Equipment.
The recovery in commodity markets that benefited first quarter results continued during the second quarter. Demand for coal, copper and iron ore continued to be strong, coal stockpiles and copper inventories continued to shrink, and prices remained firm. Much of the strength in commodity markets has been driven by consumption in China, although demand continued to increase in the United States and other countries.
Customer orders were very strong in the second quarter of fiscal 2004, with substantial increases over the levels of the second quarter of fiscal 2003. Original equipment orders from domestic coal customers were particularly strong. In addition, both segments experienced increases in aftermarket orders.
Revenues for the quarter were up as a result of continued strength in the aftermarket and the effect of foreign currency translations. The strong incoming order rates of the last two quarters are expected to be reflected in higher revenues in future quarters. Gross margins improved during the second quarter as a result of higher operating levels and the benefits of cost savings initiatives. Earnings also benefited from the effects of foreign currency translations and the reversal of a tax accrual.
The Company also continued to generate cash during the second quarter, particularly from customer advance deposits. Total debt net of cash was reduced to less than $10 million at the end of the quarter.
Net Sales
The following table sets forth the combined net sales included in our Condensed Consolidated Statement of Operations:
| Three Months Ended |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Sales (In thousands) |
May 1, 2004 |
May 3, 2003 |
Change | ||||||||
| Underground Mining Machinery | $ | 199,479 | $ | 177,168 | $ | 22,311 | |||||
| Surface Mining Equipment | 138,203 | 121,720 | 16,483 | ||||||||
| $ | 337,682 | $ | 298,888 | $ | 38,794 | ||||||
The increase in net sales for underground mining machinery in the second quarter was largely the result of foreign currency translation benefits from aftermarket products and for original equipment sales outside the United States. Aftermarket sales increased in the United States and remained substantially flat outside of the U.S. after eliminating the currency translation benefits. Increased coal activity in the U.S. benefited aftermarket sales. Original equipment sales included a significant shipment of armored face conveyors into China. However, this increase was offset by roof support shipments in the prior year’s quarter which were not repeated in the current quarter.
The increase in original equipment sales for surface mining equipment was primarily due to the copper markets. An increase of a percentage-of-completion sale of a dragline in Australia and an increase in original equipment sales in both Australia and South America contributed to the overall increase. Original equipment sales to Canada during the quarter were lower due primarily to sales during the prior year’s quarter of equipment sold into the iron ore and coal markets that were not repeated in the current quarter. The demand for copper, iron ore, and oil sands favorably impacted aftermarket parts and service sales. Our South American, Southern United States and South Africa regions all experienced increases in aftermarket product and service sales, principally due to the increase in demand for copper. Our Australian region experienced an increase in service sales associated with the dragline erection. Service revenues in Canada were lower due to multiple rebuilds performed last year not being repeated this year.
Operating Income
The following table sets forth the operating income included in our Condensed Consolidated Statement of Operations:
| Three Months Ended |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| In thousands |
May 1, 2004 |
May 3, 2003 |
Change | ||||||||
| Operating income: | |||||||||||
| Underground Mining Machinery | $ | 16,874 | $ | 11,659 | $ | 5,215 | |||||
| Surface Mining Equipment | 12,072 | 5,216 | 6,856 | ||||||||
| Corporate Expense | (6,460 | ) | (5,822 | ) | (638 | ) | |||||
| Total | $ | 22,486 | $ | 11,053 | $ | 11,433 | |||||
The improvement in operating income for underground mining machinery resulted from higher sales volumes, a favorable impact of manufacturing overhead absorption, benefits from our strategic sourcing initiatives, and cost savings from our restructurings in the United States and United Kingdom. These items were partially offset by increases in pension expense and medical costs in the United States and United Kingdom, increased legal expenses and our performance based compensation accrual.
The improvement in operating income for surface mining equipment was due to the increase in sales volume of new machines and aftermarket products and services, improved manufacturing absorption, continued cost controls and the sales mix of proprietary parts versus non-proprietary parts. These improvements were offset slightly by an increase in our performance based bonus accrual.
The increase in corporate expenses relates primarily to an increase in the accrual associated with the Company’s performance based bonus plan.
Product Development, Selling and Administrative Expense
Product development, selling and administrative expense totaled $69.4 million, or 20.6% of sales, in the second quarter of fiscal 2004, as compared to $60.1 million, or 20.1% of sales, in the second quarter of fiscal 2003. The increase was attributable to higher sales expenses related to increased business activity during the quarter, higher pension and performance based compensation costs quarter over quarter and the foreign exchange impact on expenses. Offsetting these increases was lower amortization expense associated with adjustments to deferred tax assets that reduced intangible assets at the end of fiscal 2003 and the elimination of prior year restructuring charges and the benefits in fiscal 2004 from those restructuring charges.
Provision for Income Taxes
Income tax expense for the second quarter of fiscal 2004 decreased to $1.6 million as compared to $3.0 million in the second quarter of fiscal 2003. On a consolidated basis, these income tax provisions represented effective income tax rates for the second quarters of fiscal 2004 and 2003 of 8% and 56%, respectively. The main drivers impacting the income tax provisions were changes in the year over year global mix of earnings and the ability in fiscal 2004 to recognize certain Australian tax losses due to the restructuring of our Australian subsidiaries that occurred in the latter part of fiscal 2003. Additionally, the second quarter of fiscal 2004 was also impacted by the reversal of approximately $6.3 million of deferred income tax liabilities previously recorded in the fourth quarter of fiscal 2003 on certain unappropriated earnings of a foreign subsidiary. Upon the completion of a corporate restructuring during the second quarter, the deferred income tax liability was deemed no longer required and was reversed, with the resulting income tax benefit recognized as a discreet item in the second quarter. Excluding the impact of this deferred tax reversal, the consolidated effective rate for the second quarter of fiscal 2004 would have been approximately 38%.
Cash taxes paid for the second quarter of fiscal 2004 were $8.8 million compared to $7.7 million in the second quarter of fiscal 2003. This increase is attributable to the timing of estimated taxes due by the Companies non-domestic affiliates during the quarter offset in part by savings from our restructuring of our Australian subsidiaries completed in the latter part of fiscal 2003.
Net Sales
The following table sets forth the combined net sales included in our Condensed Consolidated Statement of Operations:
| Six Months Ended |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Sales (In thousands) |
May 1, 2004 |
May 3, 2003 |
Change | ||||||||
| Underground Mining Machinery | $ | 354,495 | $ | 307,653 | $ | 46,842 | |||||
| Surface Mining Equipment | 266,873 | 230,396 | 36,477 | ||||||||
| $ | 621,368 | $ | 538,049 | $ | 83,319 | ||||||
The increase in net sales for underground mining machinery in the first six months was the result of increased shipments of both original equipment and aftermarket products and foreign currency translation benefits. Markets for both the original equipment and aftermarket products continued to reflect the increased demand that began in the first quarter. Increased shipments of roof supports, armored face conveyors and longwall shearers worldwide more than offset a decrease in continuous miner sales in Australia. We also showed increases in continuous miners in South Africa and armored face conveyors into China during the first six months of fiscal 2004. An increase in continuous miners shipments in the United States was offset by lower sales of roof supports. The increase in original equipment sales reflects improvements we are seeing in coal markets, particularly in the United States. Aftermarket sales remained strong in the United States and were substantially flat outside of the U.S. after eliminating currency translation benefits. Increased coal activity in the U.S. benefited aftermarket sales.
The increase in our original equipment sales for surface mining equipment was primarily due to an increase of a percentage-of-completion sale of a dragline in Australia and the increased demand for electric mining shovels in South America. The demand for copper significantly impacted aftermarket parts and service sales. Our South American and South African regions had significant increases in aftermarket product and service sales. Aftermarket service sales increased in Australia due to the erection of the dragline.
Operating Income
The following table sets forth the operating income (loss) included in our Condensed Consolidated Statement of Operations:
| Six Months Ended |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| In thousands |
May 1, 2004 |
May 3, 2003 |
Change | ||||||||
| Operating income: | |||||||||||
| Underground Mining Machinery | $ | 24,442 | $ | 11,624 | $ | 12,818 | |||||
| Surface Mining Equipment | 18,959 | 6,281 | 12,678 | ||||||||
| Corporate Expense | (13,188 | ) | (10,134 | ) | (3,054 | ) | |||||
| Total | $ | 30,213 | $ | 7,771 | $ | 22,442 | |||||
The improvement in operating income for underground mining machinery resulted from higher sales volumes, favorable foreign currency rate conversion, a favorable impact of manufacturing overhead absorption associated with the increase in original equipment production, benefits from our strategic sourcing initiatives, and cost savings from our restructuring in the United States and United Kingdom. These improvements were partially offset by increases in pension expense and medical costs in the United States and United Kingdom and an increase in the accrual for the performance based compensation plan.
The improvement in operating income for surface mining equipment was due to the increase in sales volume of new machines and aftermarket products and services in South America, Australia and South Africa, favorable manufacturing overhead absorption, continued cost controls, and a decrease in restructuring charges. These favorable improvements were slightly offset by unfavorable purchase price variances associated with high steel costs and surcharges.
The increase in corporate expenses relates primarily to an increase in the accrual associated with the Company’s performance based bonus plan.
Product Development, Selling and Administrative Expense
Product development, selling and administrative expense totaled $132.2 million, or 21.1% of sales, for the six months ended May 1, 2004, as compared to $115.7 million, or 21.5% of sales, for the six months ended May 3, 2003. While a lower percentage of total sales, the increase in product development, selling and administrative expense was attributable to higher sales expenses related to increased business activity during the quarter, higher pension and performance based compensation costs year over year, and the foreign exchange impact on expenses. Offsetting these increases were lower amortization expenses associated with adjustments to deferred tax assets that reduced intangible assets at the end of fiscal 2003.
Provision for Income Taxes
Income tax expense for the 2004 Six Months increased to $2.1 million as compared to a $0.7 million income tax benefit for the 2003 Six Months. On a consolidated basis, these income tax provisions represented effective income tax rates for the 2004 Six Months and 2003 Six Months of 9% and 18%, respectively. The income tax provisions were changes in the year over year global mix of earnings and the ability in fiscal 2004 to recognize certain Australian tax losses due to the restructuring of our Australian subsidiaries that occurred in the latter part of fiscal 2003. Additionally, the second quarter of fiscal 2004 was also impacted by the reversal of approximately $6.3 million of deferred income tax liabilities previously recorded on certain unappropriated earnings of a foreign subsidiary. Upon the completion of a corporate restructuring during the second quarter, the deferred income tax liability was no longer required and was reversed and recognized as a discreet item in the second quarter. Excluding the impact of this deferred tax reversal, the consolidated effective rate for the 2004 Six Months would have been approximately 38%.
Cash taxes paid for the 2004 Six Months were $8.7 million compared to $12.5 million paid for the 2003 Six Months. This decrease in cash taxes paid was primarily due to the restructuring of our Australian subsidiaries in the latter part of fiscal 2003 and reduced payments required by foreign affiliates related to prior year estimated taxes. Additionally, cash taxes previously reported for the first quarter of fiscal 2004 were reduced to reflect a reclassification of a $2.1 million refund received by a non-domestic foreign affiliate.
Bookings and Backlog
Bookings continue their trend upward in both original equipment and aftermarket products and services. During the fiscal 2004 second quarter and year to date, the Company received $504.1 million and $878.3 million, respectively, of new orders compared to new order bookings of $311.8 million and $588.2 million for the fiscal 2003 second quarter and year to date, respectively. Both the underground and surface mining businesses had increases in new orders compared to a year ago. In addition, both the original equipment and aftermarket products of both businesses had more new order bookings during the current quarter and year to date period than they did a year ago. Both bookings and backlog benefited slightly from sales translated from foreign currencies. Especially encouraging was the level of new orders received for electric mining shovels in all our markets and for continuous miners in the United States, China and South Africa.
As a result of the strong level of new orders, backlog increased from $252.3 million at the beginning of fiscal 2004 to $509.2 million at the end of the second quarter.
Discussion of Cash Flows
At the end of the second quarter, we had $208.7 million in cash and cash equivalents and working capital of $502.3 million as compared to $148.5 million in cash and cash equivalents and working capital of $450.9 million at the beginning of the fiscal year. Our net debt, or total debt net of $208.7 million of cash, at the end of the second quarter was $7.0 million compared to net debt of $59.2 million at the beginning of the fiscal year.
Operating Activities
Cash provided by operations during the fiscal 2004 six months was $26.2 million compared to cash provided by operations of $41.8 million in fiscal 2003 six months. The decrease in operating cash flow was primarily a result of an increase in inventory and accounts receivable associated with the increase in the level of business activity. These items were partially offset by the improved profitability in the first half of fiscal 2004.
Investing Activities
Investing activities during the fiscal 2004 six months provided $0.4 million compared to a use of cash of $17.2 million during the fiscal 2003 six months. The increase in cash provided by investing activities was primarily attributed to the purchase of equity interest in our Australian subsidiary for $12.3 million in fiscal 2003 and a $2.8 million decrease in our capital expenditures. We expect to fund capital expenditures in 2004 with operating cash flows and available cash.
Financing Activities
During the fiscal 2004 six months, cash provided by financing activities was $31.0 million compared to cash provided by financing activities of $0.8 million during the fiscal 2003 six months. The increase was due to $29.8 million received from the exercise of employee stock options and a $8.0 million increase in short-term notes offset by $6.3 million of dividends paid and additional financing fees from the amendment of the Credit Agreement.
Credit Agreement
During the first quarter of fiscal 2004, we announced the amendment and restatement of our revolving credit facility. The amendment extends the term of the facility by three years to October 15, 2008, provides flexibility in the financial covenants, improves the pricing “grid,” reduces the size of the facility from $250 million to $200 million, and lessens restrictions on cash dividends and restricted payments. The Credit Agreement was further amended during the second quarter to facilitate corporate restructurings.
As of the end of the second quarter, we had $208.7 million in cash and cash equivalents and $136.4 million available for borrowings under the Credit Agreement. Based upon our current level of operations, we believe that cash on hand, cash flow from operations and available borrowings under the Credit Agreement, will be adequate to meet our anticipated future cash requirements. No cash contributions are required to be made to our U.S. pension plan in fiscal 2004. Cash contributions to U.S. pension plans are expected to be approximately $80 million unless we elect to prefund such plans in fiscal 2004.
Off-Balance Sheet Arrangements
We lease various assets under operating leases. The aggregate payments under operating leases as of the end of the first quarter are disclosed below in the table of Disclosures about Contractual Obligations and Commercial Commitments. No significant changes to lease commitments have occurred since the end of the first quarter. We have no other off-balance sheet arrangements.
Disclosures about Contractual Obligations and Commercial Commitments
The following table sets forth our contractual obligations and commercial commitments as of May 1, 2004:
| Contractual Obligations |
Total |
Less than 1 year |
1 - 3 years |
4 - 5 years |
After 5 years | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Long-Term Debt | $ | 200,266 | $ | -- | $ | -- | $ | -- | $ | 200,266 | |||||||
| Short-Term Notes Payable | 12,085 | 12,085 | -- | -- | -- | ||||||||||||
| Capital Lease Obligations | 3,262 | 1,092 | 1,182 | 588 | 400 | ||||||||||||
| Operating Leases | 19,481 | 8,240 | 7,019 | 2,312 | 1,910 | ||||||||||||
| Total | $ | 235,094 | $ | 21,417 | $ | 8,201 | $ | 2,900 | $ | 202,576 | |||||||
Market conditions in most of the commodity markets served by our customers remain robust. The U.S. coal market continues to strengthen in both coal pricing and demand. Higher spot coal pricing will over time be reflected in supply contracts with higher prices. Demand for coal is being positively affected by continued high natural gas prices, reduced imports of coal into the U.S. from South America, and increases in exports of metallurgical coal from the U.S. U.S. coal producers are increasing their production levels, and capital spending plans. The increase in production levels is primarily occurring in existing mine operations, which we believe is leading to the increasing demand for replacement equipment from us as operators drive for more production from the same reserves.
The international coal markets continue to be strong with rising prices for both thermal and metallurgical coal. Capacity levels in shipping port facilities have placed shipping constraints in both South Africa and Australia, but overall the markets are strong. China continues to take the necessary steps in the long-term conversion of their underground coal industry to high productivity mining methods. Efforts by the Chinese banking regulators to reduce over-investment in areas such as steel and real estate, while encouraging investments in power plants, railroads, and coal should reduce the risk of capital availability, and be a positive contributor to this conversion. Joy Mining Machinery is engaged in a number of discussions with existing and new mining companies in China and anticipates receiving orders from certain of the new mining companies prior to the end of fiscal 2004. We continue to believe we will experience solid, long-term, double-digit growth in China, both for our underground mining machinery and our aftermarket parts and service activities.
Markets served by P&H Mining Equipment in surface mining are strong across the board. Copper mining, the largest of these markets, continues to enjoy strong pricing despite some softening over the last month. Copper producers are increasing production at a number of mines, and are developing plans and ordering equipment for new mines. Positive trends also are continuing both in iron ore and the oil sands of Canada, additional important markets for P&H. Incoming order rates of electric mining shovels were strong again in the second quarter with the expansion of mining activities by our customers. Finally, we have entered into a new 5-year labor agreement in our Milwaukee manufacturing facility of P&H Mining Equipment.
Several factors temper our outlook. We believe that the current increases in purchases for mining equipment and services will be influenced by our customers exercising discipline in increasing their production. As we increase our production to meet the increased demand for mining equipment, our challenge is to manage our working capital and the other aspects of our business so that we meet the needs of our customers while maximizing returns to shareholders. We will need to continue to control pension and health care costs. Our ability to grow revenues is constrained by the capacity of our plants, our ability to supplement that capacity with outside sources, and our success in securing critical supplies such as steel and copper. The positive effects we are seeing on our business as a result of higher customer production and capital spending levels could be offset by customer restraints on production and capital spending, increasing lead times at our facilities, and tightening steel supplies.
Our discussion and analysis of financial condition and results of operations is based upon our Condensed Consolidated Financial Statements which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. We evaluate, on an ongoing basis, our estimates and judgments, including those related to bad debts, excess inventory, warranty, intangible assets, income taxes, and contingencies. We base our estimates on historical experience and assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.
We believe our accounting policies for revenue recognition, inventories, intangible assets, accrued warranties, pension and postretirement benefits and costs, and income taxes are the ones that most frequently require us to make estimates and judgments, and therefore are critical to the understanding of our results of operations. See Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of our annual report on Form 10-K for the year ended November 1, 2003 for a discussion of these policies. There were no material changes to these policies during the first half of fiscal 2004.
As more fully described in our Annual Report on Form 10-K for the year ended November 1, 2003, we are exposed to various types of market risks, primarily foreign currency risks. We monitor our risks in this area on a continuous basis and generally enter into forward foreign currency contracts to minimize these exposures for periods of less than one year. We do not engage in speculation in our derivative strategies. Gains and losses from foreign currency contract activities are offset by changes in the underlying costs of the transactions being hedged.
We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board of Directors.
Our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended ("the Act")) were effective as the end of the second quarter, based on the evaluation of these controls and procedures required by Rule 13a-15(b) or 15d-15(b) of the Act.
There were no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of their most recent evaluation.
| See Item 3 – Legal Proceedings of Part I of our annual report on Form 10-K for the year ended November 1, 2003. The dispute between the Official Committee of Unsecured Creditors of Beloit Corporation and certain present and former officers of the Company and Beloit Corporation was resolved during the second quarter of fiscal 2004 when the Wisconsin Supreme Court ruled in favor of the defendants and dismissed the case. In the dispute between Sokolovskaya Investment Company (“SIC”) and Joy Mining Machinery Limited, SIC now seeks damages of between $89 million and $98 million. |
| Not applicable. |
| Not applicable. |
| See Item 4 – Submission of Matters to a Vote of Security Holders of Part II of our quarterly report on Form 10-Q for the quarter ended January 31, 2004 for the results of the voting on director nominees at the annual meeting of stockholders held on February 24, 2004. |
| This report and other documents or oral statements we make or made on our behalf contain both historical and forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. Forward-looking statements are predictions and generally can be identified by use of statements that include phrases such as “believe,” “expect,”“anticipate,” “intend,” “plan,” “foresee,” or other words or phrases of similar import. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated. In addition to any factors that may accompany forward-looking statements, factors that could materially affect actual results include the following. |
| Our principal businesses involve designing, manufacturing, marketing and servicing large, complex machines. Significant periods of time are necessary to design and build these machines. Large amounts of capital must be devoted by our customers to purchase these machines and to finance the mines that use them. Our success in obtaining and managing a relatively small number of sales opportunities, including our success in securing payment for such sales and meeting the requirements of warranties and guarantees associated with such sales, can affect our financial performance. In addition, many mines are located in undeveloped or developing economies where business conditions are less predictable. In recent years, up to 52% of our total sales occurred outside the United States. |
| Additional factors that could cause actual results to differ materially from those contemplated include: |
| • | Factors affecting customers’ purchases of new equipment, rebuilds, parts and services such as: production capacity, stockpiles, and production and consumption rates of coal, copper, iron, gold, oil 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; the effects of rising energy costs on customer operations; work stoppages at customers or providers of transportation; and the timing, severity and duration of customer buying cycles. |
| • | Factors affecting our ability to capture available sales opportunities, including: customers’ perceptions of the quality and value of our products and services as compared to competitors’ products and services; customers’ perceptions of our financial health and stability as compared to our competitors; our ability to obtain adequate supplies of raw materials such as heavy plate and specialty steels; and the availability of manufacturing capacity at our factories. |
| • | Factors affecting our ability to successfully manage the sales we obtain, such as: the accuracy of our cost and time estimates; the adequacy of our cost and control systems; and our success in delivering products and completing service projects on time and within budget; our success in recruiting and retaining managers and key employees; wage stability and cooperative labor relations; plant capacity and utilization; increases in the costs and constraints on the supply of major purchased items such as steel can adversely affect profits and revenues; and whether acquisitions are assimilated and divestitures completed without notable surprises or unexpected difficulties. |
| • | 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. |
| • | Factors affecting our general business, such as: unforeseen patent, tax, product, environmental, employee health and benefit, or contractual liabilities; nonrecurring 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. |
| • | Various other factors beyond our control. |
a) Exhibits:
| 10(a) | First Amendment to Second Amended and Restated Credit Agreement and Consent dated as of April 19, 2004 and entered into by and among Joy Global Inc., as Borrower, the lenders named therein, as Lenders, Deutsche Bank Trust Company America, as Agent, Heller Financial, Inc. and Fleet Capital Corporation, as Co-Syndication Agents, and CIT Group/Business Credit, as Documentation Agent |
| 10(b) | Form of Non-Employee Director Restricted Stock Unit Award Agreement dated May 8, 2003 |
| 10(c) | Form of Non-Employee Director Restricted Stock Unit Award Agreement entered into as of February 24, 2004 |
| 10(d) | Form of Stock Option Agreement entered into as of January 21, 2004 |
| 10(e) | Form of Performance Unit Agreement entered into as of January 21, 2004 between Joy Global Inc. and James A. Chokey, John Nils Hanson, Mark E. Readinger, Donald C. Roof, Michael W. Sutherlin and Dennis R. Winkleman |
| 10(f) | Form of Restricted Stock Unit Award Agreement entered into as of January 21, 2004 between Joy Global Inc. and James A. Chokey, John Nils Hanson, Mark E. Readinger, Donald C. Roof, Michael W. Sutherlin and Dennis R. Winkleman |
| 31(a) | Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certifications |
| 31(b) | Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certifications |
| 32 | Section 1350 Certifications |
(b) Reports on Form 8-K
Form 8-K Report dated as of February 10, 2004 Item 5 & “Other Events” |
Form 8-K Report dated as of February 24, 2004 Item 12 “Results of Operations and Financial Condition” |
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.
| Date May 28, 2004 | JOY GLOBAL INC. (Registrant) /s/ Donald C. Roof Donald C. Roof Executive Vice President, Chief Financial Officer and Treasurer |
| Date May 28, 2004 | /s/ Michael S. Olsen Michael S. Olsen Vice President and Controller and Chief Accounting Officer |