The Harnischfeger Corporation was founded in 1884, and has two major segments: P & H Heavy Equipment Group, consisting of the Construction Equipment Group, consisting of the Construction Equipment Division and the Mining and Electrical Equipment Division, and Industrial Group, consisting of the Material Handling Equipment Division and the Harnischfeger Engineers Division.
Of the $15,176,000 net profit, $11,005,000 or $.93 per share was attributed to the cumulative effect of a change in depreciation method from accelerated to straight line for financial reporting. The change was applied retroactively to all assets subject to accelerated methods. The change impacted its US plants, machinery and equipment. The company previously used accelerated methods for both financial and tax reporting. The company stated that the change allowed it to conform to accounting practices used by the industry and asserted that the effect was immaterial.
In fiscal year 1984, the company changed its estimated depreciation lives on certain US plants, machinery and equipment.
It further changed the residual values of its machinery and equipment. The net income increased because of this by $3.2 million. The company also began to include the full sales price of construction and mining equipment purchased from Kobe Steel, and sold by the company. These sales totaled $28 million or 7% of the total consolidated net sales.
Also effective fiscal year 1984, the company began to include financial statements of certain foreign subsidiaries on the basis of a fiscal year ending September 30, rather than July 31, as was employed in previous years. The result of this action was a change of $5.4 million in net sales. Total management compensation for the company's 14 executive officers topped 2 million dollars and averaged $154,000 per person.
In conclusion, the management of Harnischfeger Corporation reaped many rewards as a result of the net...