JOY GLOBAL INC - FORM 10-Q - September 4, 2015

Attached files

file filename
EX-31.1 - EXHIBIT 31.1 - JOY GLOBAL INCjoy-07312015xex311x10q.htm
EX-32.1 - EXHIBIT 32.1 - JOY GLOBAL INCjoy-07312015xex321x10q.htm
EX-31.2 - EXHIBIT 31.2 - JOY GLOBAL INCjoy-07312015xex312x10q.htm

 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________ 
FORM 10-Q
____________________________________________ 
(MARK ONE)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED July 31, 2015
OR 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD from                    to                     
Commission File number 001-09299
____________________________________________  
JOY GLOBAL INC.
(Exact Name of Registrant as Specified in Its Charter)
 ____________________________________________
Delaware
39-1566457
(State of Incorporation)
(I.R.S. Employer Identification No.)
100 East Wisconsin Ave, Suite 2780
Milwaukee, Wisconsin 53202
(Address of Principal Executive Offices) (Zip Code)
(414) 319-8500
(Registrant’s Telephone Number, Including Area Code)
____________________________________________ 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files.)    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
LARGE ACCELERATED FILER
ý
 
ACCELERATED FILER
¨
 
 
 
 
 
NON-ACCELERATED FILER
¨
 
SMALLER REPORTING COMPANY
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
 
Class
 
August 28, 2015
Common Stock, $1 par value
 
97,474,578
 
 
 
 
 



JOY GLOBAL INC.
FORM 10-Q INDEX
July 31, 2015
 
PAGE NO.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Forward-Looking Statements
This document contains forward-looking statements, including estimates, projections, statements relating to our business plans, objectives, pending acquisitions, expected operating results and other non-historical information, and the assumptions on which those statements are based. These statements constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements are identified by forward-looking terms such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "indicate," "intend," "may be," "objective," "plan," "potential," "predict," "should," "will be," and similar expressions. Forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from any forward-looking statement. In addition, certain market outlook information and other market statistical data contained herein is based on third party sources that we cannot independently verify, but that we believe to be reliable. Important factors that could cause our actual results to differ materially from the results anticipated by the forward-looking statements include general economic and industry conditions in the markets in which we operate, risks associated with conducting business in foreign countries, risks associated with acquisitions and the other risks discussed in Item 1A, Risk Factors, of our Annual Report on Form 10-K for our fiscal year ended October 31, 2014 and in other filings that we make with the U.S. Securities and Exchange Commission (the "SEC"). Any or all of these factors could cause our results of operations, financial condition or liquidity for future periods to differ materially from those expressed in or implied by any forward-looking statement. Furthermore, there may be other factors that could cause our actual results to differ materially from the results referred to in the forward-looking statements. We undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date on which such statements are made or to reflect the occurrence of unanticipated events, except as required by law.



PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
JOY GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
 
 
Quarter Ended
 
Nine Months Ended
 
July 31,
2015
 
August 1,
2014
 
July 31,
2015
 
August 1,
2014
Net sales
$
792,183

 
$
875,661

 
$
2,306,579

 
$
2,644,703

Cost of sales
574,838

 
623,729

 
1,674,987

 
1,879,499

Product development, selling and administrative expenses
145,215

 
137,259

 
444,571

 
444,822

Other income
(1,234
)
 
(4,618
)
 
(5,347
)
 
(9,896
)
Operating income
73,364

 
119,291

 
192,368

 
330,278

Interest income
2,543

 
1,707

 
8,463

 
6,583

Interest expense
(16,219
)
 
(16,604
)
 
(48,368
)
 
(49,148
)
Income before income taxes
59,688

 
104,394

 
152,463

 
287,713

Provision for income taxes
14,803

 
33,105

 
45,271

 
93,612

Net income
$
44,885

 
$
71,289

 
$
107,192

 
$
194,101

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.46

 
$
0.71

 
$
1.10

 
$
1.93

Diluted earnings per share
$
0.46

 
$
0.71

 
$
1.09

 
$
1.91

Dividends per share
$
0.20

 
$
0.20

 
$
0.60

 
$
0.55

Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
97,480

 
99,856

 
97,481

 
100,666

Diluted
98,033

 
100,738

 
98,052

 
101,536

See Notes to Condensed Consolidated Financial Statements.

3

JOY GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands)
 
 
Quarter Ended
 
July 31,
2015
 
August 1,
2014
Net income
$
44,885

 
$
71,289

Other comprehensive income (loss):
 
 
 
Change in unrecognized pension and other postretirement obligations, net of taxes (benefits) of $2,108 and ($6,516)
6,007

 
(10,176
)
Derivative instrument fair market value adjustment, net of taxes of $1,312 and $165
3,137

 
425

Foreign currency translation adjustment on long-term intercompany foreign loans
2,332

 
68

Other foreign currency translation adjustment
(42,498
)
 
20,077

Total other comprehensive (loss) income, net of taxes
(31,022
)
 
10,394

Comprehensive income
$
13,863

 
$
81,683

 
Nine Months Ended
 
July 31,
2015
 
August 1,
2014
Net income
$
107,192

 
$
194,101

Other comprehensive income (loss):
 
 
 
Change in unrecognized pension and other postretirement obligations, net of taxes (benefits) of $6,643 and ($3,286)
17,700

 
(2,641
)
Derivative instrument fair market value adjustment, net of taxes of $2,791 and $63
6,736

 
139

Foreign currency translation adjustment on long-term intercompany foreign loans
(1,414
)
 
(7,862
)
Other foreign currency translation adjustment
(140,781
)
 
3,535

Total other comprehensive (loss), net of taxes
(117,759
)
 
(6,829
)
Comprehensive (loss) income
$
(10,567
)
 
$
187,272


See Notes to Condensed Consolidated Financial Statements.


4

JOY GLOBAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
 
 
July 31,
2015
 
October 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
140,900

 
$
270,191

Accounts receivable, net
829,536

 
1,059,709

Inventories
1,184,342

 
1,108,308

Other current assets
177,219

 
180,151

Total current assets
2,331,997

 
2,618,359

Property, plant and equipment, net
875,150

 
892,440

Other assets:
 
 
 
Other intangible assets, net
332,469

 
319,269

Goodwill
1,554,177

 
1,516,693

Deferred income taxes
74,532

 
70,181

Other non-current assets
163,804

 
180,044

Total other assets
2,124,982

 
2,086,187

Total assets
$
5,332,129

 
$
5,596,986

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Short-term borrowings, including current portion of long-term obligations
$
14,171

 
$
11,739

Trade accounts payable
330,838

 
395,945

Employee compensation and benefits
82,901

 
136,911

Advance payments and progress billings
297,722

 
285,939

Accrued warranties
56,802

 
67,272

Other accrued liabilities
212,440

 
265,600

Current liabilities of discontinued operations
11,582

 
11,582

Total current liabilities
1,006,456

 
1,174,988

Long-term obligations
1,256,032

 
1,269,541

Other liabilities:
 
 
 
Liabilities for postretirement benefits
18,721

 
19,609

Accrued pension costs
135,280

 
144,379

Other non-current liabilities
171,373

 
147,472

Total other liabilities
325,374

 
311,460

Shareholders’ equity
2,744,267

 
2,840,997

Total liabilities and shareholders’ equity
$
5,332,129

 
$
5,596,986

See Notes to Condensed Consolidated Financial Statements.

5

JOY GLOBAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
Nine Months Ended
 
July 31,
2015
 
August 1,
2014
Operating Activities:
 
 
 
Net income
$
107,192

 
$
194,101

Adjustments to continuing operations:
 
 
 
Depreciation and amortization
102,914

 
98,725

Changes in deferred income taxes
7,463

 
(5,864
)
Contributions to defined benefit employee pension plans
(12,106
)
 
(5,760
)
Defined benefit employee pension plan expense
15,786

 
13,575

Share-based compensation expense
23,846

 
11,204

Changes in long-term receivables
11,335

 
(2,650
)
Other adjustments to continuing operations, net
697

 
(5,556
)
Changes in working capital items attributed to continuing operations:
 
 
 
Accounts receivable, net
198,081

 
214,448

Inventories
(120,377
)
 
(84,439
)
Other current assets
(17,265
)
 
12,324

Trade accounts payable
(60,936
)
 
(29,442
)
Employee compensation and benefits
(55,106
)
 
(15,291
)
Advance payments and progress billings
35,462

 
(3,352
)
Accrued warranties
(9,800
)
 
(21,579
)
Other accrued liabilities
(58,472
)
 
(72,123
)
Net cash provided by operating activities of continuing operations
168,714

 
298,321

Net cash used by operating activities of discontinued operations
—

 
(103
)
Net cash provided by operating activities
168,714

 
298,218

Investing Activities:
 
 
 
Acquisition of businesses, net of cash acquired
(114,353
)
 
(47,058
)
Property, plant and equipment acquired
(57,821
)
 
(69,068
)
Proceeds from sale of property, plant and equipment
4,071

 
8,882

Other investing activities, net
625

 
(89
)
Net cash used by investing activities
(167,478
)
 
(107,333
)
Financing Activities:
 
 
 
Common stock issued
2,853

 
10,189

Dividends paid
(58,456
)
 
(55,334
)
Repayments of term loan
—

 
(37,500
)
Repayments of short term debt
(11,545
)
 
—

Treasury stock purchased
(50,000
)
 
(194,336
)
Other financing activities, net
261

 
(10,319
)
Net cash used by financing activities
(116,887
)
 
(287,300
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
(13,640
)
 
(1,252
)
Decrease in Cash and Cash Equivalents
(129,291
)
 
(97,667
)
Cash and Cash Equivalents at Beginning of Period
270,191

 
405,709

Cash and Cash Equivalents at End of Period
$
140,900

 
$
308,042


See Notes to Condensed Consolidated Financial Statements.

6

JOY GLOBAL INC.
CONDENSED NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.
Description of Business
Joy Global Inc. (the "Company," "we" and "us") is a leading manufacturer and servicer of high productivity mining equipment for the extraction of metals and minerals. We manufacture and market original equipment and parts and perform services for both underground and surface mining, as well as certain industrial applications. Our equipment is used in major mining regions throughout the world to mine coal, copper, iron ore, oil sands, gold and other minerals. We operate in two business segments: Underground Mining Machinery ("Underground") and Surface Mining Equipment ("Surface"). We are a major manufacturer of underground mining machinery for the extraction and haulage of coal and other bedded minerals. We are also a major producer of surface mining equipment for the extraction and haulage of copper, coal and other minerals and ores. We offer comprehensive direct service, which includes our smart service offerings, near major mining regions worldwide and provide extensive operational support for many types of equipment used in mining. Our principal manufacturing facilities are located in the United States, including facilities in Alabama, Pennsylvania, Texas and Wisconsin, and internationally, including facilities in Australia, Canada, China, South Africa, the United Kingdom and France.

2.
Basis of Presentation
The Condensed Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited and are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to SEC rules and regulations. In our opinion, all adjustments necessary for the fair presentation on a going concern basis of the results of operations, cash flows and financial position for all periods presented have been made. All such adjustments made are of a normal recurring nature. The preparation of the financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Ultimate realization of assets and settlement of liabilities in the future could differ from those estimates.
These financial statements should be read in conjunction with the financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014. The results of operations for any interim period are not necessarily indicative of the results to be expected for the full year.

3.
Acquisitions
Acquisition of Mining Technologies International Inc.
On May 30, 2014, we closed on the purchase of certain assets of Mining Technologies International Inc. ("MTI") for $44.4 million dollars. MTI is a Canadian manufacturer of underground hard rock mining equipment serving the North American markets and a world leading supplier of raise bore drilling consumables. We acquired substantially all of the assets associated with MTI’s hard rock drilling, loaders, dump trucks, shaft sinking and raise bore product lines. MTI's results of operations have been included in the accompanying financial statements as part of the Underground segment from the acquisition date forward.
In connection with the acquisition, we recorded goodwill of approximately $0.3 million and intangible assets of approximately $9.9 million. The intangible assets are primarily comprised of customer relationships and designs and drawings, which are being amortized over their respective estimated useful lives.
Acquisition of Montabert S.A.S.
On June 1, 2015, we completed the acquisition of 100% of the equity of Montabert S.A.S. ("Montabert") for approximately $121.5 million dollars, gross of cash acquired of $7.1 million dollars and subject to a working capital adjustment. Montabert specializes in the design, production and distribution of high quality hydraulic rock breakers, pneumatic equipment, drilling attachments, drifters and related parts and tools. This acquisition expands the Company's product and service capabilities for hard rock mining, tunneling and rock excavation, further diversifying our commodity and end market exposures. Montabert's results of operations will be included as part of the Underground segment from the date of the acquisition forward.
In connection with the acquisition, we preliminarily recorded goodwill of approximately $55.7 million and intangible assets of approximately $35.1 million. The intangible assets are primarily comprised of customer relationships, trade names and patents, which are being amortized over their respective estimated useful lives. Other assets acquired consist of working capital related items and property, plant, and equipment, with values that are not individually significant. The accounting for the purchase price is preliminary and subject to change, as we are in the process of obtaining third party valuations of assets acquired.


7



4.
Inventories
Consolidated inventories consist of the following:
 
In thousands
July 31,
2015
 
October 31,
2014
Finished goods
886,939

 
$
835,227

Work in process
225,537

 
203,805

Raw materials
71,866

 
69,276

Total inventories
$
1,184,342

 
$
1,108,308

Finished goods include finished components and parts in addition to any finished equipment.

5. Goodwill and Other Intangible Assets
Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed, which is principally the straight-line method. Intangible assets that are subject to amortization are evaluated for potential impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. No impairment was identified related to our finite-lived intangible assets as of July 31, 2015.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is assigned to specific reporting units, and is tested for impairment at least annually, during the fourth quarter of our fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Due to the prolonged suppressed global commodity markets, its related effect on the global mining investment environment and the resulting impact on our stock price, our total shareholders’ equity exceeded our market capitalization during the latter part of the quarter ended July 31, 2015, indicating the possibility of an impairment to goodwill. Based on this indicator of impairment, we performed an interim test for impairment of goodwill as of the last day of our fiscal third quarter. We have concluded our step one evaluation on our reporting units. After completing this analysis, we determined that the estimated fair value of our Underground reporting unit was lower than the carrying value of the reporting unit. Given the timing of the decline in our market capitalization, we have not completed step two of the goodwill impairment test for this reporting unit, which will determine the amount of impairment loss, if any, for our Underground reporting unit. Step two of the impairment test requires we perform a theoretical purchase price allocation for the Underground reporting unit to determine the implied fair value of goodwill to the recorded amount of goodwill. We have engaged a third party valuation firm to assist in this process. We are unable to provide a reasonable estimate or a range of estimates for the potential non-cash impairment charge at this time. We will complete the analysis during the fourth quarter.


6. Warranties
We provide for the estimated costs that may be incurred under product warranties to remedy deficiencies of quality or performance of our products. Warranty costs are accrued at the time revenue is recognized. These product warranties extend over either a specified period of time, units of production or machine hours depending on the product subject to the warranty. We accrue a provision for estimated future warranty costs based on the historical relationship of warranty costs to sales. We periodically review the adequacy of the accrual for product warranties and adjust the warranty percentage and accrued warranty reserve for actual experience as necessary.
The following table reconciles the changes in the product warranty reserve:
 
Quarter Ended
 
Nine Months Ended
In thousands
July 31,
2015
 
August 1,
2014
 
July 31,
2015
 
August 1,
2014
Balance, beginning of period
$
58,194

 
$
73,602

 
$
67,272

 
$
85,732

Accrual for warranty expensed during the period
7,701

 
7,138

 
26,554

 
23,801

Settlements made during the period
(9,933
)
 
(17,357
)
 
(36,320
)
 
(46,533
)
Effect of foreign currency translation
(359
)
 
56

 
(1,903
)
 
439

     Acquired warranty accrual
$
1,199

 
$
246

 
1,199

 
$
246

Balance, end of period
$
56,802

 
$
63,685

 
$
56,802

 
$
63,685


8



7.
Borrowings and Credit Facilities
On July 29, 2014, we entered into a $1.0 billion unsecured revolving credit facility that matures on July 29, 2019 (as amended, the "Credit Agreement"). Under the Credit Agreement, we also may request an increase of up to $250.0 million of additional aggregate revolving commitments, subject to the terms and conditions contained in the Credit Agreement. The Credit Agreement simultaneously replaced the $1.0 billion revolving credit agreement dated as of October 12, 2012 (the "Prior Credit Agreement"), that was scheduled to expire on November 12, 2017. Under the terms of the Credit Agreement, we pay a commitment fee ranging from 0.09% to 0.30% on the unused portion of the revolving credit facility based on our credit rating. Letters of credit issued under applicable provisions of the Credit Agreement represent an unfunded utilization of the Credit Agreement for purposes of calculating the periodic commitment fee due. Eurodollar rate loans bear interest for a period from the applicable borrowing date until a date one week or one, two, three or six months thereafter, as selected by the Company, at the corresponding Eurodollar rate plus a margin of 1.0% to 2.0% depending on the Company's credit rating. Base rate loans bear interest from the applicable borrowing date at a rate equal to (i) the highest of (a) the federal funds rate plus 0.5%, (b) the rate of interest in effect for such day as publicly announced by the administrative agent as its "prime rate," or (c) a daily rate equal to the one-month Eurodollar rate plus 1.0%, plus (ii) a margin that varies according to the Company's credit rating. Swing line loans bear interest at either the base rate described above or the daily floating Eurodollar rate plus the applicable margin, as selected by the Company. The Credit Agreement is guaranteed by each of our current and future material domestic subsidiaries and requires the maintenance of certain financial covenants, including leverage and interest coverage ratios. The Credit Agreement also restricts payment of dividends or other returns of capital to shareholders if we are not in compliance with the financial covenants in the agreement. As of July 31, 2015, we were in compliance with all financial covenants of the Credit Agreement and had no restrictions on the payment of dividends or other returns of capital to shareholders.
As of July 31, 2015, there were no direct borrowings under the Credit Agreement. Total interest expense recognized for direct borrowings under the Credit Agreement for the quarters July 31, 2015 and August 1, 2014 is $0.4 million and $0.1 million, respectively. For the nine months ended July 31, 2015 and August 1, 2014, total interest expense recognized for direct borrowings under the Credit Agreement was $0.9 million and $0.1 million, respectively. Outstanding standby letters of credit issued under the Credit Agreement, which count toward the $1.0 billion credit limit, totaled $143.2 million. As of July 31, 2015, there was $856.8 million available for borrowings under the Credit Agreement.
On July 29, 2014, we also entered into a term loan agreement which matures July 29, 2019 and provides for a commitment of up to $375.0 million (as amended, the "Term Loan"). The Term Loan replaced our prior term loan, dated as of June 16, 2011 (the "Prior Term Loan"). The Prior Term Loan had been scheduled to mature on July 16, 2016 and provided an initial commitment of $500.0 million, which had been drawn in full in conjunction with our fiscal 2011 acquisition of LeTourneau Technologies, Inc. and had been amortized to $375.0 million at the date that we entered into the Term Loan. We utilized the $375.0 million commitment under the Term Loan to repay the balance outstanding under the Prior Term Loan. The Term Loan requires quarterly principal payments beginning in fiscal 2016 and contains terms and conditions that are the same as the terms and conditions of the Credit Agreement. The Term Loan is guaranteed by each of our current and future material domestic subsidiaries and requires the maintenance of certain financial covenants, including leverage and interest coverage ratios. As of July 31, 2015, we were in compliance with all financial covenants of the Term Loan.
On October 12, 2011, we issued $500.0 million aggregate principal amount of 5.125% Senior Notes due in 2021 (the "2021 Notes") at a discount of $4.2 million in an offering that was registered under the Securities Act. Interest on the 2021 Notes is paid semi-annually in arrears on October 15 and April 15 of each year, and the 2021 Notes are guaranteed by each of our current and future material domestic subsidiaries. At our option, we may redeem some or all of the 2021 Notes at a redemption price of the greater of 100% of the principal amount of the 2021 Notes to be redeemed or the sum of the present values of the principal amounts and the remaining scheduled interest payments using a discount rate equal to the sum of a treasury rate of a comparable treasury issue plus 0.5%.
In November 2006, we issued $250.0 million aggregate principal amount of 6.0% Senior Notes due 2016 and $150.0 million aggregate principal amount of 6.625% Senior Notes due 2036 (the "2016 Notes" and "2036 Notes," respectively). Interest on the 2016 Notes and 2036 Notes is paid semi-annually in arrears on May 15 and November 15 of each year, and the 2016 Notes and 2036 Notes are guaranteed by each of our current and future material domestic subsidiaries. The 2016 Notes and 2036 Notes were issued in a private placement under an exemption from registration provided by the Securities Act. In the second quarter of fiscal 2007, the 2016 Notes and 2036 Notes were exchanged for substantially identical notes in an exchange that was registered under the Securities Act. At our option, we may redeem some or all of the 2016 Notes and 2036 Notes at a redemption price of the greater of 100% of the principal amount of the 2016 Notes and 2036 Notes to be redeemed or the sum of the present values of the principal amounts and the remaining scheduled interest payments using a discount rate equal to the sum of a treasury rate of a comparable treasury issue plus 0.3% for the 2016 Notes and 0.375% for the 2036 Notes.
Direct borrowings and capital lease obligations consist of the following:

9

In thousands
July 31,
2015
 
October 31,
2014
Domestic:
 
 
 
Term Loan due 2019
375,000

 
375,000

6.0% Senior Notes due 2016
249,446

 
249,131

5.125% Senior Notes due 2021
497,097

 
496,806

6.625% Senior Notes due 2036
148,545

 
148,522

Other borrowings
—

 
11,634

Foreign:
 
 
 
Capital leases
115

 
187

Total obligations
1,270,203

 
1,281,280

Less: Amounts due within one year
(14,171
)
 
(11,739
)
Long-term obligations
$
1,256,032

 
$
1,269,541

     
8.
Accumulated Other Comprehensive Income (Loss)
Comprehensive income (loss) and its components are presented in the Condensed Consolidated Statements of Comprehensive Income (Loss). Changes in accumulated other comprehensive income (loss), net of taxes, consist of the following:
 
Quarter ended July 31, 2015
 
Quarter ended August 1, 2014
 
Change in Unrecognized Pension and Other Postretirement Obligations
 
Derivative Instrument Fair Market Value Adjustment
 
Foreign Currency Translation Adjustment
 
Total
 
Change in Unrecognized Pension and Other Postretirement Obligations
 
Derivative Instrument Fair Market Value Adjustment
 
Foreign Currency Translation Adjustment
 
Total
Beginning balance
$
(517,623
)
 
$
8,335

 
$
(112,731
)
 
$
(622,019
)
 
$
(532,587
)
 
$
4,742

 
$
2,988

 
$
(524,857
)
Other comprehensive (loss) income before reclassifications, net of taxes
(25
)
 
1,979

 
(40,166
)
 
(38,212
)
 
(15,202
)
 
262

 
20,145

 
5,205

Amounts reclassified from accumulated other comprehensive income, net of taxes
6,032

 
1,158

 
—

 
7,190

 
5,026

 
163

 
—

 
5,189

Total other comprehensive income (loss), net of taxes
6,007

 
3,137

 
(40,166
)
 
(31,022
)
 
(10,176
)
 
425

 
20,145

 
10,394

Ending balance
$
(511,616
)
 
$
11,472

 
$
(152,897
)
 
$
(653,041
)
 
$
(542,763
)
 
$
5,167

 
$
23,133

 
$
(514,463
)

10

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended July 31, 2015
 
Nine months ended August 1, 2014
 
Change in Unrecognized Pension and Other Postretirement Obligations
 
Derivative Instrument Fair Market Value Adjustment
 
Foreign Currency Translation Adjustment
 
Total
 
Change in Unrecognized Pension and Other Postretirement Obligations
 
Derivative Instrument Fair Market Value Adjustment
 
Foreign Currency Translation Adjustment
 
Total
Beginning balance
$
(529,316
)
 
$
4,736

 
$
(10,702
)
 
$
(535,282
)
 
$
(540,122
)
 
$
5,028

 
$
27,460

 
$
(507,634
)
Other comprehensive (loss) income before reclassifications, net of taxes
(7,152
)
 
4,192

 
(142,195
)
 
(145,155
)
 
(15,202
)
 
3,555

 
(4,327
)
 
(15,974
)
Amounts reclassified from accumulated other comprehensive income (loss), net of taxes
24,852

 
2,544

 
—

 
27,396

 
12,561

 
(3,416
)
 
—

 
9,145

Total other comprehensive income (loss), net of taxes
17,700

 
6,736

 
(142,195
)
 
(117,759
)
 
(2,641
)
 
139

 
(4,327
)
 
(6,829
)
Ending balance
$
(511,616
)
 
$
11,472

 
$
(152,897
)
 
$
(653,041
)
 
$
(542,763
)
 
$
5,167

 
$
23,133

 
$
(514,463
)
Details of the reclassifications from accumulated other comprehensive income (loss) are disclosed below:
 
 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
 
 
 
 
Quarter Ended
 
Nine Months Ended
 
Affected Line Items in the Statements of Income
 
 
July 31,
2015
 
August 1,
2014
 
July 31,
2015
 
August 1,
2014
 
Change in unrecognized pension and other postretirement obligations:
 
 
 
 
 
 
 
 
 
 
Amortization of prior service cost
 
$
50

 
$
181

 
$
151

 
$
539

 
Cost of sales/Product development, selling and administrative expense*
Amortization of net actuarial gain
 
5,767

 
5,544

 
17,905

 
15,951

 
Cost of sales/Product development, selling and administrative expense*
Curtailment loss attributable to unrecognized prior negotiated enhancements
 
—

 
1,582

 
—

 
1,582

 
Cost of sales/Product development, selling and administrative expense*
Settlement loss related to UK plan
 
2,323

 
—

 
15,229

 
—

 
Administrative expense
Deferred tax
 
(2,108
)
 
(2,281
)
 
(8,433
)
 
(5,511
)
 
Provision for income taxes
Amounts reclassified from accumulated other comprehensive income, net of taxes
 
$
6,032

 
$
5,026

 
$
24,852

 
$
12,561

 
 
 
 
 
 
 
 
 
 
 
 
 
Derivative instrument fair market value adjustment:
 
 
 
 
 
 
 
 
 
 
Foreign exchange cash flow hedges
 
$
1,642

 
$
227

 
$
3,606

 
$
(4,805
)
 
Net sales/Cost of sales**
Deferred tax
 
(484
)
 
(64
)
 
(1,062
)
 
1,389

 
Provision for income taxes
Amounts reclassified from accumulated other comprehensive income (loss), net of taxes
 
$
1,158

 
$
163

 
$
2,544

 
$
(3,416
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reclassifications for the period
 
$
7,190

 
$
5,189

 
$
27,396

 
$
9,145

 
 

* Amounts are included in the computation of net periodic benefits costs as either cost of sales or product development, selling and administrative expense as appropriate. Refer to Footnote 12, Retiree Benefits, for additional information.

** Amounts are included in either net sales or cost of sales as appropriate. Refer to Footnote 13, Derivatives, for additional information.



11

9.
Shareholders' Equity
In August 2013, our Board of Directors authorized the Company to repurchase up to $1.0 billion in shares of our common stock until August 2016. Under the program, the Company may repurchase shares in the open market in accordance with applicable SEC rules and regulations. During the quarter ended July 31, 2015, we did not repurchase any shares of common stock. During the quarter ended August 1, 2014, we purchased 1,091,602 shares of common stock for approximately $64.8 million. During the nine months ended July 31, 2015, we purchased 954,580 shares of common stock for approximately $50.0 million, all purchases of which occurred in the first quarter. During the nine months ended August 1, 2014, we purchased 3,488,312 shares of common stock for approximately $194.3 million. Since its inception, the Company has repurchased 9,771,605 shares of common stock under the program for approximately $533.4 million, leaving $466.6 million available under the program.

10. Share-Based Compensation
Total share-based compensation expense (income) recognized for the quarters ended July 31, 2015 and August 1, 2014 is $7.9 million and $(2.0) million, respectively. Total share-based compensation expense recognized for the nine months ended July 31, 2015 and August 1, 2014 was $23.8 million and $11.2 million, respectively. Income from share based compensation for the quarter ended August 1, 2014 was the result of the adjustment of forfeiture rates and the reassessment of performance related measures at that time. The total share-based compensation expense is reflected in our Condensed Consolidated Statements of Cash Flows in operating activities as an add back to net income.
The corresponding deferred taxes recognized related to the share-based compensation is an asset of $2.1 million and a liability of $0.1 million for the quarters ended July 31, 2015 and August 1, 2014, respectively. The corresponding deferred tax asset recognized related to the share-based compensation expense was $6.2 million and $3.0 million for the nine months ended July 31, 2015 and August 1, 2014, respectively.

11. Restructuring Charges
During fiscal 2015, in response to the adverse market conditions, the Company made decisions to further implement its cost reduction programs. 2015 programs as used herein refer to costs related to all 2015 restructuring activities. This includes entering into severance and termination agreements and full or partial closures of certain facilities in order to better align the Company's overall cost structure with anticipated levels of future demand. These activities are expected to be mostly completed by the end of fiscal 2015.
The Company incurred some immaterial restructuring costs in fiscal 2014. These costs related to decisions that preceded the fiscal 2015 restructuring plan and are therefore not considered to be part of such plan.
Restructuring charges incurred to date in fiscal 2015 have consisted of employee severance and termination costs. The following table summarizes the total expected costs and the amounts incurred by segment:
In thousands
Underground
 
Surface
 
Corporate
 
Consolidated
Employee Severance and Termination Costs
 
 
 
 
 
 
 
Total expected costs
$
12,312

 
$
6,986

 
$
252

 
$
19,550

 
 
 
 
 
 
 
 
Amount incurred for the quarter ended July 31, 2015
$
6,896

 
$
879

 
$
—

 
$
7,775

Amount incurred for the nine months ended July 31, 2015
$
12,312

 
$
6,986

 
$
252

 
$
19,550

All restructuring costs are recorded in the income statement under the heading Product development, selling and administrative expense.
Amounts impacting the Company's reserve for restructuring charges are as follows:
In thousands
Quarter Ended July 31, 2015
 
Nine Months Ended July 31, 2015
 
Employee Severance and Termination Costs
 
Employee Severance and Termination Costs
Beginning accrual
$
9,328

 
$
—

Costs incurred
7,775

 
19,550

Costs paid/settled
(7,963
)
 
(10,528
)
Effect of foreign currency translation
(118
)
 
—

Ending accrual
$
9,022

 
$
9,022

The Company expects to incur additional restructuring costs under its 2015 programs, outside of employee severance and termination costs, in the fourth quarter of fiscal 2015 and in future quarters of approximately $9.4 million related to actions

12

taken to date in the fiscal year. Such costs primarily relate to property, plant, and equipment related charges, of which an estimated $6.3 million relates to accelerated depreciation of equipment. Charges in the fourth quarter of fiscal 2015 are expected to be $2.3 million for these items.
Additionally, subsequent to the end of the quarter, the Company undertook further actions related to its 2015 programs and expects to incur approximately $4.0 million of additional employee severance and termination costs in our fiscal fourth quarter as a result of such activities.
For the 2015 fiscal year, total restructuring charges under 2015 programs are anticipated to be between $30.0 million and $40.0 million, with $10.0 million to $20.0 million of such costs anticipated in the fourth quarter. These ranges include expected costs for activities not yet implemented. Total expected cash costs related to the 2015 programs are estimated to be approximately $24.0 million million for employee severance and termination costs, with the remaining expected charges consisting primarily of non-cash property, plant, and equipment items. We expect to achieve savings in future periods to offset these costs.

12. Retiree Benefits
The components of the net periodic benefit cost associated with our pension and other postretirement plans are as follows:
 
Pension Benefits
 
Postretirement Benefits
 
Quarter Ended
 
Quarter Ended
In thousands
July 31,
2015
 
August 1,
2014
 
July 31,
2015
 
August 1,
2014
Service cost
$
1,036

 
$
1,634

 
$
204

 
$
195

Interest cost
18,344

 
22,511

 
291

 
315

Expected return on assets
(25,108
)
 
(27,348
)
 
(156
)
 
(121
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
17

 
148

 
33

 
33

Actuarial loss (gain)
5,973

 
5,703

 
(206
)
 
(159
)
Curtailment charge
—

 
7,838

 
—

 
—

Settlement charge
2,323

 
—

 
—

 
—

Net periodic benefit cost
$
2,585

 
$
10,486

 
$
166

 
$
263

 
 
 
 
 
 
 
 
 
Pension Benefits
 
Postretirement Benefits
 
Nine Months Ended
 
Nine Months Ended
In thousands
July 31,
2015
 
August 1,
2014
 
July 31,
2015
 
August 1,
2014
Service cost
$
2,989

 
$
4,672

 
$
613

 
$
714

Interest cost
57,690

 
63,810

 
872

 
959

Expected return on assets
(78,698
)
 
(79,747
)
 
(468
)
 
(415
)
Amortization of:
 
 
 
 
 
 
 
Prior service cost
52

 
440

 
99

 
99

Actuarial loss (gain)
18,524

 
16,562

 
(619
)
 
(611
)
Curtailment charge
—

 
7,838

 
—

 
—

Settlement charge
15,229

 
—

 
—

 
—

Net periodic benefit cost
$
15,786

 
$
13,575

 
$
497

 
$
746

The actuarial loss (gain) arises from differences in estimates and actual experiences for certain assumptions, including changes in the discount rate and expected return on assets. For the nine months ended July 31, 2015, we contributed $12.1 million to our defined benefit employee pension plans, and we expect contributions to be less than $15.0 million for the full fiscal year.
In conjunction with a UK law change, we recorded non-cash pension settlement charges of $2.3 million and $15.2 million for the quarter and nine months ended July 31, 2015, respectively, as a result of the decision of certain individuals to transfer their pension benefit out of the Company's defined benefit pension plan to a defined contribution plan.

13

For the quarter and nine months ended August 1, 2014, a $7.8 million non-cash pension curtailment charge was recorded in conjunction with the substantial completion of negotiations with certain of our U.S. bargaining units, resulting in the freezing of their respective defined benefit plans at the end of the 2014 calendar year.

13. Derivatives
We are exposed to certain foreign currency risks in the normal course of our global business operations. We enter into derivative contracts that are foreign currency forward contracts to hedge the risks of certain identified and anticipated transactions in currencies other than the functional currency of the respective operating unit. The types of risks hedged are those arising from the variability of future earnings and cash flows caused by fluctuations in foreign currency exchange rates. These contracts are for forecasted transactions and committed receivables and payables denominated in foreign currencies and are not entered into for speculative purposes. Consequently, any market-related losses on the forward contract would be offset by changes in the value of the hedged item, and, as a result, we are generally not exposed to net market risk associated with these instruments.
Each derivative is classified as either a cash flow hedge, a fair value hedge or an undesignated instrument. All derivatives are recorded at fair value on the Condensed Consolidated Balance Sheets under the heading Other current assets or under the heading Other accrued liabilities, as appropriate. Cash flows from fair value and cash flow hedges are classified within the same category as the item being hedged on the Condensed Consolidated Statements of Cash Flows. Cash flows from undesignated derivative instruments are included in operating activities on the Condensed Consolidated Statements of Cash Flows.
For derivative contracts that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss of the derivative contract is recorded as a component of other comprehensive income, net of tax. This amount is reclassified into the income statement on the line associated with the underlying transaction for the periods in which the hedged transaction affects earnings. The amounts recorded in accumulated other comprehensive income for existing cash flow hedges are generally expected to be reclassified into earnings within one year, and all of the existing hedges will be reclassified into earnings by October 2017. Ineffectiveness related to these derivative contracts was recorded in the Condensed Consolidated Statements of Income as a loss of $0.1 million for the quarter ended July 31, 2015. There was no ineffectiveness related to these contracts for the quarter ended August 1, 2014. Ineffectiveness related to these derivative contracts was also recorded in the Condensed Consolidated Statements of Income as a loss of $0.1 million and a gain of less than $0.1 million for the nine months ended July 31, 2015 and August 1, 2014, respectively.
For derivative contracts that are designated and qualify as a fair value hedge, the gain or loss is recorded in the Condensed Consolidated Statements of Income under the heading Cost of sales. For the quarters ended July 31, 2015 and August 1, 2014, we recorded gains of $1.4 million and $0.1 million, respectively, related to fair value hedges, which were offset by foreign exchange fluctuations of the underlying hedged item. For the nine months ended July 31, 2015 and August 1, 2014, we recorded a gain of $0.8 million and a loss of $0.7 million, respectively, related to fair value hedges, which were offset by foreign exchange fluctuations of the underlying hedged item.
For derivative contracts entered into in order to hedge revaluation of net balance sheet exposures in non-functional currency that are not designated as a fair value hedge or a cash flow hedge, the gain or loss is recorded in the Condensed Consolidated Statements of Income under the heading Cost of sales. For the quarters ended July 31, 2015 and August 1, 2014, we recorded gains of $9.8 million and $0.1 million, respectively, related to undesignated hedges, which were offset by foreign exchange fluctuations. For the nine months ended July 31, 2015 and August 1, 2014, we recorded gains of $17.8 million and $2.7 million, respectively, related to undesignated hedges, which were offset by foreign exchange fluctuations.
The following table summarizes the effect of cash flow hedges on the Condensed Consolidated Financial Statements:
In thousands
 
Effective Portion
 
 
Amount of (Loss) Gain Recognized in Other Comprehensive Income
 
(Loss) Gain Reclassified from Accumulated Other Comprehensive Income into Earnings
Derivative Hedging Relationship
 
 
Location
 
Amount
Foreign currency forward contracts
 
 
 
 
 
 
Quarter ended July 31, 2015
 
$
2,807

 
Cost of sales
 
$
(1,642
)
 
 
 
 
Sales
 
—

Nine months ended July 31, 2015
 
$
5,911

 
Cost of sales
 
$
(3,606
)
 
 
 
 
Sales
 
—

Quarter ended August 1, 2014
 
$
363

 
Cost of sales
 
$
(267
)
 
 
 
 
Sales
 
40

Nine months ended August 1, 2014
 
$
5,007

 
Cost of sales
 
$
4,586

 
 
 
 
Sales
 
219


14

We are exposed to credit risk in the event of nonperformance by counterparties to the forward contracts. The terms of the forward contract determine the amount and timing of amounts to be exchanged, and the contract is generally subject to credit risk only when it has a positive fair value.

14. Earnings Per Share
Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during each period. Diluted earnings per share is computed similar to basic earnings per share, except that the weighted average number of shares outstanding is increased to include additional shares from the assumed exercise of stock options, performance shares and restricted stock units, if dilutive.
The following table sets forth the computation of basic and diluted earnings per share:
 
Quarter Ended
 
Nine Months Ended
In thousands, except per share amounts
July 31,
2015
 
August 1,
2014
 
July 31,
2015
 
August 1,
2014
Numerator:
 
 
 
 
 
 
 
Net income
$
44,885

 
$
71,289

 
$
107,192

 
$
194,101

Denominator:
 
 
 
 
 
 
 
Weighted average shares outstanding
97,480

 
99,856

 
97,481

 
100,666

Dilutive effect of stock options, performance shares and restricted stock units
553

 
882

 
571

 
870

Weighted average shares outstanding assuming dilution
98,033

 
100,738

 
98,052

 
101,536

 
 
 
 
 
 
 
 
Basic earnings per share
$
0.46

 
$
0.71

 
$
1.10

 
$
1.93

Diluted earnings per share
$
0.46

 
$
0.71

 
$
1.09

 
$
1.91

Options to purchase a weighted average of 2.7 million and 1.7 million shares were excluded from the calculations of diluted earnings per share for the quarters ended July 31, 2015 and August 1, 2014, respectively, as the effect would have been antidilutive. Options to purchase a weighted average of 2.6 million and 1.8 million shares were excluded from the calculations of diluted earnings per share for the nine months ended July 31, 2015 and August 1, 2014, respectively, as the effect would have been antidilutive.


15. Fair Value Measurements
GAAP establishes a three level fair value hierarchy that prioritizes information used in developing assumptions when pricing an asset or liability as follows:
Level 1: Quoted prices in active markets for identical instruments;
Level 2: Inputs, other than quoted prices in active markets, that are observable for the instrument either directly or indirectly or quoted prices for similar instruments in active markets; and
Level 3: Unobservable inputs for the instrument where there is little or no market data, which requires the reporting entity to develop its own assumptions.
GAAP requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement.
The following tables present the fair value hierarchy for those assets and liabilities measured at fair value and disclose the fair value of long-term obligations recorded at cost as of July 31, 2015 and October 31, 2014. As of July 31, 2015 and October 31, 2014, we did not have any Level 3 assets or liabilities.


15

Fair Value Measurements as of July 31, 2015
 
 
 
 
 
 
 
In thousands
Carrying
Value
 
Total Fair
Value
 
Level 1
 
Level 2
Current Assets
 
 
 
 
 
 
 
Cash equivalents
$
5,141

 
$
5,141

 
$
5,141

 
$
—

Other Current Assets
 
 
 
 
 
 
 
Derivatives
$
16,246

 
$
16,246

 
$
—

 
$
16,246

Other Accrued Liabilities
 
 
 
 
 
 
 
Derivatives
$
7,546

 
$
7,546

 
$
—

 
$
7,546

Long-term Obligations Including Amounts due within One Year
 
 
 
 
 
 
 
Term Loan due 2019
$
375,000

 
$
375,098

 
$
—

 
$
375,098

6.0% Senior Notes due 2016
$
249,446

 
$
263,440

 
$
—

 
$
263,440

5.125% Senior Notes due 2021
$
497,097

 
$
514,570

 
$
—

 
$
514,570

6.625% Senior Notes due 2036
$
148,545

 
$
159,760

 
$
—

 
$
159,760


Fair Value Measurements as of October 31, 2014
 
 
 
 
 
 
 
In thousands
Carrying
Value
 
Total Fair
Value
 
Level 1
 
Level 2
Current Assets
 
 
 
 
 
 
 
Cash equivalents
$
20,776

 
$
20,776

 
$
20,776

 
$
—

Other Current Assets
 
 
 
 
 
 
 
Derivatives
$
2,820

 
$
2,820

 
$
—

 
$
2,820

Other Accrued Liabilities
 
 
 
 
 
 
 
Derivatives
$
7,294

 
$
7,294

 
$
—

 
$
7,294

Long-term Obligations Including Amounts due within One Year
 
 
 
 
 
 
 
Term Loan due 2019
$
375,000

 
$
379,108

 
$
—

 
$
379,108

6.0% Senior Notes due 2016
$
249,131

 
$
272,025

 
$
—

 
$
272,025

5.125% Senior Notes due 2021
$
496,806

 
$
547,000

 
$
—

 
$
547,000

6.625% Senior Notes due 2036
$
148,522

 
$
181,095

 
$
—

 
$
181,095

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
Cash equivalents: The carrying value of cash equivalents approximates fair value based on the short-term nature of these instruments.
Derivatives: The fair value of forward foreign exchange contracts is based on a valuation model that discounts cash flows resulting from the differential between the contract price and the market-based forward rate.
Term Loan: The fair value of the Term Loan is estimated using discounted cash flows and market conditions.
Senior Notes: The fair market value of the senior notes is estimated based on market quotations of similar instruments at the respective period end.

16. Contingent Liabilities
We establish reserves based on our assessment of contingencies related to legal claims asserted against us, as required by GAAP. Developments during the course of legal proceedings may affect our assessments and estimates of our contingencies, which in turn may require us to record or change the amount of a reserve, or make a payment that is different than the amount that we have reserved. In addition, as a normal part of operations, our subsidiaries undertake contractual obligations, warranties and guarantees in connection with the sale of products or services. Although the outcome of these matters cannot be predicted with certainty and favorable or unfavorable resolutions may affect the results of operations on a quarter-to-quarter basis, we believe that the outcome of such legal and other matters will not have a materially adverse effect on our future consolidated financial position, results of operations or liquidity.
We and our subsidiaries are involved in various unresolved legal matters that arise in the normal course of operations, the most prevalent of which relate to product liability (including approximately 3,400 asbestos and silica-related cases), employment

16

and commercial matters. We and our subsidiaries also become involved from time to time in proceedings relating to environmental matters and litigation arising outside the ordinary course of business.
As of July 31, 2015, we were contingently liable to banks, financial institutions and others for approximately $172.0 million for outstanding standby letters of credit, surety bonds and bank guarantees to secure the performance of sales contracts and other third party provided guarantees in the ordinary course of business. Of the $172.0 million, approximately $27.7 million relates to surety bonds and $1.1 million relates to outstanding letters of credit or other guarantees issued by non-U.S. banks for non-U.S. subsidiaries under locally provided credit facilities.
In addition, the SEC’s Division of Enforcement is conducting an investigation concerning our 2012 acquisition of International Mining Machinery Holdings Limited and related accounting matters. We are cooperating with the SEC regarding this investigation, which is ongoing. While it is not possible to predict the timing or outcome of the SEC inquiry, we currently believe that this matter will not have a material adverse effect on the Company's future consolidated results of operations, financial position or liquidity.

17. Segment Information
We operate in two reportable segments: Underground and Surface. Crushing and conveying operating results related to surface applications are reported as part of the Surface segment, while total crushing and conveying operating results are included in the Underground segment. Eliminations primarily consist of the surface applications of crushing and conveying included in both operating segments. The results of operations for MTI and Montabert have been included in the Underground segment from their respective acquisition dates forward.
Operating income (loss) of segments does not include interest income and expense, corporate administration expenses and the provision for income taxes.
In thousands
Underground
 
Surface
 
Corporate
 
Eliminations
 
Total
Quarter ended July 31, 2015
 
 
 
 
 
 
 
 
 
Net sales
$
453,302

 
$
362,559

 
$
—

 
$
(23,678
)
 
$
792,183

Operating income (loss)
$
33,967

 
$
57,319

 
$
(12,542
)
 
$
(5,380
)
 
$
73,364

Interest income
—

 
—

 
2,543

 
—

 
2,543

Interest expense
—

 
—

 
(16,219
)
 
—

 
(16,219
)
Income (loss) before income taxes
$
33,967

 
$
57,319

 
$
(26,218
)
 
$
(5,380
)
 
$
59,688

Depreciation and amortization
$
22,826

 
$
13,726

 
$
186

 
$
—

 
$
36,738

Capital expenditures
$
10,628

 
$
7,398

 
$
—

 
$
—

 
$
18,026

 
 
 
 
 
 
 
 
 
 
Quarter ended August 1, 2014
 
 
 
 
 
 
 
 
 
Net sales
$
470,747

 
$
435,186

 
$
—

 
$
(30,272
)
 
$
875,661

Operating income (loss)
$
47,635

 
$
87,269

 
$
(7,039
)
 
$
(8,574
)
 
$
119,291

Interest income
—

 
—

 
1,707

 
—

 
1,707

Interest expense
—

 
—

 
(16,604
)
 
—

 
(16,604
)
Income (loss) before income taxes
$
47,635

 
$
87,269

 
$
(21,936
)
 
$
(8,574
)
 
$
104,394

Depreciation and amortization
$
18,568

 
$
14,625

 
$
695

 
$
—

 
$
33,888

Capital expenditures
$
12,675

 
$
10,078

 
$
2,011

 
$
—

 
$
24,764


17

 
 
 
 
 
 
 
 
 
 
In thousands
Underground
 
Surface
 
Corporate
 
Eliminations
 
Total
Nine months ended July 31, 2015
 
 
 
 
 
 
 
 
 
Net sales
$
1,261,904

 
$
1,132,981

 
$
—

 
$
(88,306
)
 
$
2,306,579

Operating income (loss)
$
106,691

 
$
142,931

 
$
(36,704
)
 
$
(20,550
)
 
$
192,368

Interest income
—

 
—

 
8,463

 
—

 
8,463

Interest expense
—

 
—

 
(48,368
)
 
—

 
(48,368
)
Income (loss) before income taxes
$
106,691

 
$
142,931

 
$
(76,609
)
 
$
(20,550
)
 
$
152,463

Depreciation and amortization
$
60,538

 
$
40,672

 
$
1,704

 
$
—

 
$
102,914

Capital expenditures
$
24,849

 
$
32,831

 
$
141

 
$
—

 
$
57,821

 
 
 
 
 
 
 
 
 

Nine months ended August 1, 2014
 
 
 
 
 
 
 
 

Net sales
$
1,466,088

 
$
1,279,507

 
$
—

 
$
(100,892
)
 
$
2,644,703

Operating income (loss)
$
177,773

 
$
216,034

 
$
(35,464
)
 
$
(28,065
)
 
$
330,278

Interest income
—

 
—

 
6,583

 
—

 
6,583

Interest expense
—

 
—

 
(49,148
)
 
—

 
(49,148
)
Income (loss) before income taxes
$
177,773

 
$
216,034

 
$
(78,029
)
 
$
(28,065
)
 
$
287,713

Depreciation and amortization
$
54,780

 
$
41,834

 
$
2,111

 
$
—

 
$
98,725

Capital expenditures
$
31,653

 
$
33,446

 
$
3,969

 
$
—

 
$
69,068


18. Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09 Revenue from Contracts with Customers. ASU 2014-09 provides a single principles-based, five-step model to be applied to all contracts with customers. The five steps are to (i) identify the contracts with the customer, (ii) identify the performance obligations in the contact, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when each performance obligation is satisfied. Revenue will be recognized when promised goods or services are transferred to the customer in an amount that reflects the consideration expected in exchange for those goods or services. In July 2015, the FASB agreed to delay the effective date of ASU 2014-09 for one year and to permit early adoption by entities as of the original effective dates. Considering the one year deferral, ASU 2014-09 will be effective for the Company beginning on October 27, 2018 and the standard allows for either full retrospective adoption or modified retrospective adoption. The Company is continuing to evaluate the impact that the adoption of this guidance will have on our financial condition, results of operations and the presentation of our financial statements.
In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which changes the presentation of debt issuance costs in financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. Further, in June 2015, the FASB agreed to clarifying guidance from the Securities and Exchange Commission on the presentation of debt issuance costs on revolving debt arrangements, permitting entities to elect that such costs be classified as an asset. The guidance in the ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is allowed for all entities for financial statements that have not been previously issued and entities would apply the new guidance retrospectively to all prior periods. ASU 2015-03 will be effective for the Company beginning on October 29, 2016. This guidance is not expected to have a significant impact on our financial condition, results of operations or presentation of our financial statements.
In April 2015, the FASB also issued ASU 2015-04, Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets, which permits an employer whose fiscal year-end does not coincide with a calendar month end the ability to elect to measure its defined benefit retirement obligations and related plan assets as of the month end that is closest to its fiscal year-end. If elected, this accounting policy is applied consistently on a prospective basis for all plans, with related disclosure of the alternative measurement date used. The ASU is effective for the Company beginning on October 29, 2016, with early adoption permitted. This guidance is not expected to have a significant impact on our financial condition, results of operations or presentation of our financial statements.
In July 2015, the FASB issued ASU 2015-11, "Simplifying the Measurement of Inventory," which requires most entities to measure most inventories at the lower of cost or net realizable value ("NRV"). This simplifies the evaluation from the current method of lower of cost or market, where market is based upon one of three measures (i.e. replacement cost, net realizable value, or net realizable value less a normal profit margin). The ASU does not apply to inventories measured under the last-in, first-out

18

(LIFO) method or the retail inventory method (RIM), and defines NRV as the "estimated selling price in the the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation." The ASU is effective on a prospective basis for the Company beginning on October 28, 2017, with early adoption permitted. This guidance is not expected to have a significant impact on our financial condition, results of operations or presentation of our financial statements.

19. Subsidiary Guarantors for 2016 Notes and 2036 Notes
The following tables present condensed consolidated financial information as of July 31, 2015 and October 31, 2014 and for the quarters and nine months ended July 31, 2015 and August 1, 2014 for: (a) the Company; (b) on a combined basis, the guarantors of the 2016 Notes and 2036 Notes issued in November 2006, which include the significant domestic operations of Joy Global Underground Mining LLC, Joy Global Surface Mining Inc, N.E.S. Investment Co., Joy Global Conveyors Inc., Joy Global Longview Operations LLC and certain immaterial wholly owned subsidiaries of Joy Global Longview Operations LLC (the "Subsidiary Guarantors"); and (c) on a combined basis, the non-guarantors, which include all of our foreign subsidiaries and a number of small domestic subsidiaries (the "Non-Guarantor Subsidiaries").
The borrowings are fully and unconditionally guaranteed on a joint and several unsecured basis by the Subsidiary Guarantors, which are direct and indirect 100% owned subsidiaries of the Company. We conduct all of our business and derive essentially all of our income from our subsidiaries. Therefore, our ability to make payments on the obligations is dependent on the earnings and distribution of funds from our subsidiaries. There are no restrictions on the ability of any of our domestic subsidiaries to transfer funds to the parent company. Separate financial statements of the Subsidiary Guarantors are not presented because we believe such separate statements or disclosures would not be useful to investors.

Condensed Consolidating Statement of Income
Quarter ended July 31, 2015
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
432,882

 
$
608,964

 
$
(249,663
)
 
$
792,183

Cost of sales
—

 
322,255

 
446,319

 
(193,736
)
 
574,838

Product development, selling and administrative expenses
12,499

 
63,209

 
69,507

 
—

 
145,215

Other (income) expense
—

 
3,769

 
(5,003
)
 
—

 
(1,234
)
Operating income (loss)
(12,499
)
 
43,649

 
98,141

 
(55,927
)
 
73,364

Intercompany items
16,750

 
(30,145
)
 
(6,865
)
 
20,260

 
—

Interest (expense) income, net
(16,068
)
 
1,863

 
529

 
—

 
(13,676
)
Income (loss) before income taxes and equity in income of subsidiaries
(11,817
)
 
15,367

 
91,805

 
(35,667
)
 
59,688

Provision (benefit) for income taxes
(8,654
)
 
997

 
22,460

 
—

 
14,803

Equity in income of subsidiaries
48,048

 
21,505

 
—

 
(69,553
)
 
—

Net income
$
44,885

 
$
35,875

 
$
69,345

 
$
(105,220
)
 
$
44,885

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
13,863

 
$
37,066

 
$
32,435

 
$
(69,501
)
 
$
13,863



19

Condensed Consolidating Statement of Income
Quarter ended August 1, 2014  
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
523,862

 
$
560,533

 
$
(208,734
)
 
$
875,661

Cost of sales
—

 
381,527

 
411,714

 
(169,512
)
 
623,729

Product development, selling and administrative expenses
7,017

 
49,531

 
80,711

 
—

 
137,259

Other (income) expense
—

 
2,344

 
(6,962
)
 
—

 
(4,618
)
Operating income (loss)
(7,017
)
 
90,460

 
75,070

 
(39,222
)
 
119,291

Intercompany items
15,641

 
(14,897
)
 
(7,048
)
 
6,304

 
—

Interest (expense) income, net
(15,614
)
 
1,083

 
(366
)
 
—

 
(14,897
)
Income (loss) before income taxes and equity in income of subsidiaries
(6,990
)
 
76,646

 
67,656

 
(32,918
)
 
104,394

Provision (benefit) for income taxes
(5,923
)
 
32,719

 
6,330

 
(21
)
 
33,105

Equity in income of subsidiaries
72,356

 
25,017

 
—

 
(97,373
)
 
—

Net income
$
71,289

 
$
68,944

 
$
61,326

 
$
(130,270
)
 
$
71,289

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
81,683

 
$
69,038

 
$
80,787

 
$
(149,825
)
 
$
81,683



Condensed Consolidating Statement of Income
Nine Months ended July 31, 2015
 
 
 
 
 
 
 
 
 
 
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
1,405,663

 
$
1,611,037

 
$
(710,121
)
 
$
2,306,579

Cost of sales
—

 
1,032,345

 
1,186,093

 
(543,451
)
 
1,674,987

Product development, selling and administrative expenses
36,503

 
185,949

 
222,119

 
—

 
444,571

Other (income) expense
68

 
12,863

 
(18,278
)
 
—

 
(5,347
)
Operating income (loss)
(36,571
)
 
174,506

 
221,103

 
(166,670
)
 
192,368

Intercompany items
50,106

 
(75,362
)
 
(35,306
)
 
60,562

 
—

Interest (expense) income, net
(47,449
)
 
4,999

 
2,545

 
—

 
(39,905
)
Income (loss) before income taxes and equity in income of subsidiaries
(33,914
)
 
104,143

 
188,342

 
(106,108
)
 
152,463

Provision (benefit) for income taxes
(2,739
)
 
25,488

 
22,522

 
—

 
45,271

Equity in income of subsidiaries
138,367

 
19,039

 
—

 
(157,406
)
 
—

Net income
$
107,192

 
$
97,694

 
$
165,820

 
$
(263,514
)
 
$
107,192

 
 
 
 
 
 
 
 
 
 
Comprehensive (loss) income
$
(10,567
)
 
$
98,570

 
$
32,286

 
$
(130,856
)
 
$
(10,567
)


20

Condensed Consolidating Statement of Income
Nine Months ended August 1, 2014
 
 
 
 
 
 
 
 
 
 
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
1,504,843

 
$
1,793,900

 
$
(654,040
)
 
$
2,644,703

Cost of sales
—

 
1,115,516

 
1,301,028

 
(537,045
)
 
1,879,499

Product development, selling and administrative expenses
35,840

 
184,036

 
224,946

 
—

 
444,822

Other (income) expense
(473
)
 
8,496

 
(17,919
)
 
—

 
(9,896
)
Operating income (loss)
(35,367
)
 
196,795

 
285,845

 
(116,995
)
 
330,278

Intercompany items
48,422

 
(60,625
)
 
(19,053
)
 
31,256

 
—

Interest (expense) income, net
(47,495
)
 
4,679

 
251

 
—

 
(42,565
)
Income (loss) before income taxes and equity in income of subsidiaries
(34,440
)
 
140,849

 
267,043

 
(85,739
)
 
287,713

Provision (benefit) for income taxes
(15,855
)
 
88,939

 
20,528

 
—

 
93,612

Equity in income of subsidiaries
212,686

 
105,984

 
—

 
(318,670
)
 
—

Net income
$
194,101

 
$
157,894

 
$
246,515

 
$
(404,409
)
 
$
194,101

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
187,272

 
$
159,288

 
$
240,592

 
$
(399,880
)
 
$
187,272


21

Condensed Consolidating Balance Sheet
As of July 31, 2015
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
25,138

 
$
2,462

 
$
113,300

 
$
—

 
$
140,900

Accounts receivable, net
—

 
246,172

 
599,546

 
(16,182
)
 
829,536

Inventories
—

 
567,371

 
715,576

 
(98,605
)
 
1,184,342

Other current assets
72,794

 
14,776

 
89,649

 
—

 
177,219

Total current assets
97,932

 
830,781

 
1,518,071

 
(114,787
)
 
2,331,997

Property, plant and equipment, net
22,152

 
330,105

 
527,909

 
(5,016
)
 
875,150

Other assets:
 
 
 
 
 
 
 
 


Other intangible assets, net
—

 
214,724

 
117,745

 
—

 
332,469

Goodwill
—

 
453,401

 
1,100,776

 
—

 
1,554,177

Deferred income taxes
2,841

 
—

 
71,691

 
—

 
74,532

Other non-current assets
4,095,114

 
2,006,794

 
2,540,575

 
(8,478,679
)
 
163,804

Total other assets
4,097,955

 
2,674,919

 
3,830,787

 
(8,478,679
)
 
2,124,982

Total assets
$
4,218,039

 
$
3,835,805

 
$
5,876,767

 
$
(8,598,482
)
 
$
5,332,129

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Short-term borrowings, including current portion of long-term obligations
$
14,063

 
$
—

 
$
108

 
$
—

 
$
14,171

Trade accounts payable
2,273

 
139,569

 
188,996

 
—

 
330,838

Employee compensation and benefits
4,976

 
31,574

 
46,351

 
—

 
82,901

Advance payments and progress billings
—

 
100,566

 
212,373

 
(15,217
)
 
297,722

Accrued warranties
—

 
21,869

 
34,933

 
—

 
56,802

Other accrued liabilities
58,613

 
66,411

 
100,520

 
(13,104
)
 
212,440

Current liabilities of discontinued operations
—

 
11,582

 
—

 
—

 
11,582

Total current liabilities
79,925

 
371,571

 
583,281

 
(28,321
)
 
1,006,456

Long-term obligations
1,256,025

 
—

 
7

 
—

 
1,256,032

Other liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for postretirement benefits
17,849

 
872

 
—

 
—

 
18,721

Accrued pension costs
117,596

 
8,659

 
9,025

 
—

 
135,280

Other non-current liabilities
2,377

 
7,343

 
161,653

 
—

 
171,373

Total other liabilities
137,822

 
16,874

 
170,678

 
—

 
325,374

Shareholders’ equity
2,744,267

 
3,447,360

 
5,122,801

 
(8,570,161
)
 
2,744,267

Total liabilities and shareholders’ equity
$
4,218,039

 
$
3,835,805

 
$
5,876,767

 
$
(8,598,482
)
 
$
5,332,129



22

Condensed Consolidating Balance Sheet
As of October 31, 2014
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 


Cash and cash equivalents
$
54,874

 
$
16,429

 
$
198,888

 
$
—

 
$
270,191

Accounts receivable, net
—

 
400,456

 
675,515

 
(16,262
)
 
1,059,709

Inventories
—

 
470,194

 
753,922

 
(115,808
)
 
1,108,308

Other current assets
87,945

 
9,520

 
82,671

 
15

 
180,151

Total current assets
142,819

 
896,599

 
1,710,996

 
(132,055
)
 
2,618,359

Property, plant and equipment, net
23,660

 
346,761

 
525,642

 
(3,623
)
 
892,440

Other assets:
 
 
 
 
 
 
 
 


Other intangible assets, net
—

 
228,950

 
90,319

 
—

 
319,269

Goodwill
—

 
453,374

 
1,063,319

 
—

 
1,516,693

Deferred income taxes
159

 
—

 
70,022

 
—

 
70,181

Other non-current assets
4,191,771

 
2,102,499

 
2,644,843

 
(8,759,069
)
 
180,044

Total other assets
4,191,930

 
2,784,823

 
3,868,503

 
(8,759,069
)
 
2,086,187

Total assets
$
4,358,409

 
$
4,028,183

 
$
6,105,141

 
$
(8,894,747
)
 
$
5,596,986

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Short-term borrowings, including current portion of long-term obligations
$
—

 
$
11,634

 
$
105

 
$
—

 
$
11,739

Trade accounts payable
3,134

 
215,235

 
177,576

 
—

 
395,945

Employee compensation and benefits
11,639

 
58,374

 
66,898

 
—

 
136,911

Advance payments and progress billings
—

 
117,768

 
193,165

 
(24,994
)
 
285,939

Accrued warranties
—

 
17,002

 
50,270

 
—

 
67,272

Other accrued liabilities
94,097

 
54,523

 
124,244

 
(7,264
)
 
265,600

Current liabilities of discontinued operations
—

 
11,582

 
—

 
—

 
11,582

Total current liabilities
108,870

 
486,118

 
612,258

 
(32,258
)
 
1,174,988

Long-term obligations
1,269,459

 
—

 
82

 
—

 
1,269,541

Other liabilities:
 
 
 
 
 
 
 
 


Liabilities for postretirement benefits
18,743

 
866

 
—

 
—

 
19,609

Accrued pension costs
132,448

 
7,529

 
4,402

 
—

 
144,379

Other non-current liabilities
(12,108
)
 
7,780

 
151,800

 
—

 
147,472

Total other liabilities
139,083

 
16,175

 
156,202

 
—

 
311,460

Shareholders’ equity
2,840,997

 
3,525,890

 
5,336,599

 
(8,862,489
)
 
2,840,997

Total liabilities and shareholders’ equity
$
4,358,409

 
$
4,028,183

 
$
6,105,141

 
$
(8,894,747
)
 
$
5,596,986



23

Condensed Consolidating Statement of Cash Flows
Nine Months ended July 31, 2015
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Consolidated
Operating Activities:
 
 
 
 
 
 
 
Net cash provided by operating activities
$
76,032

 
$
14,882

 
$
77,800

 
$
168,714

Investing Activities:
 
 
 
 
 
 
 
Acquisition of businesses, net of cash acquired
—

 
—

 
(114,353
)
 
(114,353
)
Property, plant and equipment acquired
(141
)
 
(17,429
)
 
(40,251
)
 
(57,821
)
Proceeds from sale of property, plant and equipment
942

 
214

 
2,915

 
4,071

Other investing activities, net
(1,227
)
 
—

 
1,852

 
625

Net cash used by investing activities
(426
)
 
(17,215
)
 
(149,837
)
 
(167,478
)
Financing Activities:
 
 
 
 
 
 
 
Common stock issued
2,853

 
—

 
—

 
2,853

Dividends paid
(58,456
)
 
—

 
—

 
(58,456
)
Treasury stock purchased
(50,000
)
 
—

 
—

 
(50,000
)
Repayments of short-term debt


 
(11,634
)
 
89

 
(11,545
)
Other financing activities, net
261

 
—

 
—

 
261

Net cash (used) provided by financing activities
(105,342
)
 
(11,634
)
 
89

 
(116,887
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

 
—

 
(13,640
)
 
(13,640
)
Decrease in Cash and Cash Equivalents
(29,736
)

(13,967
)

(85,588
)

(129,291
)
Cash and Cash Equivalents at Beginning of Period
54,874

 
16,429

 
198,888

 
270,191

Cash and Cash Equivalents at End of Period
$
25,138

 
$
2,462

 
$
113,300

 
$
140,900



24

Condensed Consolidating Statement of Cash Flow
Nine Months ended August 1, 2014
In thousands
Parent
Company
 
Subsidiary
Guarantors
 
Non-Guarantor
Subsidiaries
 
Consolidated
Operating Activities:
 
 
 
 
 
 
 
Net cash provided (used) by operating activities of continuing operations
$
194,291

 
$
(4,062
)
 
$
108,092

 
$
298,321

Net cash used by operating activities of discontinued operations
—

 
(103
)
 
—

 
(103
)
Net cash provided (used) by operating activities
194,291

 
(4,165
)
 
108,092

 
298,218

Investing Activities:
 
 
 
 
 
 
 
Acquisition of businesses, net of cash acquired
—

 
—

 
(47,058
)
 
(47,058
)
Property, plant and equipment acquired
(3,969
)
 
(15,317
)
 
(49,782
)
 
(69,068
)
Proceeds from sale of property, plant and equipment
—

 
7,124

 
1,758

 
8,882

Other investing activities, net
(82
)
 
232

 
(239
)
 
(89
)
Net cash used by investing activities
(4,051
)
 
(7,961
)
 
(95,321
)
 
(107,333
)
Financing Activities:
 
 
 
 
 
 
 
Common stock issued
10,189

 
—

 
—

 
10,189

Dividends paid
(55,334
)
 
—

 
—

 
(55,334
)
Repayments of term loan
(37,500
)
 
—

 
—

 
(37,500
)
Treasury stock purchased
(194,336
)
 
—

 
—

 
(194,336
)
Repayments of short-term debt


 


 


 
—

Other financing activities, net
(1,099
)
 
(1,212
)
 
(8,008
)
 
(10,319
)
Net cash used by financing activities
(278,080
)
 
(1,212
)
 
(8,008
)
 
(287,300
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

 
—

 
(1,252
)
 
(1,252
)
(Decrease) Increase in Cash and Cash Equivalents
(87,840
)
 
(13,338
)
 
3,511

 
(97,667
)
Cash and Cash Equivalents at Beginning of Period
122,901

 
20,361

 
262,447

 
405,709

Cash and Cash Equivalents at End of Period
$
35,061

 
$
7,023

 
$
265,958

 
$
308,042


20. Subsidiary Guarantors for Credit Agreement, Term Loan and 2021 Notes
The following tables present condensed consolidated financial information as of July 31, 2015 and October 31, 2014 and for the quarters and nine months ended July 31, 2015 and August 1, 2014 for: (a) the Company; (b) on a combined basis, the guarantors of the Credit Agreement, the Term Loan and the 2021 Notes issued in October 2011, which include Joy Global Underground Mining LLC, Joy Global Surface Mining Inc, N.E.S. Investment Co., Joy Global Conveyors Inc. and Joy Global Longview Operations LLC (the "Supplemental Subsidiary Guarantors"); and (c) on a combined basis, the non-guarantors, which include all of our foreign subsidiaries and a number of small domestic subsidiaries ("Non-Guarantor Subsidiaries").
The borrowings are fully and unconditionally guaranteed on a joint and several unsecured basis by the Supplemental Subsidiary Guarantors, which are direct and indirect 100% owned subsidiaries of the Company. We conduct all of our business and derive essentially all of our income from our subsidiaries. Therefore, our ability to make payments on the obligations is dependent on the earnings and distribution of funds from our subsidiaries. There are no restrictions on the ability of any of our domestic subsidiaries to transfer funds to the parent company. Separate financial statements of the Supplemental Subsidiary Guarantors are not presented because we believe such separate statements or disclosures would not be useful to investors.


25

Condensed Consolidating Statement of Income
Quarter ended July 31, 2015
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
430,840

 
$
611,006

 
$
(249,663
)
 
$
792,183

Cost of sales
—

 
320,352

 
448,222

 
(193,736
)
 
574,838

Product development, selling and administrative expenses
12,499

 
63,209

 
69,507

 
—

 
145,215

Other (income) expense
—

 
3,771

 
(5,005
)
 
—

 
(1,234
)
Operating income (loss)
(12,499
)
 
43,508

 
98,282

 
(55,927
)
 
73,364

Intercompany items
16,750

 
(30,145
)
 
(6,865
)
 
20,260

 
—

Interest (expense) income, net
(16,068
)
 
1,907

 
485

 
—

 
(13,676
)
Income (loss) before income taxes and equity in income of subsidiaries
(11,817
)
 
15,270

 
91,902

 
(35,667
)
 
59,688

Provision (benefit) for income taxes
(8,654
)
 
997

 
22,460

 
—

 
14,803

Equity in income of subsidiaries
48,048

 
21,602

 
—

 
(69,650
)
 
—

Net income
$
44,885

 
$
35,875

 
$
69,442

 
$
(105,317
)
 
$
44,885

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
13,863

 
$
37,066

 
$
32,532

 
$
(69,598
)
 
$
13,863


Condensed Consolidating Statement of Income
Quarter ended August 1, 2014
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
520,247

 
$
564,148

 
$
(208,734
)
 
$
875,661

Cost of sales
—

 
378,457

 
414,784

 
(169,512
)
 
623,729

Product development, selling and administrative expenses
7,017

 
49,337

 
80,905

 
—

 
137,259

Other (income) expense
—

 
2,350

 
(6,968
)
 
—

 
(4,618
)
Operating income (loss)
(7,017
)
 
90,103

 
75,427

 
(39,222
)
 
119,291

Intercompany items
15,641

 
(14,897
)
 
(7,048
)
 
6,304

 
—

Interest (expense) income, net
(15,614
)
 
1,055

 
(338
)
 
—

 
(14,897
)
Income (loss) before income taxes and equity in income of subsidiaries
(6,990
)
 
76,261

 
68,041

 
(32,918
)
 
104,394

Provision (benefit) for income taxes
(5,923
)
 
32,720

 
6,329

 
(21
)
 
33,105

Equity in income of subsidiaries
72,356

 
25,017

 
—

 
(97,373
)
 
—

Net income
$
71,289

 
$
68,558

 
$
61,712

 
$
(130,270
)
 
$
71,289

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
81,683

 
$
68,652

 
$
81,173

 
$
(149,825
)
 
$
81,683



26

Condensed Consolidating Statement of Income
Nine Months ended July 31, 2015
 
 
 
 
 
 
 
 
 
 
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
1,400,258

 
$
1,616,442

 
$
(710,121
)
 
$
2,306,579

Cost of sales
—

 
1,026,939

 
1,191,499

 
(543,451
)
 
1,674,987

Product development, selling and administrative expenses
36,503

 
185,949

 
222,119

 
—

 
444,571

Other (income) expense
68

 
12,872

 
(18,287
)
 
—

 
(5,347
)
Operating income (loss)
(36,571
)
 
174,498

 
221,111

 
(166,670
)
 
192,368

Intercompany items
50,106

 
(75,362
)
 
(35,306
)
 
60,562

 
—

Interest (expense) income, net
(47,449
)
 
5,242

 
2,302

 
—

 
(39,905
)
Income (loss) before income taxes and equity in income of subsidiaries
(33,914
)
 
104,378

 
188,107

 
(106,108
)
 
152,463

Provision (benefit) for income taxes
(2,739
)
 
25,502

 
22,508

 
—

 
45,271

Equity in income of subsidiaries
138,367

 
18,818

 
—

 
(157,185
)
 
—

Net income
$
107,192

 
$
97,694

 
$
165,599

 
$
(263,293
)
 
$
107,192

 
 
 
 
 
 
 
 
 
 
Comprehensive (loss) income
$
(10,567
)
 
$
98,570

 
$
32,065

 
$
(130,635
)
 
$
(10,567
)


Condensed Consolidating Statement of Income
Nine Months ended August 1, 2014
 
 
 
 
 
 
 
 
 
 
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Net sales
$
—

 
$
1,495,659

 
$
1,803,084

 
$
(654,040
)
 
$
2,644,703

Cost of sales
—

 
1,108,173

 
1,308,371

 
(537,045
)
 
1,879,499

Product development, selling and administrative expenses
35,840

 
183,363

 
225,619

 
—

 
444,822

Other (income) expense
(473
)
 
8,890

 
(18,313
)
 
—

 
(9,896
)
Operating income (loss)
(35,367
)
 
195,233

 
287,407

 
(116,995
)
 
330,278

Intercompany items
48,422

 
(60,625
)
 
(19,053
)
 
31,256

 
—

Interest (expense) income, net
(47,495
)
 
4,595

 
335

 
—

 
(42,565
)
Income (loss) before income taxes and equity in income of subsidiaries
(34,440
)
 
139,203

 
268,689

 
(85,739
)
 
287,713

Provision (benefit) for income taxes
(15,855
)
 
89,828

 
19,639

 
—

 
93,612

Equity in income of subsidiaries
212,686

 
105,984

 
—

 
(318,670
)
 
—

Net income
$
194,101

 
$
155,359

 
$
249,050

 
$
(404,409
)
 
$
194,101

 
 
 
 
 
 
 
 
 
 
Comprehensive income
$
187,272

 
$
156,753

 
$
243,127

 
$
(399,880
)
 
$
187,272



27

Condensed Consolidating Balance Sheet
As of July 31, 2015
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
25,138

 
$
1,972

 
$
113,790

 
$
—

 
$
140,900

Accounts receivable, net
—

 
245,241

 
600,477

 
(16,182
)
 
829,536

Inventories
—

 
561,454

 
721,493

 
(98,605
)
 
1,184,342

Other current assets
72,794

 
13,864

 
90,561

 
—

 
177,219

Total current assets
97,932

 
822,531

 
1,526,321

 
(114,787
)
 
2,331,997

Property, plant and equipment, net
22,152

 
328,549

 
529,465

 
(5,016
)
 
875,150

Other assets:
 
 
 
 
 
 
 
 
 
Other intangible assets, net
—

 
214,724

 
117,745

 
—

 
332,469

Goodwill
—

 
453,401

 
1,100,776

 
—

 
1,554,177

Deferred income taxes
2,841

 
—

 
71,691

 
—

 
74,532

Other non-current assets
4,095,114

 
1,978,193

 
2,569,176

 
(8,478,679
)
 
163,804

Total other assets
4,097,955

 
2,646,318

 
3,859,388

 
(8,478,679
)
 
2,124,982

Total assets
$
4,218,039

 
$
3,797,398

 
$
5,915,174

 
$
(8,598,482
)
 
$
5,332,129

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Short-term borrowings, including current portion of long-term obligations
$
14,063

 
$
—

 
$
108

 
$
—

 
$
14,171

Trade accounts payable
2,273

 
139,552

 
189,013

 
—

 
330,838

Employee compensation and benefits
4,976

 
31,460

 
46,465

 
—

 
82,901

Advance payments and progress billings
—

 
100,564

 
212,375

 
(15,217
)
 
297,722

Accrued warranties
—

 
21,869

 
34,933

 
—

 
56,802

Other accrued liabilities
58,613

 
66,386

 
100,545

 
(13,104
)
 
212,440

Current liabilities of discontinued operations
—

 
11,582

 
—

 
—

 
11,582

Total current liabilities
79,925

 
371,413

 
583,439

 
(28,321
)
 
1,006,456

Long-term obligations
1,256,025

 
—

 
7

 
—

 
1,256,032

Other liabilities:
 
 
 
 
 
 
 
 


Liabilities for postretirement benefits
17,849

 
872

 
—

 
—

 
18,721

Accrued pension costs
117,596

 
8,659

 
9,025

 
—

 
135,280

Other non-current liabilities
2,377

 
7,343

 
161,653

 
—

 
171,373

Total other liabilities
137,822

 
16,874

 
170,678

 
—

 
325,374

Shareholders’ equity
2,744,267

 
3,409,111

 
5,161,050

 
(8,570,161
)
 
2,744,267

Total liabilities and shareholders’ equity
$
4,218,039

 
$
3,797,398

 
$
5,915,174

 
$
(8,598,482
)
 
$
5,332,129



28

Condensed Consolidating Balance Sheet
As of October 31, 2014
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
ASSETS
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 


Cash and cash equivalents
$
54,874

 
$
16,429

 
$
198,888

 
$
—

 
$
270,191

Accounts receivable, net
—

 
391,672

 
684,299

 
(16,262
)
 
1,059,709

Inventories
—

 
470,194

 
753,922

 
(115,808
)
 
1,108,308

Other current assets
87,945

 
9,520

 
82,671

 
15

 
180,151

Total current assets
142,819

 
887,815

 
1,719,780

 
(132,055
)
 
2,618,359

Property, plant and equipment, net
23,660

 
345,117

 
527,286

 
(3,623
)
 
892,440

Other assets:
 
 
 
 
 
 
 
 


Other intangible assets, net
—

 
228,950

 
90,319

 
—

 
319,269

Goodwill
—

 
453,374

 
1,063,319

 
—

 
1,516,693

Deferred income taxes
159

 
—

 
70,022

 
—

 
70,181

Other non-current assets
4,191,771

 
2,106,760

 
2,640,582

 
(8,759,069
)
 
180,044

Total other assets
4,191,930

 
2,789,084

 
3,864,242

 
(8,759,069
)
 
2,086,187

Total assets
$
4,358,409

 
$
4,022,016

 
$
6,111,308

 
$
(8,894,747
)
 
$
5,596,986

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
Short-term borrowings, including current portion of long-term obligations
$
—

 
$
11,634

 
$
105

 
$
—

 
$
11,739

Trade accounts payable
3,134

 
214,603

 
178,208

 
—

 
395,945

Employee compensation and benefits
11,639

 
58,374

 
66,898

 
—

 
136,911

Advance payments and progress billings
—

 
117,768

 
193,165

 
(24,994
)
 
285,939

Accrued warranties
—

 
17,002

 
50,270

 
—

 
67,272

Other accrued liabilities
94,097

 
54,523

 
124,244

 
(7,264
)
 
265,600

Current liabilities of discontinued operations
—

 
11,582

 
—

 
—

 
11,582

Total current liabilities
108,870

 
485,486

 
612,890

 
(32,258
)
 
1,174,988

Long-term obligations
1,269,459

 
—

 
82

 
—

 
1,269,541

Other liabilities:
 
 
 
 
 
 
 
 
 
Liabilities for postretirement benefits
18,743

 
866

 
—

 
—

 
19,609

Accrued pension costs
132,448

 
7,529

 
4,402

 
—

 
144,379

Other non-current liabilities
(12,108
)
 
7,780

 
151,800

 
—

 
147,472

Total other liabilities
139,083

 
16,175

 
156,202

 
—

 
311,460

Shareholders’ equity
2,840,997

 
3,520,355

 
5,342,134

 
(8,862,489
)
 
2,840,997

Total liabilities and shareholders’ equity
$
4,358,409

 
$
4,022,016

 
$
6,111,308

 
$
(8,894,747
)
 
$
5,596,986

 

29

Condensed Consolidating Statement of Cash Flows
Nine Months ended July 31, 2015
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Consolidated
Operating Activities:
 
 
 
 
 
 
 
Net cash provided by operating activities
$
76,032

 
$
14,392

 
$
78,290

 
$
168,714

Investing Activities:
 
 
 
 
 
 


Acquisition of businesses, net of cash acquired
—

 
—

 
(114,353
)
 
(114,353
)
Property, plant and equipment acquired
(141
)
 
(17,429
)
 
(40,251
)
 
(57,821
)
Proceeds from sale of property, plant and equipment
942

 
214

 
2,915

 
4,071

Other investing activities, net
(1,227
)
 
—

 
1,852

 
625

Net cash used by investing activities
(426
)
 
(17,215
)
 
(149,837
)
 
(167,478
)
Financing Activities:


 


 


 


Common stock issued
2,853

 
—

 
—

 
2,853

Dividends paid
(58,456
)
 
—

 
—

 
(58,456
)
Treasury stock purchased
(50,000
)
 
—

 
—

 
(50,000
)
Repayments of short-term debt


 
(11,634
)
 
89

 
(11,545
)
Other financing activities, net
261

 
—

 
—

 
261

Net cash (used) provided by financing activities
(105,342
)
 
(11,634
)
 
89

 
(116,887
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

 
—

 
(13,640
)
 
(13,640
)
(Decrease) Increase in Cash and Cash Equivalents
(29,736
)

(14,457
)

(85,098
)

(129,291
)
Cash and Cash Equivalents at Beginning of Period
54,874

 
16,429

 
198,888

 
270,191

Cash and Cash Equivalents at End of Period
$
25,138

 
$
1,972

 
$
113,790

 
$
140,900



30

Condensed Consolidating Statement of Cash Flows
Nine Months ended August 1, 2014
In thousands
Parent
Company
 
Supplemental
Subsidiary
Guarantors
 
Supplemental
Non-Guarantor
Subsidiaries
 
Consolidated
Operating Activities:
 
 
 
 
 
 
 
Net cash provided (used) by operating activities of continuing operations
$
194,291

 
$
(4,062
)
 
$
108,092

 
$
298,321

Net cash used by operating activities of discontinued operations
—

 
(103
)
 
—

 
(103
)
Net cash provided (used) by operating activities
194,291

 
(4,165
)
 
108,092

 
298,218

Investing Activities:
 
 
 
 
 
 
 
Acquisition of businesses, net of cash acquired
—

 
—

 
(47,058
)
 
(47,058
)
Property, plant and equipment acquired
(3,969
)
 
(15,317
)
 
(49,782
)
 
(69,068
)
Proceeds from sale of property, plant and equipment
—

 
7,124

 
1,758

 
8,882

Other investing activities, net
(82
)
 
232

 
(239
)
 
(89
)
Net cash used by investing activities
(4,051
)
 
(7,961
)
 
(95,321
)
 
(107,333
)
Financing Activities:


 


 


 


Common stock issued
10,189

 
—

 
—

 
10,189

Dividends paid
(55,334
)
 
—

 
—

 
(55,334
)
Repayments of term loan
(37,500
)
 
—

 
—

 
(37,500
)
Treasury stock purchased
(194,336
)
 
—

 
—

 
(194,336
)
Repayments of short term debt


 


 


 
—

Other financing activities, net
(1,099
)
 
(1,212
)
 
(8,008
)
 
(10,319
)
Net cash used by financing activities
(278,080
)
 
(1,212
)
 
(8,008
)
 
(287,300
)
Effect of Exchange Rate Changes on Cash and Cash Equivalents
—

 
—

 
(1,252
)
 
(1,252
)
(Decrease) Increase in Cash and Cash Equivalents
(87,840
)
 
(13,338
)
 
3,511

 
(97,667
)
Cash and Cash Equivalents at Beginning of Period
122,901

 
20,361

 
262,447

 
405,709

Cash and Cash Equivalents at End of Period
$
35,061

 
$
7,023

 
$
265,958

 
$
308,042


21. Subsequent Events
On August 18, 2015, our Board of Directors declared a cash dividend of $0.20 per outstanding share of common stock. The dividend will be paid on September 18, 2015 to all shareholders of record at the close of business on September 4, 2015.


31

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Condensed Consolidated Financial Statements and the related notes to the Condensed Consolidated Financial Statements in Item 1 of this Quarterly Report on Form 10-Q.

Overview
Joy Global Inc. is a leading manufacturer and servicer of high productivity mining equipment for the extraction of metals and minerals. We manufacture and market original equipment and parts and perform services for both underground and surface mining, as well as certain industrial applications. Service sales, which include revenues from maintenance and repair services, diagnostic analysis, fabrication, mining equipment and electric motor rebuilds, equipment erection services, training, and sales of replacement parts, account for the remainder of our consolidated sales. Our equipment is used in major mining regions throughout the world to mine coal, copper, iron ore, oil sands, gold and other minerals. We operate in two business segments: Underground and Surface. We are a major manufacturer of underground mining machinery for the extraction and haulage of coal and other bedded minerals. We are also a major producer of surface mining equipment for the extraction and haulage of copper, coal and other minerals and ores. We offer comprehensive direct service, which includes our smart service offerings, near major mining regions worldwide and provide extensive operational support for many types of equipment used in mining. Our principal manufacturing facilities are located in the United States, including facilities in Alabama, Pennsylvania, Texas and Wisconsin, and internationally, including facilities in Australia, Canada, China, South Africa, the United Kingdom, and France.
Operating Results
Quarter Ended July 31, 2015 Compared With Quarter Ended August 1, 2014
Net sales in the third quarter of fiscal 2015 were $792.2 million, compared to $875.7 million in the third quarter of fiscal 2014. The decrease in net sales of $83.5 million, or 10%, in the current year third quarter reflected a decrease in original equipment sales of $56.9 million, or 22%, and a decrease in service sales of $26.6 million, or 4%. Original equipment sales decreased in all regions except North America (which is comprised of the United States and Canada) as well as Australia and Africa. The decrease in original equipment sales was led by Latin America, which includes Mexico, Central America, and South America and which decreased by $46.3 million, and China, which decreased by $27.1 million. Declines in service sales in North America and Africa were partially offset by increases in all other regions. The decrease in service sales was led by North America, which decreased by $49.9 million on lower demand for parts and machine rebuilds, as coal producers continue to face challenging market conditions. Compared to the prior year third quarter, net sales in the third quarter of fiscal 2015 included a $50.1 million unfavorable effect of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Operating income in the third quarter of fiscal 2015 was $73.4 million, or 9.3% of net sales, compared to $119.3 million, or 13.6% of net sales, in the third quarter of fiscal 2014. The decrease in operating income of $45.9 million, or 38%, in the current year third quarter was primarily due to margins on lower sales volumes of $26.3 million, a less favorable product mix of $13.9 million, and higher product development, selling, and administrative expenses of $8.0 million. The overall increase in product development, selling, and administrative expenses was driven by increased bad debt expenses in North America and higher overall incentive based compensation expenses, as the prior year included a reassessment of performance related measures which did not recur in the third quarter of 2015. Also contributing to the increase in such costs are higher restructuring costs, $2.3 million of costs related to a non-cash pension settlement charge in Eurasia, and acquisition costs of $0.8 million. All of these increases were partially offset by savings from the Company's cost reduction programs. During the quarter, we also had favorable period costs (defined as any costs of sales other than those costs associated with selling inventory at standard costs) of $2.5 million, inclusive of increased excess purchase accounting charges of $2.7 million on our Montabert acquisition. The overall decrease in period costs was mostly due to lower non-cash pension curtailment charges in North America as the $7.8 million charge incurred in the prior year did not repeat. Compared to the prior year third quarter, operating income in the third quarter of fiscal 2015 included a $7.6 million unfavorable effect of foreign currency translation.
Net income was $44.9 million, or $0.46 per diluted share, in the third quarter of fiscal 2015, compared to $71.3 million, or $0.71 per diluted share, in the third quarter of fiscal 2014.
Bookings in the third quarter of fiscal 2015 were $635.1 million, compared to $923.4 million in the third quarter of fiscal 2014. The decrease in bookings of $288.4 million, or 31%, in the current year third quarter reflected a decrease in original equipment bookings of $186.5 million, or 66%, and a decrease in service orders of $101.9 million, or 16%. Original equipment bookings decreased in all regions, except Eurasia. The decrease in original equipment bookings was led by Latin America and China, which decreased $73.9 million and $56.4 million, respectively. Service bookings decreased in all regions except Eurasia, which increased $11.2 million, and Latin America, which was flat. The decline in service bookings was led by North America, which decreased

32

by $87.8 million on lower rebuild and parts activity. Compared to the prior year third quarter, bookings in the third quarter of fiscal 2015 included a $45.8 million unfavorable effect of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Nine Months Ended July 31, 2015 Compared With Nine Months Ended August 1, 2014
Net sales in the first nine months of fiscal 2015 were $2.3 billion, compared to $2.6 billion in the first nine months of fiscal 2014. The decrease in net sales of $338.1 million, or 13%, in the first nine months of the current year reflected a decrease in original equipment sales of $192.7 million, or 24%, and a decrease in service sales of $145.4 million, or 8%. Original equipment sales decreased in all regions, except North America, which was flat, and Africa. The decrease in original equipment sales was led by Australia and Latin America, which decreased by $58.2 million and $58.0 million, respectively. Service sales decreased in all regions except China. The decrease in service sales was led by Australia and North America, which decreased by $53.6 million and $45.0 million, respectively, on weakened demand for parts and rebuilds. Compared to the first nine months of the prior year, net sales in the first nine months of fiscal 2015 included a $97.3 million unfavorable effect of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Operating income in the first nine months of fiscal 2015 was $192.4 million, or 8.3% of net sales, compared to $330.3 million, or 12.5% of net sales, in the first nine months of fiscal 2014. The decrease in operating income of $137.9 million, or 42%, in the first nine months of the current year was primarily due to margins on lower sales volumes of $117.9 million, and a less favorable product mix of $31.2 million, offset by lower product development, selling, and administrative expenses of $0.3 million. Product development, selling, and administrative expenses include $6.2 million of increased restructuring costs versus the first nine months of fiscal 2014 and $15.2 million of non-cash pension settlement charges in Eurasia. These increases were offset by savings from the company's cost reduction programs and by lower incentive based compensation expenses. In addition, the decreases in profit outlined above were partially offset by higher manufacturing cost absorption of $10.9 million, and lower period costs of $4.6 million, inclusive of increased excess purchase accounting charges of $2.8 million year over year. The decline in period costs was led by lower pension curtailment charges in North America of $7.8 million as well as lower incentive based compensation expenses. Compared to the first nine months of the prior year, operating income in the first nine months of fiscal 2015 included a $9.7 million unfavorable effect of foreign currency translation.
Net income was $107.2 million, or $1.09 per diluted share, in the first nine months of fiscal 2015, compared to $194.1 million, or $1.91 per diluted share, in the first nine months of fiscal 2014.
Bookings in the first nine months of fiscal 2015 were $2.1 billion, compared to $2.8 billion in the first nine months of fiscal 2014. The decrease in bookings of $751.6 million, or 27%, in the first nine months of the current year reflected a decrease in original equipment bookings of $461.4 million, or 52%, and a decrease in service orders of $290.2 million, or 15%. Original equipment bookings decreased in all regions. The decrease in original equipment bookings was led by Latin America, China and North America, which decreased $139.3 million, $117.9 million, and $96.0 million, respectively. Bookings declined from the prior year period in part because the 2014 bookings included the Company's first low seam longwall system and a multiple shovel order for a greenfield expansion project in the Canadian oil sands that were not repeated in the current year. Service bookings decreased in all regions. The decrease in service bookings was led by North America, which decreased by $177.4 million. Compared to the first nine months of the prior year, bookings in the first nine months of fiscal 2015 included an $128.4 million unfavorable effect of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Market Outlook
Global macroeconomic trends have weakened further over the last several months and have resulted in lower estimates for growth in 2015. A slower than expected first half in the U.S., along with slowing growth in China, are largely responsible for the revised outlook. The Eurozone has stayed resilient in the face of Greek and Russian issues, with minimal growth expected in the region for 2015. Further decline in commodity prices and re-balancing in China will weigh on growth through the remainder of 2015. Slower economic activity will likely reduce commodity demand, straining market balances and keeping downward pressure on prices.
A slowing global economy has re-introduced concern surrounding the strength of copper demand and has driven related spot price declines. At the same time, refined copper markets have experienced surplus conditions through May which has also weighed on prices. Despite the pricing concerns, mine disruptions thus far in 2015 have resulted in rates of lost production that are characteristic of the copper industry. This dynamic, along with the longer-term expectation for copper to return to a deficit, should continue to elicit investment from projects that have the strongest economic incentives to proceed.
Increasing regulation of carbon emissions as well as an abundant supply of low cost natural gas has created one of the most challenging environments that the U.S. coal market has ever seen. As low natural gas price levels are expected to be maintained

33

for the remainder of the year, this has driven a large reduction in U.S. coal burn through June, with further reductions expected for the remainder of the year. Through July, U.S. coal production has dropped substantially. The combination of the expected continuation of lower natural gas prices along with reduced coal export opportunities is likely to drive a greater than previously expected reduction in total U.S. coal production for the year.
Internationally, thermal coal markets remain well supplied amidst a slowing global demand environment. Chinese coal imports are trending significantly below peak levels and Indian power plant stockpiles are nearly three times higher than they were a year ago, reducing near-term demand.
Headwinds to the global economy have resulted in steel production falling through July, which is driving a decline in met coal demand. While supply curtailments continue to be announced, the decline in demand along with currency related production pressure has left the market in surplus. In addition, it is expected that the fourth quarter met coal prices will fall further from the levels seen at the end of the previous quarter. The impacts of a declining global steel market also continue to affect the iron ore market. The combination of weakening demand and continued strong supply growth has left iron ore prices trending at consistently low levels, although weaker demand going forward could push prices lower.
Overall, the global mining industry remains strained as miners navigate through a sharp and prolonged downturn. Commodity price declines continue to reduce our customers' capital expenditure plans and delay maintenance spending. The weakening of the global economy over the last quarter has further deteriorated the supply and demand imbalances.
Company Outlook
We are continuing to take proactive steps to better position the company for the eventual market recovery. Our focus on cost control and capital management will help mitigate the market softness currently impacting the business. We have exceeded our year-to-date cost savings target, and we will continue to drive cost out of the business over the next several quarters.
We have seen some early successes with our recent acquisition of Montabert and the integration is proceeding well. Our hard rock business is proving to be more resilient to the commodity downturn but not totally immune. We also achieved important new product development milestones as our prototype hybrid excavator and underground electric loader were delivered to hard rock customers. These new products leverage our unique energy efficient electric drive technology for a step function improvement in cost and reliability for the mines.
The ongoing challenges in commodity markets along with slowing global economic growth have weighed on our customers’ financial position and our incoming order rates. Our focus remains on prudently managing the business through the current market downturn as well as providing the world-class service and technical expertise that our customers expect and need. We will continue to invest strategically in areas that provide value to our customers and returns to our shareholders.




34


Results of Operations
Quarter Ended July 31, 2015 Compared With Quarter Ended August 1, 2014
Net Sales
The following table sets forth the net sales included in our Condensed Consolidated Statements of Income:
 
Quarter Ended
 
 
 
 
In thousands
July 31, 2015
 
August 1, 2014
 
$ Change
 
% Change
Net Sales
 
 
 
 
 
 
 
Underground
$
453,302

 
$
470,747

 
$
(17,445
)
 
(3.7
)
Surface
362,559

 
435,186

 
(72,627
)
 
(16.7
)
Eliminations
(23,678
)
 
(30,272
)
 
6,594

 
 
Total Sales
$
792,183

 
$
875,661

 
$
(83,478
)
 
(9.5
)
Underground net sales in the third quarter of fiscal 2015 were $453.3 million, compared to $470.7 million in the third quarter of fiscal 2014. The decrease in Underground net sales of $17.4 million, or 4%, in the current year third quarter reflected an increase in original equipment sales of $3.5 million, or 2%, and a decrease in service sales of $21.0 million, or 6%. Original equipment sales increased in Australia and Africa by $23.1 million and $12.2 million, respectively, with decreases in all other regions. The increase in original equipment sales in Australia are mostly due to higher longwall activity in the current year third quarter. Service sales decreased in North America and Africa with increases in all other regions. The decrease in service sales was led by North America, which decreased by $36.7 million mostly on lower demand for parts and rebuilds. Compared to the prior year third quarter, Underground net sales in the third quarter of fiscal 2015 included a $38.7 million unfavorable effect of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Surface net sales in the third quarter of fiscal 2015 were $362.6 million, compared to $435.2 million in the third quarter of fiscal 2014. The decrease in Surface net sales of $72.6 million, or 17%, in the current year third quarter reflected a decrease in original equipment sales of $64.4 million, or 53%, and a decrease in service sales of $8.2 million, or 3%. Original equipment sales decreased in all regions except North America. The decrease in original equipment sales was led by Latin America, which decreased by $46.3 million. Service sales declined in North America and Africa, with increases in all other regions. The decrease in service sales was led by North America, which decreased by $17.6 million. Compared to the prior year third quarter, Surface net sales in the third quarter of fiscal 2015 included a $11.4 million unfavorable effect of foreign currency translation.
Operating Income
The following table sets forth the operating income included in our Condensed Consolidated Statements of Income:
 
Quarter Ended
 
July 31, 2015
 
August 1, 2014
 
Operating
 
 
 
Operating
 
 
In thousands
Income
 
% of Net Sales
 
Income
 
% of Net Sales
Operating Income
 
 
 
 
 
 
 
Underground
$
33,967

 
7.5
 
$
47,635

 
10.1
Surface
57,319

 
15.8
 
87,269

 
20.1
Corporate Expense
(12,542
)
 
 
 
(7,039
)
 
 
Eliminations
(5,380
)
 
 
 
(8,574
)
 
 
Total Operating Income
$
73,364

 
9.3
 
$
119,291

 
13.6
Underground operating income in the third quarter of fiscal 2015 was $34.0 million, or 7.5% of net sales, compared to $47.6 million, or 10.1% of net sales, in the third quarter of fiscal 2014. The decrease in Underground operating income of $13.7 million, or 29%, in the current year third quarter was primarily due to margins on lower sales volumes of $7.5 million, a less favorable product mix of $13.8 million and higher product development, selling, and administrative costs of $7.7 million. The overall increase in product development, selling, and administrative costs include $4.3 million of higher bad debt charges, $1.2 million of increased costs for restructuring activities, $2.3 million of non-cash pension settlement charges in Eurasia, and higher legal expenses versus the third quarter of fiscal 2014. These items were partially offset by higher manufacturing cost absorption of $10.9 million and lower period costs of $4.9 million, net of $2.7 million of increased excess purchase accounting charges. Declines in

35

period costs were mostly impacted by the prior year quarter's $7.8 million of pension curtailment charges in North America that did not recur. Compared to the prior year third quarter, Underground operating income in the third quarter of fiscal 2015 included a $7.3 million unfavorable effect of foreign currency translation.
Surface operating income in the third quarter of fiscal 2015 was $57.3 million, or 15.8% of net sales, compared to $87.3 million, or 20.1% of net sales, in the third quarter of fiscal 2014. The decrease in Surface operating income of $30.0 million, or 34%, in the current year third quarter was primarily due to margins on lower sales volumes of $20.8 million, a less favorable product mix of $1.2 million, lower manufacturing cost absorption of $7.9 million, and higher period costs of $2.3 million. These items were partially offset by reduced product development, selling and administrative expenses of $5.3 million, inclusive of $0.3 million of higher restructuring charges, mostly due to savings from the Company's cost reduction programs. Compared to the prior year third quarter, Surface operating income in the third quarter of fiscal 2015 included a $0.3 million unfavorable impact of foreign currency translation.
Corporate expense in the third quarter of fiscal 2015 was $12.5 million, compared to $7.0 million in the third quarter of fiscal 2014. The increase in corporate expense of $5.5 million, or 78%, is due to $4.4 million of higher incentive based compensation expense in the current year third quarter on our share based compensation plans, as the prior year reassessment of performance related measures did not recur, and to $1.5 million of increased acquisition and legal costs.
Product Development, Selling and Administrative Expense
Product development, selling and administrative expense in the third quarter of fiscal 2015 was $145.2 million, or 18.3% of net sales, compared to $137.3 million, or 15.7% of net sales, in the third quarter of fiscal 2014. The increase in product development, selling and administrative expense of $8.0 million, or 6%, was due primarily to $4.0 million of additional bad debt expense, greater legal and related charges of $4.0 million, increased restructuring costs of $1.5 million, $2.3 million in non-cash pension settlement charges, higher incentive based compensation expense, and increased acquisition related costs. These cost increases were partially offset by savings from the Company's cost reduction programs. Restructuring activities continued in the quarter to better align the company's workforce and overall cost structure with current and expected future demand.
Net Interest Expense
Net interest expense in the third quarter of fiscal 2015 was $13.7 million, compared to $14.9 million in the third quarter of fiscal 2014. The decrease in net interest expense of $1.2 million, or 8%, was primarily due to increased interest earned on interest bearing assets as well as the reduction in the borrowing spreads and commitment fees as a result of the third quarter fiscal 2014 refinancing.
Provision for Income Taxes
The provision for income taxes in the third quarter of fiscal 2015 was $14.8 million, compared to $33.1 million in the third quarter of fiscal 2014. The effective income tax rate was 24.8% in the third quarter of fiscal 2015, compared to 31.7% in the third quarter of fiscal 2014. A net discrete tax benefit of $0.8 million was recorded in the third quarter of fiscal 2015, compared to a benefit of $0.4 million in the third quarter of fiscal 2014. The decrease in the effective tax rate for the quarter, excluding discrete items, was primarily attributable to a change in geographical mix of projected earnings. The decrease in the effective tax rate was also aided by cash repatriation benefits in the current year third quarter.
Bookings
Bookings represent new customer orders for original equipment and services, exclusive of long-term maintenance and repair arrangements and life cycle management arrangements awarded to us during the reporting period. Customer orders represent arrangements to purchase specific original equipment or services. We record bookings when firm orders are received and add the bookings to our backlog. Bookings for the quarters ended July 31, 2015 and August 1, 2014 are as follows:
 
Quarter Ended
 
 
 
 
In thousands
July 31, 2015
 
August 1, 2014
 
$ Change
 
% Change
Bookings
 
 
 
 
 
 
 
Underground
$
365,705

 
$
493,115

 
$
(127,410
)
 
(25.8
)
Surface
325,617

 
482,609

 
(156,992
)
 
(32.5
)
Eliminations
(56,269
)
 
(52,307
)
 
(3,962
)
 
 
Total Bookings
$
635,053

 
$
923,417

 
$
(288,364
)
 
(31.2
)

36

Underground bookings in the third quarter of fiscal 2015 were $365.7 million, compared to $493.1 million in the third quarter of fiscal 2014. The decrease in Underground bookings of $127.4 million, or 26%, in the current year third quarter reflected a decrease in original equipment bookings of $85.3 million, or 48%, and a decrease in service orders of $42.2 million, or 13%. Original equipment orders decreased in all regions except Eurasia. The largest decline in original equipment bookings occurred in China, which decreased $37.1 million on lower longwall equipment orders. Service orders decreased in all regions except Eurasia. The decrease in service orders was led by North America, which decreased by $38.8 million, primarily due to lower demand for parts and rebuilds. Compared to the prior year third quarter, Underground bookings in the third quarter of fiscal 2015 included a $30.9 million unfavorable impact of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Surface bookings in the third quarter of fiscal 2015 were $325.6 million, compared to $482.6 million in the third quarter of fiscal 2014. The decrease in Surface bookings of $157.0 million, or 33%, in the current year third quarter reflected a decrease in original equipment bookings of $94.2 million, or 68%, and a decrease in service orders of $62.8 million, or 18%. Original equipment orders decreased in all regions except North America and Eurasia. The decrease in original equipment orders was led by Latin America, which decreased by $73.9 million. Service orders decreased in all regions except Latin America, which was flat, and Africa. The decrease in service orders was led by North America, which decreased by $53.8 million. Compared to the prior year third quarter, Surface bookings in the third quarter of fiscal 2015 included a $14.9 million unfavorable impact of foreign currency translation.
Nine Months Ended July 31, 2015 Compared With Nine Months Ended August 1, 2014
Net Sales
The following table sets forth the net sales included in our Condensed Consolidated Statements of Income:
 
Nine Months Ended
 
 
 
 
In thousands
July 31, 2015
 
August 1, 2014
 
$ Change
 
% Change
Net Sales
 
 
 
 
 
 
 
Underground
$
1,261,904

 
$
1,466,088

 
$
(204,184
)
 
(13.9
)
Surface
1,132,981

 
1,279,507

 
(146,526
)
 
(11.5
)
Eliminations
(88,306
)
 
(100,892
)
 
12,586

 
 
Total Sales
$
2,306,579

 
$
2,644,703

 
$
(338,124
)
 
(12.8
)
Underground net sales in the first nine months of fiscal 2015 were $1.3 billion, compared to $1.5 billion in the first nine months of fiscal 2014. The decrease in Underground net sales of $204.2 million, or 14%, in the first nine months of the current year reflected a decrease in original equipment sales of $116.4 million, or 24%, and a decrease in service sales of $87.8 million, or 9%. Original equipment sales decreased in all regions except Africa. The decrease in original equipment sales was led by China and Australia, which decreased by $52.5 million and $40.7 million, respectively. Service sales decreased in all regions except China. The decrease in service sales was led by Australia and Africa, which decreased by $42.9 million and $30.3 million, respectively, due to decreased rebuild and parts sales in those regions. Compared to the first nine months of the prior year, Underground net sales in the first nine months of fiscal 2015 included a $70.2 million unfavorable effect of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Surface net sales in the first nine months of fiscal 2015 were $1.1 billion, compared to $1.3 billion in the first nine months of fiscal 2014. The decrease in Surface net sales of $146.5 million, or 11%, in the first nine months of the current year reflected a decrease in original equipment sales of $81.6 million, or 24%, and a decrease in service sales of $64.9 million, or 7%. Original equipment sales decreased in all regions except North America and China. The overall decrease in original equipment sales was led by Latin America, which decreased by $58.0 million. Service sales decreased in all regions. The decrease in service sales was led by North America, which decreased by $41.9 million. Compared to the first nine months of the prior year, Surface net sales in the first nine months of fiscal 2015 included a $27.1 million unfavorable effect of foreign currency translation.
Operating Income
The following table sets forth the operating income included in our Condensed Consolidated Statements of Income:

37

 
Nine Months Ended
 
July 31, 2015
 
August 1, 2014
 
Operating
 
 
 
Operating
 
 
In thousands
Income
 
% of Net Sales
 
Income
 
% of Net Sales
Operating Income
 
 
 
 
 
 
 
Underground
$
106,691

 
8.5
 
$
177,773

 
12.1
Surface
142,931

 
12.6
 
216,034

 
16.9
Corporate Expense
(36,704
)
 
 
 
(35,464
)
 
 
Eliminations
(20,550
)
 
 
 
(28,065
)
 
 
Total Operating Income
$
192,368

 
8.3
 
$
330,278

 
12.5
Underground operating income in the first nine months of fiscal 2015 was $106.7 million, or 8.5% of net sales, compared to $177.8 million, or 12.1% of net sales, in the first nine months of fiscal 2014. The decrease in Underground operating income of $71.1 million, or 40%, in the first nine months of the current year was primarily due to margins on lower sales volumes of $71.0 million, a less favorable product mix of $21.8 million and increased product development, selling, and administrative costs of $13.6 million. The increased product development, selling, and administrative expenses include higher restructuring costs of $2.8 million, $15.2 million of non-cash pension settlement charges in Eurasia, and increased bad debt expenses of $2.3 million, partially offset by lower incentive based compensation. During the year, we also had higher manufacturing cost absorption of $18.9 million and lower period costs of $18.7 million, inclusive of $2.8 million in excess purchase accounting charges, all of which partially offset the declines outlined above. Period costs were lower due to $7.8 million of pension curtailment charges that were incurred in North America in the prior year and which did not repeat in the current year, as well as favorable manufacturing cost variances. Compared to the first nine months of the prior year, Underground operating income in the first nine months of fiscal 2015 included a $9.6 million unfavorable effect of foreign currency translation.
Surface operating income in the first nine months of fiscal 2015 was $142.9 million, or 12.6% of net sales, compared to $216.0 million, or 16.9% of net sales, in the first nine months of fiscal 2014. The decrease in Surface operating income of $73.1 million, or 34%, in the first nine months of the current year was primarily due to margins on lower sales volumes of $51.2 million, a less favorable product mix of $12.6 million, lower manufacturing cost absorption of $8.0 million, and higher period costs of $14.2 million. These items were partially offset by reduced product development, selling and administrative expenses of $14.5 million, inclusive of $4.0 million of increased restructuring costs. Compared to the first nine months of the prior year, Surface operating income in the first nine months of fiscal 2015 included a $0.1 million unfavorable impact of foreign currency translation.
Corporate expense in the first nine months of fiscal 2015 was $36.7 million, compared to $35.5 million in the first nine months of fiscal 2014. The increase in corporate expense of $1.2 million, or 3%, is primarily due to higher incentive based compensation costs as well as increased acquisition and legal related costs, partially offset by administrative cost reduction efforts.
Product Development, Selling and Administrative Expense
Product development, selling and administrative expense in the first nine months of fiscal 2015 was $444.6 million, or 19.3% of net sales, compared to $444.8 million, or 16.8% of net sales, in the first nine months of fiscal 2014. The decrease in product development, selling and administrative expense of $0.3 million, or 0.1%, was due primarily to cost savings from the Company's previous restructuring programs and lower incentive based compensation expense, partially offset by $15.2 million of non-cash pension settlement charges and $6.2 million of incremental charges for restructuring activities undertaken in the current fiscal year. Restructuring activities continued in the first nine months of 2015 to better align the company's workforce and overall cost structure with current and expected future demand.
Net Interest Expense
Net interest expense in the first nine months of fiscal 2015 was $39.9 million, compared to $42.6 million in the first nine months of fiscal 2014. The decrease in net interest expense of $2.7 million, or 6%, was primarily due to the reduction in the borrowing spreads and commitment fees as a result of the third quarter fiscal 2014 refinancing, as well as increased interest earned on interest bearing assets.
Provision for Income Taxes
The provision for income taxes in the first nine months of fiscal 2015 was $45.3 million, compared to $93.6 million in the first nine months of fiscal 2014. The effective income tax rate was 29.7% in the first nine months of fiscal 2015, compared to 32.5% in the first nine months of fiscal 2014. Net discrete tax expense of $0.8 million was recorded in the first nine months of

38

fiscal 2015, compared to a benefit of $1.4 million in the first nine months of fiscal 2014. The decrease in the effective tax rate for the period, excluding discrete items, was primarily attributable to a change in geographical mix of projected earnings.
Bookings and Backlog
Bookings for the nine months ended July 31, 2015 and August 1, 2014 are as follows:
 
Nine Months Ended
 
 
 
 
In thousands
July 31, 2015
 
August 1, 2014
 
$ Change
 
% Change
Bookings
 
 
 
 
 
 
 
Underground
$
1,210,096

 
$
1,432,218

 
$
(222,122
)
 
(15.5
)
Surface
980,675

 
1,516,519

 
(535,844
)
 
(35.3
)
Eliminations
(110,812
)
 
(117,212
)
 
6,400

 
 
Total Bookings
$
2,079,959

 
$
2,831,525

 
$
(751,566
)
 
(26.5
)
Underground bookings in the first nine months of fiscal 2015 were $1.2 billion, compared to $1.4 billion in the first nine months of fiscal 2014. The decrease in Underground bookings of $222.1 million, or 16%, in the first nine months of the current year reflected a decrease in original equipment bookings of $126.2 million, or 27%, and a decrease in service orders of $96.0 million, or 10%. Original equipment orders decreased in all regions except North America, which increased $42.4 million, or 34%. The largest declines were seen in China and Eurasia, which decreased by $95.1 million and $51.4 million, respectively. Prior year original equipment orders included the booking of the first high productivity low seam longwall system in Eurasia, which did not repeat, whereas the lower China volumes are being unfavorably impacted by lower longwall equipment demand. Service orders decreased in all regions. The decrease in service orders was led by North America, which decreased by $41.7 million due to lower demand for parts and rebuilds. Compared to the first nine months of the prior year, Underground bookings in the first nine months of fiscal 2015 included a $94.7 million unfavorable impact of foreign currency translation, due primarily to the decline in the value of the Australian dollar and South African rand relative to the U.S. dollar.
Surface bookings in the first nine months of fiscal 2015 were $1.0 billion, compared to $1.5 billion in the first nine months of fiscal 2014. The decrease in Surface bookings of $535.8 million, or 35%, in the first nine months of the current year reflected a decrease in original equipment bookings of $334.3 million, or 72%, and a decrease in service orders of $201.6 million, or 19%. Original equipment orders decreased in all regions except Eurasia. The decrease in original equipment orders was led by Latin America and North America, which decreased by $139.3 million and $119.5 million, respectively. Bookings declined in part because the prior year included a multiple shovel order for a greenfield expansion project in the Canadian oil sands that was not repeated. Service orders decreased in all regions except China and Africa. The decrease in service orders was led by North America, which declined by $143.8 million. Compared to the first nine months of the prior year, Surface bookings in the first nine months of fiscal 2015 included an $33.7 million unfavorable impact of foreign currency translation.
Backlog represents unfilled customer orders for our original equipment and service, exclusive of long-term maintenance and repair arrangements and life cycle management arrangements. Customer orders included in backlog represent contracts to purchase specific original equipment or services. The backlog amounts reported exclude sales already recognized by period end under the percentage-of-completion method of accounting. The following table provides backlog as of July 31, 2015 and October 31, 2014:
In thousands
July 31,
2015
 
October 31,
2014
Backlog
 
 
 
Underground
$
693,473

 
$
729,791

Surface
477,555

 
629,861

Eliminations
(48,775
)
 
(26,269
)
Total Backlog
$
1,122,253

 
$
1,333,383




39


Liquidity and Capital Resources
The following table summarizes the major elements of our working capital as of July 31, 2015 and October 31, 2014:
In thousands
July 31, 2015
 
October 31, 2014
Accounts receivable, net
$
829,536

 
$
1,059,709

Inventories
1,184,342

 
1,108,308

Trade accounts payable
(330,838
)
 
(395,945
)
Advance payments and progress billings
(297,722
)
 
(285,939
)
Trade Working Capital
$
1,385,318

 
$
1,486,133

Other current assets
177,219

 
180,151

Short-term borrowings, including current portion of long-term obligations
(14,171
)
 
(11,739
)
Employee compensation and benefits
(82,901
)
 
(136,911
)
Accrued warranties
(56,802
)
 
(67,272
)
Other accrued liabilities
(212,440
)
 
(265,600
)
Working Capital Excluding Cash and Cash Equivalents
$
1,196,223

 
$
1,184,762

Cash and cash equivalents
140,900

 
270,191

Working Capital
$
1,337,123

 
$
1,454,953

We currently use trade working capital and cash flows from continuing operations as two financial measurements to evaluate the performance of our operations and our ability to meet our financial obligations. We require trade working capital investment because our direct service model requires us to maintain certain inventory levels in order to maximize our customers’ machine availability. This information also provides management with a focus on our receivable terms and collectability efforts and our ability to obtain advance payments on original equipment orders. As part of the continuous improvement of our purchasing and manufacturing processes, we continue to strive for alignment of inventory levels with customer demand and current production schedules.
Cash provided by continuing operating activities during the first nine months of fiscal 2015 was $168.7 million, compared to $298.3 million during the first nine months of fiscal 2014. The decrease in cash provided by continuing operations was primarily due to lower earnings, an increase in inventories, and decreases in amounts owed to trade vendors, partially offset by increased advance payments and progress billings.
Cash used by investing activities during the first nine months of fiscal 2015 was $167.5 million, compared to $107.3 million during the first nine months of fiscal 2014. The increase in cash used by investing activities was primarily due to $67.0 million of higher acquisition costs related to the acquisition of Montabert in the first nine months of the current fiscal year as compared to those incurred for the acquisition of MTI in the first nine months of the prior fiscal year. This increased cash use was partially offset by a reduction in non-acquisition related capital expenditures.
Cash used by financing activities during the first nine months of fiscal 2015 was $116.9 million, compared to $287.3 million during the first nine months of fiscal 2014. The decrease in cash used by financing activities was primarily due to a decrease in share repurchases and a decrease in required repayments made on the Term Loan due to the change in the repayment schedule associated with the debt refinancing that occurred in the third quarter of fiscal 2014.
On May 19, 2015, our Board of Directors declared a cash dividend of $0.20 per outstanding share of common stock. The dividend was paid on June 18, 2015 to all shareholders of record at the close of business on June 4, 2015. In addition, on August 18, 2015, our Board of Directors declared a cash dividend of $0.20 per outstanding share of common stock. The dividend will be paid on September 18, 2015 to all shareholders of record at the close of business on September 4, 2015.
Restructuring Programs
Restructuring activities continued in the first nine months of 2015 to better align the company's workforce and overall cost structure with current and expected future demand. For the 2015 fiscal year, total restructuring charges under 2015 programs are anticipated to be between $30.0 million and $40.0 million, with $10.0 million to $20.0 million of such costs anticipated in the fourth quarter as the Company continues to optimize its global manufacturing footprint. These ranges include expected costs for activities not yet implemented. Total expected cash costs related to the 2015 programs are estimated to be approximately $24.0 million for employee severance and termination costs, with the remaining expected charges consisting primarily of non-cash property, plant, and equipment items.

40


Quarterly Dividend Process
Beginning in the first quarter of Fiscal 2016 (December 2015), we will align the announcement of dividend payments with our release of quarterly earnings information. We will maintain similar periods between dividend declaration dates, record dates, and payment dates following this alignment.
Retiree Benefits
We sponsor pension plans in the U.S. and in other countries. The significance of the funding requirements of these plans is largely dependent on the value of the plan assets, the investment returns on the plan assets, actuarial assumptions, including discount rates, and the impact of the Pension Protection Act of 2006. For the nine months ended July 31, 2015, we contributed $12.1 million to our defined benefit employee pension plans. We expect contributions to our defined benefit pension plans to be less than $15.0 million for the full fiscal year.
In conjunction with a UK law change, we recorded non-cash pension settlement charges of $2.3 million and $15.2 million for the quarter and nine months ended July 31, 2015, respectively, as a result of the decision of certain individuals to transfer their benefit out of the Company's defined benefit pension plan to a defined contribution plan.
Similarly, during the quarter and nine months ended August 1, 2014, a $7.8 million non-cash pension curtailment charge was recorded in conjunction with the substantial completion of negotiations with certain of our U.S. bargaining units, resulting in the freezing of their respective defined benefit plans at the end of the 2014 calendar year.
Credit Agreement
On July 29, 2014, we entered into a $1.0 billion unsecured revolving credit facility that matures on July 29, 2019. Under the Credit Agreement, we also may request an increase of up to $250.0 million of additional aggregate revolving commitments, subject to the terms and conditions contained in the Credit Agreement. The Credit Agreement simultaneously replaced the $1.0 billion revolving credit agreement dated as of October 12, 2012 that was scheduled to expire on November 12, 2017. Under the terms of the Credit Agreement, we pay a commitment fee ranging from 0.09% to 0.30% on the unused portion of the revolving credit facility based on our credit rating. Letters of credit issued under applicable provisions of the Credit Agreement represent an unfunded utilization of the Credit Agreement for purposes of calculating the periodic commitment fee due. Eurodollar rate loans bear interest for a period from the applicable borrowing date until a date one week or one, two, three or six months thereafter, as selected by the Company, at the corresponding Eurodollar rate plus a margin of 1.0% to 2.0% depending on the Company's credit rating. Base rate loans bear interest from the applicable borrowing date at a rate equal to (i) the highest of (a) the federal funds rate plus 0.5%, (b) the rate of interest in effect for such day as publicly announced by the administrative agent as its "prime rate," or (c) a daily rate equal to the one-month Eurodollar rate plus 1.0%, plus (ii) a margin that varies according to the Company's credit rating. Swing line loans bear interest at either the base rate described above or the daily floating Eurodollar rate plus the applicable margin, as selected by the Company. The Credit Agreement is guaranteed by each of our current and future material domestic subsidiaries and requires the maintenance of certain financial covenants, including leverage and interest coverage ratios. The Credit Agreement also restricts payment of dividends or other returns of capital to shareholders if we are not in compliance with the financial covenants in the agreement. As of July 31, 2015, we were in compliance with all financial covenants of the Credit Agreement and had no restrictions on the payment of dividends or other returns of capital to shareholders.
As of July 31, 2015, there were no direct borrowings under the Credit Agreement. Total interest expense recognized for direct borrowings under the Credit Agreement for the quarters ended July 31, 2015 and August 1, 2014 is $0.4 million and less than $0.1 million, respectively. For the nine months ended July 31, 2015 and August 1, 2014, total interest expense recognized for direct borrowings under the Credit Agreement was $0.9 million and less than $0.1 million, respectively. Outstanding standby letters of credit issued under the Credit Agreement, which count toward the $1.0 billion credit limit, totaled $143.2 million. As of July 31, 2015, there was $856.8 million available for borrowings under the Credit Agreement.
On July 29, 2014, we also entered into a term loan agreement which matures July 29, 2019 and provides for a commitment of up to $375.0 million. The Term Loan replaced our prior term loan, dated as of June 16, 2011. The Prior Term Loan had been scheduled to mature on July 16, 2016 and provided an initial commitment of $500.0 million, which had been drawn in full in conjunction with our fiscal 2011 acquisition of LeTourneau Technologies, Inc. and had been amortized to $375.0 million at the date that we entered into the Term Loan. We utilized the $375.0 million commitment under the Term Loan to repay the balance outstanding under the Prior Term Loan. The Term Loan requires quarterly principal payments beginning in fiscal 2016 and contains terms and conditions that are the same as the terms and conditions of the Credit Agreement. The Term Loan is guaranteed by each of our current and future material domestic subsidiaries and requires the maintenance of certain financial covenants, including leverage and interest coverage ratios. As of July 31, 2015, we were in compliance with all financial covenants of the Term Loan.

41

On October 12, 2011, we issued $500.0 million aggregate principal amount of 5.125% Senior Notes due in 2021 at a discount of $4.2 million in an offering that was registered under the Securities Act. Interest on the 2021 Notes is paid semi-annually in arrears on October 15 and April 15 of each year, and the 2021 Notes are guaranteed by each of our current and future material domestic subsidiaries. At our option, we may redeem some or all of the 2021 Notes at a redemption price of the greater of 100% of the principal amount of the 2021 Notes to be redeemed or the sum of the present values of the principal amounts and the remaining scheduled interest payments using a discount rate equal to the sum of a treasury rate of a comparable treasury issue plus 0.5%.
In November 2006, we issued $250.0 million aggregate principal amount of 6.0% Senior Notes due 2016 and $150.0 million aggregate principal amount of 6.625% Senior Notes due 2036. Interest on the 2016 Notes and 2036 Notes is paid semi-annually in arrears on May 15 and November 15 of each year, and the 2016 Notes and 2036 Notes are guaranteed by each of our current and future material domestic subsidiaries. The 2016 Notes and 2036 Notes were issued in a private placement under an exemption from registration provided by the Securities Act. In the second quarter of fiscal 2007, the 2016 Notes and 2036 Notes were exchanged for substantially identical notes in an exchange that was registered under the Securities Act. At our option, we may redeem some or all of the 2016 Notes and 2036 Notes at a redemption price of the greater of 100% of the principal amount of the 2016 Notes and 2036 Notes to be redeemed or the sum of the present values of the principal amounts and the remaining scheduled interest payments using a discount rate equal to the sum of a treasury rate of a comparable treasury issue plus 0.3% for the 2016 Notes and 0.375% for the 2036 Notes.
Stock Repurchase Program
In August 2013, our Board of Directors authorized the Company to repurchase up to $1.0 billion in shares of our common stock until August 2016. Under the program, the Company may repurchase shares in the open market in accordance with applicable SEC rules and regulations. During the quarter ended July 31, 2015, we did not repurchase any shares of common stock. During the quarter ended August 1, 2014, we purchased 1,091,602 shares of common stock for approximately $64.8 million. During the nine months ended July 31, 2015, we purchased 954,580 shares of common stock for approximately $50.0 million, all purchases of which occurred during the first quarter. During the nine months ended August 1, 2014, we purchased 3,488,312 shares of common stock for approximately $194.3 million. Since its inception, the Company has repurchased 9,771,605 shares of common stock under the program for approximately $533.4 million, leaving $466.6 million available under the program.
Advance Payments and Progress Billings
As part of the negotiation process associated with original equipment orders, contracts generally require advance payments and progress billings from our customers to support the procurement of inventory and other resources. As of July 31, 2015, advance payments and progress billings were $297.7 million. As orders are shipped or costs are incurred, the advance payments and progress billings are recognized as revenue in the consolidated financial statements.
Financial Condition
We believe our liquidity and capital resources are adequate to meet our projected needs. We had $140.9 million in cash and cash equivalents as of July 31, 2015 and $856.8 million available for borrowings under the Credit Agreement. Requirements for working capital, dividends, pension contributions, capital expenditures, acquisitions, stock repurchases and principal and interest payments on our Term Loan and Senior Notes will be adequately funded by cash on hand and continuing operations, supplemented by short and long term borrowings, as required.

Goodwill and Other Intangible Assets
Finite-lived intangible assets are amortized to reflect the pattern of economic benefits consumed, which is principally the straight-line method. Intangible assets that are subject to amortization are evaluated for potential impairment whenever events or circumstances indicate that the carrying amount may not be recoverable. No impairment was identified related to our finite-lived intangible assets as of July 31, 2015.
Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is assigned to specific reporting units, and is tested for impairment at least annually, during the fourth quarter of our fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Due to the prolonged suppressed global commodity markets, its related effect on the global mining investment environment and the resulting impact on our stock price, our total shareholders’ equity exceeded our market capitalization during the latter part of the quarter ended July 31, 2015, indicating the possibility of an impairment to goodwill. Based on this indicator of impairment, we performed an interim test for impairment of goodwill as of the last day of our fiscal third quarter. We have concluded our step one evaluation on our reporting units. After completing this analysis, we determined that the estimated fair value of our Underground reporting unit was lower than the carrying value of the reporting unit.

42

Given the timing of the decline in our market capitalization, we have not completed step two of the goodwill impairment test for this reporting unit, which will determine the amount of impairment loss, if any, for our Underground reporting unit. Step two of the impairment test requires we perform a theoretical purchase price allocation for the Underground reporting unit to determine the implied fair value of goodwill to the recorded amount of goodwill. We have engaged a third party valuation firm to assist in this process. We are unable to provide a reasonable estimate or a range of estimates for the potential non-cash impairment charge at this time. We will complete the analysis during the fourth quarter.
Off-Balance Sheet Arrangements
We lease various assets under operating leases. No significant changes to lease commitments have occurred since our year ended October 31, 2014. We have no other off-balance sheet arrangements.

Critical Accounting Estimates, Assumptions and Policies
Our discussion and analysis of financial condition and results of operations is based on our Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We continually evaluate our estimates and judgments, including those related to bad debts, inventory, goodwill and intangible assets, warranty, pension and postretirement benefits and costs, income taxes and contingencies. We base our estimates on historical experience and assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.
We believe our accounting policies for revenue recognition, inventories, goodwill and other intangible assets, accrued warranties, pension and postretirement benefits and costs and income taxes are the policies that most frequently require us to make estimates and judgments, and therefore are critical to the understanding of our results of operations. See Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended October 31, 2014 for a discussion of these policies.
As discussed throughout this Form 10-Q, due to the prolonged suppressed global commodities markets, its related impact on the global mining investment environment, and the resulting impact on our stock price, our total shareholders' equity exceeded our market capitalization during the latter part of the quarter ended July 31, 2015, indicating a possibility of an impairment to goodwill. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is assigned to specific reporting units, which we have identified as our operating segments, and is tested for impairment at least annually, during the fourth quarter of our fiscal year, or more frequently upon the occurrence of an event or when circumstances indicate that a reporting unit’s carrying amount is greater than its fair value. Goodwill is evaluated for impairment by comparing the fair value of each of our reporting units to their book value. We generally first determine, based on a qualitative assessment, whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we then determine the fair value of the reporting unit based on a discounted cash flow model. If the fair value of the reporting unit exceeds its carrying value, goodwill is not impaired. If the carrying value of the reporting unit exceeds its fair value, the impairment test continues by comparing the carrying value of the reporting unit’s goodwill to the implied fair value of goodwill. The implied fair value of goodwill is determined by deducting the fair value of a reporting unit’s identifiable assets and liabilities from the fair value of the reporting unit as a whole, as if that reporting unit had just been acquired and the fair value of the individual assets acquired and liabilities assumed were being determined initially. If goodwill is impaired, we recognize a non-cash impairment loss based on the amount by which the book value of goodwill exceeds its implied fair value.
The process of evaluating the potential impairment of goodwill is highly subjective and requires significant judgment at many points during the analysis. Qualitative assessments regarding goodwill involve a high degree of judgment and can entail subjective considerations. The discounted cash flow model involves many assumptions, including operating results forecasts and discount rates. Inherent in the operating results forecasts are certain assumptions regarding revenue growth rates, projected cost saving initiatives and projected long-term growth rates in the determination of terminal values. Due to the impairment indicator identified above, we performed an interim test for impairment of goodwill as of the last day of our fiscal third quarter. We have concluded our step one evaluation on our reporting units. After completing this analysis, we determined that the estimated fair value of our Underground reporting unit was lower than the carrying value of the reporting unit. Given the timing of the decline in our market capitalization, we have not completed step two of the goodwill impairment test for this reporting unit, which will determine the amount of impairment loss, if any, for our Underground reporting unit. Step two of the impairment test requires we perform a theoretical purchase price allocation for the Underground reporting unit to determine the implied fair value of goodwill to the recorded amount of goodwill. We have engaged a third party valuation firm to assist in this process. We are unable to provide a reasonable estimate or a range of estimates for the potential non-cash impairment charge at this time. We will complete the analysis during the fourth quarter.

43

Other than the discussion on goodwill above, there were no material changes to these policies since our year ended October 31, 2014.

New Accounting Pronouncements
Our new accounting pronouncements are set forth under Part I, Item 1 of this Quarterly Report on Form 10-Q and are incorporated herein by reference.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
As more fully described in our Annual Report on Form 10-K for the year ended October 31, 2014, we are exposed to various types of market risks, such as interest rate risk, commodity price risk and foreign currency risk. We monitor our risks on a continuous basis and generally enter into forward foreign currency contracts to minimize our foreign currency exposures. We do not engage in speculation in our derivative strategies. Gains and losses from foreign currency contract activities are offset by changes in the underlying costs of the transactions being hedged. There have been no material changes to our primary market risk exposures or how such risks are managed since our year ended October 31, 2014.

Item 4. Controls and Procedures
We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known on a timely basis to the officers who certify our financial reports and to other members of senior management and the Board of Directors.
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures are effective (1) in recording, processing, summarizing, and reporting, on a timely basis, information required to be disclosed in the reports we file or submit under the Exchange Act and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
There have not been any changes in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during our quarter ended July 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

44

PART II. OTHER INFORMATION

Item 1. Legal Proceedings
We and our subsidiaries are involved in various unresolved legal matters that arise in the normal course of operations, the most prevalent of which relate to product liability (including approximately 3,400 asbestos and silica-related cases), employment and commercial matters. We and our subsidiaries also become involved from time to time in proceedings relating to environmental matters and litigation arising outside the ordinary course of business.

SEC Investigation. Since the fourth quarter of 2014, the SEC’s Division of Enforcement has been conducting an investigation concerning our 2012 acquisition of International Mining Machinery Holdings Limited and related accounting matters. This investigation is discussed in Note 16, Contingent Liabilities, of this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended October 31, 2014.

Delaware Chancery Litigation. As disclosed in our Quarterly Report on Form 10-Q for the period ended May 1, 2015, we reached an agreement with the plaintiff to pay its legal counsel fees of $0.3 million, following which the court entered a Stipulation and Order dismissing the suit on June 5, 2015.

Item 1A. Risk Factors
We are conducting an interim review of our goodwill, which may lead to future goodwill impairment charges or other asset impairment charges that may have a material adverse impact on our financial results.
A significant portion of our assets consists of goodwill and other intangible assets, the carrying value of which may be reduced if we determine that those assets are impaired. We evaluate our goodwill and long-lived intangible assets for impairment annually in our fourth quarter, or more frequently if events or changes in circumstances suggest that impairment may exist. Our total shareholders’ equity exceeded our market capitalization during the latter part of the quarter ended July 31, 2015, indicating the possibility of an impairment to goodwill and other intangible assets, which totaled $1.9 billion, or approximately 35% of our total assets, as of July 31, 2015. Based upon this indicator of impairment, we performed an interim test for impairment of goodwill as of the last day of our fiscal third quarter and as of the date of this report, we have concluded our step one evaluation of our reporting units, noting that our Underground estimated fair value was lower than the carrying value of the reporting unit. Given the timing of the decline in our market capitalization, we have not completed step two of the goodwill impairment test for this reporting unit, which will determine the amount of impairment loss, if any, for our Underground reporting unit. Step two of the impairment test requires we perform a theoretical purchase price allocation for the Underground reporting unit to determine the implied fair value of goodwill to the recorded amount of goodwill. We have engaged a third party valuation firm to assist in this process. We are unable to provide a reasonable estimate or a range of estimates for the potential non-cash impairment charge at this time. We will complete the analysis during the fourth quarter. Because of the significance of our goodwill and other intangible assets, the results of the step 2 impairment analysis could have a material adverse effect on our results of operations and financial condition.
Except for the change in risks surrounding impairment of goodwill and other intangible assets discussed above, during the quarter ended July 31, 2015, there were no other material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for our fiscal year ended October 31, 2014.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.

Item 3. Defaults upon Senior Securities
Not applicable.

Item 4. Mine Safety Disclosures
Not applicable.

Item 5. Other Information
Not applicable.


45


Item 6. Exhibits
 
 
 
31.1
Chief Executive Officer Rule 13a-14(a)/15d-14(a) Certifications
 
 
31.2
Chief Financial Officer Rule 13a-14(a)/15d-14(a) Certifications
 
 
32.1
Section 1350 Certifications
 
 
101.INS
XBRL Instance Document
 
 
101.SCH
XBRL Taxonomy Extension Schema Document
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
101.DEF
XBRL Taxonomy Extension Definition Document
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document


46

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 Milwaukee, Wisconsin, on September 4, 2015.
 
 
JOY GLOBAL INC.
 
(Registrant)
 
 
Date: September 4, 2015
/s/ James M. Sullivan
 
James M. Sullivan
 
Executive Vice President and Chief Financial Officer
 
(Principal Financial Officer)
 
 
Date: September 4, 2015
/s/ Matthew S. Kulasa
 
Matthew S. Kulasa
 
Vice President, Controller and Chief Accounting Officer
 
(Principal Accounting Officer)


47

JOY GLOBAL INC Reports

Also read