(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 January 29, 2005
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 February 18, 2005 80,258,782 shares |
JOY GLOBAL INC.
FORM 10-Q – INDEX
January 29, 2005
| PART I. - FINANCIAL INFORMATION | Page No. | |
| Item 1 - Financial Statements (unaudited): | ||
|
Condensed Consolidated Statement of Income - Three Months Ended January 29, 2005 and January 31, 2004 |
3 | |
|
Condensed Consolidated Balance Sheet - January 29, 2005 and January 31, 2004 |
4 | |
|
Condensed Consolidated Statement of Cash Flows - Three Months Ended January 29, 2005 and January 31, 2004 |
5 | |
| Notes to Condensed Consolidated Financial Statements | 6 - 21 | |
| Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 - 27 | |
| Item 3 - Quantitative and Qualitative Disclosures About Market Risk | 27 | |
| Item 4 - Controls and Procedures | 27 | |
| PART II. - OTHER INFORMATION | ||
| Item 1 - Legal Proceedings | 28 | |
| Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds | 28 | |
| Item 3 - Defaults Upon Senior Securities | 28 | |
| Item 4 - Submission of Matters to a Vote of Security Holders | 28 | |
| Item 5 - Other Information | 28 - 29 | |
| Item 6 - Exhibits | 29 | |
| Signatures | 30 | |
| Three Months Ended | |||||
|---|---|---|---|---|---|
| January 29, 2005 |
January 31, 2004 | ||||
| Net sales | $ 383,690 | $ 283,686 | |||
| Costs and expenses: | |||||
| Cost of sales | 270,869 | 213,891 | |||
| Product development, selling | |||||
| and administrative expenses | 71,281 | 62,743 | |||
| Restructuring charges | — | 433 | |||
| Other income | (721 | ) | (1,108 | ) | |
| Operating income | 42,261 | 7,727 | |||
| Interest expense, net | (4,418 | ) | (5,674 | ) | |
| Loss on debt repurchase | (2,393 | ) | — | ||
| Income before reorganization items | 35,450 | 2,053 | |||
| Reorganization items | (116 | ) | (615 | ) | |
| Income before provision for income taxes | 35,334 | 1,438 | |||
| Provision for income taxes | (13,150 | ) | (500 | ) | |
| Net income | $ 22,184 | $ 938 | |||
| Net income per share: * | |||||
| Basic | $ 0.28 | $ 0.01 | |||
| Diluted | $ 0.27 | $ 0.01 | |||
| Dividends per share * | $ 0.075 | $ 0.033 | |||
| Weighted average shares outstanding: * | |||||
| Basic | 80,062 | 76,431 | |||
| Diluted | 82,134 | 78,429 | |||
| * | Share
data adjusted for effect of 3-for-2 stock split effective January 21, 2005 |
See accompanying notes to consolidated financial statements
| January 29, 2005 |
October 30, 2004 | ||||
|---|---|---|---|---|---|
| ASSETS | (Unaudited) | ||||
| Current assets: | |||||
| Cash and cash equivalents | $ 189,740 | $ 231,706 | |||
| Accounts receivable, net | 244,070 | 259,897 | |||
| Inventories | 507,765 | 443,810 | |||
| Other current assets | 64,474 | 56,639 | |||
| Total current assets | 1,006,049 | 992,052 | |||
Property, plant and equipment, net | 204,326 | 207,974 | |||
| Intangible assets, net | 42,220 | 40,213 | |||
| Deferred income taxes | 129,279 | 129,424 | |||
| Other assets | 69,976 | 70,696 | |||
| Total assets | $1,451,850 | $1,440,359 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Short-term notes payable, including current portion | |||||
| of long-term debt | $ 2,094 | $ 3,110 | |||
| Trade accounts payable | 127,754 | 139,178 | |||
| Employee compensation and benefits | 53,887 | 82,472 | |||
| Advance payments and progress billings | 100,512 | 87,507 | |||
| Income taxes payable | 14,616 | 4,910 | |||
| Other accrued liabilities | 124,208 | 114,675 | |||
| Total current liabilities | 423,071 | 431,852 | |||
Long-term obligations | 188,252 | 202,869 | |||
| Accrued pension costs | 270,684 | 268,933 | |||
| Other | 86,222 | 84,657 | |||
| Total liabilities | 968,229 | 988,311 | |||
| Shareholders' equity | 483,621 | 452,048 | |||
| Total liabilities and shareholders' equity | $1,451,850 | $1,440,359 | |||
See accompanying notes to consolidated financial statements
| Three Months Ended | |||||
|---|---|---|---|---|---|
| January 29, 2005 |
January 31, 2004 | ||||
| Cash flows from operating activities: | |||||
| Net income | $ 22,184 | $ 938 | |||
| Non-cash items: | |||||
| Depreciation and amortization | 10,463 | 12,001 | |||
| Amortization of financing fees | 433 | 1,889 | |||
| Loss on debt repurchase | 2,393 | -- | |||
| Increase (decrease) in deferred income taxes, net | |||||
| of change in valuation allowance | (188 | ) | (1,899 | ) | |
| Change in long-term accrued pension costs | 4,209 | 5,271 | |||
| Other, net | 647 | 872 | |||
| Changes in Working Capital Items: | |||||
| (Increase) decrease in accounts receivable, net | 19,371 | 6,656 | |||
| (Increase) decrease in inventories | (58,282 | ) | (8,049 | ) | |
| (Increase) decrease in other current assets | (5,773 | ) | (2,764 | ) | |
| Increase (decrease) in trade accounts payable | (13,980 | ) | (8,055 | ) | |
| Increase (decrease) in employee compensation and benefits | (25,561 | ) | (15,466 | ) | |
| Increase (decrease) in advance payments and progress billings | 12,220 | 3,308 | |||
| Increase (decrease) in other accrued liabilities | 19,408 | (2,979 | ) | ||
| Net cash used by operating activities | (12,456 | ) | (8,277 | ) | |
| Cash flows from investing activities: | |||||
| Property, plant and equipment acquired | (4,376 | ) | (2,626 | ) | |
| Proceeds from sale of property, plant and equipment | 322 | 2,283 | |||
| Intangibles acquired | (2,966 | ) | (1,529 | ) | |
| Other, net | (1,200 | ) | 2,128 | ||
| Net cash provided (used) by investing activities | (8,220 | ) | 256 | ||
| Cash flows from financing activities: | |||||
| Exercise of stock options | 1,265 | 24,790 | |||
| Dividends paid | (5,853 | ) | (2,491 | ) | |
| Repurchase of 8.75% Senior Subordinated Notes | (16,536 | ) | -- | ||
| Repayment of long-term obligations | (276 | ) | (353 | ) | |
| Increase (decrease) in short-term notes payable | (962 | ) | 338 | ||
| Financing fees | -- | (1,000 | ) | ||
| Net cash provided (used) by financing activities | (22,362 | ) | 21,284 | ||
| Effect of exchange rate changes on cash and cash equivalents | 1,072 | 33 | |||
| Increase (Decrease) in Cash and Cash Equivalents | (41,966 | ) | 13,296 | ||
| Cash and Cash Equivalents at Beginning of Period | 231,706 | 148,505 | |||
| Cash and Cash Equivalents at End of Period | $ 189,740 | $ 161,801 | |||
See accompanying notes to consolidated financial statements
| 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 October 30, 2004. 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 facility 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 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 January 29, 2005, we were in compliance with financial covenants in the Credit Agreement and the Indenture. |
| In December, we purchased approximately $14.5 million of our 8.75% Senior Subordinated Notes in several open market purchases. These transactions, which resulted in a $2.4 million loss, consisted of approximately $16.5 million of cash and the writedown of unamortized finance costs of $0.4 million. Since these transactions are purchases, not redemption’s, the bonds remain outstanding in accordance with their terms of the Indenture. |
| At January 29, 2005, 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 $84.7 million. The amount available for borrowings under the Credit Agreement is also limited by a borrowing base calculation. At January 29, 2005, there was $115.3 million available for borrowings under the Credit Agreement. |
| On December 15, 2004, our board of directors authorized a three-for-two split of our common shares, payable on January 21, 2005 to shareholders of record on January 6, 2005. References in the Consolidated Condensed Financial Statements to the number of common shares and related per share amounts have been restated to reflect the stock split. |
| On January 28, 2005, we began our sixth distribution of common stock to holders of allowed pre-petition claims against Harnischfeger Industries, Inc., the Company’s name prior to its reorganization in 2001. This is the final distribution of shares to holders of allowed pre-petition claims against the Company. The distribution consists of 1,850,074 shares (equivalent to 1,233,423 shares prior to the Company’s 3-for-2 stock split, less any fractional shares that would have resulted from the split) and $1,596 of cash paid in lieu of fractional shares, as well as $477,952 of cash payable in satisfaction of accrued dividends previously declared on the shares being distributed. |
| This distribution, under our Plan of Reorganization, brings the total number of shares distributed to date to 75,000,000 as adjusted to reflect the Company’s 3-for-2 stock split (equivalent to 50,000,000 shares prior to such stock split). This distribution is based on approximately $1.21 billion of allowed claims. This distribution, when added to the prior distributions, equates one share of Joy Global Inc. common stock prior to the stock split to a $24.11 allowed claim (equivalent to $16.08 on a split-adjusted basis). All subsequent references to stock shares will be on a post-split basis unless otherwise noted. |
| Our stock incentive plan authorizes the grant of up to 13,584,000 stock options, performance shares, restricted stock units and other stock-based awards to officers, employees and directors. As of January 29, 2005 stock option grants aggregating approximately 8.1 million shares of common stock had been made to approximately 250 individuals. Included in this aggregate were options to purchase 22,500 shares granted to each of our six outside directors. On February 25, 2003, and February 24, 2004, restricted stock unit grants of 8,373 and 3,238, 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 and November 15, 2004 restricted stock unit grants of 71,198 and 54,150, respectively, 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 2003, 2004 and 2005 performance share award programs under our stock incentive plan provide long-term incentive compensation opportunities to certain senior executives. Up to approximately 593,000 shares of common stock may be earned by the senior executives under the 2003, 2004 and 2005 performance share award programs if at the end of a three year award cycle cumulative net cash flow, as defined in the performance award agreements, exceeds certain threshold amounts. Each performance share represents the right to earn one share of common stock. Awards can range from 0% to 150% of the target award opportunities and may be paid out in stock, cash or a combination of stock and cash. In the event of a change in control, the performance shares are paid out in cash based on the greater of actual performance or target award. During the first quarter of 2005 and prior to the 3-for-2 stock split, we distributed 155,882 of the 363,614 performance shares earned under the 2001 performance share award program. |
| As of January 29, 2005, 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 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 | |||||
|---|---|---|---|---|---|
| In thousands except per share data |
January 29, 2005 |
January 31, 2004 | |||
| Net income, as reported | $ 22,184 | $ 938 | |||
| Add: | |||||
| Compensation expense included | |||||
| in reported net income, net of | |||||
| related tax effect | 2,011 | 1,550 | |||
| Deduct: | |||||
| Compensation expense determined | |||||
| under SFAS No. 123, net of related taxes | (1,822 | ) | (2,279 | ) | |
| Pro forma net income | $ 22,373 | $ 209 | |||
| Net income per share * | |||||
| As reported | |||||
| Basic | $ 0.28 | $ 0.01 | |||
| Diluted | $ 0.27 | $ 0.01 | |||
| Pro forma * | |||||
| Basic | $ 0.28 | $ 0.00 | |||
| Diluted | $ 0.27 | $ 0.00 | |||
| * | Share
data adjusted for effect of 3-for-2 stock split effective January 21, 2005 |
| Separate Statements of Shareholders’ Equity are not required to be presented for interim periods. However, comprehensive income consisted of the following: |
| Three Months Ended | |||||
|---|---|---|---|---|---|
| In thousands |
January 29, 2005 |
January 31, 2004 | |||
| Net income | $22,184 | $ 938 | |||
| Comprehensive income: | |||||
| Translation adjustments | 8,082 | 7,426 | |||
| Derivative fair value adjustments | 936 | (234 | ) | ||
| Total comprehensive income | $31,202 | $ 8,130 | |||
| Basic net income per share is computed based on the weighted-average number of shares outstanding during each period. Diluted net income per share is computed based on the weighted average number of ordinary shares during each period, plus dilutive potential 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 per share:
| Three Months Ended | |||||
|---|---|---|---|---|---|
| In thousands except per share data |
January 29, 2005 |
January 31, 2004 | |||
| Numerator: | |||||
| Net income | $ 22,184 | $ 938 | |||
| Denominator: | |||||
| Denominator for basic net income per share - | |||||
| Weighted average shares | 80,062 | 76,431 | |||
| Effect of dilutive securities: | |||||
| Stock options, restricted stock and | |||||
| performance shares | 2,072 | 1,998 | |||
| Denominator for diluted net income per share - | |||||
| Adjusted weighted average shares and | |||||
| assumed conversions | 82,134 | 78,429 | |||
| Basic net income per share * | $ 0.28 | $ 0.01 | |||
| Diluted net income per share * | $ 0.27 | $ 0.01 | |||
| * | Share
data adjusted for effect of 3-for-2 stock split effective January 21, 2005 |
| We and our subsidiaries are involved in various unresolved legal matters that arise in the normal course of operations, the most prevalent of which relate to product liability (including asbestos-related and silicosis 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 outcome of such legal and other 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,” (the “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. We and the Plan were added as defendants in this case in early 2004. 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. On May 24, 2004, the court granted our motion to dismiss the Plan and the Board committee and denied our motion to dismiss us and our former directors from this action. |
| The General Organization for Industrial and Mining Projects (“IMC”), an agency of the government of Egypt commenced legal proceedings in Egypt in late 2002 against Joy Mining Machinery Limited (“Joy MM”), one of our subsidiaries located in the United Kingdom, 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. IMC may also seek wrongfully to draw on approximately 9.7 million pounds sterling in bank guarantees established for the benefit of IMC in connection with the agreement. On August 6, 2004, The International Centre for Settlement of Investment Disputes declined to accept jurisdiction of arbitration proceedings initiated by Joy MM against IMC. IMC has now commenced proceedings against Joy MM in the Cairo Arbitration Centre to recover unspecified damages for the alleged breach of contract and delay. An arbitration panel has been selected and proceedings before it have commenced. |
| 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 $65 million and $82 million. An arbitration panel has been selected and hearings before it have commenced. |
| At January 29, 2005, we were contingently liable to banks, financial institutions and others for approximately $106.9 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 $106.9 million, approximately $6.2 million was issued at our request on behalf of Beloit Corporation. At January 29, 2005, there were $2.5 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 January 29, 2005, the nominal or face value of forward foreign exchange contracts to which we are a party, in absolute U.S. dollar equivalent terms, was $246.8 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, net consisted of the following:
| In thousands |
January 29, 2005 |
October 30, 2004 | |||
|---|---|---|---|---|---|
| Finished goods | $254,756 | $244,244 | |||
| Work in process and purchased parts | 204,071 | 164,660 | |||
| Raw materials | 48,938 | 34,906 | |||
| $507,765 | $443,810 | ||||
| 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 | |||||
|---|---|---|---|---|---|
| In thousands |
January 29, 2005 |
January 31, 2004 | |||
| Balance, beginning of period | $ 31,259 | $ 30,443 | |||
| Accrual for warranty expensed during | |||||
| the period | 5,387 | 3,595 | |||
| Settlements made during the period | (4,124 | ) | (4,056 | ) | |
| Change in liability for pre-existing warranties | |||||
| during the period, including expirations | (295 | ) | (215 | ) | |
| Effect of foreign currency translation | 288 | 401 | |||
| Balance, end of period | $ 32,515 | $ 30,168 | |||
| 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. For the three months ended January 29, 2005 and January 31, 2004, the $0.1 million and $0.6 million, respectively, of reorganization items represented post emergence professional fees. |
| 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 income when the liability is incurred. |
| During 2003, we implemented 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 was completed in the fourth quarter of Fiscal 2004 at a cost of $2.0 million. We realized approximately $5.5 million in cost savings in our cost of sales in Fiscal 2004 as a result of the Fiscal 2003 rationalization plan at P&H. These savings are sustainable in future years, but will vary based upon sales. |
| During 2003, Joy Mining Machinery implemented a manufacturing capacity rationalization plan for North America. Total costs for the Joy North American manufacturing capacity rationalization included $1.5 million for one-time termination benefits for 132 employees, $0.8 million for abandoned assets, and $1.4 million for other associated costs. Also during 2003, Joy Mining Machinery implemented a manufacturing capacity rationalization plan for the United Kingdom and Australia. The total costs for the United Kingdom manufacturing capacity rationalization were $1.6 million for one-time termination benefits for 26 employees. The total costs for the Australian manufacturing capacity rationalization were $0.2 million for one-time termination benefits for 27 employees. The Fiscal 2003 rationalization plan at Joy was completed in the fourth quarter of Fiscal 2004 at a total cost of $5.5 million. We realized approximately $5.8 million in cost savings in Fiscal 2004 as a result of the Fiscal 2003 rationalization plan at Joy. These savings consisted of $4.7 million reflected in our cost of sales and $1.1 million reflected in our product development, selling and administrative expenses. These savings are sustainable in future years, but will vary based upon sales. |
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 |
January 29, 2005 |
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