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Joy Global Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: December 18, 2012 06:05AM
Joy Global Inc. (JOYG) filed Annual Report for the period ended 2012-10-26.
Highlight of Business Operations:Net sales for 2012 totaled approximately $5.7 billion compared to $4.4 billion in 2011, an increase of 28.5%. In 2012, IMM had sales of $219.0 million and LeTourneaus sales increased by $306.5 million. Aftermarket sales increased $332.4 million, or 12.7%, when compared to the prior year due to increased parts sales and machine assemblies for both the Underground Mining Machinery and Surface Mining Equipment segments. Original equipment sales increased $924.6 million, or 51.8%, when compared to the prior year due to last years strong order rate flowing to this years sales. Foreign currency translation unfavorably impacted sales by $51.4 million.
Underground Mining Machinery net sales for 2012 were $3.1 billion compared to $2.6 billion for 2011, and included a $136.2 million increase in aftermarket sales, a $175.7 million increase in original equipment sales and $219.0 million in sales from the acquisition of IMM. Aftermarket sales increased in China and Australia by $111.5 million and $46.6 million, respectively, primarily due to increased demand for parts. Original equipment sales increased in Australia and Eurasia by $214.8 million and $36.0 million, respectively, primarily due to increased roof support sales in both regions and increased bolter miner and conveyor system sales in Australia. The increase in original equipment sales from Australia and Eurasia was partially offset by decreases in sales from China and North America. Foreign currency translation unfavorably impacted sales by $39.7 million.
Operating income for the Surface Mining Equipment segment was $592.7 million in fiscal 2012, compared to operating income of $422.5 million in fiscal 2011. Operating income in 2012 increased $50.6 million from the acquisition of LeTourneau. LeTourneaus 2012 and 2011 operating income was reduced by $13.7 million and $8.8 million, respectively, for non-recurring purchase accounting charges. In addition to the $50.6 million increase from LeTourneau, operating income was favorably impacted by $148.3 million due to higher sales volumes, which was partially offset by $37.2 million of increased period costs, $10.3 million due to pension curtailment and special termination benefit charges, and $2.4 million of restructuring charges.
Product development, selling and administrative expense was $736.8 million, or 13.0% of sales, in 2012, compared to $602.0 million, or 13.7% of sales, in 2011. The inclusion of LeTourneau and IMM increased product development, selling and administrative expenses by $74.6 million. In addition to the $74.6 million attributable to the acquisitions operations, product development costs increased by an additional $9.6 million driven by research and development activities on new or existing products and increased personnel for smart services activities. Selling costs increased by $13.3 million to support increased sales volumes and aftermarket infrastructure. The increase in administrative expenses of $37.1 million relates to restructuring charges of $9.9 million and increased performance based compensation of $8.0 million.
Product development, selling and administrative expense was $602.0 million, or 13.7% of sales, in 2011, compared to $480.6 million, or 13.6% of sales, in 2010. Before acquisition transaction costs of $19.7 million in 2011, product development, selling and administrative expenses totaled $582.3 million, or 13.2% of sales. Product development costs increased by $20.8 million, which is attributable to research and development activities on new or existing products and increased personnel for smart services activities. Selling costs increased by $34.0 million due to travel, warehouse costs to support increased parts volumes and the inclusion of $5.6 million from LeTourneaus mining equipment business. Administrative expenses increased primarily due to acquisition transaction costs.
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