Joy Global Inc.
JOY GLOBAL INC (Form: 10-Q, Received: 08/30/2012 16:20:32)
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED July 27, 2012

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   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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   x     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   x    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   x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class

 

Outstanding at August 24, 2012

Common Stock, $1 par value   105,878,314

 

 

 


Table of Contents

JOY GLOBAL INC.

FORM 10-Q INDEX

July 27, 2012

 

     PAGE NO.  

PART I. – FINANCIAL INFORMATION

  

Item 1 – Financial Statements:

  

Condensed Consolidated Statement of Income – Quarter and Nine Months Ended July 27, 2012 and July 29, 2011

     4   

Condensed Consolidated Balance Sheet – July 27, 2012 and October 28, 2011

     5   

Condensed Consolidated Statement of Cash Flows – Nine Months Ended July 27, 2012 and July 29, 2011

     6   

Notes to Condensed Consolidated Financial Statements

     7 – 30   

Item  2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations

     31 – 40   

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

     40   

Item 4 – Controls and Procedures

     40   

PART II. – OTHER INFORMATION

  

Item 1 – Legal Proceedings

     41   

Item 1A – Risk Factors

     41   

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds

     41   

Item 3 – Defaults Upon Senior Securities

     41   

Item 4 – Mine Safety Disclosures

     41   

Item 5 – Other Information

     41   

Item 6 – Exhibits

     42   

Signature

     43   


Table of Contents

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results and the assumptions upon which those statements are based, are “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 our expectations and assumptions at the time they are made and are subject to risks and uncertainties, that may cause actual results to differ materially from the forward-looking statements. In addition, certain market outlook information 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 risks discussed in Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for our fiscal year ended October 28, 2011, and in other filings that we make with the U. S. Securities and Exchange Commission. Any or all of these factors could cause our actual results and financial or legal status for future periods to differ materially from those expressed or referred to in any forward-looking statement. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.


Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

JOY GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENT OF INCOME

(Unaudited)

(In thousands, except per share amounts)

 

     Quarter Ended     Nine Months Ended  
     July 27,     July 29,     July 27,     July 29,  
     2012     2011     2012     2011  

Net sales

   $ 1,388,723      $ 1,136,352      $ 4,065,984      $ 3,068,613   

Costs and expenses:

        

Cost of sales

     912,939        739,626        2,716,404        2,013,615   

Product development, selling and administrative expenses

     179,436        165,325        532,825        438,985   

Other income

     (3,127     (4,591     (29,903     (7,839
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     299,475        235,992        846,658        623,852   

Interest income

     1,533        3,438        4,062        11,595   

Interest expense

     (18,335     (9,470     (54,061     (25,195

Reorganization items

     —          —          —          (35
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations before income taxes

     282,673        229,960        796,659        610,217   

Provision for income taxes

     88,291        58,155        241,806        174,208   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     194,382        171,805        554,853        436,009   

Income from continuing operations attributable to non-controlling interest

     (38     —          (180     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations attributable to Joy Global Inc.

     194,344        171,805        554,673        436,009   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from discontinued operations, net of income taxes

     (826     1,300        (5,215     1,300   

Income (loss) from discontinued operations, net of income taxes attributable to non-controlling interest

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from discontinued operations, net of income taxes attributable to Joy Global Inc.

     (826     1,300        (5,215     1,300   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     193,556        173,105        549,638        437,309   

Net income attributable to non-controlling interest

     (38     —          (180     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Joy Global Inc.

   $ 193,518      $ 173,105      $ 549,458      $ 437,309   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share:

        

Continuing operations

   $ 1.83      $ 1.63      $ 5.24      $ 4.16   

Discontinued operation

     (0.01     0.01        (0.05     0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 1.82      $ 1.64      $ 5.19      $ 4.17   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share:

        

Continuing operations

   $ 1.82      $ 1.61      $ 5.19      $ 4.09   

Discontinued operation

     (0.01     0.01        (0.05     0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 1.81      $ 1.62      $ 5.14      $ 4.10   
  

 

 

   

 

 

   

 

 

   

 

 

 

Dividends per share

   $ 0.175      $ 0.175      $ 0.525      $ 0.525   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     106,025        105,204        105,794        104,803   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     106,866        106,735        106,867        106,475   
  

 

 

   

 

 

   

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Statements.

 

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JOY GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(In thousands)

 

     July 27,      October 28,  
     2012      2011  

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 454,237       $ 288,321   

Cash held in escrow

     —           866,000   

Accounts receivable, net

     1,148,639         884,696   

Inventories

     1,544,062         1,334,134   

Other current assets

     189,902         190,568   

Current assets of discontinued operations

     —           288   
  

 

 

    

 

 

 

Total current assets

     3,336,840         3,564,007   

Property, plant and equipment, net

     779,235         539,571   

Investment in unconsolidated affiliate

     —           380,114   

Other intangible assets, net

     599,126         385,441   

Goodwill

     1,383,654         428,478   

Deferred income taxes

     62,143         73,123   

Other non-current assets

     146,379         55,448   

Non-current assets of discontinued operations

     —           172   
  

 

 

    

 

 

 

Total assets

   $ 6,307,377       $ 5,426,354   
  

 

 

    

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities:

     

Short-term notes payable, including current portion of long-term obligations

   $ 82,400       $ 35,895   

Trade accounts payable

     487,811         452,519   

Employee compensation and benefits

     129,234         147,664   

Advance payments and progress billings

     823,231         771,841   

Accrued warranties

     104,208         82,737   

Other accrued liabilities

     303,301         206,588   

Current liabilities of discontinued operations

     18,609         27,327   
  

 

 

    

 

 

 

Total current liabilities

     1,948,794         1,724,571   

Long-term obligations

     1,538,460         1,356,412   

Accrued pension costs

     204,811         332,452   

Other liabilities

     116,117         61,124   
  

 

 

    

 

 

 

Total liabilities

     3,808,182         3,474,559   
  

 

 

    

 

 

 

Shareholders’ equity

     2,499,195         1,951,795   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 6,307,377       $ 5,426,354   
  

 

 

    

 

 

 

See Notes to Condensed Consolidated Financial Statements.

 

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JOY GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

(In thousands)

 

     Nine Months Ended  
     July 27,     July 29,  
     2012     2011  

Operating Activities:

    

Net Income

   $ 549,638      $ 437,309   

(Income) loss from discontinued operations

     5,215        (1,300

Adjustments to continuing operations:

    

Depreciation and amortization

     119,826        50,669   

Deferred income taxes

     26,612        (11,883

Excess income tax benefit from share-based payment awards

     (20,826     (17,837

Contributions to retiree benefit plans

     (138,055     (134,352

Retiree benefit plan expense

     29,258        38,429   

Other, net

     (29,363     18,369   

Changes in Working Capital Items Attributed to Continuing Operations, net of acquisition:

    

Accounts receivable, net

     (97,330     (64,902

Inventories, net

     (199,470     (259,180

Other current assets

     (29,577     (41,574

Trade accounts payable

     (44,807     18,894   

Employee compensation and benefits

     (22,463     (12,169

Advance payments and progress billings

     54,040        303,475   

Other accrued liabilities

     50,323        22,186   
  

 

 

   

 

 

 

Net cash provided by operating activities – continuing operations

     253,021        346,134   

Net cash used by operating activities – discontinued operations

     (15,747     (2,444
  

 

 

   

 

 

 

Net cash provided by operating activities

     237,274        343,690   
  

 

 

   

 

 

 

Investing Activities:

    

Property, plant and equipment acquired

     (169,290     (75,189

Acquisition of International Mining Machinery, net of cash acquired

     (955,917     (140,613

Acquisition of LeTourneau, net of cash acquired

     —          (1,041,161

Withdrawal of cash held in escrow

     866,000        —     

Other, net

     7,119        2,514   
  

 

 

   

 

 

 

Net cash used by investing activities – continuing operations

     (252,088     (1,254,449

Net cash used by investing activities – discontinued operations

     —          (361
  

 

 

   

 

 

 

Net cash used by investing activities

     (252,088     (1,254,810
  

 

 

   

 

 

 

Financing Activities:

    

Share-based payment awards

     30,589        70,426   

Dividends paid

     (55,431     (54,870

Proceeds from Further Term Loan

     250,000        —     

Change in short and long-term obligations, net

     (36,641     508,861   

Financing fees

     (1,620     (9,435
  

 

 

   

 

 

 

Net cash provided by financing activities – continuing operations

     186,897        514,982   

Net cash provided by financing activities – discontinued operations

     —          —     
  

 

 

   

 

 

 

Net cash provided by financing activities

     186,897        514,982   
  

 

 

   

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

     (6,167     23,649   
  

 

 

   

 

 

 

Increase (Decrease) in Cash and Cash Equivalents

     165,916        (372,489

Cash and Cash Equivalents at Beginning of Period

     288,321        815,581   
  

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

   $ 454,237      $ 443,092   
  

 

 

   

 

 

 

See Notes to Condensed Consolidated Financial Statements.

 

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NOTES TO CONDENSED CONSOLIDATED FINACIAL STATEMENTS
1. Description of Business

Joy Global Inc. (the “Company”) is a worldwide leader in high productivity mining solutions, and we manufacture and market original equipment and aftermarket parts and services for both underground and surface mining and certain industrial applications. Our equipment is used in major mining regions throughout the world to mine coal, copper, iron ore, oil sands and other minerals. We operate in two business segments: Underground Mining Machinery and Surface Mining Equipment. We are a major manufacturer of underground mining equipment for the extraction of coal and other bedded minerals and offer comprehensive service locations near major mining regions worldwide. We are also a major producer of surface mining equipment for the extraction of ores and minerals and we provide extensive operational support for many types of equipment used in surface mining.

 

2. Basis of Presentation

The Condensed Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q are unaudited and have been prepared by us in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In our opinion, all adjustments necessary for the fair presentation on a going concern basis of the results of operations, cash flows and financial position for all periods presented have been made. All 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 reported in the financial statements and accompanying notes. Actual amounts could differ from the 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 28, 2011. 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 International Mining Machinery Holdings Limited

On December 29, 2011, we completed the purchase of 534.8 million shares of International Mining Machinery Holdings Limited (“IMM”). The shares, which represented approximately 41.1% of IMM’s outstanding common stock, were purchased pursuant to a stock purchase agreement, dated July 11, 2011, as amended and restated on July 14, 2011. The shares were purchased for HKD8.50 per share, or approximately $584.6 million. As a result of this and prior open market purchases, we acquired a controlling interest on such date of approximately 69.2% of IMM’s outstanding common stock and were required by Rule 26.1 of the Hong Kong Takeovers Code to commence a tender offer to purchase all of the outstanding shares of IMM common stock and options to purchase IMM common stock that we did not already own. The tender offer commenced on January 6, 2012 and we completed the tender offer on February 10, 2012. As a result of the tender offer, we beneficially owned approximately 98.9% of IMM’s outstanding common stock. On July 25, 2012, we effected the compulsory acquisition of the remaining shares under applicable provisions of the Cayman Island Companies Law, under which IMM is incorporated. We paid consideration of approximately $16.2 million to complete the compulsory acquisition. The combined effect of these transactions resulted in our beneficial ownership of 100% of the common stock of IMM.

Prior to obtaining control on December 29, 2011, our investment in IMM had been accounted for under the equity method. Upon obtaining control, we applied the acquisition method of accounting, re-measured the preexisting interest at fair value and recorded a gain of $19.4 million. The gain is reported in the Condensed Consolidated Statement of Income under “other income” for the nine month period ended July 27, 2012. The results of operations for IMM have been included in the accompanying Condensed Consolidated Financial Statements from December 29, 2011 forward as part of the Underground Mining Machinery segment. Prior to obtaining control, our share of income from IMM was reported in the Condensed Consolidated Statement of Income under “other income” and included in Corporate.

 

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The preliminary allocation of the purchase price to the assets acquired and liabilities assumed is based upon the estimated fair values at the date of acquisition. The fair values of the assets and liabilities included in the table below are preliminary and subject to change as we are currently in the process of obtaining third-party valuations of assets acquired and liabilities assumed and assessing certain reserves and contingent liabilities. Adjustments have been made in the current quarter to reflect updated fair value estimates for inventory and intangible assets and to adjust for other liabilities. The excess of the purchase price over the net tangible and identifiable intangible assets is reflected as goodwill. The following table summarizes the preliminary estimates of fair value of the assets acquired and the liabilities assumed as of the acquisition date:

 

(in thousands)

      

Assets Acquired:

  

Cash and cash equivalents

   $ 72,912   

Accounts receivable

     202,825   

Inventories

     91,176   

Other current assets

     15,622   

Property, plant and equipment

     123,600   

Other intangible assets and goodwill

     1,138,894   

Other non-current assets

     13,041   
  

 

 

 

Total assets acquired

     1,658,070   

Liabilities Assumed:

  

Short-term notes payable

     (14,666

Accounts payable

     (87,305

Employee compensation and benefits

     (6,458

Advance payments and progress billings

     (6,122

Other accrued liabilities

     (61,123

Other non-current liabilities

     (58,958
  

 

 

 

Total liabilities assumed

     (234,632
  

 

 

 
   $ 1,423,438   
  

 

 

 

The fair value for identified intangible assets was primarily determined based upon discounted expected cash flows. Of the $1.1 billion of intangible assets and goodwill, $165.0 million has been preliminarily assigned to intangible assets which are being amortized over a weighted average life of 13.5 years. The determination of the useful life was based upon historical experience, economic factors, and future cash flows of the assets acquired.

The results of IMM have been included in the condensed consolidated financial statements since the date of acquisition. We have incurred acquisition costs of $24.3 million related to IMM, of which $8.6 million was recognized in the prior fiscal year.

The following unaudited pro forma financial information for the nine months ended July 27, 2012 and three and nine months ended July 29, 2011 reflect the results of continuing operations of the Company as if the acquisition of IMM had been completed on October 28, 2011 and October 30, 2010, respectively. Pro forma adjustments have been made for changes in depreciation and amortization expenses related to the valuation of the acquired tangible and intangible assets at fair value, the elimination of non-recurring items and the addition of incremental costs related to debt used to finance the acquisition.

 

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Table of Contents

 

     Nine Months Ended      Quarter Ended  
     July 27,      July 29,      July 29,  
     2012      2011      2011  

Net sales

   $ 4,135,147       $ 3,320,159       $ 1,232,051   

Income from continuing operations

   $ 562,128       $ 438,259       $ 172,153   

Basic earnings per share from continuing operations

   $ 5.31       $ 4.18       $ 1.64   

Diluted earnings per share from continuing operations

   $ 5.26       $ 4.12       $ 1.61   

The unaudited pro forma financial information is presented for information purposes only. It is not necessarily indicative of what our financial position or results of operations actually would have been had we completed the acquisition at the dates indicated, nor does it purport to project the future financial position or operating results of the combined company.

Acquisition of LeTourneau Technologies, Inc.

We completed the acquisition of LeTourneau Technologies, Inc. (“LeTourneau”) on June 22, 2011. LeTourneau historically operated in three businesses, mining equipment, steel products and drilling products. Subsequent to the acquisition, we entered into a definitive agreement to sell the drilling products business of LeTourneau and that transaction closed on October 24, 2011. The results of operations for LeTourneau have been included in the accompanying Condensed Consolidated Financial Statements from the acquisition date forward, with results of the drilling products business being included as results of discontinued operations. Results for the mining equipment and steel products business are included in continuing operations as part of the Surface Mining Equipment segment.

We purchased all of the outstanding shares of LeTourneau. The purchase price for the acquisition was as follows:

 

(in thousands)

      

Cash consideration

   $ 1,100,000   

Working capital purchase price adjustments

     (46,323
  

 

 

 
   $ 1,053,677   
  

 

 

 

The allocation of the purchase price was finalized in the third quarter of fiscal 2012. Adjustments have been made in the current quarter to reflect warranty reserves and the agreement of the disposition of certain assets and liabilities related to the drilling products business.

 

4. Inventories

Consolidated inventories consisted of the following:

 

     July 27,      October 28,  

(in thousands)

   2012      2011  

Finished goods

   $ 890,978       $ 832,730   

Work in process and purchased parts

     416,728         269,798   

Raw materials

     236,356         231,606   
  

 

 

    

 

 

 
   $ 1,544,062       $ 1,334,134   
  

 

 

    

 

 

 

July 27, 2012 inventories include $80.2 million attributable to the IMM acquisition.

 

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5. Warranties

The following table reconciles the changes in the product warranty reserve.

 

     Quarter Ended     Nine Months Ended  
     July 27,     July 29,     July 27,     July 29,  

(in thousands)

   2012     2011     2012     2011  

Balance, beginning of period

   $ 102,429      $ 66,776      $ 82,737      $ 62,351   

Accrual for warranty expensed during the period

     8,413        9,780        34,314        27,376   

Settlements made during the period

     (13,117     (9,408     (36,668     (25,076

Change in liability for pre-existing warranties during the period, including expirations

     7,498        928        19,016        1,170   

Effect of foreign currency translation

     (1,015     (398     (988     1,857   

Acquired warranty accrual

     —          11,545        5,797        11,545   
  

 

 

   

 

 

   

 

 

   

 

 

 

Balance, end of period

   $ 104,208      $ 79,223      $ 104,208      $ 79,223   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjustments were made in the first and third quarters of fiscal 2012 to reflect changes in the liability of $10.0 million and $6.1 million, respectively, for pre-existing warranties related to the mining equipment business of LeTourneau.

 

6. Borrowings and Credit Facilities

Direct borrowings and capital lease obligations consisted of the following:

 

     July 27,     October 28,  

(in thousands)

   2012     2011  

Term Loan due 2016

   $ 475,000      $ 493,750   

Further Term Loan due 2016

     244,375        —     

6.0% Senior Notes due 2016

     248,270        248,008   

6.625% Senior Notes due 2036

     148,460        148,441   

5.125% Senior Notes due 2021

     496,003        495,755   

Short-term notes payable and bank overdrafts

     6,977        4,140   

Capital leases and other

     1,775        2,213   
  

 

 

   

 

 

 
     1,620,860        1,392,307   

Less: Amounts due within one year

     (82,400     (35,895
  

 

 

   

 

 

 

Long-term obligations

   $ 1,538,460      $ 1,356,412   
  

 

 

   

 

 

 

We have a $700.0 million unsecured revolving credit facility (the “Credit Agreement”) that expires on November 3, 2014. The Credit Agreement requires the maintenance of certain financial covenants including leverage and interest coverage ratios. The Credit Agreement also restricts payment of dividends or other return of capital when the consolidated leverage ratio exceeds a stated level amount. At July 27, 2012, we were in compliance with all financial covenants of the Credit Agreement and had no restrictions on the payment of dividends or return of capital.

At July 27, 2012, there were no direct borrowings under the Credit Agreement. Outstanding letters of credit issued under the Credit Agreement, which reduce availability under the $700.0 million credit limit, totaled $280.1 million. At July 27, 2012, there was $419.9 million available for borrowings under the Credit Agreement.

 

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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, and collectively, the “Notes”) with interest on the Notes being paid semi-annually in arrears on May 15 and November 15 of each year, starting May 15, 2007. The Notes are guaranteed by each of our current and future material domestic subsidiaries. The Notes were issued in a private placement under an exemption from registration provided by the Securities Act, as amended. In the second quarter of fiscal 2007, the Notes were exchanged for substantially identical notes that are registered under the Securities Act. At our option, we may redeem some or all of the Notes at a redemption price of the greater of 100% of the principal amount of the 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.

On June 16, 2011, we entered into a credit agreement, which matures June 16, 2016, and provided for a $500.0 million term loan commitment (the “Term Loan”), which was drawn in full to partially finance the acquisition of LeTourneau. The Term Loan requires quarterly principal payments that began in the fourth quarter of fiscal year 2011. The Term Loan contains terms and conditions that are substantially similar to 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. At July 27, 2012, 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 the 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, starting April 15, 2012, 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%.

On October 31, 2011, we entered into a credit agreement that provides for a further $250.0 million term loan commitment (the “Further Term Loan”). The Further Term Loan requires quarterly principal payments that began in the third quarter of fiscal year 2012 and matures June 16, 2016. The Further Term Loan contains terms and conditions that are substantially similar to the terms and conditions of the Credit Agreement and the Term Loan. The Further 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. The Further Term Loan was drawn in full on February 10, 2012, in conjunction with the settlement of the IMM tender offer. At July 27, 2012, we were in compliance with all financial covenants of the Further Term Loan.

 

7. Share-Based Compensation

We recognized total share-based compensation expense for the quarter ended July 27, 2012 and July 29, 2011 of approximately $5.5 million and $6.7 million, respectively. We recognized total share-based compensation expense for the nine months ended July 27, 2012 and July 29, 2011 of approximately $20.0 million and $18.9 million, respectively.

 

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8. Retiree Benefits

The components of the net periodic pension and other post-retirement benefits expense recognized are as follows:

 

     Pension Benefits     Postretirement Benefits  
     Quarter Ended     Quarter Ended  
     July 27,     July 29,     July 27,     July 29,  

(in thousands)

   2012     2011     2012     2011  

Service cost

   $ 2,748      $ 5,223      $ 220      $ 166   

Interest cost

     20,620        21,800        302        343   

Expected return on assets

     (24,612     (23,833     (57     (71

Amortization of:

        

Prior service cost

     327        343        13        12   

Actuarial loss (gain)

     8,415        8,999        (272     (214
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 7,498      $ 12,532      $ 206      $ 236   

 

     Pension Benefits     Postretirement Benefits  
     Nine Months Ended     Nine Months Ended  
     July 27,     July 29,     July 27,     July 29,  

(in thousands)

   2012     2011     2012     2011  

Service cost

   $ 13,223      $ 15,493      $ 720      $ 736   

Interest cost

     61,863        64,182        1,028        1,155   

Expected return on assets

     (73,812     (69,540     (237     (255

Amortization of:

        

Prior service cost

     980        1,031        39        36   

Actuarial loss (gain)

     25,247        26,573        (870     (982

Curtailment loss

     1,077        —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net periodic benefit cost

   $ 28,578      $ 37,739      $ 680      $ 690   
  

 

 

   

 

 

   

 

 

   

 

 

 

The actuarial loss (gain) arises from differences in estimates and actual experiences for certain assumptions including changes in discount rate and expected return on assets. During fiscal 2012 we expect to contribute approximately $180.0 million to $190.0 million to our defined benefit employee pension plans.

On February 28, 2012 a modification was made to the Joy Global Pension Plan freezing benefits for all salaried and non-bargained hourly participants effective May 1, 2012. We recorded a $1.1 million curtailment charge in the second quarter of fiscal 2012 in conjunction with the freeze.

 

9. Derivatives

We enter into derivative contracts, primarily 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. We have designated substantially all of these contracts as either cash flow or fair value hedges. These contracts are for forecasted transactions and committed receivables and payables denominated in foreign currencies and are not entered into for speculative purposes.

 

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We are exposed to certain foreign currency risks in the normal course of our global business operations. For derivative contracts that are designated and qualify for 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 period(s) 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 December 2013. Ineffectiveness related to these derivative contracts was recorded in the Condensed Consolidated Statement of Income as a gain of $0.4 million and $0.3 million for the quarters ended July 27, 2012 and July 29, 2011, respectively. Ineffectiveness related to these derivative contracts was recorded in the Condensed Consolidated Statement of Income as a gain of $2.0 million and $0.6 million for the nine months ended July 27, 2012 and July 29, 2011, respectively.

For derivative contracts that are designated and qualify as a fair value hedge, gain or loss is recorded in the Condensed Consolidated Statement of Income under the heading Cost of Sales. For the quarters ended July 27, 2012 and July 29, 2011, we recorded a $0.3 million gain and a $2.3 million loss, respectively, in the Condensed Consolidated Statement of Income related to fair value hedges which was offset by foreign exchange fluctuations of the underlying receivables. For the nine months ended July 27, 2012 and July 29, 2011, we recorded a $2.9 million loss and a $0.7 million loss, respectively, in the Condensed Consolidated Statement of Income related to fair value hedges which was offset by foreign exchange fluctuations of the underlying receivables.

For derivative contracts that are not designated as a fair value hedge or a cash flow hedge the gain or loss is recorded in the Condensed Consolidated Statement of Income under the heading Cost of Sales. For the quarter and nine months ended July 27, 2012 we recorded a $0.8 million gain and a $2.0 million gain, respectively, in the Condensed Consolidated Statement of Income related to undesignated hedges which was offset by foreign exchange fluctuations.

The following table summarizes the effect of cash flow hedges on the Consolidated Financial Statements:

 

(in thousands)

   Effective Portion  
     Amount of Gain/(Loss)     Gain/(Loss) Reclassified from AOCI into Earnings  

Derivative Hedging Relationship

   Recognized in OCI     Location    Amount  

Foreign currency forward contracts

  

Quarter ended July 27, 2012

   $ (1,769   Cost of sales    $ (2,450
     Sales      456   

Nine months ended July 27, 2012

   $ (1,112   Cost of sales    $ (343
     Sales      414   

Quarter ended July 29, 2011

   $ 2,945      Cost of sales    $ 413   
     Sales      456   

Nine months ended July 29, 2011

   $ 9,392      Cost of sales    $ 3,357   
     Sales      4,039   

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

 

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Forward exchange contracts are entered into to protect the value of forecasted transactions and committed future foreign currency receipts and disbursements and consequently any market-related loss on the forward contract would be offset by changes in the value of the hedged item. As a result, we are generally not exposed to net market risk associated with these instruments.

 

10. Equity and Noncontrolling Interest

Changes in consolidated equity attributable to the Company and noncontrolling interest consisted of the following, net of taxes where applicable:

 

    Quarter Ended July 27, 2012     Quarter Ended July 29, 2011  
    Equity     Equity           Equity     Equity        
    Attributable     Attributable to           Attributable     Attributable to        
    to Joy     Noncontrolling     Total     to Joy     Noncontrolling     Total  
    Global Inc.     Interests     Equity     Global Inc.     Interests     Equity  

Beginning balance

  $ 2,328,149      $ 16,387      $ 2,344,536      $ 1,709,091      $ —        $ 1,709,091   

Comprehensive income (loss):

           

Net income

    193,518        38        193,556        173,105        —          173,105   

Change in pension liability, net of taxes

    5,734        —          5,734        11,438        —          11,438   

Derivative instrument fair market value adjustment, net of taxes

    146        —          146        1,360        —          1,360   

Currency translation adjustment

    (20,843     —          (20,843     (1,777     —          (1,777
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income:

    178,555        38        178,593        184,126        —          184,126   

Other changes in equity:

           

Dividends

    (18,522     —          (18,522     (18,382     —          (18,382

Purchase of IMM shares from noncontrolling interest

    —          (16,425     (16,425     —          —          —     

Other, including share based payment awards and options exercised

    11,013        —          11,013        3,536        —          3,536   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 2,499,195      $ —        $ 2,499,195      $ 1,878,371      $ —        $ 1,878,371   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    Nine Months Ended July 27, 2012     Nine Months Ended July 29, 2011  
    Equity     Equity           Equity     Equity        
    Attributable     Attributable to           Attributable     Attributable to        
    to Joy     Noncontrolling     Total     to Joy     Noncontrolling     Total  
    Global Inc.     Interests     Equity     Global Inc.     Interests     Equity  

Beginning balance

  $ 1,951,795      $ —        $ 1,951,795      $ 1,342,366      $ —        $ 1,342,366   

Acquisition of controlling interest in IMM

    —          437,654        437,654        —          —          —     

Comprehensive income (loss):

           

Net income

    549,458        180        549,638        437,309        —          437,309   

Change in pension liability, net of taxes

    27,045        —          27,045        23,210        —          23,210   

Derivative instrument fair market value adjustment, net of taxes

    (771     —          (771     1,309        —          1,309   

Currency translation adjustment

    (12,591     —          (12,591     50,055        —          50,055   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income:

    563,141        180        563,321        511,883        —          511,883   

Other changes in equity:

           

Dividends

    (55,431     —          (55,431     (54,870     —          (54,870

Purchase of IMM shares from noncontrolling interest

    —          (437,834     (437,834     —          —          —     

Other, including share based payment awards and options exercised

    39,690        —          39,690        78,992        —          78,992   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Ending balance

  $ 2,499,195      $ —        $ 2,499,195      $ 1,878,371      $ —        $ 1,878,371   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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11. Basic and Diluted Net Income Per Share

Basic net income per share is computed by dividing net income attributable to the Company by the weighted-average number of shares outstanding during each period. Diluted net income per share is computed by dividing net income attributable to the Company by the weighted-average number of shares outstanding during each period, plus dilutive potential shares considered outstanding during the period.

The following table sets forth the computation of basic and diluted net income per share.

 

     Quarter Ended      Nine Months Ended  
     July 27,     July 29,      July 27,     July 29,  

(in thousands except per share data)

   2012     2011      2012     2011  

Numerator:

         

Income from continuing operations available to common shareholders

   $ 194,344      $ 171,805       $ 554,673      $ 436,009   

Income (loss) from discontinued operations available to common shareholders

     (826     1,300         (5,215     1,300   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income available to common shareholders

   $ 193,518      $ 173,105       $ 549,458      $ 437,309   
  

 

 

   

 

 

    

 

 

   

 

 

 

Denominator:

         

Denominator for basic net income per share -

         

Weighted average shares

     106,025        105,204         105,794        104,803   

Effect of dilutive securities:

         

Stock options, restricted stock units and performance shares

     841        1,531         1,073        1,672   
  

 

 

   

 

 

    

 

 

   

 

 

 

Denominator for diluted net income per share -

         

Adjusted weighted average shares and assumed conversions

     106,866        106,735         106,867        106,475   
  

 

 

   

 

 

    

 

 

   

 

 

 

Basic earnings (loss) per share:

         

Continuing operations

   $ 1.83      $ 1.63       $ 5.24      $ 4.16   

Discontinued operations

     (0.01     0.01         (0.05     0.01   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 1.82      $ 1.64       $ 5.19      $ 4.17   
  

 

 

   

 

 

    

 

 

   

 

 

 

Diluted earnings (loss) per share:

         

Continuing operations

   $ 1.82      $ 1.61       $ 5.19      $ 4.09   

Discontinued operations

     (0.01     0.01         (0.05     0.01   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net income

   $ 1.81      $ 1.62       $ 5.14      $ 4.10   
  

 

 

   

 

 

    

 

 

   

 

 

 

Options to purchase approximately 1.3 million shares were outstanding at July 27, 2012 but were excluded from the calculation of diluted earnings per share as the effect would have been antidilutive.

 

12. 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

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

 

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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 27, 2012 and October 28, 2011. As of July 27, 2012 and October 28, 2011, we did not have any Level 3 assets or liabilities.

Fair Value Measurements

at July 27, 2012

(in thousands)

   Carrying
Value
     Total Fair
Value
     Level 1      Level 2  

Current Assets

           

Cash and cash equivalents

   $ 454,237       $ 454,237       $ 454,237       $ —     

Other Current Assets

           

Derivatives

   $ 11,740       $ 11,740       $ —         $ 11,740   

Other Accrued Liabilities

           

Derivatives

   $ 15,063       $ 15,063       $ —         $ 15,063   

Long-term Obligations Including

           

Amounts due within One Year

           

Term Loan due 2016

   $ 475,000       $ 527,415       $ —         $ 527,415   

Further Term Loan due 2016

   $ 244,375       $ 280,842       $ —         $ 280,842   

6.0% Senior Notes due 2016

   $ 248,270       $ 287,100       $ 287,100       $ —     

6.625% Senior Notes due 2036

   $ 148,460       $ 177,465       $ 177,465       $ —     

5.125% Senior Notes due 2021

   $ 496,003       $ 553,300       $ 553,300       $ —     

Fair Value Measurements

at October 28, 2011

(in thousands)

   Carrying
Value
     Total Fair
Value
     Level 1      Level 2  

Current Assets

           

Cash and cash equivalents

   $ 288,321       $ 288,321       $ 288,321       $ —     

Cash held in escrow

   $ 866,000       $ 866,000       $ 866,000       $ —     

Other Current Assets

           

Derivatives

   $ 8,904       $ 8,904       $ —         $ 8,904   

Other Long-term Assets

           

Investment in unconsolidated affiliate

   $ 380,114       $ 371,802       $ 371,802       $ —     

Other Accrued Liabilities

           

Derivatives

   $ 4,004       $ 4,004       $ —         $ 4,004   

Long-term Obligations Including

           

Amounts due within One Year

           

6.0% Senior Notes due 2016

   $ 248,008       $ 281,878       $ 281,878       $ —     

6.625% Senior Notes due 2036

   $ 148,441       $ 164,504       $ 164,504       $ —     

Term Loan due 2016

   $  493,750       $  486,949       $ —         $  486,949   

5.125% Senior Notes due 2021

   $ 495,755       $ 536,350       $ 536,350       $ —     

 

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The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value.

Cash and cash equivalents : The carrying value approximates fair value based on the short-term nature of these instruments.

Cash held in escrow : The carrying value approximates fair value.

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.

Senior Notes : The fair market value of the Senior Notes is estimated based on market quotations at the respective period end.

Term Loan : The fair value of our Term Loan is estimated using discounted cash flows and market conditions.

Further Term Loan : The fair value of our Further Term Loan is estimated using discounted cash flows and market conditions.

Investment in Unconsolidated Affiliate : The fair value of the investment in IMM at October 28, 2011 was estimated based on an active quoted market price. We obtained control of IMM on December 29, 2011, and the results of operations of IMM have been included with our Underground Mining Machinery segment from the acquisition date forward. See Note 3 for further information.

 

13. Contingent Liabilities

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 over 1,000 asbestos and silica-related cases), employment, and commercial matters. Also, 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 consolidated financial position, results of operations, or liquidity.

During the reorganization of our predecessor Harnischfeger Industries, Inc. in 1999 under Chapter 11 of the United States Bankruptcy Code, the Wisconsin Department of Workforce Development (“DWD”) filed claims against Beloit Corporation (“Beloit”), a former majority owned subsidiary, and us in federal bankruptcy court seeking “at least” $10.0 million in severance benefits and penalties, plus interest, on behalf of former Beloit employees. DWD’s claim against Beloit included unpaid severance pay due under a severance policy Beloit established in 1996. Since DWD’s claims were still being litigated as of the effective date of our plan of reorganization, the plan of reorganization provided that the claim allowance process with respect to DWD’s claims would continue as long as necessary to liquidate and determine these claims. On September 21, 2010, the U.S. District Court for the District of Delaware granted judgment in our favor. DWD then filed a post-judgment motion asking the court to change its decision. That motion was denied and stricken by the court on November 22, 2011. Any appeal by DWD was due on December 22, 2011. DWD did not appeal and thus the case remains resolved in our favor and is over.

 

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On July 27, 2012, we were contingently liable to banks, financial institutions, and others for approximately $304.7 million for outstanding letters of credit, bank guarantees, and surety bonds securing performance of sales contracts and other guarantees in the ordinary course of business. Of the $304.7 million, approximately $14.9 million relates to surety bonds and $9.7 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.

From time to time we and our subsidiaries become involved in proceedings relating to environmental matters. We believe that the resolution of such environmental matters will not have a materially adverse effect on our consolidated financial position, results of operations or liquidity.

 

14. Segment Information

We operate in two reportable segments: Underground Mining Machinery and Surface Mining Equipment. Crushing and conveying operating results related to surface applications are reported as part of the Surface Mining Equipment segment, while total crushing and conveying operating results are included with the Underground Mining Machinery segment. Eliminations consist of the surface applications of crushing and conveying included in both operating segments. On June 22, 2011 we completed the acquisition of LeTourneau. LeTourneau historically operated in three business segments, mining equipment, steel products, and drilling products. Results of LeTourneau’s mining equipment and steel products are included with our Surface Mining Equipment segment. The drilling products segment was sold on October 24, 2011 and results from the drilling products segment are classified as discontinued operations. On December 29, 2011, we obtained control of IMM. IMM is a leading designer and manufacturer of underground coal mining equipment in China. The results of operations for IMM have been included in the Underground Mining Machinery segment from the acquisition date forward.

 

     Underground      Surface                     
     Mining      Mining                     

In thousands

   Machinery      Equipment      Corporate     Eliminations     Total  

Quarter ended July 27, 2012

            

Net sales

   $ 754,082       $ 675,555       $ —        $ (40,914   $ 1,388,723   

Operating income (loss)

     166,753         154,551         (12,770     (9,059     299,475   

Interest and reorganization items

     —           —           (16,802     —          (16,802
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

   $ 166,753       $ 154,551       $ (29,572   $ (9,059   $ 282,673   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Depreciation and amortization

   $ 25,389       $ 13,539       $ 554      $ —        $ 39,482   

Capital expenditures

   $ 25,412       $ 28,149       $ 1,637      $ —        $ 55,198   

Total assets

   $ 3,870,509       $ 2,185,059       $ 251,809      $ —        $ 6,307,377   

Quarter ended July 29, 2011

            

Net sales

   $ 669,179       $ 507,552       $ —        $ (40,379   $ 1,136,352   

Operating income (loss)

     156,437         113,760         (24,392     (9,813     235,992   

Interest and reorganization items

     —           —           (6,032     —          (6,032
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

   $ 156,437       $ 113,760       $ (30,424   $ (9,813   $ 229,960   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Depreciation and amortization

   $ 10,618       $ 8,344       $ 59      $ —        $ 19,021   

Capital expenditures

   $ 8,546       $ 12,745       $ 800      $ —        $ 22,091   

Total assets

   $ 2,017,105       $ 2,512,387       $ 400,866      $ —        $ 4,930,358   

 

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Nine Months ended July 27, 2012

            

Net sales

   $ 2,279,937       $ 1,900,206       $ —        $ (114,159   $ 4,065,984   

Operating income (loss)

     500,181         407,380         (35,338     (25,565     846,658   

Interest and reorganization items

     —           —           (49,999     —          (49,999
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

   $ 500,181       $ 407,380       $ (85,337   $ (25,565   $ 796,659   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Depreciation and amortization

   $ 71,604       $ 46,937       $ 1,285      $ —        $ 119,826   

Capital expenditures

   $ 76,432       $ 88,140       $ 4,718      $ —        $ 169,290   

Total assets

   $ 3,870,509       $ 2,185,059       $ 251,809      $ —        $ 6,307,377   

Nine Months ended July 29, 2011

            

Net sales

   $ 1,828,481       $ 1,333,372       $ —        $ (93,240   $ 3,068,613   

Operating income (loss)

     406,807         290,673         (50,548     (23,080     623,852   

Interest and reorganization items

     —           —           (13,635     —          (13,635
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes

   $ 406,807       $ 290,673       $ (64,183   $ (23,080   $ 610,217   
  

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Depreciation and amortization

   $ 30,769       $ 19,725       $ 175      $ —        $ 50,669   

Capital expenditures

   $ 39,359       $ 35,030       $ 800      $ —        $ 75,189   

Total assets

   $ 2,017,105       $ 2,512,387       $ 400,866      $ —        $ 4,930,358   

 

15. Recent Accounting Pronouncements

In July 2012, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” ASU No. 2012-02 provides us the option to perform a qualitative assessment to determine whether further indefinite-lived intangible asset impairment testing is necessary. If, as a result of the qualitative assessment, it is determined that it is more likely than not that an indefinite-lived intangible asset is impaired, the quantitative impairment test is required. Otherwise, no further testing is required. ASU 2012-02 will be effective for the indefinite-lived impairment tests performed in fiscal 2013, with early adoption permitted. The adoption is not expected to have any impact on our financial condition or results of operations.

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-08, “Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment.” ASU No. 2011-08 provides us the option to perform a qualitative assessment to determine whether further goodwill impairment testing is necessary. If, as a result of the qualitative assessment, it is determined that it is more likely than not that a reporting unit’s fair value is less than its carrying amount, the two-step quantitative impairment test is required. Otherwise, no further testing is required. ASU 2011-08 will be effective for the goodwill impairment tests performed in fiscal 2013, with early adoption permitted. The adoption is not expected to have any impact on our financial condition or results of operations.

 

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In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” ASU No. 2011-05 eliminates the option to present components of other comprehensive income as part of the statement of shareholders’ equity. ASU 2011-05 will be effective for the quarter ending January 25, 2013. The adoption of this guidance will have no impact on our financial condition or results of operations but will impact the presentation of the financial statements. We are currently evaluating the presentation options.

 

16. Subsidiary Guarantors

The following tables present condensed consolidated financial information of continuing operations as of July 27, 2012 and October 28, 2011 and for the quarter and nine months ended July 27, 2012 and July 29, 2011 for: (a) the Company; (b) on a combined basis, the guarantors of the Credit Agreement, the Term Loan, the Further Term Loan and Senior Notes issued in November 2006, which include the significant domestic operations of Joy Technologies Inc., P&H Mining Equipment Inc., N.E.S. Investment Co., LeTourneau Technologies, Inc., Continental Crushing & Conveying Inc., and certain immaterial wholly owned subsidiaries of LeTourneau Technologies, Inc. (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 wholly 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.

 

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Condensed Consolidating Statement of Income

Quarter Ended July 27, 2012

(In thousands)

 

     Parent     Subsidiary     Non-Guarantor              
     Company     Guarantors     Subsidiaries     Eliminations     Consolidated  

Net sales

   $ —        $ 882,063      $ 903,075      $ (396,415   $ 1,388,723   

Cost of sales

     —          601,153        643,506        (331,720     912,939   

Product development, selling and administrative expenses

     12,735        83,931        82,770        —          179,436   

Other (income) expense

     —          4,761        (7,888     —          (3,127
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (12,735     192,218        184,687        (64,695     299,475   

Intercompany items

     15,726        (13,306     (25,577     23,157        —     

Interest income (expense)—net

     (17,712     256        654        —          (16,802

Reorganization items

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes and equity

     (14,721     179,168        159,764        (41,538     282,673   

Provision (benefit) for income taxes

     (10,833     82,093        17,031        —          88,291   

Equity in income (loss) of subsidiaries

     198,270        86,701        —          (284,971     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     194,382        183,776        142,733        (326,509     194,382   

Income from continuing operations attributable to non-controlling interest

     (38     —          (38     38        (38
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations attributable to Joy Global Inc.

   $ 194,344      $ 183,776      $ 142,695      $ (326,471   $ 194,344   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Condensed Consolidating Statement of Income

Quarter Ended July 29, 2011

(In thousands)

 

     Parent     Subsidiary     Non-Guarantor              
     Company     Guarantors     Subsidiaries     Eliminations     Consolidated  

Net sales

   $ —        $ 712,779      $ 718,079      $ (294,506   $ 1,136,352   

Cost of sales

     —          476,603        488,767        (225,744     739,626   

Product development, selling and administrative expenses

     24,102        80,652        60,571        —          165,325   

Other (income) expense

     —          15,975        (20,566     —          (4,591
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (24,102     139,549        189,307        (68,762     235,992   

Intercompany items

     4,778        (7,054     (34,681     36,957        —     

Interest income (expense)—net

     (8,687     382        2,273        —          (6,032

Reorganization items

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes and equity

     (28,011     132,877        156,899        (31,805     229,960   

Provision (benefit) for income taxes

     (29,103     56,015        31,243        —          58,155   

Equity in income (loss) of subsidiaries

     170,713        41,721        —          (212,434     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ 171,805      $ 118,583      $ 125,656      $ (244,239   $ 171,805   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Condensed Consolidating Statement of Income

Nine Months Ended July 27, 2012

(In thousands)

 

     Parent     Subsidiary     Non-Guarantor              
     Company     Guarantors     Subsidiaries     Eliminations     Consolidated  

Net sales

   $ —        $ 2,454,780      $ 2,678,424      $ (1,067,220   $ 4,065,984   

Cost of sales

     —          1,679,986        1,905,797        (869,379     2,716,404   

Product development, selling and administrative expenses

     55,394        252,567        224,864        —          532,825   

Other (income) expense

     —          16,901        (46,804     —          (29,903
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (55,394     505,326        594,567        (197,841     846,658   

Intercompany items

     48,219        (37,684     (79,708     69,173        —     

Interest income (expense)—net

     (52,244     420        1,825        —          (49,999

Reorganization items

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes and equity

     (59,419     468,062        516,684        (128,668     796,659   

Provision (benefit) for income taxes

     (43,965     215,417        70,354        —          241,806   

Equity in income (loss) of subsidiaries

     570,307        258,183        —          (828,490     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     554,853        510,828        446,330        (957,158     554,853   

Income from continuing operations attributable to non-controlling interest

     (180     —          (180     180        (180
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations attributable to Joy Global Inc.

   $ 554,673      $ 510,828      $ 446,150      $ (956,978   $ 554,673   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Condensed Consolidating Statement of Income

Nine Months Ended July 29, 2011

(In thousands)

 

     Parent     Subsidiary     Non-Guarantor              
     Company     Guarantors     Subsidiaries     Eliminations     Consolidated  

Net sales

   $ —        $ 1,945,694      $ 1,880,908      $ (757,989   $ 3,068,613   

Cost of sales

     —          1,305,519        1,293,895        (585,799     2,013,615   

Product development, selling and administrative expenses

     49,760        215,577        173,648        —          438,985   

Other (income) expense

     —          51,059        (58,898     —          (7,839
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (49,760     373,539        472,263        (172,190     623,852   

Intercompany items

     31,014        (33,920     (82,808     85,714        —     

Interest income (expense)—net

     (23,637     2,141        7,896        —          (13,600

Reorganization items

     (35     —          —          —          (35
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes and equity

     (42,418     341,760        397,351        (86,476     610,217   

Provision (benefit) for income taxes

     (51,481     136,937        88,752        —          174,208   

Equity in income (loss) of subsidiaries

     426,946        152,658        —          (579,604     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations

   $ 436,009      $ 357,481      $ 308,599      $ (666,080   $ 436,009   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Condensed Consolidating Balance Sheets:

As of July 27, 2012

(In thousands)

 

     Parent     Subsidiary      Non-Guarantor              
     Company     Guarantors      Subsidiaries     Eliminations     Consolidated  

ASSETS

           

Current assets

   $ 216,613      $ 1,293,597       $ 2,064,135      $ (237,505   $ 3,336,840   

Property, plant and equipment-net

     12,784        366,762         399,689        —          779,235   

Intangible assets-net

     —          834,851         1,147,929        —          1,982,780   

Other assets

     4,091,090        2,357,603         1,795,319        (8,035,490     208,522   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

   $ 4,320,487      $ 4,852,813       $ 5,407,072      $ (8,272,995   $ 6,307,377   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

           

Current liabilities

   $ 93,803      $ 892,166       $ 1,041,543      $ (97,327   $ 1,930,185   

Current liabilities of discontinued operation

     —          49,322         (30,713     —          18,609   

Long-term debt

     1,537,108        1,321         31        —          1,538,460   

Accrued pension costs

     191,598        6,789         6,424        —          204,811   

Other non-current liabilities

     (1,217     12,505         104,829        —          116,117   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities

     1,821,292        962,103         1,122,114        (97,327     3,808,182   

Shareholders’ equity

     2,499,195        3,890,710         4,284,958        (8,175,668     2,499,195   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 4,320,487      $ 4,852,813       $ 5,407,072      $ (8,272,995   $ 6,307,377   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

 

24


Table of Contents

As of October 28, 2011

(In thousands)

 

     Parent      Subsidiary      Non-Guarantor               
     Company      Guarantors      Subsidiaries      Eliminations     Consolidated  

ASSETS

             

Current assets

   $ 1,053,875       $ 1,224,326       $ 1,508,026       $ (222,220   $ 3,564,007   

Property, plant and equipment-net

     1,530         324,505         213,536         —          539,571   

Intangible assets-net

     —           792,972         20,947         —          813,919   

Other assets

     2,632,946         1,966,826         1,182,149         (5,273,064     508,857   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total assets

   $ 3,688,351       $ 4,308,629       $ 2,924,658       $ (5,495,284   $ 5,426,354   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

             

Current liabilities

   $ 61,269       $ 909,006       $ 854,915       $ (100,619   $ 1,724,571   

Long-term debt

     1,354,704         1,638         70         —          1,356,412   

Accrued pension costs

     318,173         6,950         7,329         —          332,452   

Other non-current liabilities

     2,410         9,373         49,341         —          61,124   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities

     1,736,556         926,967         911,655         (100,619     3,474,559   

Shareholders’ equity attributable to Joy Global Inc.

     1,951,795         3,381,662         2,013,003         (5,394,665     1,951,795   

Noncontrolling interest

     —           —           —           —          —     
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total equity

     1,951,795         3,381,662         2,013,003         (5,394,665     1,951,795   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 3,688,351       $ 4,308,629       $ 2,924,658       $ (5,495,284   $ 5,426,354   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Condensed Consolidating Statement of Cash Flows:

Nine Months Ended July 27, 2012

(In thousands)

 

     Parent     Subsidiary     Non-Guarantor        
     Company     Guarantors     Subsidiaries     Consolidated  

Net cash provided (used) by operating activities – continuing operations

   $ 33,027      $ 99,643      $ 120,351      $ 253,021   

Net cash used by operating activities – discontinued operations

     —          (15,747     —          (15,747
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided (used) by operating activities

     33,027        83,896        120,351        237,274   

Investing Activities:

        

Acquisition of controlling interest in IMM, net of cash acquired

     (1,028,829     —          72,912        (955,917

Withdrawal of cash held in escrow

     866,000        —          —          866,000   

Other

     (4,852     (85,481     (71,838     (162,171
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided (used) by investing activities – continuing operations

     (167,681     (85,481     1,074        (252,088

Net cash used by investing activities – discontinued operations

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided (used) by investing activities

     (167,681     (85,481     1,074        (252,088
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities – continuing operations

     199,162        (300     (11,965     186,897   

Net cash used by financing activities – discontinued operations

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided (used) by financing activities

     199,162        (300     (11,965     186,897   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     —          —          (6,167     (6,167
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     64,508        (1,885     103,293        165,916   

Cash and cash equivalents at beginning of period

     100,181        16,152        171,988        288,321   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 164,689      $ 14,267      $ 275,281      $ 454,237   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Nine Months Ended July 29, 2011

(In thousands)

 

     Parent     Subsidiary     Non-Guarantor        
     Company     Guarantors     Subsidiaries     Consolidated  

Net cash provided by operating activities – continuing operations

   $ 285,682      $ 35,685      $ 24,767      $ 346,134   

Net cash used by operating activities – discontinued operations

     —          (2,444     —          (2,444
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     285,682        33,241        24,767        343,690   

Investing Activities:

        

Investment in IMM

     (140,613     —          —          (140,613

Acquisition of LeTourneau

     (1,041,161     —          —          (1,041,161

Other

     (1,029     (43,370     (28,276     (72,675
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used by investing activities – continuing operations

     (1,182,803     (43,370     (28,276     (1,254,449

Net cash used by investing activities – discontinued operations

     —          (361     —          (361
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used by investing activities

     (1,182,803     (43,731     (28,276     (1,254,810

Share-based payment awards

     70,426        —          —          70,426   

Changes in short and long-term obligations, net

     500,000        2,436        6,425        508,861   

Other

     (64,305     —          —          (64,305
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities – continuing operations

     506,121        2,436        6,425        514,982   

Net cash provided by financing activities – discontinued operations

     —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by financing activities

     506,121        2,436        6,425        514,982   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     —          —          23,649        23,649   
  

 

 

   

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (391,000     (8,054     26,565        (372,489

Cash and cash equivalents at beginning of period

     439,295        16,262        360,024        815,581   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 48,295      $ 8,208      $ 386,589      $ 443,092   
  

 

 

   

 

 

   

 

 

   

 

 

 

17. Supplemental Subsidiary Guarantors

The following tables present condensed consolidated financial information as of July 27, 2012 and October 28, 2011 and for the quarter and nine months ended July 27, 2012 for: (a) the Company; (b) on a combined basis, the guarantors of the 2021 Notes issued in October 2011, which include Joy Technologies Inc., P&H Mining Equipment Inc., N.E.S. Investment Co., Continental Crushing & Conveying Inc. and LeTourneau Technologies, Inc. (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 wholly 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.

 

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Condensed Consolidating Statement of Income

Quarter Ended July 27, 2012

(In thousands)

 

           Supplemental                    
     Parent     Subsidiary     Non-Guarantor              
     Company     Guarantors     Subsidiaries     Eliminations     Consolidated  

Net sales

   $ —        $ 839,498      $ 945,640      $ (396,415   $ 1,388,723   

Cost of sales

     —          568,833        675,826        (331,720     912,939   

Product development, selling and administrative expenses

     12,735        77,873        88,828        —          179,436   

Other (income) expense

     —          5,182        (8,309     —          (3,127
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (12,735     187,610        189,295        (64,695     299,475   

Intercompany items

     15,726        (13,306     (25,577     23,157        —     

Interest income (expense)—net

     (17,712     254        656        —          (16,802

Reorganization items

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes and equity

     (14,721     174,558        164,374        (41,538     282,673   

Provision (benefit) for income taxes

     (10,833     82,093        17,031        —          88,291   

Equity in income (loss) of subsidiaries

     198,270        91,311        —          (289,581     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     194,382        183,776        147,343        (331,119     194,382   

Income from continuing operations attributable to non-controlling interest

     (38     —          (38     38        (38
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations attributable to Joy Global Inc.

   $ 194,344      $ 183,776      $ 147,305      $ (331,081   $ 194,344   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Condensed Consolidating Statement of Income

Nine Months Ended July 27, 2012

(In thousands)

 

           Supplemental                    
     Parent     Subsidiary     Non-Guarantor              
     Company     Guarantors     Subsidiaries     Eliminations     Consolidated  

Net sales

   $ —        $ 2,412,215      $ 2,720,989      $ (1,067,220   $ 4,065,984   

Cost of sales

     —          1,647,666        1,938,117        (869,379     2,716,404   

Product development, selling and administrative expenses

     55,394        246,509        230,922        —          532,825   

Other (income) expense

     —          17,322        (47,225     —          (29,903
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (55,394     500,718        599,175        (197,841     846,658   

Intercompany items

     48,219        (37,684     (79,708     69,173        —     

Interest income (expense)—net

     (52,244     418        1,827        —          (49,999

Reorganization items

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from continuing operations before income taxes and equity

     (59,419     463,452        521,294        (128,668     796,659   

Provision (benefit) for income taxes

     (43,965     215,417        70,354        —          241,806   

Equity in income (loss) of subsidiaries

     570,307        262,793        —          (833,100     —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations

     554,853        510,828        450,940        (961,768     554,853   

Income from continuing operations attributable to non-controlling interest

     (180     —          (180     180        (180
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income from continuing operations attributable to Joy Global Inc.

   $ 554,673      $ 510,828      $ 450,760      $ (961,588   $ 554,673   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

28


Table of Contents

Condensed Consolidating Balance Sheets:

As of July 27, 2012

(In thousands)

 

           Supplemental                     
     Parent     Subsidiary      Non-Guarantor              
     Company     Guarantors      Subsidiaries     Eliminations     Consolidated  

ASSETS

           

Current assets

   $ 216,613      $ 1,257,006       $ 2,100,726      $ (237,505   $ 3,336,840   

Property, plant and equipment-net

     12,784        360,712         405,739        —          779,235   

Intangible assets-net

     —          834,851         1,147,929        —          1,982,780   

Other assets

     4,091,090        2,346,281         1,806,641        (8,035,490     208,522   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

 

Total assets

   $ 4,320,487