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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended
October 31, 1996.
/ / Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 for the transition
period from to .
Commission file number 1-9299
HARNISCHFEGER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 39-1566457
(State of (I.R.S. Employer
Jurisdiction of Identification No.)
Incorporation or
Organization)
3600 South Lake Drive, St. Francis, Wisconsin 53235-3716
(Address of Principal Executive Office)
Registrant's Telephone Number, Including Area Code:
(414) 486-6400
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange On
Title of Each Class Which Registered
Common Stock, $1 Par Value New York and Pacific Stock
Exchanges
Preferred Stock Purchase Rights New York and Pacific Stock
Exhanges
Securities registered pursuant to Section 12(g) of the Act:
None
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 if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /X/
The aggregate market value of Registrant's Common
Stock held by non-affiliates, as of January 27, 1997, based
on a closing price of $45, was approximately $2,212.7
million.
The number of shares outstanding of Registrant's
Common Stock, as of January 27, 1997, was 49,171,007.
DOCUMENTS INCORPORATED BY REFERENCE
Management's Discussion and Analysis of Financial
Statements, Consolidated Financial Statements, Notes to
Consolidated Financial Statements, Report of Independent
Accountant's and Five-Year Review of Financial Data of
Registrant's. Registrant's proxy statement for the 1997
annual meeting of stockholders to be filed within 120 days
of the end of the Registrant's fiscal year.
HARNISCHFEGER INDUSTRIES, INC.
INDEX TO
ANNUAL REPORT ON FORM 10-K
For The Fiscal Year Ended October 31, 1996
Page
----
Part I
Item 1. Business........................ 3
Item 2. Properties...................... 10
Item 3. Legal Proceedings............... 13
Item 4. Submission of Matters to a
Vote of Security Holders...... 14
Part II
Item 5. Market for the Registrant's
Common Stock and Related
Stockholder Matters........... 14
Item 6. Selected Financial Data ........ 14
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations..... 14
Item 8. Financial Statements and
Supplementary Data............ 14
Item 9. Change in and Disagreements with
Accountants on Accounting and
Financial Disclosure.......... 14
Part III
Item 10.Directors and Executive Officers
of the Registrant............. 15
Item 11.Executive Compensation.......... 15
Item 12.Security Ownership of Certain
Beneficial Owners and
Management.................... 15
Item 13.Certain Relationships and Related
Transactions.................. 15
Part IV
Item 14.Exhibits, Financial Statement
Schedules and Reports
on Form 8-K................... 15
Signatures ............................... 19
PART I
Item 1. Business
SEGMENTS OF BUSINESS
Harnischfeger Industries, Inc. ("Harnischfeger
Industries" or the "Company") is a holding company for
subsidiaries involved in the worldwide manufacture and
distribution of surface mining equipment (P&H Mining
Equipment); underground mining equipment (Joy Mining
Machinery); pulp and papermaking machinery (Beloit
Corporation); and material handling equipment (P&H Material
Handling). In early fiscal 1996, the Company completed the
acquisition of Dobson Park Industries plc ("Dobson"), an
industrial engineering group with interests in underground
mining equipment, industrial electronic control systems,
toys and plastics. Dobson's principal subsidiary, Longwall
International, is engaged in the manufacture, sale and
service of mining equipment for the international
underground coal mining industry and has been integrated
into the Company's Mining Equipment Segment. In March
1996, the Company completed the purchase of the assets of
the pulp machinery division of Ingersoll-Rand Company.
Harnischfeger Industries is the direct successor to a
business begun over 100 years ago which, at October 31,
1996, through its subsidiaries, manufactures and markets
products classified into three industry segments: Pulp and
Papermaking Machinery, Mining Equipment, and Material
Handling.
The following discussion and the portions of the Company's
1996 Annual Report to Shareholders incorporated herein by
reference contain forward looking statements. Terms such
as "anticipate", "believe", "estimate", "expect",
"indicate", "may be", "objective", "plan", "predict", and
"will be" are intended to identify such statements.
Forward-looking statements are subject to certain risks,
uncertainties and assumptions which could cause actual
results to differ materially from those predicted. See
"Cautionary Factors" at the end of this Item 1.
MINING EQUIPMENT
P&H Mining Equipment is the world's largest producer
of electric mining shovels and is a significant producer of
electric and diesel-electric crawler and walking draglines,
hydraulic mining excavators, blasthole drills, and dredge
and dragline bucket products. Electric mining shovels range
in capacity from 18 to 80 cubic yards, crawler draglines
from 10 to 20 cubic yards and hydraulic mining excavators
from 12 to 27 cubic yards. Capacities for walking draglines
range from 20 to 150 cubic yards. Blasthole drill models
have drilling diameters ranging from 9 to 22 inches and bit
load capacities from 70,000 to 150,000 pounds.
The products of P&H Mining Equipment are used in
mines, quarries and earth-moving operations in the digging
and loading of such minerals and other ores as coal,
copper, gold, iron ore, lead, zinc, bauxite, uranium,
phosphate, stone and clay.
P&H Mining Equipment has a relationship in the mining
shovel business with Kobe Steel, Ltd. ("Kobe") pursuant to
which P&H Mining Equipment licenses Kobe to manufacture
certain electric mining shovels and related replacement
parts in Japan. Harnischfeger Corporation has the exclusive
right to market Kobe-manufactured mining shovels and parts
outside Japan (except in the case of certain government
sales). In addition, Harnischfeger Corporation is party to
an agreement with a corporate unit of the People's Republic
of China, licensing the manufacture and sale of two models
of electric mining shovels and related components. This
relationship provides P&H Mining Equipment with an
opportunity to sell component parts for shovels built in
China.
On November 29, 1994, pursuant to an exchange of
common stock, the Company completed its acquisition of Joy
Technologies Inc. ("Joy" or "Joy Mining Machinery"), a
world leader in underground mining equipment. Joy
manufactures and services mining equipment for the
underground extraction of coal and other bedded materials
and has facilities in Australia, South Africa, the United
Kingdom and the United States, as well as sales offices in
Poland and the People's Republic of China. Joy Mining
Machinery designs, manufactures and distributes continuous
miners; entry drivers and sump shearers; longwall shearers;
roof supports; armored face conveyors; shuttle cars; and
continuous haulage systems for use in underground mining.
Joy products are not sold into the general construction
industry, and demand for them is not tied to cycles in that
industry. Joy also maintains an extensive network of
service and spare parts distribution centers to rebuild and
service equipment and sell spare parts in support of its
installed base. This network includes seven service
centers in the United States and five outside of the United
States, all of which are strategically located in major
underground mining regions. The financial position and
results of operations of Harnischfeger Industries and Joy
were combined retroactively in fiscal 1995.
In early fiscal 1996, the Company completed the
acquisition of Dobson Park Industries plc for a purchase
price of approximately $330 million including acquisition
costs plus the assumption of net debt of approximately $40
million.
Dobson, headquartered in the United Kingdom, was an
industrial engineering group with interests in underground
mining equipment, industrial electronic control systems,
toys and plastics. Longwall International ("Longwall"),
one of the main subsidiaries of Dobson, was engaged in the
manufacture, sale and service of underground mining
equipment for the international coal mining industry. Its
products include electronically controlled roof support
systems, armored face conveyors, pumps and belt conveyor
components and systems. The Company is fully integrating
Longwall's operations into Joy, thus enabling Joy to offer
integrated underground longwall mining systems to the
worldwide mining industry. The industrial electronic and
toys/plastics businesses are held for sale. Several of the
businesses were sold during 1996. The remaining businesses
are expected to be sold within the next year.
Financial information with respect to the acquisition
of Dobson is presented in Note 2 to the Financial
Statements of the 1996 Annual Report to Shareholders
incorporated herein by reference.
PULP AND PAPERMAKING MACHINERY
The Pulp and Papermaking Machinery Division is
comprised of the Company's 80% interest in Beloit
Corporation ("Beloit"). Mitsubishi Heavy Industries, Ltd.
("Mitsubishi") is the owner of the other 20% interest in
Beloit. The Company and Mitsubishi have entered into
certain agreements that provide Mitsubishi with the right
to designate one of Beloit's five directors. These
agreements also place certain restrictions on the transfer
of Beloit stock. In the event of a change in control of the
Company, Mitsubishi has the right to sell its 20% interest
back to the Company for the greater of $60 million or the
book value of its equity interest.
Beloit is a leader in the design and manufacture of
pulp and papermaking machinery and related products used in
the pulp and paper industries. Beloit operates on a global
basis with major manufacturing facilities in ten countries
and sales and service offices located throughout the world.
In addition, licensing arrangements exist with several
major foreign companies.
Beloit's activities are divided into the following
categories: complete installations involving the design,
manufacture and installation of integrated pulp and
papermaking machinery; major rebuilds and servicing of
existing systems; and the sale of ancillary equipment and
replacement parts. This machinery is custom designed to
meet the specific needs of each customer. On March 27,
1996, the Company purchased the assets of the pulp
machinery division of Ingersoll-Rand Company ("IMPCO"),
which significantly strengthens Beloit's pulping equipment
offerings.
Beloit is known for the quality and dependability of
its products and is a leader in product innovation and
development. Beloit has made a continuous commitment to
research and development activities and has been granted
numerous patents on its designs. Beloit systems and
equipment are used by a substantial number of paper
producers, both domestic and foreign.
A major factor in Beloit's success in the pulp and
papermaking machinery industry has been its international
manufacturing operations. Beloit's overseas facilities have
been used to support both domestic and foreign sales and
have provided Beloit with the flexibility to shift its
manufacturing to more favorable locations as appropriate.
Beloit's manufacturing facilities are supported by a
domestic and international marketing network staffed by
experienced sales engineers.
Beloit Corporation spent nine months developing a
total strategic redesign of its business. A $43.0 million
pre-tax restructuring charge was recorded in the fourth
quarter to accomplish asset and employment reductions
necessary to implement the strategy. The restructuring and
refocus will be an all-out effort to improve operating
efficiencies and profit margins, expand Beloit Mill
Services offerings for aftermarket support, and satisfy the
vigorous growth in demand for pulp and papermaking
machinery in the Pacific Rim.
Formerly, the Pulp and Papermaking Machinery Division
also included the Company's 20% interest in Measurex
Corporation ("Measurex"). In fiscal 1995, Measurex
repurchased its stock which had been held by the Company
resulting in a pre-tax gain of $29.7 million. Measurex
continues to have cooperative agreements with Beloit.
P&H MATERIAL HANDLING
P&H Material Handling produces lines of
through-the-air material handling equipment designed for a
variety of users and container handling cranes for use in
ports in addition to providing aftermarket support and
distribution and service.
Engineered overhead cranes are comprised of several
product lines: engineered cranes, standard cranes, portal
cranes, ship-to-shore cranes, and crane components. Cranes
are designed for installation in a wide range of industrial
settings. Each crane is engineered to the customer's
specifications, using standard components wherever
possible. Engineered cranes are marketed for moderate to
severe duty cycle applications in capacities from 3 to 800
tons.
Standard overhead cranes are available in capacities
from 5 to 100 tons. Stacker cranes, ranging in capacities
from 2 to 50 tons, are particularly suitable for factory
automation projects. Portal cranes range in lifting
capacities from 5 to 100 tons and are used outdoors for
woodyard, scrap, and container handling.
P&H Material Handling has two groups specializing in
aftermarket support and distribution and service. The P&H
Aftermarket Group consists of Product Support, which
markets replacement products and repair parts and
Phoenix(TM), which handles pre-owned and remanufactured
cranes and parts plus provides engineering services for the
revitalization of crane and runway systems.P&H Distribution
and Service provides installation, erection and repair and
maintenance services under the ProCare trademark.
DISCONTINUED SEGMENTS
Environmental
The Company completed the sale of Joy Environmental
Technologies ("JET") in the first quarter of 1996. JET was
a unit of Joy which supplied air pollution and ash handling
equipment for electric utilities and other industrial
operations.
Systems
Syscon Corporation ("Syscon"), the remaining unit in
the Company's Systems Group, was sold in February 1995 to
Logicon, Inc. Syscon was engaged principally in providing
systems development, systems integration and systems
services to the U. S. Government, government agencies and
commercial enterprises.
INTERNATIONAL OPERATIONS
In 1996, 1995 and 1994, Beloit's foreign sales
amounted to 53%, 41% and 30%, respectively, of Beloit's
consolidated net sales.
Foreign sales of the Mining Equipment segment
generated approximately 58% of the segment's consolidated
net sales in 1996, 44% in 1995 and 48% in 1994.
Foreign sales of the P&H Material Handling segment's
consolidated net sales amounted to 39% in 1996 and 48% in
1995. Sales in 1994 were principally in the United States.
Beloit has granted licensing agreements to serve
certain foreign markets to companies located in Australia,
Japan and Spain. Beloit maintains sales and service offices
throughout the world.
Harnischfeger Industries' international operations are
subject to certain risks not generally applicable to its
domestic businesses, including currency fluctuations,
changes in tariff restrictions, restrictive regulations of
foreign governments (including price and exchange
controls), and other governmental actions. Harnischfeger
Industries has entered into various foreign currency
exchange contracts with major international financial
institutions designed to minimize its exposure to exchange
rate fluctuations on foreign currency transactions.
GENERAL
Seasonality
No significant portion of Harnischfeger Industries'
business is subject to or influenced by seasonal factors;
however, the Company's business is influenced by the
cyclical nature of the paper, mining and capital goods
industries.
Distribution
P&H Mining and Joy Mining Machinery sales are made
mostly through sales at the segments' headquarters and
sales offices located around the world. Joy's worldwide
sales forces have marketing responsibility for new machine
sales, as well as for parts, components and rebuild
services provided to customers. A segment of the sales
force in the United States is dedicated to operating a
fleet of trucks which visit customer sites on a regular
basis in order to deliver components and parts.
Sales of Beloit products are principally made directly
to end users. Beloit maintains a worldwide marketing group
to coordinate and support worldwide facilities in marketing
strategies, technical sales support and participation in
major projects including interface with engineering firms
and financial institutions. Beloit offers systems and
turnkey alternatives to assist in related business
development throughout the world. Agents are used in
certain foreign countries to augment Beloit's sales force
stationed in the segment's manufacturing facilities and in
sales offices worldwide.
In the United States, overhead cranes and certain
electrical products are principally marketed directly from
the segments' headquarters and regional sales offices.
Electric wire rope and chain hoists and crane
modernizations are sold through dealers and distributors,
assisted and coordinated by corporate and regional office
personnel. P&H Material Handling has a dealer network of
regional distributorships (referred to as Material Handling
Centers).
The manufacture and sale of repair and replacement
parts and the servicing of equipment are important aspects
of each of the Company's businesses.
Competition
Harnischfeger Industries conducts its domestic and
foreign operations under highly competitive market
conditions, requiring that its products and services be
competitive in price, quality, service and delivery.
The pulp and paper capital machinery market is
globally competitive; Beloit's two major paper machinery
competitors are foreign-owned companies. The principal
competitors are Valmet Paper Machinery, Inc., with
controlling interest held by Valmet Corporation, Finland,
and Voith Sulzer Papiertechnik GMBH, with headquarters in
Germany. The principal competitors in pulp machinery are
Sunds Difibrator, Ahlstrom, and Kvaerner, Black-Clawson and
Andritz. In the aftermarket area, Beloit competes with
various small suppliers.
P&H Mining Equipment's principal competitors in
electric mining shovels are Bucyrus International, Inc. and
Marion, a division of Global Industrial Technologies.
Harnischfeger Industries believes P&H Mining Equipment is
the leading participant in this market. Its principal
competitors in the hydraulic mining excavator market are
Demag, Hitachi, Caterpillar and Orenstein & Koppel. In
draglines, the main competitors are Bucyrus International,
Inc. and Marion. The Division's main competitors in drills
are Ingersoll-Rand, Driltech and Bucyrus International,
Inc.
In the underground coal mining industry, Joy competes
primarily on the basis of the quality and reliability of
its products and its ability to provide timely, extensive
and cost-effective repair and rebuild services and delivery
of spare parts. Joy's primary competitors in the
continuous mining machinery industry are EIMCO, Voest
Alpine(a Tampella Tamrock Company), Simmons-Rand Company(a
subsidiary of Long-Airdox Company) and Jeffrey. In the
longwall shearer new equipment market, Joy competes
primarily with Anderson Longwall (a subsidiary of Long-Airdox Company),
Eickhoff Corporation, and Mitsui Miike
Machinery Company, Ltd. In the continuous haulage market,
Joy competes with Long-Airdox, Fairchild International and
Jeffrey. In roof supports and armored face conveyors, Joy
primarily competes with DBT, Long-Airdox Company and
several regional suppliers. In the sale of spare parts for
Joy's equipment, Joy competes with various small suppliers.
The principal worldwide competitors for the P&H
Material Handling Division are Demag and Konecranes
International KCI. Harnischfeger Industries believes that
P&H Material Handling is one of the largest worldwide
participants in this market. When considering any specific
geographic market, the competitors would normally be split
into overhead cranes, dockside cranes, hoists, and service.
There are significant numbers of competitors in each of the
geographic markets and segments of those markets.
Customers
During 1996, there were no sales or services made to
an individual customer amounting to 10% or more of
consolidated sales.
Backlog
Backlog by business segment for the Company's
continuing operations (in thousands of dollars) as of the
end of fiscal years 1996 and 1995 was as follows:
October 31,
-------------------------
1996 1995
---------- -----------
Mining Equipment............................. $ 453,480 $ 221,540
Pulp and Papermaking Machinery............... 846,137 679,625
Material Handling ........................... 132,550 130,879
---------- ----------
$1,432,167 $1,032,044
========== ==========
Supply of Materials and Purchased Components
P&H Mining Equipment Division and P&H Material
Handling manufacture machines and heat-treated gears,
pinions, shafts, structural fabrications, electrical
motors, generators and other electrical parts. They
purchase raw and semi-processed steel, castings, forgings,
copper and other materials for these parts and components
from approximately 400 suppliers. In addition, component
parts, such as engines, bearings, controls, hydraulic
components, and a wide variety of mechanical and electrical
items are purchased from approximately 1,500 suppliers.
Purchases of materials and components are made on a
competitive basis with no single source being dominant.
Joy purchases electric motors, gears, hydraulic
parts, electronic components, forgings, steel, clutches and
other components and raw materials from outside suppliers.
Although Joy purchases certain components and raw materials
from a single supplier, alternative sources of supply are
available for all such quantities. Joy believes that it
has adequate sources of supplies of component parts and raw
materials for its manufacturing requirements.
The Pulp and Papermaking Machinery Division purchases
raw materials used in its products which include plates,
sheets, shapes, carbon and alloy steel, stainless steel,
brass and bronze, nickel alloy, and aluminum. Purchases of
semi-processed and component parts include castings,
valves, filters, pumps, dryers, electrical equipment, and
various vacuum, drying, hydraulic, combustion,
material-handling and temperature control systems. Beloit
has approximately 5,300 suppliers, of which approximately
1,600 are most commonly used. No single source is dominant.
Patents and Licenses
Patents are important in the papermaking industry. All
major papermaking machinery manufacturers use patents
extensively to protect the technology base that results
from research and development. Beloit has been granted
numerous patents on its designs and more are pending. Most
are registered in all of the major countries into which
Beloit and its licensees sell.
Joy and P&H Mining Equipment and their respective
subsidiaries own numerous patents and trademarks and have
patent licenses from others relating to their respective
products and manufacturing methods. Also, patent licenses
are granted to others throughout the world and royalties
are received under most of these licenses. While they do
not consider any particular patent or license or group of
patents or licenses to be essential to their respective
business as a whole, they consider their patents and
licenses significant to the conduct of its business in
certain product areas.
P&H Material Handling has numerous trademarks and
domestic and foreign patents, patent applications and
patent licensing agreements. P&H Material Handling does not
consider these businesses materially dependent upon any
patent or patent license agreement.
Research and Development
Harnischfeger Industries maintains a strong commitment
to research and development with engineering staffs that
are engaged in full-time research and development of new
products, and improvement of existing products. Beloit
maintains research and development facilities in Rockton,
Illinois; Pittsfield, Massachusetts; Bolton, United
Kingdom; Clarks Summit, Pennsylvania; Portland, Oregon; and
Waukesha, Wisconsin. Harnischfeger Corporation maintains
research and development facilities in Milwaukee,
Wisconsin. Joy pursues technological development through
the engineering of new products, systems and applications;
the improvement and enhancement of licensed technology; and
synergistic acquisitions of technology. Research and
development expenses were $34.5 million in 1996, $30.3
million in 1995 and $28.9 million in 1994.
Environmental and Health and Safety Matters
The activities of the Company are regulated by
federal, state and local statutes, regulations and
ordinances relating to both environmental protection and
worker health and safety. These laws govern current
operations, require remediation of environmental impacts
associated with past or current operations, and under
certain circumstances provide for civil and criminal
penalties and fines, as well as injunctive and remedial
relief. The Company's foreign operations are subject to
similar requirements as established by their respective
countries.
The Company has expended substantial managerial and
financial resources in developing and implementing actions
for continued compliance with these requirements. The
Company believes that it has substantially satisfied these
diverse requirements. However, because these requirements
are complex and, in many areas, rapidly evolving, there can
be no guarantee against the possibility of sizeable
additional costs for compliance in the future. These same
requirements must also be met by the Company's competitors
and, therefore, the costs for present and future compliance
with these laws should not create a competitive
disadvantage. Further, these laws have not had, and are not
presently expected to have, a material adverse effect on
the Company.
The Company's operations or facilities have been and
may become the subject of formal or informal enforcement
actions or proceedings for alleged noncompliance with
either environmental or worker health and safety laws or
regulations. Such matters have typically been resolved
through direct negotiations with the regulatory agency and
have typically resulted in corrective actions or abatement
programs. However, in some cases, fines or other penalties
have been paid. Historically, neither such commitments nor
such penalties have been material.
Employees
As of October 31, 1996, Harnischfeger Industries
employed approximately 17,200, of which approximately 9,600
were employed in the United States. Approximately 3,700 of
the U. S. employees are represented by local unions under
collective bargaining agreements with expiration dates from
March 22, 1997 to April 1, 2001. Harnischfeger Industries
believes that it maintains generally good relationships
with its employees.
Financial Information about Industry Segments
The financial information on industry segments is
presented in Note 15 to the Financial Statements
incorporated herein by reference.
Cautionary Factors
------------------
This report and other documents or oral statements which
have been and will be prepared or made in the future
contain or may contain forward-looking statements by or on
behalf of the Company. Such statements are based upon
management's expectations at the time they are made. In
addition to the assumptions and other factors referred to
specifically in connection with such statements, the
following factors, among others, could cause actual results
to differ materially from those contemplated.
The Company's principal businesses involve designing,
manufacturing, marketing and servicing large, complex
machines for the mining, papermaking and capital goods
industries. Long periods of time are necessary to plan,
design and build these machines. With respect to new
machines and equipment, there are risks of customer
acceptances and start-up or performance problems. Large
amounts of capital are required to be devoted by the
Company's customers to purchase these machines and to
finance the mines, paper mills, steel mills and other
facilities that use these machines. The Company's success
in obtaining and managing a relatively small number of
sales opportunities can have a material effect on the
Company's financial performance. In addition, many
projects are located in undeveloped or developing economies
where business conditions are less predictable. In recent
years, more than 50% of the Company's total sales occurred
outside the United States.
Other factors that could cause actual results to differ
materially from those contemplated include:
- Factors affecting purchases of new equipment,
rebuilds, parts and services such as:
production capacity, stockpiles and production
and consumption rates of coal, copper, iron,
gold, fiber, paper/paperboard, recycled paper,
steel and other commodities; the cash flows of
customers; the cost and availability of
financing to customers and the ability of
customers to obtain regulatory approval for
investments in mining, papermaking, steel
making, automotive manufacturing and other
heavy industrial projects; the ages,
efficiencies and utilization rates of existing
equipment; the development of new technologies;
the availability of used or alternative
equipment; consolidations among customers; work
stoppages at customers or providers of
transportation; and the timing, severity and
duration of customer buying cycles,
particularly in the paper and mining
businesses.
- Factors affecting the Company's ability to
capture available sales opportunities,
including: customers' perceptions of the
quality and value of the Company's products as
compared to competitors' products; the
existence of patents protecting or restricting
the Company's ability to offer features
requested by customers; whether the Company has
successful reference installations to show
customers, especially for papermaking and
mining equipment; customers perceptions of the
health and stability of the Company as compared
to its competitors; the availability of
manufacturing capacity at the Company's
factories; and whether the Company can offer
the complete package of products and services
sought by its customers.
- Factors affecting the Company's ability to
successfully manage sales it obtains, such as:
the accuracy of the Company's cost and time
estimates for major projects; the Company's
success in completing projects on time and
within budget; the Company's success in
recruiting and retaining managers and key
employees; wage stability and cooperative labor
relations; plant capacity and utilization; and
whether acquisitions are assimilated and
divestitures completed without notable
surprises or unexpected difficulties.
- Factors affecting the Company's general
business, such as: unforeseen patent, tax,
product, environmental, employee health or
benefit or contractual liabilities;
nonrecurring restructuring charges; changes in
accounting or tax rules or regulations; and
reassessments of asset valuations such as
inventories.
- Factors affecting general business levels, such
as: political turmoil and economic growth in
major markets such as the United States,
Canada, Europe, The Far East, South Africa,
Australia and Chile; environmental and trade
regulations; and the stability and ease of
exchange of currencies.
Item 2. Properties
As of October 31, 1996, the following principal
properties were owned, except as indicated. All of these
plants are generally suitable for operations.
Harnischfeger Industries owns a 94,000 square foot
office building in St. Francis, Wisconsin, which is used as
its worldwide corporate headquarters.
MINING EQUIPMENT LOCATIONS
Floor Space Land Area
Plant and Location (Sq. Ft.) (Acres) Principal Operations
- ------------------------- ----------- --------- -------------------------
Milwaukee, Wisconsin..... 1,067,000 46 Electric mining shovels,
hydraulic mining
excavators, electric and
diesel-electric draglines
and large rotary blasthole
drills. Crane welding.
Milwaukee, Wisconsin..... 180,000 13 Electrical products, heavy
duty overhead and portal
crane components and
service parts warehouse.
Crane assembly.
Franklin, Pennsylvania... 714,640 63 Underground coal mining
machinery, components and
parts.
Warrendale, Pennsylvania. 82,750 13 Underground coal mining
parts and service.
Reno, Pennsylvania....... 121,400 22 Components and parts for
mining machinery.
Brookpark, Ohio.......... 85,000 4 Components and parts for
mining machinery.
Solon, Ohio.............. 96,800 14 Components and parts for
mining machinery.
Abingdon, Virginia....... 63,400 22 Underground coal mining
machinery and components.
Bluefield, Virginia...... 102,160 15
Duffield, Virginia....... 72,000 11
Homer City, Pennsylvania. 79,500 10 Mining machinery rebuild,
Meadowlands, Pennsylvania 118,316 13 service and parts sales.
Mt. Vernon, Illinois..... 107,130 12
Price, Utah.............. 44,200 6
New Philadelphia, Ohio... 277,600 17 Axial vane, and centrifugal
fans, components and parts.
Bassendean, Australia.... 75,500 5 Components and parts for
mining shovels.
Mt. Thorley, Australia... 20,000 6 Components and parts for
mining shovels.
Kurri Kurri,
Australia.............. 61,000 7 Mining machinery rebuild,
service and parts sales.
Litigow, Australia....... 9,000 2 Parts sales for mining
machinery parts sales.
Wollongong, Australia.... 54,000 3 Rebuild service center
Moss Vale, Australia..... 107,000 18 Underground coal mining
machinery, components and
parts.
Rockhampton, Australia... 8,000 3 Sales
Johannesburg, So.
Africa................. 44,000(1) 1 Electrical products and
components for mining
shovels.
Steeledale, South Africa. 557,400 15 Underground coal mining
machinery, components and
parts.
Wadeville, South Africa 154,000 34 Coal mining machinery,
assembly and service.
Belo Horizonte, Brazil... 37,700 1 Components and parts for
mining shovels.
Pinxton, U.K............. 76,000 10 Fabrication.
Wigan, U.K............... 337,000 27 Mining machinery, components
and parts.
Worcester, U.K........... 100,000 9 Mining machinery, components
and parts.
Bestwood, U.K............ 190,000 16 Service and rebuilds.
- -------------------------
(1) Under a lease expiring in 2005.
The mining equipment segment operates warehouses in
Casper and Green River, Wyoming; Hibbing, Minnesota;
Charleston and Pineville, West Virginia; Milwaukee,
Wisconsin; Phoenix, Arizona; Elco, Nevada; Birmingham,
Alabama; Carlsbad, New Mexico; Norton, Virginia; Lovely and
Henderson, Kentucky; Hinton, Sparwood, Cornwall and
Vancouver, Canada; Bayswater, Mt. Thorley, Gracemere,
Rockhampton, Emerald, Kurri Kurri, Litigow and Mackay,
Australia; Belo Horizonte, Brazil; Weiterstadt, Germany;
Johannesburg, Wadeville and Hendrina, South Africa;
Stobswood and Bestwood, United Kingdom and Puerto Ordaz,
Venezuela. The warehouses in Casper, Hibbing, Milwaukee,
Mt. Thorley, Belo Horizonte and Johannesburg are owned; the
others are leased. In addition, the segment leases sales
offices throughout the United States and in principal
locations in other countries.
PULP AND PAPERMAKING MACHINERY LOCATIONS
Floor Space Land Area
Plant and Location (Sq. Ft.) (Acres) Principal Operations
- -------------------------- ----------- --------- ------------------------
Beloit, Wisconsin......... 928,000 40 Papermaking machinery and
finished product processing equipment.
Beloit, Wisconsin......... 230,000 15 Castings, pattern shop.
Waukesha, Wisconsin....... 57,000 10 Castings, pattern shop and
finished product processing.
Waukesha, Wisconsin....... 76,000(1) 13 Refiner plate machining,
finished product processing
and warehousing.
Rockton, Illinois......... 469,000 203 Papermaking machinery,
finished product processing
equipment and R&D center.
South Beloit, Illinois.... 163,000 11 Castings.
Dalton, Massachusetts..... 277,000 55 Stock and pulp preparation
equipment and specialized
processing systems.
Lenox, Massachusetts...... 127,000 19 Winders.
Pittsfield,
Massachusetts........... 36,000 30 Research and development
facility and pilot plant
for process simulation.
Aiken, South Carolina..... 127,000 17
Columbus, Mississippi..... 133,000 22 Rubber and polymeric covers
Federal Way, Washington... 55,000 3 for rolls; rubber blankets;
Neenah, Wisconsin......... 77,000 10 rubber linings and metal
Clarks Summit, PA......... 99,800 10 roll repairs.
Renfrew, Canada........... 145,000 22
Hattiesburg, Mississippi.. 100,000 15 Component parts and repair
of stock and pulp
preparation equipment,
papermaking machinery and
finished product processing
equipment.
Kalamazoo, Michigan....... 23,500 1 Filled rolls for
supercalenders and
specialty rolls.
Portland, Oregon.......... 41,000 5 Bulk materials handling
and drying systems.
Rochester, New Hampshire.. 15,650 5 Specialty services provided
principally to the paper
industry.
Nashua, New Hampshire..... 425,000 63 Stock and pulp preparation
equipment and specialized
processing systems.
Pensacola, Florida........ 7,250 2 Specialty services provided
principally to the paper
industry.
Sandusky, Ohio............ 254,000 13 Centrifugal castings.
Glenrothes, U. K.......... 56,000 8 Centrifugal castings.
Sherbrooke, Quebec, Canada 337,000 26 Stock and pulp preparation
equipment and specialized
processing systems.
Campinas, Brazil.......... 202,000 33 Papermaking machinery and
finished product processing
equipment; stock and pulp
preparation equipment;
woodyard and pulp plant
equipment.
Bolton, U.K............... 465,400 73 Papermaking machinery and
finished product processing
equipment; stock and pulp
preparation equipment.
Pinerolo, Italy........... 517,400 18 Papermaking machinery and
finished product processing
equipment; stock and pulp
preparation equipment.
Jelenia Gora, Poland...... 522,000 40 Papermaking machinery and
finished product processing
equipment; stock and
pulp preparation equipment.
Swiecie, Poland........... 37,000 (2) 4 Components and parts for
papermaking machinery
equipment.
Cernay, France............ 35,200 15 Roll-covering service.
- -------------------------
(1) Under a lease expiring in 2007.
(2) Under a lease expiring in 2019.
The Pulp and Papermaking Machinery business has
warehouse space at the above facilities and in addition
maintains leased facilities in Memphis, Tennessee; Swiecie,
Poland; and Montreal, Canada. Sales offices are also
maintained at various locations throughout the world.
P&H MATERIAL HANDLING LOCATIONS
Floor Space Land Area
Plant and Location (Sq. Ft.) (Acres) Principal Operations
- ----------------------- ----------- --------- ---------------------
Windsor, Wisconsin..... 55,000 (1) 5 Remanufacture of
overhead cranes,
hoists and material
handling equipment.
Oak Creek, Wisconsin..... 277,000 36 Engineered and standard
overhead cranes, hoists
and material handling
equipment.
Loughborough, UK......... 420,000 36 Engineered and standard
overhead cranes, hoists,
controls and material
handling equipment.
Johannesburg, So. Africa 124,000 7 Engineered and standard
overhead cranes, hoists
and material handling
equipment.
Mexico City, Mexico...... 65,000 3 Engineered and standard
overhead cranes, hoists
and material handling
equipment.
Birmingham, Alabama...... 36,500 3 Standard overhead cranes
and service.
Simpsonville, S. Carolina 40,400 (2) 6 Standard overhead cranes
and service.
Mississauga, Canada...... 17,600 (3) 1 Manufacture of brakes.
Edmonton, Canada......... 32,300 3 Standard overhead cranes
and service.
Singapore, Singapore..... 21,200 (4) 1 Standard overhead cranes
and hoist distribution.
(1) Under a lease expiring in 2002
(2) Under a lease expiring in 1999
(3) Under a lease expiring in 2000
(4) Under a lease expiring in 2024
The material handling division has leased facilities
for its company owned Material Handling Centers in San
Leandro, California; Reno, Nevada; Dallas and Houston,
Texas; New Orleans, Louisiana; Chicago, Illinois; Detroit
and Grand Rapids, Michigan; Pittsburgh, Pennsylvania;
Cleveland, Ohio; Denver, Colorado; Waukesha, Wisconsin;
Lynwood, Washington; Phoenix, Arizona; and Richmond,
Calgary and Saskatoon, Canada. In addition, the division
leases sales offices throughout the United States and in
principal locations in other countries. It also has
approximately 18 leased locations for service operations in
the United Kingdom, Mexico and South Africa.
Information relating to lease commitments is presented
in Note 11 to the Financial Statements incorporated herein
by reference.
Item 3. Legal Proceedings
The Company is party to litigation matters and claims,
which are normal in the course of its operations. Also, as
a normal part of their operations, the Company's
subsidiaries undertake certain contractual obligations,
warranties and guarantees in connection with the sale of
products or services. In the case of Beloit Corporation,
certain claims are currently pending in connection with its
contractual undertakings. While the outcome of such
litigation and claims cannot be predicted with certainty
and favorable or unfavorable judgements or resolutions may
affect income on a quarter-to-quarter basis, management
believes that such matters will not have a materially
adverse effect on the Company's consolidated financial
position or annual results of operations.
The Company is also involved in a number of
proceedings and potential proceedings relating to
environmental matters. Although it is difficult to estimate
the potential exposure to the Company related to these
environmental matters, the Company believes that these
matters will not have a materially adverse effect on its
consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security
holders during the fourth quarter of fiscal 1996.
Executive Officers of the Registrant
The following table sets forth, through the date of
filing this 10-K report, the executive officers of
Harnischfeger Industries, their ages, their offices with
Harnischfeger Industries and the period during which they
have held such offices.
Name Age Current Office and Principle Occupation
- ---------------------------- --- -------------------------------------
Jeffery T. Grade............ 53 Chairman of the Board and Chief Executive
Officer since 1993; Chief Executive
Officer since 1992; President and Chief
Operating Officer from 1986 to 1995;
Director since 1983; Senior Vice
President, Finance and Administration
and Chief Financial Officer from 1983
to 1986.
Number of Years as an Officer 14
John Nils Hanson............ 54 President and Chief Operating Officer
since July 1, 1995; President and Chief
Executive Officer of Joy Mining Machinery
1990 to July 1995. Director since 1996.
Number of Years as an Officer 1
Francis M. Corby, Jr........ 52 Executive Vice President for Finance and
Administration since December 1994;
Senior Vice President, Finance and
Chief Financial Officer from 1986 to
December 1994. Director since 1996.
Number of Years as an Officer 11
K. Thor Lundgren............ 49 Executive Vice President for Law and
Government Affairs since December 1994;
Senior Vice President and General
Counsel from 1991 to December 1994.
Number of Years as an Officer 5
Mr. Lundgren joined the Company in September 1991.
Prior to joining the Company, Mr. Lundgren was a partner
with the law firm of Michael, Best & Friedrich.
The business address of each such person is 3600
South Lake Drive, St. Francis, Wisconsin 53235-3716. All
officers listed above are citizens of the United States of
America. Officers are elected annually but may be removed
at any time at the discretion of the Board of Directors.
There are no family relationships between the foregoing
officers.
PART II
The information required by Items 6 through 8 is
incorporated herein by reference from the 1996 Annual
Report to Shareholders.
Form 10-K
Item Number
- -----------
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters (filed in this report on Form 10-K)
Item 6. Selected Financial Data for the Registrant for Each of
the Last Five Fiscal Years
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and disagreements with Accountants on Accounting
and Financial Disclosure: None
PART III
All information required by Items 10 through 13 of
Part III, with the exception of information on the
Executive Officers which appears in Part I of this report,
is incorporated by reference from the Company's Proxy
Statement for its 1997 Annual Meeting of Shareholders to be
filed with the Securities and Exchange Commission within
120 days after the close of the fiscal year.
PART IV
The information required by item 14 is incorporated
by reference herein from the 1996 Annual Report to
Shareholders.
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) The following documents are filed as part of this
report:
(1) Financial Statements*
Consolidated Statement of Income for the years ended
October 31, 1996, 1995 and 1994
Consolidated Balance Sheet at October 31, 1996 and
1995
Consolidated Statement of Cash Flow for the years
ended October 31, 1996, 1995 and 1994
Consolidated Statement of Shareholders' Equity for
the years ended October 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Report of Independent Accountants
* Incorporated by reference from the 1996 Annual Report to
Shareholders
(2) Financial Statement Schedule
Report of Independent Accountants on Financial
Statement Schedule...............................
For the Years Ended October 31, 1996, 1995 and 1994:
II. Valuation and Qualifying Accounts...............
All other schedules are omitted because they are
either not applicable or the required information is shown
in the financial statements or notes thereto.
Financial statements of 50% or less-owned companies
have been omitted because the proportionate share of their
profit before income taxes and total assets are less than
20% of the respective consolidated amounts and investments
in such companies are less than 20% of consolidated total
assets.
(3) Exhibits
Exhibit
Number Exhibit
------- ---------------------------------------------------
3(a) Certificate of Incorporation of Harnischfeger Industries,
Inc. (incorporated by reference to Exhibit 3(a) of the
Registration Statement on Form S-4, File No. 33-8821).
(b) Bylaws of Harnischfeger Industries, Inc., as amended on
December 9, 1996.
(c) Certificate of Designations of Preferred Stock, Series D
(incorporated by reference to Exhibit 28.1(b) to
Registrant's Current Report on Form 8-K dated
March 25, 1992).
(d) Amendment to Certificate of Incorporation of Harnischfeger
Industries, Inc. dated November 29, 1994(incorporated by
reference to Exhibit 4.1(c) to Registration Statement on
Form S-8, File No. 33-57209).
4(a) 9.1% Series A Senior Note Agreement dated as of
September 15, 1989 (incorporated by reference to Exhibit
4(b) to Report of Harnischfeger Industries, Inc. on
Form 10-K for the year ended October 31, 1991,
File No.1-9299).
(b) 9.1% Series B Senior Note Agreement dated as of
October 15, 1989 (incorporated by reference to
Exhibit 4(c) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1991, File No.
1-9299).
(c) 8.95% Series C Senior Note Agreement dated as of
February 15, 1991 (incorporated by reference to
Exhibit 4(d) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1991, File No.
1-9299).
(d) 8.9% Series D Senior Note Agreement dated as of
October 1, 1991 (incorporated by reference to
Exhibit 4(e) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1991, File No.
1-9299).
(e) Indenture for Debentures issued March 3, 1992 between
Harnischfeger Industries, Inc. and Continental Bank,
National Association, Trustee, dated March 1, 1992
(incorporated by reference to Exhibit 4(f) to Report of
Harnischfeger Industries, Inc. on Form 10-K for the year
ended October 31, 1992, File No. 1-9299).
(f) First Supplemental Indenture for Debentures issued
June 22, 1992 between Harnischfeger Industries, Inc.
and Continental Bank, National Association,
Trustee, dated June 12, 1992 (incorporated by reference
to Exhibit 4(g) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1992,
File No. 1-9299).
(g) Registration Statement filed on Form S-3, for issuance
of Debt Securities of up to $150,000,000 dated
August 22, 1992, File No. 33-51436 (incorporated by
reference to Exhibit 4(h) to Report of Harnischfeger
Industries, Inc. on Form 10-K for the year ended
October 31, 1992, File No. 1-9299).
(h) Registration Statement filed on Form S-3, for issuance
of Debt Securities of up to $200,000,000 dated
April 10, 1996, File No. 333-2401.
(i) Rights Agreement dated as of February 8, 1989 between
the Registrant and the First National Bank of Boston,
as Rights Agent, which includes as Exhibit A
the Certificate of Designations of Preferred Stock,
Series D, setting forth the terms of the Preferred Stock,
Series D; as Exhibit B the Form of Rights Certificate;
and as Exhibit C the Summary of Rights to Purchase
Preferred Stock, Series D (Incorporated by reference to
Exhibit 1 to Registrant's Registration Statement on
Form 8-A filed on February 9, 1989).
(j) Harnischfeger Industries, Inc. Stock Employee Compensation
Trust Agreement effective as of March 23, 1993
(incorporated by reference to Exhibit 4(k) to Report
of Harnischfeger Industries, Inc. on Form 10-K for the
year ended October 31, 1993, File No.1-9299).*
(k) Amendment One to Harnischfeger Industries, Inc. Stock
Employee Compensation Trust Agreement dated
January 1, 1994.(incorporated by reference to Exhibit
4(j) to Report of Harnischfeger Industries, Inc. on Form
10-K for the year ended October 31, 1995, File No. 1-9299).*
(l) Amendment Two to Harnischfeger Industries, Inc. Stock
Employee Compensation Trust Agreement dated May 6, 1995.*
(m) $240,000,000 Amended and Restated Credit Agreement
dated as of November 25, 1994 among Harnischfeger
Industries Inc. as borrower and financial institutions
from time to time thereto as lenders, the First National
Bank of Chicago and Royal Bank of Canada, as co-agents
and Chemical Bank as Agent (incorporated by reference to
Exhibit 4(k) to Report of Harnischfeger Industries, Inc.
on Form 10-K for the year ended October 31, 1994,
File No.1-9299).
(n) Form of Indenture, dated as of September 1, 1993, for
Joy Technologies Inc.'s 10 1/4% Senior Notes due 2002
(incorporated by reference to Exhibit 4.1 to Joy
Technologies Inc.'s Report on Form 10-Q for the quarter
ended August 27, 1993, filed October 7, 1993).
9(a) Amendment No. 1 to Form of Indenture for Joy Technolgies
Inc.'s 10 1/4% Senior Notes due 2002.
(b) Amendment No. 2 to Form of Indenture for Joy
Technologies Inc.'s 10 1/4% Senior Note due 2002.
10(a) Harnischfeger Industries, Inc. 1988 Incentive Stock Plan,
as amended on March 6, 1995 incorporated by reference
to Exhibit 10(a) to Report of Harnischfeger Industries,
Inc. on Form 10-K for the year ended October 31, 1995,
File No. 01-9299).*
(b) Harnischfeger Industries, Inc. Stock Incentive Plan
as amended as of October 14, 1996*
(c) Harnischfeger Industries, Inc. Executive Incentive Plan,
as amended as of October 14, 1996.*
(d) Harnischfeger Industries, Inc. Executive Incentive Plan,
as amended as of October 14, 1996.*
(e) Harnischfeger Industries, Inc. Supplemental Retirement
and Stock Funding Plan, as amended as of October 14, 1996.*
(f) Directors Stock Compensation Plan,as amended as of
October 14, 1996.*
(g) Service Compensation Agreement for Directors effective
as of June 1, 1992 (incorporated by reference to
Exhibit 10(g) to Report of Harnischfeger
Industries, Inc. on Form 10-K for the year ended
October 31, 1992, File No. 1-9299).*
(h) Joy Technologies Inc. 1991 Stock Option and Equity
Incentive Plan dated November 12, 1991 (incorporated
by reference to Exhibit 99-1999.1 to Registration
Statement on For S-8, File No. 33-57209).*
(i) Amendment to Joy Technologies Inc. 1991 Stock Option
and Equity Incentive Plan dated November 29, 1994
(incorporated by reference to Exhibit 99-1999.2 to
Registration Statement on Form S-8, File No. 33-57209).*
(j) Harnischfeger Industries Deferred Compensation Trust as
amended and restated as of October 9, 1995 (incorporated
by reference to exhibit 10 to Report of Harnischfeger
Industries, Inc. on Form 10-Q for the quarter ended
January 31, 1995, File No. 01-9299).*
(k) Amendment No. 1 to Harnischfeger Industries Deferred
Compensation Trust as amended and restated as of
October 9, 1995.*
11 Statement Re Computation of Earnings Per Share.
13 1996 Annual Report to Shareholders
21 Subsidiaries of the Registrant.
23(a) Consent of Price Waterhouse LLP
23(b) Consent of Arthur Andersen LLP
24 Powers of Attorney.
27 Financial Data Schedule
- -------------------------------------------
* Represents a management contract or compensatory plan
or arrangement required to be filed as an exhibit pursuant
to Item 14(c) of Form 10-K.
(b) Reports on Form 8-K
NONE
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To the Board of Directors of
Harnischfeger Industries, Inc.
Our audits of the consolidated financial statements
referred to in our report dated November 21, 1996 appearing
in the 1996 Annual Report to Shareholders of Harnischfeger
Industries, Inc. (which report and consolidated financial
statements are incorporated by reference in this Annual
Report on Form 10-K) also included an audit of the
Financial Statement Schedule listed in Item 14(a) of this
Form 10-K. In our opinion, this Financial Statement
Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with
the related consolidated financial statements.
PRICE WATERHOUSE LLP
Milwaukee, Wisconsin
November 21, 1996
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of St.
Francis, Wisconsin, on the 28th day of January 1997.
HARNISCHFEGER INDUSTRIES, INC.
(Registrant)
/s/FRANCIS M. CORBY, JR.
Francis M. Corby, Jr.
Executive Vice President for
Finance and Administration
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in
the capacities indicated on January 28, 1997.
Signature Title
- -------------------------------- -------------------------------------
/s/JEFFERY T. GRADE Chairman and Chief Executive Officer
-------------------------
Jeffery T. Grade
/s/JOHN NILS HANSON Director and President and Chief
------------------------ Operating Officer
John Nils Hanson
/s/FRANCIS M. CORBY, JR. Director and Executive Vice President
------------------------- for Finance and Administration
Francis M. Corby, Jr.
/s/JAMES C. BENJAMIN Vice President and Controller
-------------------------
James C. Benjamin
(1) Director
-------------------------
Donna M. Alvarado
(1) Director
-------------------------
Larry D. Brady
(1) Director
-------------------------
John D. Correnti
(1) Director
-------------------------
Harry L. Davis
(1) Director
-------------------------
Robert M. Gerrity
(1) Director
-------------------------
Robert B. Hoffman
(1) Director
-------------------------
Ralph C. Joynes
(1) Director
-------------------------
Herbert V. Kohler, Jr.
(1) Director
-------------------------
Jean-Pierre Labruyere
(1) Director
-------------------------
Robert F. Schnoes
(1) Director
-------------------------
Donald Taylor
- -------------------------
(1) Jeffery T. Grade, by signing his name hereto, does
hereby sign and execute this report on behalf of each of
the above-named Directors of Harnischfeger Industries, Inc.
pursuant to powers of attorney executed by each of such
Directors and filed with the Securities and Exchange
Commission as an exhibit to this report.
January 28, 1997
By: /s/JEFFERY T. GRADE
-----------------------
Jeffery T. Grade,
Attorney-in-fact
Item 5
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
THE ANNUAL MEETING
The annual meeting of the shareholders of Harnischfeger
Industries, Inc. will be held at Milwaukee's Wyndham Hotel,
139 E. Kilbourn Ave., on Tuesday, April 15, 1997 at 10:00
a.m.
ANNUAL REPORT ON FORM 10-K
Copies of the annual report on Form 10-K, filed with the
Securities and Exchange Commission, will be available to
shareholders after February 15, 1997 without charge on
request to:
Shareholder Services
Harnischfeger Industries, Inc.
P.O. Box 554
Milwaukee, WI 53201-0554
Telephone: (414)486-6480
TRANSFER AGENT AND REGISTRAR
Bank of Boston
c/o Boston EquiServe
Mail Stop 45-02-64
P.O. Box 644
Boston, MA 02102-0644
Telephone:(617)575-3400
MARKET AND OWNERSHIP OF COMMON STOCK
The principal market for the Company's Common Stock is the
New York Stock Exchange, where its trading symbol is HPH.
As of October 31, 1996, the approximate number of holders
of record of the Company's Common Stock was 2,000. In
addition, there were an estimated 10,000 beneficial owners
of shares held of record by brokers and fiduciaries.
CORPORATE HEADQUARTERS
3600 South Lake Drive
St. Francis, WI 53235-3716
MAILING ADDRESS
P.O. Box 554
Milwaukee, WI 53201-0554
SHAREHOLDER SERVICES
Annual Report Requests and General Information:
(414)486-6626
FINANCIAL INFORMATION
To obtain fax copies of recent financial press releases and
quarterly statements on request, please call 1-800-758-5804
and use access code 396450 at the prompt.
Our press releases are available on the World Wide Web at
http://www.prnewswire.com. Click on Company News On Call
to find Harnischfeger.
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Balance at Additions
Beginning by
Classification of Year Acquisition
- ------------------------------ ---------- -----------
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1996
Doubtful accounts $ 7,604 $ 2,240
------ ------
$ 7,604 $ 2,240
======= =======
For the year ended October 31, 1995
Doubtful accounts $ 7,230 $ 495
------ -------
$ 7,230 $ 495
====== ======
For the year ended October 31, 1994
Doubtful accounts $ 9,795 $ 532
Possible Contract Losses 2,687 -
------- -------
$12,482 $ 532
====== =======
(1) Represents write-off of bad debts, net of recoveries.
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Additions
Charged
Classification to Expense Deductions(1)
- ------------------------------ ---------- -----------
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1996
Doubtful accounts $ 4,278 $ (4,381)
------ --------
$ 4,278 $ (4,381)
======= =======
For the year ended October 31, 1995
Doubtful accounts $ 1,483 $ (1,514)
------ ----------
$ 1,483 $(1,514)
======= =========
For the year ended October 31, 1994
Doubtful accounts $ 1,458 $(4,817)
Possible Contract Losses - -
------- -------
$ 1,458 $ (4,817)
======= =========
(1) Represents write-off of bad debts, net of recoveries.
HARNISCHFEGER INDUSTRIES, INC.
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
(Thousands of Dollars)
Transactions
Currency of Balance
Translation Discontinued at End
Classification Effects Operations of Year
- ------------------------------ ---------- ----------- ----------
Allowances Deducted in Balance Sheet
from Accounts Receivable:
For the year ended October 31, 1996
Doubtful accounts $(1,117) $ (12) $ 8,612
------ ------- -------
$(1,117) $ (12) $ 8,612
======= ======= =======
For the year ended October 31, 1995
Doubtful accounts $ (26) $ (64) $ 7,604
------ ------ -------
$ (26) $ (64) $ 7,604
====== ======= =======
For the year ended October 31, 1994
Doubtful accounts $ 262 $ - $ 7,230
Possible Contract Losses (2,687) -
------- ------- -------
$ 262 $ (2,687) $ 7,230
====== ======== =======
(1) Represents write-off of bad debts, net of recoveries.
Allowance Deducted in Balance Sheet from Deferred Tax Assets:
Balance at Additions Balance
Beginning Charged at end
of Year to
Expense of Year
---------- ---------- --------
For the year ended October 31, 1996 $ 18,256 $ 26,712 $ 44,968
========== ========== ========
For the year ended October 31, 1995 $ 14,206 $ 4,050 $ 18,256
========== ========== ========
For the year ended October 31, 1994 $ 12,421 $ 1,785 $ 14,206
========== ========== ========
EXHIBIT 9(a)
AMENDMENT No. 1
to
INDENTURE dated as of September 1, 1993,
between
JOY TECHNOLOGIES INC.
and
BANK OF MONTREAL TRUST COMPANY
THIS AMENDMENT No. 1 to the Joy Technologies Inc.
("JTI") 10 1/4% Senior Notes Due 2003 Indenture dated as of
September 1, 1993 (the "Indenture") is adopted by JTI, Bank
of Montreal Trust Company as Trustee ("Trustee") and
Harnischfeger Industries, Inc. ("HII") on ____ __, 1996.
Capitalized terms not defined in this Amendment No. 1 shall
have the meanings given them in the Indenture.
WHEREAS, as of September 1, 1993, JTI and the Trustee
became parties to the Indenture; and
WHEREAS, on November 29, 1994, HII acquired JTI
through a stock-for-stock merger; and
WHEREAS, the parties hereto deem it desirable to
amend the Indenture to modify the reporting requirements of
Section 4.02 of the Indenture and, in connection with such
modification, to provide for the guarantee by HII of
obligations of JTI under the Indenture.
NOW, THEREFORE, effective upon the written consent to
this amendment by the Holders (as defined in the Indenture)
of at least a majority in principal amount of the
Securities (as defined in the Indenture), and by virtue and
in exercise of the power reserved to JTI and the Trustee by
Article 9 of the Indenture, the Indenture be and hereby is
amended in the following particulars:
I. The form of HII guarantee attached hereto as
Attachment A is hereby appended to the
Indenture as
------------
Attachment A; and
------------
II. Section 4.02 SEC Reports. of the Indenture is
-----------
amended and restated as follows:
SECTION 4.02 SEC Reports.
------------
Notwithstanding that the Company may not be required to
remain subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act, the Company shall file with
the SEC and provide the Trustee and Securityholders with
such annual reports and such information, documents and
other reports which are specified in Sections 13 and 15(d)
of the Exchange Act. The Company also shall comply with
the other provisions of TIA Section 314(a).
Notwithstanding the
- --------------------
foregoing, at any time the guarantee attached hereto as
Attachment A is in effect, the filing and reporting
- ------------
requirements of the first sentence of this Section 4.02 may
be satisfied by the Guarantor (as defined in Attachment A)
------------
filing with the SEC and providing the Trustee and the
Securityholders such annual reports and information,
documents and other reports of the Guarantor which are
specified in Sections 13 and 15(d) of the Exchange Act.
Subsequent to the Guaranty becoming effective,
Trustee shall notify Securityholders of the effectiveness
of the Guaranty and shall endorse or imprint a notice of
the Guaranty on certificates representing the Notes
authenticated thereafter upon transfer or exchange in
accordance with Section 9.05 of the Indenture.
IN WITNESS WHEREOF, the parties have caused this
AMENDMENT No. 1 to be duly executed as of the date first
written above.
HARNISCHFEGER INDUSTRIES, INC.,
by
______________________________
Title:
BANK OF MONTREAL TRUST COMPANY, as Trustee
by
______________________________
Title:
JOY TECHNOLOGIES INC.,
by
______________________________
Title:
EXHIBIT 9(b)
AMENDMENT No. 2 to
INDENTURE dated as of September 1, 1993, relating
to JOY TECHNOLOGIES INC. 10 1/4% Senior Notes Due
2003
THIS AMENDMENT No. 2 to the Joy Technologies
Inc. ("JTI") 10 1/4% Senior Notes Due 2003
Indenture dated as of September 1, 1993 (the
"Indenture") is adopted by JTI and First Trust of
Illinois, National Association, as successor
trustee ("Trustee") and Harnischfeger Industries,
Inc. ("HII").
WHEREAS, the parties deem it desirable to
amend the Indenture by appending thereto the
Harnischfeger Industries, Inc.guarantee ("HII
Guarantee") attached hereto as Attachment A.
-----------
NOW, THEREFORE, effective upon the execution
by JTI, HII and Trustee, the Indenture is amended
by appending the HII Guarantee thereto as
Attachment A.
- ------------
Upon execution of this Amendment No. 2, JTI
shall notify Securityholders of its effectiveness
and shall endorse or imprint a notice of the HII
Guaranty on certificates representing the Notes
authenticated thereafter upon transfer or exchange
in accordance with Section 9.05 of the Indenture.
IN WITNESS WHEREOF, the parties have caused
this AMENDMENT No. 2 to be duly executed.
FIRST TRUST OF ILLINOIS, NATIONAL ASSOCIATION, as
Trustee
by: _____________________________
Title:
Date:
JOY TECHNOLOGIES INC.,
by: ______________________________
Title:
Date:
HARNISCHFEGER INDUSTRIES, INC.
by: ______________________________
Title:
Date:
EXHIBIT 10(b)
THE HARNISCHFEGER INDUSTRIES, INC. STOCK INCENTIVE PLAN
Section 1. Purpose; Definitions
The purpose of the Plan is to give the Corporation
and its Affiliates a competitive advantage in attracting,
retaining and motivating officers and employees and to
provide the Corporation and its Affiliates with the ability
to provide incentives more directly linked to the
performance of the Corporation's businesses and increases
in economic value and shareholder value. For purposes of
the Plan, the following terms are defined as set forth
below:
(a) "Affiliate" means:
(i) a corporation at least fifty percent of the
common stock or voting power of which is owned, directly or
indirectly by the Corporation, and
(ii) any other corporation or other entity
controlled by the Corporation and designated by the
Committee from time to time as such.
(b) "Award" means a Stock Appreciation Right, Stock
Option, Restricted Stock or Performance Unit.
(c) "Award Cycle" shall mean a period of consecutive
fiscal years or portions thereof designated by the
Committee over which Performance Units are to be earned.
(d) "Board" means the Board of Directors of the
Corporation.
(e) "Cause" means:
(i) willful and continued failure to
substantially perform the reasonably assigned duties with
the Corporation which are consistent with the participant's
position and, in the event of a Change in Control, those
duties assigned prior to the Change in Control, other than
any such failure resulting from incapacity due to physical
or mental illness, or
(ii) participant's willful engagement in
illegal conduct which is materially and demonstratably
injurious to the Corporation. For purposes of this
definition, no act, or failure to act, on participant's
part shall be considered "willful" unless done, or omitted
to be done, in knowing bad faith and without reasonable
belief that the action or omission was in, or not opposed
to, the best interests of the Corporation. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the
advice of counsel for the Corporation shall be conclusively
presumed to be done, or omitted to be done, in good faith
and in the best interests of the Corporation.
(f) "Change in Control" and "Change in Control
Price" have the meanings set forth in Sections 10(b) and
(c), respectively.
(g) "Code" means the Internal Revenue Code of l986,
as amended from time to time, and any successor thereto.
(h) "Commission" means the Securities and Exchange
Commission or any successor agency.
(i) "Committee" means the Committee referred to in
Section 2.
(j) "Common Stock" means common stock, par value
$1.00 per share, of the Corporation.
(k) "Corporation" means Harnischfeger Industries,
Inc., a Delaware corporation.
(l) "Covered Employee" shall mean a participant
designated prior to the grant of shares of Restricted Stock
or Performance Units by the Committee who is or may be a
"covered employee" within the meaning of Section 162(m)(3)
of the Code in the year in which Restricted Stock or
Performance Units are taxable to such participant.
(m) "Disability" means permanent and total
disability as determined under procedures established by
the Committee for purposes of the Plan.
(n) "Disinterested Person" shall mean a member of
the Board who qualifies as a Non-Employee Director as
defined in Rule 16b-3(b)(3), as promulgated by the
Commission under the Exchange Act, or any successor
definition adopted by the Commission, and as an "outside
director" for purposes of Section 162(m) of the Code.
(o) "Early Retirement" of an employee means
Termination of Employment with the Corporation or an
Affiliate at a time when the employee is entitled to early
retirement benefits pursuant to the early retirement
provisions of the applicable pension plan of such employer.
(p) "Exchange Act" means the Securities Exchange Act
of 1934, as amended from time to time, and any successor
thereto.
(q) "Fair Market Value" means, except as provided
in Sections 5(j) and 6(b)(ii)(2), as of any given date, the
mean between the highest and lowest reported sales prices
of the Common Stock on the New York Stock Exchange
Composite Tape or, if not listed on such exchange, on any
other national securities exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public
trading market for such Common Stock, the Fair Market Value
of the Common Stock shall be determined by the Committee in
good faith.
(r) "Incentive Stock Option" means any Stock Option
designated as, and qualified as, an "incentive stock
option" within the meaning of Section 422 of the Code.
(s) "Non-Qualified Stock Option" means any Stock
Option that is not an Incentive Stock Option.
(t) "Normal Retirement" of an employee means
retirement from active employment with the Corporation or
Affiliate at or after age 65.
(u) "Performance Goals" means the performance goals
established in writing by the Committee prior to the grant
of Restricted Stock or Performance Units. Such Performance
Goals may comprise one or any combination of the following:
specified levels of economic value added, earnings per
share from continuing operations, operating income,
revenues, cash flow, retained earnings, return on assets,
return on invested capital, return on sales, market share,
equity growth, net worth growth, achieving strategic
objectives, customer satisfaction, product quality, project
milestones, shareholder return (measured in terms of stock
price appreciation) and/or total shareholder return
(measured in terms of stock price appreciation and/or
dividend growth), return on equity, and individual
performance measures. Such Performance Goals also may be
based upon the attainment of specified levels of
performance of the Corporation or one or more Affiliates
under one or more of the measures described above relative
to the performance of other corporations. With respect to
Covered Employees, all Performance Goals shall be objective
performance goals satisfying the requirements for
"performance-based compensation" within the meaning of
Section 162(m)(4) of the Code, and shall be set by the
Committee within the time period prescribed by Section
162(m) of the Code and related regulations.
(v) "Performance Unit" means an award made pursuant
to Section 8.
(w) "Plan" means the Harnischfeger Industries, Inc.
Stock Incentive Plan, as set forth herein and as
hereinafter amended from time to time.
(x) "Restricted Stock" means an award granted under
Section 7.
(y) "Retirement" means Normal or Early Retirement.
(z) "Rule 16b-3" means Rule 16b-3, as promulgated by
the Commission under Section 16(b) of the Exchange Act, as
amended from time to time.
(aa) "Stock Appreciation Right" means a right
granted under Section 6.
(bb) "Stock Option" means an option granted under
Section 5.
(cc) "Termination of Employment" means the
termination of the participant's employment with the
Corporation and any Affiliate. A participant employed by
an Affiliate shall also be deemed to incur a Termination of
Employment if the Affiliate ceases to be an Affiliate and
the participant does not immediately thereafter become an
employee of the Corporation or another Affiliate. In
addition, certain other terms used herein have definitions
given to them in the first place in which they are used.
Section 2. Administration. The Plan shall be
administered by the Human Resources Committee of the Board
or such other committee of the Board, as the Board may from
time to time determine, composed solely of not less than
two Disinterested Persons, each of whom shall be appointed
by and serve at the pleasure of the Board. The Committee
shall have full authority to grant Awards pursuant to the
terms of the Plan to officers and employees of the
Corporation and its Affiliates. Among other things, the
Committee shall have the authority, subject to the terms of
the Plan:
(a) to select the officers and employees to whom
Awards may from time to time be granted;
(b) to determine whether and to what extent
Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock and Performance Units
or any combination thereof are to be granted hereunder;
(c) to determine the number of shares of Common
Stock to be covered by each Award granted hereunder;
(d) to determine the terms and conditions of any
Award granted hereunder (including, but not limited to, the
option price (subject to Section 5(a)), any vesting
condition, restriction or limitation (which may be related
to the performance of the participant, the Corporation or
any Affiliate) and any vesting acceleration or forfeiture
waiver regarding any Award and the shares of Common Stock
relating thereto, based on such factors as the Committee
shall determine;
(e) to modify, amend or adjust the terms and
conditions of any Award, at any time or from time to time,
including but not limited to Performance Goals; provided,
however, that the Committee may not adjust upwards the
amount payable to a designated Covered Employee with
respect to a particular Award upon the satisfaction of
applicable Performance Goals;
(f) to determine to what extent and under what
circumstances Common Stock and other amounts payable with
respect to an Award shall be deferred; and
(g) to determine under what circumstances an Award
may be settled in cash or Common Stock under Sections 5(j)
and 8(b)(i). The Committee shall have the authority to
adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms
and provisions of the Plan and any Award issued under the
Plan (and any agreement relating thereto) and to otherwise
supervise the administration of the Plan. The Committee
may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to an
officer of the Corporation the authority to make decisions
pursuant to paragraphs (c), (f), (g), (h) and (i) of
Section 5 (provided that no such delegation may be made
that would cause Awards or other transactions under the
Plan to cease to be exempt from Section 16(b) of the
Exchange Act) and (ii) authorize any one or more of their
number or any officer of the Corporation to execute and
deliver documents on behalf of the Committee. Any
determination made by the Committee or pursuant to
delegated authority pursuant to the provisions of the Plan
with respect to any Award shall be made in the sole
discretion of the Committee or such delegate at the time of
the grant of the Award or, unless in contravention of any
express term of the Plan, at any time thereafter. All
decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan
shall be final and binding on all persons, including the
Corporation and its Affiliates and Plan participants.
Section 3. Common Stock Subject to Plan; Other
Limitations. The total number of shares of Common Stock
reserved and available for issuance under the Plan shall be
2,000,000, but no more than 250,000 shares of Common Stock
may be issued as Restricted Stock. No participant may be
granted Awards covering in excess of 100,000 shares of
Common Stock in any one calendar year. Shares subject to
an Award under the Plan may be authorized and unissued
shares or may be treasury shares. No participant may be
granted Performance Units in any one calendar year payable
in cash in an amount that would exceed $1,000,000. Subject
to Section 7(c)(iv), if any shares of Restricted Stock are
forfeited for which the participant did not receive any
benefits of ownership (as such phrase is construed by the
Commission or its staff), or if any Stock Option (and
related Stock Appreciation Right, if any) terminates
without being exercised, or if any Stock Appreciation Right
is exercised for cash, shares subject to such Awards shall
again be available for use in connection with Awards under
the Plan. In the event of any change in corporate
capitalization, such as a stock split, or a corporate
transaction, such as any merger, consolidation, separation,
including a spin-off, or other distribution of stock or
property of the Corporation, any reorganization (whether or
not such reorganization comes within the definition of such
term in Section 368 of the Code) or any partial or complete
liquidation of the Corporation, the Committee or Board may
make such substitution or adjustments in the aggregate
number and kind of shares reserved for issuance under the
Plan, in the number, kind and option price of shares
subject to outstanding Stock Options and Stock Appreciation
Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other
equitable substitution or adjustments as it may determine
to be appropriate in its sole discretion; provided,
however, that Awards previously made shall not be reduced
or eliminated and the number of shares subject to any Award
shall always be a whole number. Such adjusted option price
shall also be used to determine the amount payable by the
Corporation upon the exercise of any Stock Appreciation
Right associated with a Stock Option.
Section 4. Eligibility. Officers and salaried
employees of the Corporation and its Affiliates who are
responsible for or contribute to the management, growth and
profitability of the business of the Corporation and its
Affiliates are eligible to be granted Awards under the
Plan. No grant shall be made under this Plan to a director
who is not an officer or a salaried employee of the
Corporation or an Affiliate.
Section 5. Stock Options. Stock Options may be
granted alone or in addition to other Awards granted under
the Plan and may be of two types: Incentive Stock Options
and Nonqualified Stock Options. Any Stock Option granted
under the Plan shall be in such form as the Committee may
from time to time approve. The Committee shall have the
authority to grant any optionee Incentive Stock Options,
Nonqualified Stock Options or both types of Stock Options
(in each case with or without Stock Appreciation Rights);
provided, however, that grants hereunder are subject to the
aggregate limit on grants to individual participants set
forth in Section 3. Incentive Stock Options may be granted
only to employees of the Corporation and its subsidiaries
(within the meaning of Section 424(f) of the Code). To the
extent that any Stock Option is not designated as an
Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it shall constitute a
Nonqualified Stock Option. Stock Options shall be
evidenced by option agreements, the terms and provisions of
which may differ. An option agreement shall indicate on
its face whether it is intended to be an agreement for an
Incentive Stock Option or a Nonqualified Stock Option. The
grant of a Stock Option shall occur on the date the
Committee by resolution selects an individual to be a
participant in any grant of a Stock Option, determines the
number of shares of Common Stock to be subject to such
Stock Option to be granted to such individual and specifies
the terms and provisions of the Stock Option. The
Corporation shall notify a participant of any grant of a
Stock Option, and a written option agreement or agreements
shall be duly executed and delivered by the Corporation to
the participant. Such agreement or agreements shall become
effective upon execution by the Corporation and the
participant. Anything in the Plan to the contrary
notwithstanding, no term of the Plan relating to Incentive
Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the optionee affected,
to disqualify any Incentive Stock Option under such Section
422. Stock Options granted under the Plan shall be subject
to the following terms and conditions and shall contain
such additional terms and conditions as the Committee shall
deem desirable:
(a) Option Price. The option price per share of
Common Stock purchasable under a Stock Option shall be
determined by the Committee and set forth in the option
agreement, and shall not be less than the Fair Market Value
of the Common Stock subject to the Stock Option on the date
of grant.
(b) Option Term. The term of each Stock Option
shall be fixed by the Committee, but no Incentive Stock
Option shall be exercisable more than 10 years after the
date the Stock Option is granted.
(c) Exercisability. Except as otherwise provided
herein, Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be
determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments,
the Committee may at any time waive such installment
exercise provisions, in whole or in part, based on such
factors as the Committee may determine. In addition, the
Committee may at any time accelerate the exercisability of
any Stock Option.
(d) Method of Exercise. Subject to the provisions
of this Section 5, Stock Options may be exercised, in whole
or in part, at any time during the option term by giving
written notice of exercise to the Corporation specifying
the number of shares of Common Stock subject to the Stock
Option to be purchased. Such notice shall be accompanied
by payment in full of the purchase price by certified or
bank check or such other instrument as the Corporation may
accept. If approved by the Committee, payment in full or
in part may also be made in the form of unrestricted Common
Stock already owned by the optionee of the same class as
the Common Stock subject to the Stock Option and, in the
case of the exercise of a Nonqualified Stock Option,
Restricted Stock subject to an Award hereunder which is of
the same class as the Common Stock subject to the Stock
Option (based, in each case, on the Fair Market Value of
the Common Stock on the date the Stock Option is
exercised); provided, however, that, in the case of an
Incentive Stock Option, the right to make a payment in the
form of already owned shares of Common Stock of the same
class as the Common Stock subject to the Stock Option may
be authorized only at the time the Stock Option is granted.
If payment of the option exercise price of a Nonqualified
Stock Option is made in whole or in part in the form of
Restricted Stock, the number of shares of Common Stock to
be received upon such exercise equal to the number of
shares of Restricted Stock used for payment of the option
exercise price shall be subject to the same forfeiture
restrictions to which such Restricted Stock was subject,
unless otherwise determined by the Committee. In the
discretion of the Committee, payment for any shares subject
to a Stock Option may also be made by delivering a properly
executed exercise notice to the Corporation, together with
a copy of irrevocable instructions to a broker to deliver
promptly to the Corporation the amount of sale or loan
proceeds to pay the purchase price, and, if requested by
the Corporation, the amount of any federal, state, local or
foreign withholding taxes. To facilitate the foregoing,
the Corporation may enter into agreements for coordinated
procedures with one or more brokerage firms. In
addition, in the discretion of the Committee, payment for
any shares subject to a Stock Option may also be made by
instructing the Committee to withhold a number of such
shares having a Fair Market Value on the date of exercise
equal to the aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full
payment therefor has been made. Subject to any forfeiture
restrictions that may apply if a Stock Option is exercised
using Restricted Stock, an optionee shall have all of the
rights of a shareholder of the Corporation holding the
class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote
the shares and the right to receive dividends), when the
optionee has given written notice of exercise, has paid in
full for such shares and, if requested, has given the
representation described in Section 14(a).
(e) Nontransferability of Stock Options. No Stock
Option shall be transferable by the optionee other than:
(i) by will or by the laws of descent and
distribution or
(ii) in the case of a Nonqualified Stock
Option, pursuant to (a) a qualified domestic relations
order (as defined in the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the
rules thereunder) or (b) a gift to such optionee's
children, whether directly or indirectly or by means of a
trust or partnership or otherwise, if expressly permitted
under the applicable option agreement. All Stock Options
shall be exercisable, during the optionee's lifetime, only
by the optionee or by the guardian or legal representative
of the optionee or, in the case of a Nonqualified Stock
Option, its alternative payee pursuant to a qualified
domestic relations order or a gift permitted under the
applicable option agreement, it being understood that the
terms "holder" and "optionee" include the guardian and
legal representative of the optionee named in the option
agreement and any person to whom an option is transferred
by will or the laws of descent and distribution or, in the
case of a Nonqualified Stock Option, pursuant to a
qualified domestic relations order or a gift permitted
under the applicable option agreement.
(f) Termination by Death. Unless otherwise
determined by the Committee, if an optionee's employment
terminates by reason of death, any Stock Option held by
such optionee may thereafter be exercised, to the extent
then exercisable, or on such accelerated basis as the
Committee may determine, for a period of one year (or such
other period as the Committee may specify in the option
agreement) from the date of such death or until the
expiration of the stated term of such Stock Option,
whichever period is the shorter.
(g) Termination by Reason of Disability. Unless
otherwise determined by the Committee, if an optionee's
employment terminates by reason of Disability, any Stock
Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time
of termination, or on such accelerated basis as the
Committee may determine, for a period of three years (or
such shorter period as the Committee may specify in the
option agreement) from the date of such termination of
employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter;
provided, however, that if the optionee dies within such
three-year period (or such shorter period), any unexercised
Stock Option held by such optionee shall, notwithstanding
the expiration of such three-year (or such shorter) period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of one year
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Nonqualified Stock
Option.
(h) Termination by Reason of Retirement. Unless
otherwise determined by the Committee, if an optionee's
employment terminates by reason of Retirement, any Stock
Option held by such optionee may thereafter be exercised by
the optionee, to the extent it was exercisable at the time
of such Retirement, or on such accelerated basis as the
Committee may determine, for a period of three years (or
such shorter period as the Committee may specify in the
option agreement) from the date of such termination of
employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter;
provided, however, that if the optionee dies within such
three-year (or such shorter) period any unexercised Stock
Option held by such optionee shall, notwithstanding the
expiration of such three-year (or such shorter) period,
continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of one year
from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the
shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is
exercised after the expiration of the exercise periods that
apply for purposes of Section 422 of the Code, such Stock
Option will thereafter be treated as a Nonqualified Stock
Option.
(i) Other Termination. Unless otherwise determined
by the Committee, if an optionee incurs a Termination of
Employment for any reason other than death, Disability or
Retirement, any Stock Option held by such optionee shall
thereupon terminate, except that such Stock Option, to the
extent then exercisable, or on such accelerated basis as
the Committee may determine, may be exercised for the
lesser of three months from the date of such Termination of
Employment or the balance of such Stock Option's stated
term if such Termination of Employment of the optionee is
involuntary; provided, however, that if the optionee dies
within such three-month period, any unexercised Stock
Option held by such optionee shall, notwithstanding the
expiration of such three-month period, continue to be
exercisable to the extent to which it was exercisable at
the time of death for a period of one year from the date of
such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
Notwithstanding the foregoing, if an optionee incurs a
Termination of Employment at or after a Change in Control
(as defined in Section 10(b)), other than by reason of
death, Disability or Retirement, any Stock Option held by
such optionee shall be exercisable for the lesser of (1)
six months and one day from the date of such Termination of
Employment, and (2) the balance of such Stock Option's
stated term. In the event of Termination of Employment, if
an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be
treated as a Nonqualified Stock Option.
(j) Cashing Out of Stock Option. On receipt of
written notice of exercise, the Committee may elect to cash
out all or part of the portion of the shares of Common
Stock for which a Stock Option is being exercised by paying
the optionee an amount, in cash or Common Stock, equal to
the excess of the Fair Market Value of the Common Stock
over the option price times the number of shares of Common
Stock for which the Option is being cashed out on the
effective date of such cash-out.
(k) Change in Control Cash-Out. Notwithstanding any
other provision of the Plan, during the 90-day period from
and after a Change in Control (the "Exercise Period"),
unless the Committee shall determine otherwise at the time
of grant, an optionee shall have the right, whether or not
the Stock Option is fully exercisable and in lieu of the
payment of the exercise price for the shares of Common
Stock being purchased under the Stock Option and by giving
notice to the Corporation, to elect (within the Exercise
Period) to surrender all or part of the Stock Option to the
Corporation and to receive cash, within 30 days of such
notice, in an amount equal to the amount by which the
Change in Control Price per share of Common Stock shall
exceed the exercise price per share of Common Stock under
the Stock Option (the "Spread") multiplied by the number of
shares of Common Stock granted under the Stock Option as to
which the right granted under this Section 5(k) shall have
been exercised
Section 6. Stock Appreciation Rights.
(a) Grant and Exercise. Stock Appreciation Rights
may be granted in conjunction with all or part of any Stock
Option granted under the Plan. In the case of a
Nonqualified Stock Option, such rights may be granted
either at or after the time of grant of such Stock Option.
Stock Appreciation Rights also may be granted with respect
to options (other than options intended to qualify as
"incentive stock options" within the meaning of Section 422
of the Code) granted under the Harnischfeger Industries,
Inc. 1988 Incentive Stock Plan (the "Old Plan") ("Old
Options"). In the case of an Incentive Stock Option, such
rights may be granted only at the time of grant of such
Stock Option. A Stock Appreciation Right shall terminate
and no longer be exercisable upon the termination or
exercise of the related Stock Option. A Stock Appreciation
Right may be exercised by an optionee in accordance with
Section 6(b) by surrendering the applicable portion of the
related Stock Option or Old Option in accordance with
procedures established by the Committee. Upon such
exercise and surrender, the optionee shall be entitled to
receive an amount determined in the manner prescribed in
Section 6(b). Stock Options and Old Options which have
been so surrendered shall no longer be exercisable to the
extent the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights
shall be subject to such terms and conditions as shall be
determined by the Committee, including the following:
(i) Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent
that the Stock Options and Old Options to which they relate
are exercisable in accordance with the provisions of
Section 5 and this Section 6.
(ii) Upon the exercise of a Stock Appreciation
Right, an optionee shall be entitled to receive an amount
in cash, shares of Common Stock or both equal in value to
the excess of the Fair Market Value of one share of Common
Stock over the option price per share specified in the
related Stock Option or Old Option multiplied by the number
of shares in respect of which the Stock Appreciation Right
shall have been exercised, with the Committee having the
right to determine the form of payment.
(iii) Stock Appreciation Rights shall be
transferable only to permitted transferees of the
underlying Stock Option in accordance with Section 5(e) or
the underlying Old Option in accordance with the provisions
of the Old Plan.
(iv) Upon the exercise of a Stock Appreciation
Right, the Stock Option or Old Option or part thereof to
which such Stock Appreciation Right is related shall be
deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares
of Common Stock to be issued under the Plan, but only to
the extent of the number of shares as to which the Stock
Appreciation Right is exercised at the time of exercise.
Section 7. Restricted Stock.
(a) Administration. Shares of Restricted Stock may
be awarded either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the
officers and employees to whom and the time or times at
which grants of Restricted Stock will be awarded, the
number of shares to be awarded to any participant (subject
to the aggregate limit on grants to individual participants
set forth in Section 3), the conditions fo