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Joy Global Inc. Announces Third Quarter Fiscal 2012 Operating Results

Stocks in this article: JOY

The increase in operating profit, before all of the acquisition activities, was due to higher sales volume and a reduction in employee costs compared to the prior third quarter. These items were partially offset by an increase in unfavorable manufacturing variances.

The current quarter results include $22 million of operating profit from LeTourneau, net of $3 million of ongoing purchase accounting charges. Excess purchase accounting charges associated with the write-up of the acquired inventory and backlog from the LeTourneau transaction were completed in the third quarter of fiscal 2012, resulting in a final charge of $2 million.

In addition, the current quarter results include $11 million of operating profit from IMM, net of $4 million of ongoing purchase accounting charges. The third quarter results also include $8 million in excess purchase accounting charges associated with the write-up of the acquired inventory and backlog of IMM compared to our preliminary estimate of $5 million. Excess purchase accounting charges from the IMM transaction will be fully recognized in the fourth quarter of 2012 with an estimated final charge of $2 million.

Net interest expense increased to $17 million in the third quarter of 2012, up from $6 million in the prior year. The increase in interest expense is attributable to incremental borrowings associated with financing for the LeTourneau and IMM acquisitions.

The effective income tax rate was 31.2% in the current quarter compared to 25.3% in the third quarter of 2011. The effective income tax rate excluding discrete tax adjustments was 31.5% in the current quarter compared to 30.6% in the third quarter of 2011. The increase in the effective tax rate is attributable to continued refinement of our full year forecast of domestic and international earnings. The effective tax rate is expected to be between 31.0 and 31.5 percent for 2012.


Impact of Acquisitions and Unusual Items on Earnings Per Share

Quarter Ended
July 27, 2012   July 29, 2011
Dollars   Fully Dollars   Fully
in millions Diluted EPS in millions Diluted EPS
Income from continuing operations, attributable
to Joy Global Inc., as reported $ 194.3 $ 1.82 $ 171.8 $ 1.61
LeTourneau excess purchase accounting, net of tax 1.3 0.01 - -
IMM excess purchase accounting, net of tax 5.8 0.05 - -
Acquisition costs, net of tax - - 8.1 0.08
Incremental interest expense, net of tax 7.5 0.07 - -
Net discrete tax benefits 0.6 0.01 12.1 0.11
LeTourneau, net of tax 8.8 0.08 4.3 0.04
IMM, net of tax   7.3   0.07   -   -
Income from Continuing Operations Attributable
to Joy Global Inc., Before Acquisition Activities and Unusual Items $ 192.2 $ 1.79 $ 163.5 $ 1.54

Income from continuing operations in the third quarter was $194 million or $1.82 per fully diluted share, compared to income from continuing operations of $172 million or $1.61 per fully diluted share in the third quarter of the prior year. The table above lists the acquisition activities and unusual items that affected third quarter earnings per share compared to the same quarter last year.

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