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CONSOLIDATED STATEMENT OF OPERATIONS

Year Ended October 31
(Dollar amounts in thousands
except per share ¬gures) 1983 1982
1984

Revenues:




Harnischfeger Corporation
Net sales $398,708 $321,010 $447,461
Other income, including license and technical
service fees 7,067 3,111 5,209
405,775 324,121 452,670
Cost of Sales 315,216 261,384 366,297
Operating Income 90,559 62,737 86,373
Less:
Product development, selling and administrative
expenses 72,196 85,795 113,457
Interest expense”net 12,625 9,745 18,873
Provision for plant closing ” ” 23,700
Income (Loss) Before Provision (Credit) for Income
Taxes, Equity Items and Cumulative Effect of
Accounting Change 5,738 (32,803) (69,657)
Provision (Credit) for Income Taxes 2,425 (1,400) (1,600)
Income (Loss) Before Equity Items and Cumulative
Effect of Accounting Change 3,313 (31,403) (68,057)
Equity items:
Equity in earnings (loss) of unconsolidated
companies 993 (3,397) (7,891)
Minority interest in (earnings) loss of consolidated
subsidiaries (135) 170 (583)
Income (Loss) Before Cumulative Effect of Account-
ing Change 4,171 (34,630) (76,531)
Cumulative Effect of Change in Depreciation
Method 11,005 ” ”
Net Income (Loss) $ 15,176 $(34,630) $ (76,531)
Earnings (Loss) per Common and Common Equiv-
alent Share:
Income (Loss) before cumulative effect of
accounting change $ .35 $(3.49) $(7.64)
Cumulative effect of change in depreciation
method .93 ” ”
Net income (loss) $1.28 $(3.49) $(7.64)
Pro forma Amounts Assuming the Changed Depre-
ciation Method Had Been Applied Retroactively:
Net (loss) $ (33,918) $ (76,695)
(Loss) per common share $(3.42) $(7.65)

(The accompanying notes are an integral part of the financial statements.)
115
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3-33 Part 2 Business Analysis and Valuation Tools




CONSOLIDATED BALANCE SHEET

October 31
(Dollar amounts in thousands except per share ¬gures) 1983
1984

Assets
Harnischfeger Corporation




Current Assets:
Cash and temporary investments $ 96,007 $ 64,275
Accounts receivable 87,648 63,740
Inventories 144,312 153,594
Refundable income taxes and related interest 1,296 12,585
Other current assets 5,502 6,023
Prepaid income taxes 14,494 14,232
349,259 314,449
Investments and Other Assets:
Investments in and advances to:
Finance subsidiary, at equity in net assets 8,849 6,704
Other companies 4,445 2,514
Other assets 13,959 6,411
27,253 15,629
Operating Plants:
Land and improvements 9,419 10,370
Buildings 59,083 60,377
Machinery and equipment 120,949 122,154
189,451 192,901
Accumulated depreciation (93,259) (107,577)
96,192 85,324
$472,704 $415,402

(continued)
116 Overview of Accounting Analysis




3-34
Overview of Accounting Analysis




CONSOLIDATED BALANCE SHEET (continued)

October 31
(Dollar amounts in thousands except per share ¬gures) 1983
1984

Liabilities and Shareholders™ Equity




Harnischfeger Corporation
Current Liabilities:
Short-term notes payable to banks by subsidiaries $ 9,090 $ 8,155
Long-term debt and capitalized lease obligations payable
within one year 973 18,265
Trade accounts payable 37,716 21,228
Employee compensation and bene¬ts 15,041 14,343
Accrued plant closing costs 2,460 6,348
Advance payments and progress billings 20,619 15,886
Income taxes payable 1,645 3,463
Account payable to ¬nance subsidiary ” 3,436
Other current liabilities and accruals 29,673 32,333
117,217 123,457
Long-Term Obligations:
Long-term debt payable to:
Unaf¬liated lenders 128,550 139,092
Finance subsidiary ” 5,400
Capitalized lease obligations 7,870 8,120
136,420 152,612
Deferred Liabilities and Income Taxes:
Accrued pension costs 57,611 19,098
Other deferred liabilities 5,299 7,777
Deferred income taxes 6,385 134
69,295 27,009
Minority Interest 2,400 2,405
Shareholders™ Equity:
Preferred stock $100 par value”authorized 250,000 shares:
Series A $7.00 cumulative convertible preferred shares: author-
ized, issued and outstanding 117,500 shares in 1984 and
100,000 shares in 1983 11,750 10,000
Common stock, $1 par value”authorized 25,000,000 shares:
issued and outstanding 12,283,563 shares in 1984 and
10,133,563 shares in 1983 12,284 10,134
Capital in excess of par value of shares 114,333 88,332
Retained earnings 19,901 6,475
Cumulative translation adjustments (10,896) (5,022)
147,372 109,919
$472,704 $415,402


(The accompanying notes are an integral part of the financial statements.)
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CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION

Year Ended October 31,
(Dollar amounts in thousands) 1983 1982
1984

Funds Were Provided by (Applied to):
Harnischfeger Corporation




Operations:
Income (loss) before cumulative effect of accounting
change $ 4,171 $ (34,630) $(76,531)
Cumulative effect of change in depreciation method 11,005 ” ”
Net income (loss) 15,176 (34,630) (76,531)
Add (deduct) items included not affecting funds:
Depreciation 8,077 13,552 15,241
Unremitted (earnings) loss of unconsolidated
companies (993) 3,397 7, 891
Deferred pension contributions (500) 4,834 ”
Deferred income taxes 6,583 (3,178) 1,406
Reduction in accumulated depreciation resulting
from change in depreciation method (17,205) ” ”
Other”net (2,168) (67) 2,034
Decrease in operating working capital (see below) 7,039 11,605 72,172
Add (deduct) effects on operating working capital of:
Conversion of export and factored receivable sales
to debt ” 23,919 ”
Reclassi¬cation to deferred liabilities:
Accrued pension costs ” 14,264 ”
Other liabilities ” 5,510 ”
Foreign currency translation adjustments (6,009) (1,919) (5,943)
Funds provided by operations 10,000 37,287 16,270
Financing, Investment and Other Activities:
Transactions in debt and capitalized lease obligations
”Long-Term debt and capitalized lease obligations:
Proceeds from sale of 15% Senior Notes and 12%
Subordinated Debentures, net of issue costs 120,530 ” ”
Other increases 1,474 ” 25,698
Repayments (161,500) (760) (9,409)
Restructured debt ” 158,058 ”
Debt replaced, including conversion of receivable
sales of $23,919, and short-term bank notes
payable of $9,028 ” (158,058) ”
(39,496) (760) 16,289
Net increase (repayment) in short-term bank notes
payable 2,107 (3,982) (2,016)
Net increase (repayment) in debt and capitalized
lease obligations (37,389) (4,742) 14,273
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CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION (continued)

Year Ended October 31,
(Dollar amounts in thousands) 1983 1982
1984

Issuance of:




Harnischfeger Corporation
Common stock 21,310 ” 449
Common stock purchase warrants 6,663 ” ”
Salaried pension assets reversion 39,307 ” ”
Plant and equipment additions (5,546) (1,871) (10,819)
Advances to unconsolidated companies (2,882) ” ”
Other”net 269 1,531 848
Funds provided by (applied to) ¬nancing, invest-
ment and other activities 21,732 (5,082) 4,751
Increase in Cash and Temporary Investments Before
Cash Dividends $ 31,732 $ 32,205 $21,021
Cash Dividends ” ” (2,369)
Increase in Cash and Temporary Investments $ 31,732 $ 32,205 $ 18,652
Decrease (Increase) in Operating Working Capital
(Excluding Cash Items, Debt and Capitalized Lease
Obligations):
Accounts receivable $ (23,908) $ (5,327) $ 42,293
Inventories 9,282 56,904 26,124

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